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Talend S.A. (NASDAQ:TLND)
Q3 2020 Earnings Call
Nov 9, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Talend's Third Quarter 2020 Earnings Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Damaari Drumright. Please go ahead, sir.

Damaari Drumright -- Vice President, Treasury and Investor Relations

Thank you. This is Damaari Drumright, VP of Treasury and Investor Relations for Talend. I'm pleased to welcome you to Talend's third quarter fiscal year 2020 conference call. With me on the call today is Talend's CEO, Christal Bemont and CFO, Adam Meister.

During the course of today's presentation, our executives will make forward-looking statements within the meaning of the Federal Securities Laws. Forward-looking statements generally relate to future events or future financial or operating performance and involve known and unknown risks and uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from those contemplated by these forward-looking statements. Forward-looking statements in this presentation include, but are not limited to statements related to our business and financial performance, expectations and guidance for future periods, our expectations regarding our strategic product initiatives and the related benefits, and our expectations regarding the market.

Our expectations and beliefs regarding these matters may not materialize and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These results include those set forth in the press release that we issued earlier today, as well as those more fully described in our filings with the Securities and Exchange Commission. The forward-looking statements in this presentation are based on the information available to us as of the date hereof. You should not rely on them as predictions of future events and we disclaim any obligation to update any forward-looking statements except as required by law.

Please note that, other than revenue or otherwise specifically stated, the financial measures to be discussed on this call will be on a non-GAAP basis. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. We have provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures in our press release. Talend customers that are referenced by name today do not endorse any vendor, product or service and do not advise our company on selection or use of technologies, products, services or vendors.

Let me now turn the call over to Christal Bemont, Talend's CEO.

Christal Bemont -- Chief Executive Officer

Thank you, Damaari. Welcome to our Q3 2020 earnings call. We hope you're all are safe and well and we appreciate you joining today's call. We delivered another strong consecutive quarter, fueled by the momentum of digital transformation. COVID continues to reinforce the importance for organizations of all sizes, locations, and industries to digitize their businesses and take control of their data. This accelerated the shift to cloud and the opportunities it provides.

I'm pleased to report ARR grew to $269 million to the third quarter, up 16% year-over-year on a constant currency basis. Our success in Q3 was largely driven by the critical role we play in facilitating digital transformation through Talend Data Fabric and the continued execution of our strategic initiatives. Cloud ARR now stands at $88 million, up 109% year-over-year on a constant currency basis. We are thrilled to announce that we now have over 3,250 Cloud customers.

Talend continues to leverage a rich history and wealth of experience in data management and data quality as the foundation to extend our value proposition. This leaves us uniquely positioned to identify game changing opportunities otherwise locked in the chaos associated with disorganized, untrustworthy data. Gaining trust in your data and knowing where your data is remove these inherent risks and leads to better decisions. Those are the challenges that Talend is solving.

Our extended value is evident in our customer expansion and I'm excited to announce that we acquired a largest new cloud win in our history. Talend will be deployed across the organization and become a critical driver of their digital transformation. Building and enabling a world class distribution organization is critical to maximizing the opportunity in front of us and we get there by continuing to strengthen and grow our go-to-market initiatives. In Q3, our go-to-market teams continue to execute with predictability and strength and we remain focused on instrumenting our business to operate at speed and scale. A prescriptive approach to our market is critical to ensuring we build a strategic relationship from the first interaction to realizing a value of our customers. Ultimately, delivering fast, meaningful and continuous value for our customers are the underpinnings to create customers for life.

For the third consecutive quarter, we saw a strategic initiatives show-up in our results, both in the increase in the velocity of deals year-over-year, as well as the increase in percentage of deals closed in quarter compared to Q2. We also executed with better linearity and a healthy mix of new logos versus expansion, which further validates our confidence that our operations will continue to support our dynamic growth targets.

