Talend S.A. (TLND) Q4 2020 Earnings Call Transcript

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Talend S.A. (TLND)
Q4 2020 Earnings Call
Feb 10, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Please standby everyone, we're about to begin. Good day, and welcome to the Talend's Fourth Quarter FY2020 Earnings Call. [Operator Instructions]

At this time, I'd 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, Vice President of Treasury and Investor Relations for Talend. And I'm pleased to welcome you to Talend's fourth quarter fiscal year 2020 conference call.

With me on the call today are 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 along with 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 prospects for future growth and our transformation to a high-growth cloud company.

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 risks 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 as 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. You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures in our press release and investor presentation, each of which are posted on our Investor Relations website. 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

Thanks, Damaari. Welcome to our Q4 and fiscal year 2020 earnings call. We hope you're all safe and well and we appreciate you joining today's call. Before diving into a few highlights, I'd like to take a moment to thank the Talend team for their perseverance, dedication to our business and relentless commitment to enabling and supporting our customers. 2020 presented a series of unprecedented events that created a level of uncertainty like we've never experienced before. However, the collective effort of our employees and partners was unwavering. They put our customers first and help ensure that we achieved every one of the goals we set out as a business at the beginning of the year. The work, time, effort and sacrifices of our employees and partners are deeply appreciated.

Having spent the last year working with our customers and gaining an understanding of the market, I'm more certain than ever of the unique and vital role Talend plays in changing the way the world makes decisions. It's never been more obvious that data is critical to business and a broader society, but as we've seen play out on a global stage, simply collecting and storing more data doesn't guarantee success. The truth is data is only valuable if you can have absolute confidence in it, if you can trust it. Today, most companies don't have the ability to meaningfully measure, monitor and improve the overall health of data and it's exposing them to significant risk. A risk that increases each and every day with every new source of data, and it's turning data from an asset into a significant liability. Our role in the data ecosystem is to ensure that data remains an asset that can be confidently used to solve meaningful business problems.

Over the last 15 years, Talend has developed a unique mix of critical capabilities across data collection, integration, quality, governance and sharing that are essential and foundational to establishing trust. More recently, we also introduced the Talend Trust Score, the industry's first approach to providing an adequate way to quantify the reliability of the data set. This is why I'm even more passionate and absolute about the future of Talend. From this base in 2021, we will continue to streamline and automate our core capabilities used to deliver clean, complete and uncompromised data throughout the enterprise. We will also continue to build upon our Trust Score to help companies overcome the challenges that arise when they can't easily measure, monitor and improve overall data health.

Now turning to our execution. As I shared almost one year ago, today, I had high expectations and ambitions for Talend's future, building a world-class go-to-market organization was a key endeavor in 2020. I also outlined how we are going to instrument our business to support the growth and scale we are targeting, as well as extend our leadership in the cloud data ecosystem. I told you that we would have a customer-first orientation that would guide us to $100 million cloud business by the end of the year. Not only did we execute successfully in each of these areas, we did it without missing a beat, even when we were faced with the past year's difficulty.

I'm extremely pleased to tell you that by taking these actions, we finished 2020 strong. We ended the year with $108.5 million in Cloud ARR, exceeding the target of $100 million we laid out this time last year. Cloud ARR grew 101% year-over-year and 95% on a constant currency basis, driven largely by landing new cloud customers and expanding cloud into the installed base. We also worked closely with our customers to partner with them as they transitioned along their journey to cloud. I'm also excited to report that we added over 2,000 cloud customers during fiscal year 2020 more than double that of fiscal year 2019. We end the year with over 4,250 cloud customers laying a strong foundation for 2021.

Now let's take a minute to recap the progress made this year along with some key updates. Our leadership team has grown and evolved over the last year and it reflects the vision I have for Talend when I came on board. When I joined, I immediately strengthened our executive team with the appointment of Ann-Christel Graham as Chief Revenue Officer, Jamie Kiser as the Chief Customer Officer and enhanced our sales and marketing leadership in Europe by adding a new EMEA GM and Head of Marketing. During the year, we expanded Jamie's role to include Chief Operating Officer, and we hired Krishna Tammana as CTO.

Krishna becoming part of our team is a pivotal part of our leadership strategy. He has the vision and experience to build from our strong foundation and drive a product that will solve a set of fundamental market challenges around data health that simply have never been addressed. This team brings a wealth of experience in each of the respective disciplines and is united around the customer-first mentality. Their experience provided the skills for us to begin the work necessary in our key growth areas to allow us to build a business that strives to deliver strategic business value, which is the foundation for our long-term sustainable growth.

In the second half of 2020, we began preparing our go-to-market strategy for 2021. We were laser-focused on creating efficiencies in our business. Additionally, we increased the effectiveness of our interaction to ensure every conversation and message was targeted to the exact audience and tailored to reinforce the strategic business value Talend provides. Beginning on January 1st, we centered the organization around four distinct market segments, small business, mid-sized businesses, enterprise and strategic enterprise accounts. Additionally, we dedicated teams to specifically drive new logo acquisition and client expansion. The ability to ensure speed, repeatability and predictability both for our customers, as well as for our business, it is critical in our decision to segment and create dedicated new business and client teams. This strategy represents the growth and potential we see in numerous market segments that need our capabilities to uniquely address critical business decisions with data. The entire organization is aligned across this strategy, which incorporates product, marketing customer success and operation.

We continue to work with our customers to address individual data projects or needs within a single department. However, this past year, we now see organizations who are turning to Talend as a strategic solution provider that's key to their entire data infrastructure. We see a growing opportunity for Talend to be aligned with key business objectives of the C-suite, not just the CIO, but from the CEO and the rest of the business.

