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Attunity Ltd  (NASDAQ:ATTU)
Q4 2018 Earnings Conference Call
Jan. 31, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to Attunity Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I'd now like to turn the conference over to Allison Soss, KCSA Strategic Communications. Thank you. You may begin.

Allison Soss -- Investor Relations

Thank you. Thank you. Before we turn the call over to management, I would like to make the following remarks regarding forward-looking statements. All statements in this conference call other than historical facts are forward-looking statements. The words anticipate, believe, estimate, affect, intend, guidance, confidence, target, project and other similar expressions, typically are used to identify forward-looking statements.

These forward-looking statements are not guarantees of future performance and may involve and are subject to risks and uncertainties and other factors that may affect Attunity's business, financial condition and other operating results, which are included, but are not limited to, the risk factors and other qualifications contained in Attunity's annual report on Form 20-F.

Quarterly reports that are filed as well as other reports filed by Attunity with the SEC, to which your attention is directed. Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements. Attunity expressly disclaims any intent or obligation to update the forward-looking statements.

During this call, we may also present certain non-GAAP financial measures such as non-GAAP net income and certain ratios that are used with these measures. In our press release and on the financial table issued earlier on our press release, which is located on our website at attunity.com, you will find our definition of these non-GAAP financial measures, a reconciliation of these non-GAAP financial measures with the closest GAAP financial measures, as well as discussion about why we think these non-GAAP financial measures are relevant to our results. These financial measures are included for the benefit of investors and should not be considered instead of GAAP measures.

At this time, it is now my pleasure to turn the call over to Shimon Alon, Chairman and Chief Executive Officer of Attunity. Shimon, the floor is yours.

Shimon Alon -- Chairman and Chief Executive Officer

Thank you, Allison, and thank you, everyone for joining our call today. With me is Dror Harel-Elkayam, our Chief Financial Officer; and Itamar Ankorion, Chief Marketing Officer. The fourth quarter was a very strong and to a record year. In addition, we're pleased with a continued momentum that we entered 2018 with. In the fourth quarter, we achieved license revenue growth of 67% year-over-year and total revenue growth of 42% year-over-year.

During the quarter, we won more large deals, driven by our expanded product suite and investing larger scope of customer needs. We closed more deals with both new and existing customers, repeatedly winning against the competition. Let me share a few highlights of our key wins this quarter, which will help demonstrate the growth opportunity as we head into 2019.

In the quarter, we won several strategic deals each over $1 million. This wins demonstrate the value of our solution toward leading corporation. This companies selected our differentiated products over the incumbent and other solutions.

In addition, each of these deals represents significantly expansion opportunity some already in 2019. Another point to highlight is the higher attach rates of Attunity Compose, our solution for automating the delivery of analytics-ready data sets. Without such automation customers need to spend considerable time, resources and cost in the manual development process. In the fourth quarter, Compose was included in 50%, in 50% of the 10 largest deals. This demonstrate its synergy and unique value proposition with Attunity Replicate and its contribution to increasing the deal value. We expect to see this trend continue in 2019. Another highlight is that 80% of the 10 largest deals in the quarter were for data lake and data warehouse initiatives. We see growing demand in the cloud, while we also continue to see on-premise data lake deployments, with customers selecting Attunity regardless of which data center, data lake or data warehouse they use. The strong fourth quarter close out record year for us. We are pleased to report full year 2018 license revenue growth of 61% year-over-year and total revenue growth of 39% year-over-year.

I would like now to discuss the market opportunity and the investments we are making to capture a larger share. The market for cloud and analytics continue to grow and represent a large opportunity, which we believe, we are very well positioned for. Cloud adoption continue to accelerate with small enterprises adopting cloud-first strategy as well as hybrid and multi-cloud platforms, including Amazon, Microsoft Azure and Google.

Our proven technology and solutions are well positioned for meeting customers needs to make data available in the cloud effectively and in real-time. Next, the adoption of modern analytic platform including data lake and cloud data warehouse is accelerating and expanding. We are seeing a broader variety of data lake solutions on premise in the cloud and in hybrid environments.