Building out our customer first approach is key for long-term sustainable growth for our customers as well as Talend. For this reason, we expanded Jamie Kiser's role to Chief Customer Officer and Chief Operating Officer, this one for customer success focus to include oversight and leadership over critical operational duties whose role reflects the principle that our customers are the heart and center of our strategy. The combined position enables Jamie to leverage customer insights to infuse a customer-first mentality through the organization, meeting our customers where they are to deliver optimal business outcomes.

In other exciting announcements, we recently welcomed industry veteran Krishna Tammana to our leadership team as Chief Technology Officer. He is responsible for product strategy and the thought leadership as well as scaling the engineering organization to drive innovation and our market growth. Given his prior responsibilities at Splunk, there is no one with more experience at the intersection of data and cloud than Krishna. And for that reason, we're thrilled to have him lead our engineering organization as we redefine the data market. His skill-set is particularly valuable as we continue to evolve our cloud business and introduce new products that help Talend position itself as a strategic business partner. With our spectrum of cloud offering, superior data governance and the industry-first trust forum, we have laid the foundation for Krishna to innovate its scale. He brings a differentiated customer perspective, which will be instrumental in helping Talend penetrate new markets and drive growth. I'd like to take this opportunity to welcome Krishna to the team. I look forward to him sharing more at our upcoming Investor Day on November 18.

We are enthusiastic to have both Jamie in an expanded role and to have appointed Krishna to reflect our focus on serving our customers and executing on the opportunity in front of us. We've got the right leadership team with the right experience to drive scale and efficiency, as we laid the foundation for long-term sustainable growth.

Data trust is Talend's core value proposition. Talend has incredible technology depth and market experience in data integration, quality and governance. Companies need to trust their data, which means they must be able to measure the health of the data and have confidence in each step of the way through their data journey. Whether in a single report, a line of business or across the entire organization, every individual and every company should have the ability to visually monitor and gain real time health assessment of the most valuable asset, data. The simple fact is, for the vast majority of companies data trust is woefully lacking. According to a recent survey we conducted, among 70% of the operational data workers those that are dealing with company data on a day-to-day basis don't have confidence in their organization's ability to deliver trusted data. Their concerns are validated by market research indicating that as much as half of the company data have been temporarily issued.

We recently extended our capability by enabling our customers and industry to gain a new level of confidence in managing this challenge, the Talend Trust Score. This industry-first approach allows customers to not only optimize their business outcomes, but also to mitigate the risk of making decisions or building operations based on faulty data. We believe the Trust Score will fundamentally change how people and the industry work with data and how companies run their businesses, changing the lens from an IT data validation to data trust that drives business action and value.

Now let me share some customer stories from the quarter. In Q3, we significantly expanded GlaxoSmithKline, who became the Talend customer in 2017. We started our relationship by helping the company manage complex SAP integrations in their vaccines business. Last year, GSK embarked upon an on-prem to cloud data migration to accelerate analytics and optimize across R&D, marketing and finance. GSK chose to expand its relationship with Talend based on our unified approach to pervasive data quality and governance and the ability to support a range of users. Another exciting new logo win for us in Q3 is with CIBC, one of the largest banking institutions in North America. CIBC selected Talend Data Fabric to implement unique customer ID in its customer hub for regulatory compliance and data governance.

Our Stitch customers that expanded into Talend Data Fabric this last quarter is an insurance company for pet owners that serves a quarter of a million customers in North America. The company's goal is to become purely digital company delivering pet insurance, new claims, policies all online and via mobile apps to their customers over-time. After evaluating vendors like [Indecipherable], the insurance company chose Talend because of our unified Data Fabric approach and sophisticated data quality capabilities. The company selected Talend through AWS marketplace and will modernize its legacy architecture with Talend and Snowflake to build a comprehensive 360 degree customer view.

