Cloudera Inc(NYSE: CLDR) delivered a revenue growth of 41% yoy to $94.6 million during the third quarter of 2018 boosted by secular trends in artificial intelligence, hybrid and multi-cloud architectures and IoT. Their subscription software revenue surged 48% on a year-over-year basis boosted by rising digitally connected world.

The group’s subscription gross margin rose 250 basis points to 86% while Services gross margin for the quarter was 12% against 16% a year ago in the back of Timing differences. Total gross margin for the third quarter of 2018 rose 400 basis points to 73%, against 69% a year ago.

Cloudera forecasts services revenue as a percent of total revenue to continue to drift downward on the back of the rapid growth of subscription software revenue coupled with the rising traction of their partner ecosystem. As a result, they expect their services revenue in the fourth quarter to be lower than their initial expectations due to better than the expected deferral of services revenue.

The group is strengthening their machine learning capabilities and accordingly acquired Fast Forward Labs, a leader in applied artificial intelligence and machine learning. The integration of Fast Forward Labs is performing well. They launched a Cloudera shared data experience, SDX which delivers a consistent framework of data management, governance and security tools across cloud, multi-cloud and on-premise deployments, regardless of where data resides, whether in AWS’ S3, Azure’s data lake store, HDFS or another storage mechanism. Cloudera added 23 net new Global 8000 customers and continue to target large enterprise customers.

For the fourth quarter, Cloudera is targeting the total revenue to be in the range of $97 million and $99 million, which is a rise of 33% to 36% against Q4 of last year. Subscription software revenue is forecasted to be in the range of $80 million to $82 million, which is a rise of over 43% to 46% year-over-year. Non-GAAP net loss per share is expected to be in the range of $0.24 to $0.22 based on approximately 142 million weighted average shares outstanding. For the fiscal year 2018, total revenue is targeted to be in $361 million and $363 million range, which is 38% to 39% growth with subscription software revenue in the range of $297 million to $299 million, an increase of over 48% to 49% year-over-year.