In all of this lakes customer needs to accelerate the delivery of analytic-ready data, which we uniquely enable with the automation provided by Attunity Compose. In addition, we are seeing fast adoption of cloud data warehouses and are well aligned with offering from Amazon, Microsoft and Snowflake to help customers automate the process of building data warehouses in the cloud.

Finally, making data available in the cloud and for analytics creates bigger challenge for enterprises that are doing their business with SAP and mainframe systems. We provide unique solutions that address the inherent complexities in this system enabling such enterprises to accelerate and automate the process of making the date available in real-time for cloud and analytic solutions.

Looking at this market opportunity, we are increasing our investments in product innovation to expand, differentiate and scale our offering. We're making investment in Attunity Replicate with plans to introduce technologies that will accelerate the delivery of new sources and targets of endpoints. Beyond delivering more value to customer, this expansion will generate more revenue opportunity with new as well as existing customers. We are increasing our investment in Attunity Compose to expand the availability of its automation technology to more data lake and cloud data warehouse platforms. We believe these investments will strengthen its unique value and differentiation in automating the end-to-end process of providing analytic-ready data sets.

In addition, we are investing in aligning our technology with modern deployment technologies, such as Kubernetes, Docker, cloud services to enable elastic scalability and high availability. With this market opportunity and unique product offering, we are investing in growing our sales organization and customer field operation. In 2019, we will grow the sales organization in the US and in Europe by 50%, growing from 40% to close to 60% quota carrying sales people.

In addition, we will continue to invest in growing and optimizing our field operational renovation to accelerate customer success and ensure renewal of recurring revenue and add-on sales. As part of this strategy, we have established and will expand and extra team with deep knowledge and expertise in designing analytics solution. With these investments, we are addressing the large market opportunity and we are well positioned for continued growth in 2019 and beyond.

Before we introduce our 2019 outlook, I will now ask Dror to review in greater detail the financial performance. Dror, the floor is yours. Please.

Dror Harel-Elkayam -- Chief Financial Officer

Thank you, Shimon and good morning, everyone. As a note, all fourth quarter 2018 results are compared with a fourth quarter of 2017. We reported record revenue of $26 million for the quarter, representing a 42% increase from $18.3 million. Total revenue for the quarter included license revenue of $17.1 million, a 67% increase from $10.3 million and maintenance and service revenue of $8.8 million, a 10% increase. The increase in maintenance and service revenue is primarily due to increased maintenance revenue from the growth of our installed customer base and consistent high maintenance renewal rates.

Gross margin increased to 89% from 86%. R&D expenses increased 38% to $4.9 million from $3.5 million. The increase is primarily due to an increase in headcount, additional compensation and related costs and subcontractors cost to support the increased activity. Sales and marketing expenses increased 29% to $13.9 million from $10.7 million. This is primarily due to the increase in higher revenue, which drove higher commissions, addition of new hires including sales personnel, expansion of our marketing activities and increase in equity-based compensation expenses.

The increase was partially offset by capitalization of commission costs this quarter in accordance with ASC 606. G&A expenses were $2 million, up from $1.2 million. This is mainly due to an increase in headcount, additional compensation and related costs, including equity-based compensation and additional corporate activities and legal expenses all to support our growing operations.

Total operating expenses increased 30% to $23.6 million compared with $18.1 million. Total non-GAAP operating expenses increased 31% to $22 million compared with $16.7 million. Non-GAAP operating expenses this quarter excludes approximately $1.6 million in equity-based compensation expenses and amortization associated with acquisition, compared with $1.4 million in similar expenses. This quarter we substantially improved our bottom line with operating income of $2.4 million compared with operating income of $0.2 million. On a non-GAAP basis, operating income was $4 million compared with $1.6 million. Our income tax expense for the fourth quarter was $0.1 million compared with $1.7 million. This decrease is primarily due to the reduction in the US corporate tax rate and lower taxable income, mainly due to higher deductible expenses from exercise of stock option and vesting of RSUs.

Net income was $2.5 million or $0.11 per diluted share compared with net loss of $1.6 million or $0.09 per diluted share. Non-GAAP net income was $4 million or $0.17 per diluted share compared with non-GAAP net loss of $42,000 or $0.00 per diluted share.