A notable expansion win for us this last quarter was with the large global financial institution. The company selected Talend to support the global HR system modernization program, which includes the global migration of employee data from people SaaS systems to SAP success factors. Working with Accenture, our customers selected Talend because of our ability to manage complex integration projects, and our strong data quality capabilities.

General Mills is a new cloud logo for Talend last quarter, the American multinational manufacturer of branded consumer foods sees data and analytics as a key growth driver for their business. The company will use data to maximize sales and create financial efficiencies, as well as enhance marketing efforts by delivering better insights that leads to personalized consumer communication. As evidenced by our customer wins from Q3, we continue to be a critical partner to our customers, enabling their digital transformation, as well as continuing to extend our value and partnership that creates a new level of data confidence standard by providing trusted data.

We continue to expand on market leadership in the industry. I'm pleased to report that Talend was named a leader in the 2020 Gartner Magic Quadrant for Data Integration Tool for the fifth consecutive time. This highlights our ability to meet our customers where they are and solve their most complex data challenges. Showcasing the broad variety of customers and industries we serve around the world, last month we announced our Annual Talend Data Masters Award winners, which honors our most forward thinking customers. The list of innovative winners include Engie, a multinational electric utility, the Western Union Company, and SiriusXM, as well as government agencies such as Singapore Tourism Board. The awards were presented during the first leg of our Talend Connect World Tour, a virtual event for existing customers, partners and prospects, which so far has attracted thousands of registrants from around the globe.

Our ability to meet our customers where they are in their data journey is unique to Talend and it's a critical part of our strategy to capture market share. Customers' data challenges are inherently hybrid and multi-cloud and we believe this approach will continue to separate Talend in the market. Talend Data Fabric extends the value of data integration, integrity and governance, which enables our customers to scale and maximize our platforms' capabilities.

Over the last three quarters, we've made tremendous progress on the key areas of focus that I laid out at the beginning of the year. We are making great strides for being a world class sales, marketing and global customer service organization. We are laying the foundation for accelerated growth and scale. And lastly, we have expanded our leadership position in the industry.

I will conclude by reiterating my conviction about the role Talend plays around trust and clarity. We understand the critical need for data and are committed to providing trusted data and enabling optimal business outcomes. We are changing the way the world uses data and I look forward to sharing more about this with you during our investor event next week.

And with that, I will turn the call over to Adam.

Adam Meister -- Chief Financial Officer

Thanks, Christal and good afternoon, everyone. Our solid execution in Q3 was driven by our continued cloud momentum and focus on strategic priorities. I'll walk you through the details for the quarter and then provide our outlook for the remainder of 2020.

We're pleased to announce that we ended the quarter with Cloud ARR of $88 million, representing 113% year-over-year growth or 109% on a constant currency basis. With our healthy balance of expansions and new logos in Q3, and are excited to report that we now have over 3,250 cloud customers. Cloud migrations contributed $2.3 million in Q3 and is in line with expectations year-to-date, which reflects a handful of larger migrations in Q2 that came in ahead of schedule. Total ARR grew to $269 million at the end of Q3, up 20% year-over-year or 16% on a constant currency basis. Total revenue for the third quarter was $72.7 million, up 16% year-over-year. Subscription revenue for the third quarter was $66 million, up 20% year-over-year or 18% on a constant currency basis.

We continue to have success with larger scale deals to enterprise customers, particularly with cloud. As Christal mentioned, we closed our largest ever new cloud deal in Q3. We ended the quarter with 642 customers at 100,000 or more of ARR, up from 614 at the end of Q2. These customers represent 67% of our total ARR.

Our dollar based net expansion rate for the period was 107% in constant currency. This reflects the pressure on down sales we have referenced over the course of the year due to COVID. As the spending environment stabilizes, so should our overall dollar based net expansion rate. Cloud expansions remain above the overall average. Professional services revenue was $6.7 million, only 9% of total revenue for the quarter. This is consistent with our continued shift toward cloud sales, which generally require less in professional services.

