Cloudera, Inc. (CLDR) in Palo Alto, Calif., is a well-known provider of data management platforms, while Couchbase, Inc. (BASE) in Santa Clara, Calif., is a budding player in this space. CLDR develops and distributes enterprise software for data management, machine learning, and advanced analytics. The company offers software subscriptions and public cloud services for its data hub, data warehouse, machine learning, dataflow, and Hortonworks data platform. Having gone public on July 22, 2021, BASE develops and provides a NoSQL database for enterprises in various industries worldwide. Its database works in multiple configurations, ranging from cloud to multi- or hybrid-cloud to on-premises environments to the edge.
With the resurgence of COVID-19 cases, as most enterprises delay their office reopening plans, the demand for effective and secure real-time data management platforms is expected to surge to facilitate the increased productivity from remote workforces. The global enterprise data management market is expected to grow at a 13.8% CAGR to $208.87 billion by 2028. So, both CLDR and BASE should benefit.
In terms of the companies’ past month’s performance, BASE is a winner with 6.9% price gains versus CLDR’s marginal returns. But which of these stocks is a better pick now? Let’s find out.
On August 16, 2021, CLDR launched Cloudera DataFlow for the Public Cloud, a cloud-native service for data flows to process hybrid streaming workloads on the Cloudera Data Platform (CDP). With this, users can automate complex data flow operations, boost the operational efficiency of streaming data flows with auto-scaling capabilities, and cut down on cloud costs by eliminating infrastructure sizing guesswork. CLDR expects to witness high demand for the product in the coming months.
On July 29, 2021, BASE announced the general availability of Couchbase Server 7, which combines the best of relational databases with the flexibility and scale of a document database, allowing enterprises to confidently accelerate strategic initiatives, such as quickly moving business-critical applications into the cloud, improving application flexibility and increasing developer agility. Also, the server’s usage can be expanded into enterprise transactional applications and can reduce operating costs through performance enhancements. BASE expects to witness expanding market reach in the near term.
Recent Financial Results
For its fiscal second quarter, ended July 31, 2021, CLDR’s total revenue increased 10.1% year-over-year to $236.06 million. The company’s non-GAAP gross profit came in at $199.82 million, up 14.5% from the prior-year period. Its non-GAAP income from operations was $44.48 million for the quarter, representing a 49.5% rise from the prior-year period. CLDR’s non-GAAP net income was $44.13 million, up 45.7% from the prior-year period. Its non-GAAP EPS increased 50% year-over-year to $0.15. As of July 31, 2021, the company had $134.08 million in cash and cash equivalents.
For its fiscal second quarter, ended July 31, 2021, BASE’s total revenue increased 18% year-over-year to $29.70 million. The company’s non-GAAP gross profit came in at $26.23 million, up 16.5% from the prior-year period. BASE’s non-GAAP loss from operations increased 131% year-over-year to $12.01 million. While its non-GAAP net loss increased 64.2% year-over-year to $13.93 million, its non-GAAP loss per share increased 2.7% to $1.54. The company had $6.90 million in cash and cash equivalents as of June 30, 2021.
Expected Financial Performance
Analysts expect CLDR’s EPS to increase 18.5% year-over-year in the current year and decline 1.1% next year. Its revenue is expected to grow 8.4% year-over-year in the current year and 7.2% next year.
In comparison, BASE EPS is expected to remain negative in the coming quarters of the current year and next year. However, its revenue is expected to grow 17.2% year-over-year in the current year and 24.1% next year.
CLDR’s trailing-12-month revenue is almost eight times what BASE generates. CLDR is also more profitable, with a 35% levered free cash flow margin versus BASE’s negative returns.
In terms of non-GAAP forward P/E, CLDR is currently trading at 29.89x, compared to BASE’s negative 19.07x.
In terms of forward EV/Sales, BASE’s 11.95x is 59.2% higher than CLDR’s 4.87x.
While BASE has an overall D grade, which translates to Sell in our proprietary POWR Ratings system, CLDR has an overall B grade, which equates to Buy. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
Both CLDR and BASE have a C grade for Momentum, which is in sync with their mixed price performance over the past month. CLDR has gained marginally over the past month, while BASE surged 6.9% in price.
In terms of Quality, CLDR has been graded a B, which is consistent with its higher-than-industry profitability ratios. CLDR has a 35% trailing-12-month levered free cash flow margin, which is 182.9% higher than the 12.4% industry average. However, BASE’s C grade for Quality is in sync with its negative trailing-12-month levered free cash flow margin.
Of the 60 stocks in the Software – Business industry, BASE is ranked #41, while CLDR is ranked #11.
Beyond what we’ve stated above, our POWR Ratings system has also rated BASE and CLDR for Value, Sentiment, Stability, and Growth. Get all BASE ratings here. Also, click here to see the additional POWR Ratings for CLDR.
The demand for efficient and secure data management platforms from enterprises should drive companies operating in this space. Both CLDR and BASE are well-positioned to benefit from the industry tailwinds, but higher profitability, lower valuation, and better financials we think make CLDR a better buy here.
Our research shows that the odds of success increase if one bets on stocks with an Overall POWR Rating of Buy or Strong Buy. Click here to access the top-rated stocks in the Software – Business industry.
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CLDR shares were unchanged in after-hours trading Tuesday. Year-to-date, CLDR has gained 14.52%, versus a 19.58% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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