Moving on to the financial results for fiscal year 2018, which are compared with fiscal year 2017. We had record revenue of $86.2 million for the full year 2018 with 39% increase from $62.1 million. Total revenue for the year include 61% increase in license revenue to $52.5 million and a 14% increase in maintenance and service revenue to $33.7 million. Gross margin increased to 88% from 84%.

R&D expenses were $16.9 million, representing an increase of 21% from $14 million. This increase was primarily due to the additional R&D personnel, additional compensation and related costs and increase in subcontractor costs. Sales and marketing expenses for 2018 increased 24% to $44.4 million from $35.9 million. This increase is primarily due to additional personnel, higher revenue, which drove higher commission, additional investment in marketing activities and increase in equity-based compensation expenses. The increase is partially offset by capitalization of certain commission costs this year in accordance with ASC 606.

G&A expenses increased 31% to $6.6 million compared with $5.2 million, primarily due to an increase in headcount, additional compensation and related costs, including equity-based compensation and higher corporate-related activities and legal expenses. Operating income for 2018 was $7.6 million compared with an operating loss of $2.9 million. Non-GAAP operating income was $13 million, which mainly excludes $5.4 million in equity-based compensation expenses and amortization expenses of acquired intangible assets. This is compared with non-GAAP operating income of $2.2 million, which mainly excludes $5.1 million of similar expenses.

Our tax income expenses were $1.9 million compared with $3.8 million. This decrease is primarily due to the reduction in the US corporate tax rate and lower taxable income, mainly due to high deductible expenses from exercise of stock options and vesting of RSU.

Net income was $6 million or $0.27 per diluted share compared with net loss of $6.7 million or $0.39 per diluted share. Non-GAAP net income was $11.7 million or $0.52 per diluted share compared with non-GAAP net loss of $1.7 million or $0.10 per diluted share. Non-GAAP net income exclude a total of $5.7 million, mainly in equity-based compensation expenses and amortization expenses associated with acquisitions. Non-GAAP net loss last year exclude $5.1 million of similar expenses.

Now to the balance sheet. Our cash and cash equivalents and short-term deposits were $44.2 million in total. As of December 31, 2018, up from $38.1 million as of September 30, 2018, and up from $29.1 million as of December 31, 2017. The increase this quarter is a result of cash provided by operating activities of $3 million and an additional $3 million in proceeds from exercise of employees stock options. The increase this year is a result of cash provided by operating activities of $9.5 million and $6 million in proceeds from exercise of employees stock options.

Our accounts receivable balance was $19.7 million compared with $10.6 million as of December 31, 2017. The increase is mainly due to the substantial increase in revenue and accounting charge of $2 million resulting from the adoption of ASC 606. When excluding this accounting charge, our DSO was 63 days as of December 31, 2018, compared with 54 days as of December 31, 2017.

As of December 31, 2018, our total headcount was 299 compared with 256 as of December 31, 2017.

Now, I'd like to turn the call back over to Shimon to discuss our outlook for 2019.

Shimon Alon -- Chairman and Chief Executive Officer

Thank you very much, Dror. As you heard, we are very excited about the market opportunity and the momentum that we are seeing in our business. As we shared with you previously, we continue to focus on building the Company to generate over $200 million in revenue in the next several years. We are investing more in sales, marketing and product innovation. We believe these investments will enable us to capture growing share of the large market opportunity.

We continue to win and build leading brand in the data integration market. Considering the above, we introduced the following outlook for the full year of 2019. Total revenue will increase to between $104 million and $108 million, and non-GAAP operating margin will be between 14%, 1-4, and 16%, 1-6.

And now, once again, I would like to thank our long-term and new investors, our great customers, partner, dedicated members of the Attunity team and their firm support. All, thank you very, very much.

Now, I'd like to open the call for questions. Operator, please.

Questions and Answers:

Operator

Thank you. (Operator Instructions) Our first question is from Bhavan Suri with William Blair. Please proceed with your question.