Before moving to profit and loss items, I'll point out that unless otherwise specified, all expense and profitability metrics discussed today are on a non-GAAP basis. A full reconciliation of GAAP and non-GAAP results can be found in our earnings press release issued today, which is posted in the Investor Relations portion of our website.

For the third quarter, total gross margin was 80% and subscription gross margin was 86%. We expect a modest impact to subscription gross margin as we continue scaling our cloud operations. Professional services gross margin was 18% this quarter, benefiting from our focus on balancing resources and customer engagements globally.

We incurred an operating loss for the quarter of $4.2 million or 6% of revenue. We outperformed our guidance due to strong top-line performance and another quarter of prudent expense management. Operating loss also benefited from currency tailwind, as expenses are slightly more weighted toward dollars in our revenues.

Free cash flow for the quarter was negative $13.2 million. Cash and cash equivalents ended at $161 million as of September 30th. As I noted in our last earnings call, Q2 and Q3 will account for most of the expected cash burn this year. As we continue to operate in uncertain business environment, we will carefully balance the trade-off between managing expenses and investment to support growth initiatives.

Shifting to our Q4 and full year outlook, our guidance assumes current business conditions and foreign exchange rate as of October 31st, 2020. For the fourth quarter of 2020, total revenue is expected to be in the range of $74.2 million to $75.2 million, non-GAAP loss from operations is expected to be in the range of $9.5 million to $8.5 million. Non-GAAP net loss is expected to be in the range of $10.2 million to $9.2 million. Non-GAAP net loss per share is expected to be in the range of $0.32 to $0.29. This is based on a basic and diluted weighted average share count of 31.9 million shares.

For FY 2020, total revenue is now expected to be in the range of $282.8 million to $283.8 million. Non-GAAP loss from operations is expected to be in the range of $24.4 million to $23.4 million. Non-GAAP net loss is expected to be in the range of $26.8 million to $25.8 million. Non-GAAP net loss per share is expected to be in the range of $0.85 to $0.82. This is based on a basic and diluted weighted average share count of 31.5 million shares. Free cash flow is now expected to be in the range of negative $36 million to negative $32 million.

Cloud ARR was strong this quarter. We've made tremendous progress toward our target of $100 million in Cloud ARR by the end of Q4, despite the impact of COVID on our business. Our target is within reach, but we continue to monitor the current political, economic and public health environment, including the recent reensuing of lockdowns in Europe, and the rising number of COVID cases in the United States. Our strong results underscore the importance businesses are placing on actionable trusted data. Our cloud strategy and investments are the foundation for delivering long-term profitable growth. Both Krishna and Jamie have quickly stepped into their new roles, as we continued to execute on our cloud strategy and evolution. I'm excited about the immediate impact they're both having on the organization and the immense opportunity ahead of us.

Lastly, as Christal mentioned, we will be hosting a virtual Investor Day on November 18, to provide an in-depth review of our strategy and longer-term outlook. We look forward to sharing our vision with you.

With that, we will open the call for questions. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] And we will take our first question from Bhavan Suri with William Blair.

Bhavan Suri -- William Blair & Company -- Analyst

Hey, everybody. Thanks for taking my questions and nice job, especially congrats on other large cloud win. I guess I wanted to touch on something Christal you mentioned, it was that you seem to the deals closing practice sort of pacing and proving. I'd love to understand sort of what's driving that and [Indecipherable] so how much of that is because of the environment, how much of that is because of sales and marketing is doing? And where are you toward the goals you want to get to, given all the changes you've been making since you started Talend? I'd love to get a sort of sense around, what's driving that accelerated pace and how the sales and marketing business doing? And I have a quick follow-up.

