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Docker, the technology, is the poster child for containers. But it appears Docker, the business, is in trouble. In a leaked memo, Docker CEO Rob Bearden praised workers -- despite the "uncertainty [which] brings with it significant challenges" and "persevering in spite of the lack of clarity we've had these past few weeks."
Lack of clarity about what? Sources close to the company say it's simple: Docker needs more money.
Indeed, Bearden opened by saying: "We have been engaging with investors to secure more financing to continue to execute on our strategy. I wanted to share a quick update on where we stand. We are currently in active negotiations with two investors and are working through final terms. We should be able to provide you a more complete update within the next couple of weeks."
Docker has already raised $272.9 million, but the company hasn't been profitable. It's[sic] venture-capitalist supporters -- ME Cloud Ventures, Benchmark, Coatue Management, Goldman Sachs, and Greylock Partners -- which have seen it through Series E financing, can't be happy, that after almost six-years, Docker still isn't close to an IPO.
While the previous CEO, Steve Singh, promised in May 2019 that Docker would be cash-flow positive by the end of this fiscal year, that appears not to have been the case. Otherwise, Docker wouldn't need to seek additional capital.
(Score: 5, Interesting) by VLM on Tuesday October 01 2019, @11:21PM
The actual quote is free cash flow positive which has a technical precise meaning in financial analysis of investments and FCF does NOT include non-cash stuff on the P+L sheet.
So famously in other situations two ways to manipulate using FCF as a goal, are to ignore significant interest payments because they're not counted, or to zero out planned investment destroying the company in the future while turbocharging FCF for a quarter or year to make some executive bonus.
Its not that execs are lying or cheaty when they use FCF as a metric because 1) They're like that all the time because the business market evolutionarily selects for it 2) sometimes its actually honestly the best way to eval a company. Its more that if an exec gets all talky about FCF thats a flashing red light to look really close at their current manipulations of non-cash items on the P+L and how they might be dropping investment plans today to boost cash flow at the expense of future growth ... or future survival.
If financial analysis like this sounds interesting, its worth considering that classically an example of playing FCF vs EPS is buying factory capital machinery... FCF takes a single year hit for the entire expense of a machine, whereas EPS takes a longer term depreciation hit every year. Kinda sorta. So focusing on FCF is what a company does when its not planning on spending money to grow in the immediate future. If nothing else I'd be surprised if they made FCF their metric for success if they are planning on buying a data center full of gear in the near future.
And taking the above paragraph, plus looking at crunchbase, isn't it true that docker hasn't done any acquisitions for like three years? And the CEO talking about FCF instead of EPS would POSSIBLY imply they're not planning on buying anyone or anything (equipment, etc) very soon.
So that in a general sense is how you read management intent based on their use of a very specific technical financial buzzword. Its only slightly more accurate than astrology, geomancy, or biorhythms. But its worth pointing out that the CEO using that specific accounting term IS significant in some way, its not just flippantly tossing out a meaningless buzzword like "cloud" which is ironic given their business area.
I just thought that was interesting, why is this dude tossing out FCF instead of something more conventional like EPS? Well, he's probably not an idiot so he's likely sending an intentional message by that word choice.