Bhavan Suri -- William Blair -- Analyst

Great. Thank you. Congratulation, gents (ph), nice job there, solid guide too for '19. Let me just jump in, maybe Shimon, he used initially here on the large deal activity. It does sound like the large activity was solid. I'd just like to understand, how the large deal pipeline looks and some color until the products progressing and sort of what that growth might look like in '19? Sort of what you're seeing in the pipeline from a large deal perspective?

Shimon Alon -- Chairman and Chief Executive Officer

So as we said, we are very pleased with the large deals that we closed, both in Europe and in United States. The pipeline continue to grow as before. As you can see, the technology that we bring to the market, the outstanding sales force that we have and the strong management that we put in place is really driving the large deals, and therefore, the pipeline continue to grow.

Bhavan Suri -- William Blair -- Analyst

Great. Great. And then if I can, subscription, you sort of called out sort of a strong uptick of term subscription licenses. I guess what is the mix in the pipeline of subscription look like? And I guess, is that driven by product demand or market demand for term licenses? Or you're now incentivizing the sales force to leave with term licenses?

Shimon Alon -- Chairman and Chief Executive Officer

So first, I will answer what is driving it. And Dror can add some color if needed. First, we'll drive the overall revenue that we're generating regardless of it is a one-year, two-year, three-year or perpetual. It's the technology that we provided. Today, our technology provide a much better, higher ROI, and really give the customer an end-to-end solution that they need and others cannot provide. So the first thing that we do very well is provide the right technology, driven by the right marketing, the right sales with outstanding support. The way that the customer is willing to buy it, pay for it, there are different reasons for that. And I think the market move more and more into subscription, term license and the like, and we definitely adopted it very effectively as of this year. We adopted the term license/subscription and we follow what the customer needs and what the customer wants. About the mix, we'll ask Dror to give a little bit more color.

Dror Harel-Elkayam -- Chief Financial Officer

Thank you, Bravan. So in Q4, for example, 75% of our data -- of the revenues from the data product comes from term-based transactions. And we aligned the sales model accordingly, such that in 2019, we believe that this trend will continue to progress and the vast majority of the transactions would be term-based in both EMEA and in the Americas. So we definitely see the vast majority of the transactions in 2019 to be term-based with the huge potential of recurring revenues within one, two, three years from now.

Bhavan Suri -- William Blair -- Analyst

Got it. Got it. That's really helpful. And maybe -- thanks, Dror. I'll throw one out to Itamar here. Itamar, you look at -- Itamar is on the call, right? I think he was.

Shimon Alon -- Chairman and Chief Executive Officer

Yes. Waiting for you.

Bhavan Suri -- William Blair -- Analyst

Good morning. Itamar, as you think about the shift, we've talked about it for years, sort of the ETL world, and now with the speed and the flexibility and the low cost of processing like elasticity in the cloud, you're seeing more ELC move -- ETL move to more like ELT, where you take a lot more of the transformation and the database for the data lake. If you think about that is being a driver to your business, A, are you seeing that trend? And do you think that trend is picking up? And is that for simple transformation cases? Or are you seeing more and more complex information cases happen in database or data lake? How should we think about that being a tailwind for your business, especially with Replicate?

Itamar Ankorion -- Chief Marketing Officer

The short answer is that this is absolutely the direction that we've been seeing in the market for a while, and it is being strengthened, especially because of the direction of the technology platform used for analytics. As companies adopt data lakes, the old notion of data lake is that your first bring the data to the lake, more in and you threw or reform, and then transform and prepare the data. So it's a very natural ELT architecture, where the vast amounts of data first are delivered to the lake and only then they are transformed in the lake, so that's one. The second is in the cloud. So when you work into cloud, again, the first thing to do is to get the data to the cloud, if the cloud data warehouse, or a cloud data lake, and then apply the transformation. So the transition from ETL or other transformations happens on a dedicated server to ELT, where the transformation takes place within the analytic platform, is already well under way. It is the -- I think, more and more the different way things are done and Attunity is extremely well aligned with this trend, with the evolution and the innovation was down with Attunity Compose. So Attunity Replicate takes care of delivering the data into the target analytic environment, data lake, data warehouse, firmware in the cloud, and that's kind of the E&L all of that process with Compose adding the key components, and Compose now has (inaudible) all unique automation technology. Again, Compose takes care of what was traditionally a very manual process. So very (inaudible) took a lot of time, required a lot of resources, wasn't very agile. And what Compose does it, it automate the process, stating the data that was delivered is by Replicate to the data lake or data warehouse and automate the process of generating the transformations that would -- is an output, create and analytic-ready data sets. And while we started with Compose on a data warehouse side, creating SQL-based transformations, because of this push down transform for ELT, it now supports push down into SQL environments like databases, Hive, in Hadoop player base platforms or the cloud services and Spark. So again, we've evolved Compose, and as we mentioned earlier, we are going to continue to evolve Compose, which aligns with the trend you just discussed.