Christal Bemont -- Chief Executive Officer

Yeah, you bet, and good afternoon. I would say that just to directly hit it, the biggest impact that we've seen is been the work that Ann-Christel and the team have done to just put a prescriptive lens on making sure that the quality of the work that we're doing on the in-quarter deals that we're working quite frankly has become much tighter and laying the foundation for the fine tuning that we're doing in the field and making sure that we're pulling through deals in quarter as well as working on as I said, the right quality and the right types of deals that we know can pull through right now. So it's really the basic blocking and tackling that we've needed to do to really lay that foundation. And it's tracking, it's trending very much. It's a build, you don't see those things immediately that have the big impact. It's a compounded effect over-time, but it's tracking exactly where I would expect it to be.

Bhavan Suri -- William Blair & Company -- Analyst

Great. And then some of you and I discussed in depth in the past and we called out around data governance trust privacy compliance, it's a pretty attractive opportunity. And it makes sense, right with CCPA and GDPR, etc. Just an updated momentum you're seeing within that data governance related portfolio products and maybe the strategy you might have to capture greater share. Thanks.

Christal Bemont -- Chief Executive Officer

Yeah, you bet. This is something we're going to spend a fair amount of timeline at the Investor Day on November 18th. It's something we're really excited about. It's on top of mind for a lot of people in terms of not just, digital transformation for sure, is at the heart of everything that's driving a lot of momentum. But on the other side of that making sure that there is a beyond quality, a level of quantifiable and explainable trust or confidence, and it's something that we continue to really double down on as what we see is the most strategic part of what we do for our customers in the future. So you heard that Krishna has joined us, this is a big focus for Krishna and our team as we continue to develop out those opportunities for the future.

Bhavan Suri -- William Blair & Company -- Analyst

Got it. Very helpful. Thank you, guys. Nice job.

Christal Bemont -- Chief Executive Officer

Yeah. Thank you.

Adam Meister -- Chief Financial Officer

Thanks a lot.

Operator

We will take our next question from Jack Andrews with Needham.

Jack Andrews -- Needham & Company -- Analyst

Good afternoon. Thanks for taking my question. I guess I was wondering how should we be thinking about cloud migrations moving forward. Given I think, Adam, you mentioned there's $2.3 million contribution from that in this particular quarter. Is that something that you're actively seeking to facilitate or is this happening more just organically within your customer base?

And I guess the second part of the question would be, can you remind us is there a potential uplift opportunity as customers migrate from on-prem to cloud in terms of just ARR?

Adam Meister -- Chief Financial Officer

Hey, Jack. Its Adam here, I'll start. So we're really pleased with the progress year-to-date. We had mentioned last quarter that there was a handful of bigger deals that pulled forward a little bit faster. And so overall, where we're tracking through September, we're very comfortable with relative to our original target. And this is an area we are really it's about creating conversation with the customer versus creating a push or a pull in terms of their motivations and we want to really be in a discussion with them around their broader cloud strategy and how a migration in Talend will fit into that. And so this is a balance we've had through the year of making sure we're dedicating the right amount of energy and resources to facilitating those conversations, relative to just bringing in new business. And so from that perspective, we're really going to defer to our customers on their pacing, but what's most important is that we're there and having that conversation with engaging with them early, so that we're helping guide them through strategically. And when we do that well, Jack, there is an upsell opportunity. I wouldn't say that based on the amount we've done year-to-date, there's a consistent enough trend to call exactly what that expansion opportunity is. But we have seen in a number of migrations that we've done that customers will choose to expand when they move to the cloud.

Jack Andrews -- Needham & Company -- Analyst

Got it. Thanks for the color around that. If I can just squeeze one more in. Are there any lessons learned from this large cloud deal as it could be maybe applicable to other opportunities that you have in your pipeline?

Christal Bemont -- Chief Executive Officer

Yeah, I'll take that one. I think it just underscores the strategic nature of our partnership with our customers, as we talked about the fact that they're already a customer. We're seeing that there's an opportunity to really double down on the trust and confidence factor and it's something that we see will continue in terms of the strategic nature of how we really add value. I think you'll start to hear more and more of the larger enterprise types of opportunities versus maybe a one-off project, so to speak. So the underpinnings of how it goes across an entire organization and that form of confidence that we would deliver in the Talend trust.

