In late 2014, when software developer Hortonworks was getting ready to go public, the company was not in the healthiest position. Almost one-quarter of its revenue came from a single company: Microsoft.
While that was an improvement from the prior year, when a staggering 55 percent of sales came from Microsoft, it was still a bright red flag for investors, who were concerned about whether Hortonworks was diversified enough to flourish as an independent company.
From its $16 IPO price in December 2014, the stock lost more than half its value over the next 22 months to a low of $6.42 in October 2016.
Hortonworks had a good reason for its Microsoft collaboration, which started in 2011, the same year the fledgling company spun out of Yahoo. As a start-up with a package of open source software for running big data projects, Hortonworks' early integrations with Microsoft's Windows Server operating system and Azure public cloud allowed the company to pick up new business that it couldn't have attracted on its own.
"It put us on the map," said Mike Volpi, a Hortonworks board member and a partner at Index Ventures, which backed Hortonworks in 2011. "It gave us access to a lot of important customers. It was definitely material."
Today, five companies derive at least 10 percent of their revenue from Microsoft, according to FactSet, but Hortonworks isn't one of them. As of 2016, its reliance on Microsoft was down to 6 percent. Hortonworks now has more than 1,000 customers with active support subscriptions, up from 332 at the end of 2014.