Shimon Alon -- Chairman and Chief Executive Officer

I will just add one thing here. First, Itamar is right. We actually talked about ELT for a long time. I think we started around four years ago. When we say to the market, everybody's about to move into ELT and ETL is more of the old way to do it. Thanks to the data warehouse is that we can see. And actually that's the move. I just want to highlight that what we do in real-time and streaming everything. Some of the ETL companies are doing streaming on the T, on the transformation, but the data availability, the CDC, the accessing the data and moving it, it's still being done and bench files overnights and the like. So the great things about us is what the customer needs, it's real-time, data availability, ready for analytics. And that's what we provide.

Bhavan Suri -- William Blair -- Analyst

Got it. Got it. That's really helpful, guys. Thank you so much and nice job there. Thanks.

Itamar Ankorion -- Chief Marketing Officer

Thank you, Bhavan.

Shimon Alon -- Chairman and Chief Executive Officer

Thank you.

Operator

Our next question is from Jack Andrews with Needham & Company. Please proceed with your question.

Jack Andrews -- Needham & Company -- Analyst

Good morning and congratulations on the results. Shimon, I was wondering if you can talk a little bit more about your -- the sales force hiring plans? This move from 40 to 60 quota carriers. If you can talk about maybe what the cadence looks like throughout the year? And I guess the related question would be, do you see any changes in the structure -- the structure of your sales organization unfolding as more folks come online?

Shimon Alon -- Chairman and Chief Executive Officer

Yes. So first, I will say, before we actually started the new hiring and structuring the sales organization, last year, about a year ago, we got Mark Logan to join us. So we enhanced the management team. And with Mark later on, joins Steve Foster to run the sales in the US and we have Paul Kelly in EMEA, each one of them doing excellent job, not only running the sales organization, but focusing on the hiring. Therefore, we started this year with a kick-off meeting with lot of new sales guy that we already hired during Q4 and continue in Q1. On our way to be a 60-people quota carrying salespeople. Today, we have around about 47, 48 salespeople. We believe that by close to end of Q2, beginning of Q3, we'll have about 60%, 70% of the salespeople on board. More importantly than hiring the people, it's onboarding them as effectively as quick as possible. And that's again, the new sales management that we have, the promotion that we did within and the new hires are doing outstanding job in onboarding people, much better than we did in the past. So the people will ramp up, we cannot say they ramped up already because we don't in the beginning of the quarter. But we as we see so far the emphasis on training and onboarding is -- will give us great results. The third thing that these guys brought to the philosophy of the company is sensible intention, not only we focused on hiring salespeople, we also focus on retaining them. And that will make the entire sales force much more effective.

Jack Andrews -- Needham & Company -- Analyst

Great. That's helpful. And then I guess the follow-up question would be, is there a way to think about the mix of revenue coming from your direct sales today versus perhaps partner influenced? And how you expect that to trend with both of those efforts continuing to ramp up?

Shimon Alon -- Chairman and Chief Executive Officer

When you say partner influence, you brought another level of activity in the company. As you know, we are very strong partners with Amazon, Microsoft, Google, Snowflake, and many of the leads of the referral or the accounts that we are closing are coming from these vendors who need us in order to, for the customer to use whatever they sell to the (inaudible). So the relationship are very strong. And many of the activity we have, it's in conjunction with them. This set aside, the revenue, direct revenue, OEM revenue that we are getting. So I will ask Dror to answer the mix, if there is anything you can add.