Adam Meister -- Chief Financial Officer

Yeah, I'll add on to that. Actually, I think GSK is a great example of -- it is a land and expand motion, right demonstrated to be able to prove value, and then grow from there across different departments for a broader set of use cases and frankly, just a more strategic positioning in the overall infrastructure. And it's another one where we were successful in going to market with partners. And so I think it's another indicator that showing up and solving an overall business challenge for a customer is a far faster path to those large enterprise deals that we will win more of. And that's a motion that we're going to look to replicate next year.

Jack Andrews -- Needham & Company -- Analyst

Got it. I appreciate the detail around that. Thank you.

Operator

We will take our next question from Tyler Radke with Citi.

Tyler Radke -- Citigroup -- Analyst

Hey, thanks. Good afternoon. I wanted to ask you a little bit about the cloud deal that you referenced. I think you said your largest cloud deal it seems. I was curious if that was a conversion that drove the large deal value if this was kind of net new used case. And I think, if I recall correctly, last quarter you did reference the seven figure conversions. I would assume that this one's larger than that, but maybe just give us a sense for the deal and a little bit more detail and whether it was a conversion or not? Thank you.

Adam Meister -- Chief Financial Officer

Hey, Tyler. It was a new deal. So, this was the largest new deal in the cloud we've won. So this is a situation where it was an existing customer and it was a more wall, wall expansion with them, but it did not have a migration component to it.

Tyler Radke -- Citigroup -- Analyst

Got it. And was it seven figures?

Adam Meister -- Chief Financial Officer

Yes.

Tyler Radke -- Citigroup -- Analyst

Okay. Got it. And then I wanted to ask you, Adam about the dollar based net expansion rate, which came down a few points relative to Q2. And I think the way you guys define it is a revenue based metric. So it's a little bit backwards looking, but just curious as you look out, which -- it seems like a strong ARR and bookings quarter. Do you think we've kind of hit the trough in that level? Obviously, it kind of depends on the macro environment, but what's your kind of your confidence level that this is the low point?

Adam Meister -- Chief Financial Officer

Yeah, good question. So I'll rewind to the beginning of the year and remind everybody that we did expect this number to come down a point or two in any given quarter, as we shift more and more business to the cloud that revenue based metric just has a little bit of a structural headwind to it. And so any deviation from that kind of one to two point trend in a quarter signals over under-performance. And so I think we've been very upfront and transparent around just an elevated level of down-sells through the course of this year. And those are finally starting to show up in the number. And so it's a little bit elevated from what we really expected. We don't think it's materially higher. And you could see some of that impact continue into Q4 and really calling stability is going to be, I think, totally dependent wrapped up in just when the overall spending environment stability starts to come through and what kind of past the headwind of COVID. So we're not ready to call that quite yet.

Tyler Radke -- Citigroup -- Analyst

I see. Helpful color. If I could just ask a quick follow-up to that. I mean, it seems like you are seeing pretty good net adds at least on the cloud. I think you added roughly 450 net adds versus 300 last quarter. And you did talk about just higher velocities as well. So I guess do you feel like we're at a point where the new business and some of the initiatives that some of the new go-to-market leaders have put in? Do you feel like we're at a point where those new initiatives can kind of offset the headwinds from a down-sell perspective in terms of driving new customers?

Adam Meister -- Chief Financial Officer

Yes, it's a good question. I mean, this whole year, the investment thesis has been put in place to foundation, the structure, the processes and mechanisms to really be able to reaccelerate growth and part of that being expand with existing customers more. And look, I think a lot of the positive deal mechanic signals that Christal walk through and that we've talked about are evidence of that starting to show up. So we're enthusiastic about next year. Obviously, a lot depends on COVID. I hate to have that as a little bit of an overhang of the conversation, but we're confident that once some of that alleviates, there should be stability on that net retention number and we think it's the right foundation and kind of setup for pretty exciting 2021.

Tyler Radke -- Citigroup -- Analyst

Thanks so much.

Adam Meister -- Chief Financial Officer

Thank you.

Operator

Our next question comes from Chris Merwin with Goldman Sachs.

Christopher Merwin -- Goldman Sachs -- Analyst

Okay, thanks very much for taking my question. I just wanted to ask about the ability to grow users within the customer base. How are you thinking about that opportunity, specifically, when we see more of an opportunity to grow the footprint within the customer through other means? Just trying to think about the main levers here for extension within the base on a go forward basis? Thanks.

Christal Bemont -- Chief Executive Officer

Hi, I'll take that one first. Good afternoon. I would say there's a couple of different ways to look at it. First of all, we have a tremendous opportunity to expand our existing footprint within our customer base and we look at that in terms of some of the things we just talked about more of the not just the digital transformation, but more of the enterprisewide, both the users that are interested in making sure that they have access to trusted data, but also the number of expansions across the enterprise that has a need to make sure that data is running through and accessible and facilitate in such a way that's not just a one off.

So, we see a big opportunity there with the focus to just shift the conversation from a single project to more of an enterprisewide type of engagement. But I also see this as an opportunity to look at how we engage with customers on the front-end, from the very beginning, when we think about what the opportunity is to move from just a moment in time, IT or operations discussion to more of an executive discussion that we've been focusing a lot on in terms of how we provide strategic alignment to our customers that really facilitates driving business outcomes for those companies that we work with.

So I'd say in our existing customer base, a big opportunity for expansion, and then the new customers that we'll be looking at how we bring in the door will be starting with the lens of how do we really help the entire enterprise and power your business on talent in a way that's different than the way that we've seen in the past.

Christopher Merwin -- Goldman Sachs -- Analyst

Okay, very helpful. Thanks so much.

Christal Bemont -- Chief Executive Officer

Thank you.

Operator

We'll take our next question from Matt Coss with JPMorgan.

Matthew Coss -- JPMorgan Chase & Co.. -- Analyst

Hi, good afternoon. This is Matt Coss on behalf of Mark Murphy. Thank you. It seems like growth in headcount is accelerating year-over-year, at least for the past couple of quarters. Can you describe kind of where this is happening in the organization? And is this a catch-up from perhaps some positive hiring during the peak of COVID earlier this year?

Adam Meister -- Chief Financial Officer

Hey Matt, good to hear from you. I'll start. So it's coupled with the investment thesis we've had through the year. A big part of that was bringing in some additional members to bolster the team. It has been pretty broad-based. I mean, there definitely have been probably a little bit higher concentration around go-to-market functions, but I think we did a pretty good bout in Q1. And maybe I think frankly there's probably just some pause in even Canada interest for a little bit of a period there during COVID. But I wouldn't call it like an intentional acceleration right now relative to the middle of the year. So we're feeling really good about the people that we're bringing in. A big part of the strategy this year was to make sure you have the right team on the field going into '21 and I think that we're feeling very confident about that.

Matthew Coss -- JPMorgan Chase & Co.. -- Analyst

Okay, that's helpful. Thank you. And then can you provide an update on what long-term subscription gross margin looks like? It seems like there's line of sight to high or 80%s or 90%, but can you remind just where we are on the long-term -- relative to long-term target?

Adam Meister -- Chief Financial Officer

Yeah. In fact, I think we've called out in the last couple of quarters that there will be a little bit of a headwind to subscription gross margin, as we just see cloud get to be a bigger and bigger mix, obviously has not had that much of an impact. But I would say it probably stabilizes in the mid-80%s. And so it could come down a bit more from right here. And we'll talk about that a little bit more in detail at the Investor Day next week.

Matthew Coss -- JPMorgan Chase & Co.. -- Analyst

Great. Thank you.