Dror Harel-Elkayam -- Chief Financial Officer

So in terms of referrals, we do see growing referrals from these partners. It can be from Microsoft, Amazon, Snowflake and others. So the effect of the partner is positively growing. In terms of the OEM, the mix did not change and we expect between 10% to 15% of the license revenue in 2019.

Jack Andrews -- Needham & Company -- Analyst

Thanks. And then if I could just squeeze one more in. Shimon, you talked about investing more in product innovation this year. Should we expect more I guess, new products SKUs in 2019? Or is this more enhancement of your existing product portfolio?

Shimon Alon -- Chairman and Chief Executive Officer

Both. As I say, our product innovation grow in order to scale, to get more endpoints, more resources and targets, more management players so customers can be much more effective. And the same time, also to be able to automate. It's a combination of products what you call SKUs and more enhancements. Existing customers will enjoy enhancement of the current product. At the same thing, they will have their opportunity to buy more product, which will be modular with what we do. Because we're basically building platform that is based on the different product that we are building, and then we integrate all of them to a platform that provide end-to-end data availability and data ready for analytics.

Jack Andrews -- Needham & Company -- Analyst

Great. Well, thanks for the color and thanks for answering my questions.

Shimon Alon -- Chairman and Chief Executive Officer

Thank you very much.

Operator

Our next question is from Richard Baldry with ROTH Capital. Please proceed with your question. Richard, are you there?

Richard K. Baldry -- ROTH Capital Partners -- Analyst

Hello? Hi. Can you talk about whether Compose is selling back into the existing pace as well? Or is that really mostly on new deals? And then where it's bundled on new deals, how much lift is that giving on ASP basis, 10% higher 20%, 40%? So we get sort of an idea of the impact?

Shimon Alon -- Chairman and Chief Executive Officer

I will say that we're very pleased, very, very pleased with Compose. We see a huge growth in Compose year-over-year. And we also see the attach rate that we have with Replicate. Actually, as I said on the call, many of the large deals came with Compose. Compose is not just a great product, is a product that enable us to differentiate. Make data availability is only one step and make data ready for analytics created the analytics data sets, it's another important things that very few (inaudible) can do. Combining Replicate and Compose give us a very strong competitive edge and drive the large deals. And the reason it drive large deals because it saves tons of money to the customer. The ROI is very, very high. We closed a very large deal, $1.7 million in Europe that included Compose, and the reason the customer were very excited about closing the deal is because he saw that he can let lot of, what he call outsourced consultant and developers, let them go, because the focus of what they did was manual work, very expensive, that takes lot of time. So we have army of people who is sitting there what we call stitching, bending, whatever, writing scripts to do what we do in minutes with the software. And that's what drive the business. So as we are replacing lot of manual, expensive and long-term growth, this product solution go to existing customers as well as new customers.

Richard K. Baldry -- ROTH Capital Partners -- Analyst

And how much do you believe the attach rate for Compose is aided by the platforms you support? So as you are adding more platforms, do you think that attach rate just simply climbs because people would've wanted it, but wasn't available yet? Or is that created by something else?

Shimon Alon -- Chairman and Chief Executive Officer

You ask a very, very good question. Actually the waiting list for additional platform is very long. Every data warehouse and every data lake that people have they need Compose. We build so far Compose for Hive and Compose for enterprise data lake, and we are building it for the additional data warehouses from the cloud, such as Snowflake, Amazon, Microsoft and others. They will come during the year and after that. So we are following the customer requirements, we're following customer needs and there is a nice queue of people waiting for this Compose to come out.

Richard K. Baldry -- ROTH Capital Partners -- Analyst

Last thing, on seasonality, do you feel like any deals were brought forward into the fourth quarter? From the first quarter? Or nothing unusual to that? And then maybe that will help us think about the pipeline starting the year, what type of seasonality you'd expect for revenues in 2019, whether it would be similar to 2018? Thanks.