Operator

We will take your next question from Pree Gadey with Barclays.

Preetam Gadey -- Barclays PLC -- Analyst

Hey, congrats on those strong quarter guys. So again, with Snowflake public now, they've been talking quite a bit about automated meditative management, where users don't necessarily have to clean and press the data for structured and unstructured data. I was hoping walk through how much of that is reality versus Snowflake environments just been fairly limited -- the amount of data sources that include right now?

Adam Meister -- Chief Financial Officer

Yeah. Hey Pree, good to hear from you. I'll start and then Christal can chime-in. I think that we've been really pleased with the partnership that we've got with Snowflake on the go-to-market side, both on larger enterprise transactions as well as the higher volume, higher velocity end of our business. I think that traction of the market has just continued. And by and large, I think there's a very strong value proposition compelling one that using Talend as the platform for data quality in cleansing, in conjunction with Snowflake environment actually makes a lot of sense for a lot of customers. And so I'll go back, just remind everybody of kind of a key principle and premise of our business is, it's like we want to extract away some of that manual complexity and that has been the value prop for a long time whether you do that on the way into the data warehouse or whether you do it in the data warehouse. We're actually very agnostic to that. And so for us, that abstraction layer that we provide and that consistency that we provide for customers across broader deployments of Snowflake or other cloud data warehouses is pretty compelling. And we haven't seen that really shift or change over the last couple of quarters and certainly not just since their IPO.

Christal Bemont -- Chief Executive Officer

Yeah. And the only thing I would add to that is, I see the relationship with Snowflake continuing to evolve. It's a strategic partnership. As Adam said, we have a value proposition that I think is unique to Talend relative to our focus on quality and our extension of quality to trusted data. And I think that's going to be a heightened area of focus for the entire ecosystem. And looking at how we combine, quite frankly with the likes of Snowflake to create a unique value proposition in the future for our joint customers, it's really where we'll put our focus. And so I think there's a strong alignment and each provides a value that we think is really important to the ecosystem, but combined, even more so.

Preetam Gadey -- Barclays PLC -- Analyst

Right. If my math is right, current bookings accelerated this quarter to 20%. I was hoping you could kind of walk through maybe some of the moving parts, what's the large cloud customer that impact bookings quite a bit or is this kind of the norm in terms of growth rates that we should be thinking about going forward? Thank you.

Adam Meister -- Chief Financial Officer

Sure. So we'll avoid any kind of real detail on 2021 at this stage. We'll obviously provide guidance the same way we always do in our Q4 call in February. We will provide a little bit of context for just kind of an intermediate financial framework at the Analyst Day or Investor Day next week. So tune in for that for sure.

There's definitely some moving parts. FX did benefit us a bit this quarter. I think we called that out with some of the constant currency numbers. RPO is up well quarter-over-quarter, some of that is just our ability to win multi-year deals, even if they're not build up front. And just in general, I think, we've been pleased with the progress that we had this quarter and the outcome relative to kind of our base case going into it was it exceeded what we expected. So I think that's as much as we'll kind of comment on it for now. But next week at our Investor Day, we'll give a little bit more detail on how and now we think about the curve or the shape of growth next year.

Preetam Gadey -- Barclays PLC -- Analyst

Thank you.

Operator

[Operator Closing Remarks]

Duration: 44 minutes

Call participants:

Damaari Drumright -- Vice President, Treasury and Investor Relations

Christal Bemont -- Chief Executive Officer

Adam Meister -- Chief Financial Officer

Bhavan Suri -- William Blair & Company -- Analyst

Jack Andrews -- Needham & Company -- Analyst

Tyler Radke -- Citigroup -- Analyst

Christopher Merwin -- Goldman Sachs -- Analyst

Matthew Coss -- JPMorgan Chase & Co.. -- Analyst

Preetam Gadey -- Barclays PLC -- Analyst

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