Shimon Alon -- Chairman and Chief Executive Officer

So I will say, I do not recall, and my friends can remind me. But I don't recall any deal that came from Q1 to Q4. I think people maybe it's -- but they -- whatever was Q4 was Q4, and Q1 will have its own benefit. Answering the what we expect, yes, we expect to see next year about the same numbers percentage wise, third quarter as we saw in 2018 and before. It's kind of an historical number that follow us year-over-year. We continue to do about 20% to 21% in Q1, we always do about 30% to 32% in Q4. It's not us. It's the market. And it's us, and it doesn't matter what you do, that's about what you see. And then you have the Q2 and Q3. That's how we build the organization, that's how we guiding and that's what we do.

Richard K. Baldry -- ROTH Capital Partners -- Analyst

Thanks.

Operator

Our next question is from Chad Bennett with Craig-Hallum. Please proceed with your question.

Chad M. Bennett -- Craig-Hallum Capital Group -- Analyst

Great, thanks for taking my questions. Dror, maybe you could give us a sense of for fiscal '18 revenue. How much of a benefit came from multiyear billings?

Dror Harel-Elkayam -- Chief Financial Officer

When you say benefits, that's an interesting one. Definitely, the growth in our revenue come from market demand. It did not come from accounting. We definitely saw in 2018 that the new accounting standard actually helped us to align our pricing model to the way that customers see the spend, budget the spend, so that helped in that sense. But obviously, the growth came from the market and from the strength of our products and solutions. A very nice chunk of the revenues in 2018 came from term base. It was roughly, as I said earlier, 75% of the data products in Q4 were term-based transaction and the trend will continue. We started, obviously, slower in the beginning of the year, and we believe that in 2019, the majority of the transactions or the vast majority of the transactions, would be term-based.

Chad M. Bennett -- Craig-Hallum Capital Group -- Analyst

Okay. And then maybe for the fiscal '19 outlook, Dror. How should we think about license versus service growth?

Dror Harel-Elkayam -- Chief Financial Officer

So normally, you see maintenance grow between 10%, 12% in 2018. It grew around 14%. And I would expect maintenance and services to grow in 2019 in a similar pace compared with the pace of 2019.

Chad M. Bennett -- Craig-Hallum Capital Group -- Analyst

Okay. Okay. And then maybe last one, if I could. Considering the uptick in attach rates for Compose and the enhanced kind of capability and functionality there, are you overlapping at all with someone, the likes of Talent, probably not likely Altera, but is there any overlap with any other third-party vendors in terms of the success you are seeing with Compose? Thanks.

Itamar Ankorion -- Chief Marketing Officer

So the question -- Hi, it's Itamar. So as we've talked earlier, we answered the question about ELT, and we explained that we now enable a broader spectrum of address a broader scope of needs from the customer, not only to gather data to the data lakes and the data warehouses, but also automate part of transformation process, required to make data available for analytics. The moment we get into that space, there is some overlap, it's also still complementary, there is some overlap with what people have traditionally used according to traditional developer-centric ETL products like Talent, Informatica or others. So again, the key point is that what we've done, where we innovated and differentiated versus traditionally ETL is in two different aspects. One is moving to a stream, a real-time, CDC change base data integration process versus a batch-oriented process, which ensures a much more efficient and real-time transformation. And the second, which is very important, is the agility we deliver through the automation. So Attunity is designed for poeple that are not really developers. We enable data administrators, data engineers, data architect to easily and quickly configure, deploy and then automatically maintain solutions versus a traditional developer lab, data transformation, ETL tool. And that makes a big difference. So we now address a bigger part of the data integration process. As part of that, there is more overlap, with some of the what the traditional ETL tools have done, the innovation, the difference is significant. That goes back to some of the notes Shimon made earlier with some of the customers saw the opportunity to significantly make their teams more efficient, thereby reducing the amount of technical development resources they need to own or outsource in order transform data. They can reapply resources to work on other strategic needs, while we automate part of the work for them. And very importantly, they become much more agile. So their time to value decreases significantly, which is a key requirement from customers today, and the ability to iterate and deliver faster -- more solutions faster increases. So there's a lot of value for our customers.

Chad M. Bennett -- Craig-Hallum Capital Group -- Analyst

Great color, Itamar. Thank you.

Itamar Ankorion -- Chief Marketing Officer

Welcome.

Shimon Alon -- Chairman and Chief Executive Officer

Thank you, Chad .

Operator

Our next question is from Glenn Mattson with Ladenburg Thalmann. Please proceed with your question.

Glenn G. Mattson -- Ladenburg Thalmann -- Analyst

Hi, thanks for taking my question. Most of my questions have been answered at this point. But just drill down a little bit. You did mentioned that you don't think any deals were pulled forward from Q1 to Q4. But can you talk about kind of the backdrop as far as the spending environment goes? Was there any situations where maybe there was some sort of budget flush, where people -- where deals came in 10%, 20% higher than you thought they were as it relates to your pipeline? Maybe because people have extra money to spend toward the end of the year? Any color on that?

Shimon Alon -- Chairman and Chief Executive Officer

What you can see every fourth quarter toward end of the year, every year, there are some companies, large corporations that may be easier in releasing the money. We didn't see flash of cash or flash of money. We saw customers were prepared to do the deal in Q4. It's not something that we started at mid-Q4, it was something that we started in Q3 or even before. The larger deal definitely it's not something that happens overnight. I will say, we did not see any impact on any economy issues or any -- not in Europe or neither here. I think people see what we provide, seen that ROI, and that's where they are willing to go ahead.

Glenn G. Mattson -- Ladenburg Thalmann -- Analyst

Great. And I missed the question on sales force, may be you answered this already, but can you just talk about where you are recruiting from? Is it where the word getting out that kind of this is a really good growth opportunity and that's attracting people to you? Or do you have -- is it hard to find your sales guys? Just color there.

Shimon Alon -- Chairman and Chief Executive Officer

First, I will say, I think one of the two major reasons for us doing well in hiring. The first one is the success. When people see our success, and definitely compared to some other companies in this market that are struggling, they would like to join a winning team definetly sales people who are looking to join the winning team. And that's who we are. The second thing is the sales management. And I mentioned already Mark Logan and Steve Foster and Paul Kelly. They are doing outstanding job in looking at the right people, identify the talent that we need. And I say more than just hiring a number of people, hiring great talent and great people, where we had this year, since kick-off meeting in Miami a few weeks ago, and when you look around we saw, we believe, the best people in the market. So we're not just hiring, we are hiring the best people from other companies who continue to do very well for us.

Glenn G. Mattson -- Ladenburg Thalmann -- Analyst

Okay, great. Thanks, Shimon, and good luck in 2019.

Shimon Alon -- Chairman and Chief Executive Officer

Thank you, Glenn.

Operator

We have reached the end of our question-and-answer session. I would like to turn the conference back over to management for closing remarks.

Shimon Alon -- Chairman and Chief Executive Officer

Okay. Thank you very much for participating this morning in our call. While many of you are freezing today as we are here in New York, I believe our news will warm you up. I look forward to keeping you updated on the advancement of our business in the future. And we invite you to meet us any of the following investor conferences. We were invited to KeyBanc Emerging Technology Summit in San Francisco on February 26. As always, we'll join Roth Conference in Orange County, great place to be, in March 18 in California. And follow that, we'll be in Chicago with William Blair in the Stock Conference in June 5th. In between, we will join few non-deal roadshows with our friends in the banking community. We will be available for meetings, conference calls. And with any event, we'll keep updating you wherever we will be. Thank you very much, and have a great day.

Operator

Thank you. This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.

Duration: 53 minutes

Call participants:

Allison Soss -- Investor Relations

Shimon Alon -- Chairman and Chief Executive Officer

Dror Harel-Elkayam -- Chief Financial Officer

Bhavan Suri -- William Blair -- Analyst

Itamar Ankorion -- Chief Marketing Officer

Jack Andrews -- Needham & Company -- Analyst

Richard K. Baldry -- ROTH Capital Partners -- Analyst

Chad M. Bennett -- Craig-Hallum Capital Group -- Analyst

Glenn G. Mattson -- Ladenburg Thalmann -- Analyst

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