Let me share with you a recent customer win to illustrate this evolution. An exciting new cloud win for us last quarter was with WaFd Bank, a 103-year-old regional bank based in Seattle with more than 200 branches in eight Western states. In 2019, the bank embarked upon a seven-year journey to pivot from a traditional brick-and-mortar bank to a digital-first commercial bank. WaFd Bank will rely on Talend Data Fabric to build a data hub on AWS and Snowflake that will help drive decisions around operations, marketing and reporting. This information will be used to create a Customer 360 that provides a frictionless customer experience across all interactions and devices and also increases engagement.

In Q4, we also are in the business of TriNetX, a global health research network. TriNetX puts real-world data collected from hospitals all over the world into the hands of various pharma and healthcare clients to accelerate clinical research. With data growing exponentially and business expanding, the organizations like Talend to support its stringent data quality and governance requirements. TriNetX will standard in global electronic patient data on Talend Data Fabric to simplify its cloud data infrastructure and scale to meet the increasing demands of the business.

Another new cloud logo in Q4 was with one of the largest NAT companies in the world. The company wanted to continue to improve its supply chain, recognizing the value of delivering the right products on time to the global network of retail and distribution channels. The company is using the trusted data from Talend to better manage cost and inventory by getting accurate information about its most profitable SKUs in each region, working closely with Accenture, the company selected Talend over competitors like IBM and Informatica based on our native multi-cloud support for Azure and Google.

Lastly, I want to tell you about Calm, a popular meditation app. Calm lives and dies by its users being able to find the most relevant content for them. So it relies on real-time user behavior patterns to surface the content it users most want at any given time. But being able to analyze that data in seconds and turn that into user-facing recommendations takes a complex data infrastructure, and of course, it has to be right. By using Stitch, Calm was able to create a solution with AWS that seamlessly manages the data in real-time creating deeply personalized experiences for their customers. Customer stories like these highlights the value Talend brings by underscoring the significance of data to the most important business strategies. I hear these types of stories every day about how Talend is helping companies make fast pivots to make important actions needed to thrive in today's business conditions.

It is becoming increasingly clear that Talend is evolving from a company that enterprise run their data through to a company that enterprises run their businesses on. COVID has made clear that companies can no longer afford to put digital transformation on the back-burner or call it a nice-to-have. It's a must-have to survive today. And digital transformation only works if you have the data you can trust to make the right decisions to your business. Our focus on data trust and data health serves a pivotal role in providing value to our customers. The same value proposition is also strengthening our place in the ecosystem.

In December, we expanded our partnership with Snowflake, enabling their users to launch a Talend Data Fabric trial directly from within Snowflake. Customers can confidently make decisions with data that is complete and uncompromised, which they can now see and measure the Talend's industry-first Trust Score. Working together, we expanded our joint customer base to over 1,000 customers, including organizations such as AccorHotels, Uniper and Siemens.

Snowflake's CRO, Chris Degnan notes that what Talend brings to the table is helping the customer make sure they are trusting the data they are seeing, which is a critical part of digital transformation. This partnership helped us triple our business with Snowflake in 2020. Also in 2020, we had incredible success and we saw improvements across the Board with explosive cloud growth. Sales efficiencies and an industry-first trust measure are focused on trust, visibility and control becomes even more critical in a cloud-first environment. But trust is part of our DNA, so this leaves us uniquely positioned to deliver our value to our customers. It also ensures that we continue to deliver innovative products to support them. In this, we've laid the foundation for the next phase of our transformation of the company. Our results for the quarter and the year are a culmination of our execution against our 2020 targets, though we are just getting started.

In 2021, we intend to advance our cloud offerings by increasing the use of AI to automate and simplify complex and time-consuming data tasks. We plan to make it easier for customers to share data with internal teams, as well as their customers and partners using APIs. In addition, look for Talend to further expand our leadership position around data quality and empower more citizen users with new self-serve data capabilities. Importantly and as I spoke about in the opening, expect Talend to continue to fuel our growth and elevate our importance in the data ecosystem by establishing Talend as synonymous with data trust and helping companies begin to accurately measure, monitor and improve overall data health.

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

Adam Meister -- Chief Financial Officer

Thanks, Christal, and good afternoon, everyone. I'd like to echo Christal's thanks to our employees for their contribution during the fiscal year. Our strong end of 2020 wouldn't have been possible without their hard work and dedication. There are four themes that I want to emphasize today as I discuss our Q4 and 2020 results and share our outlook for Q1 in 2021. First, we delivered consistent execution throughout 2020, exceeding our guidance each quarter and ending the year above the goals we've set pre-COVID.

Second, our efforts over 2020 are now beginning to translate into operating performance. Third, this foundation will drive growth acceleration and efficiency gains in 2021. And fourth, we will continue to invest and build for long-term growth and scale. We ended 2020 with $108.5 million of Cloud ARR, exceeding our goal of $100 million. Cloud ARR grew 101% year-over-year or 95% on a constant currency basis. Cloud is now nearly 40% of our business. We migrated $5.3 million of ARR to Cloud in Q4, bringing the total to $14.6 million for the year. This clearly shows that the majority of our growth in cloud came from new logos and expansions. We added over 2,000 new cloud customers in 2020, and now have over 4,250 cloud customers in total. Total ARR grew $288.7 million as of December 31, 2020, up 19% year-over-year or 15% on a constant currency basis. Total revenue for the fourth quarter was $78.9 million, up 17% year-over-year.

Subscription revenue for the fourth quarter was $71.8 million, up 20% year-over-year or 17% on a constant currency basis. Total revenue for the full-year was $287.5 million, up 16% year-over-year. Subscription revenue for the year was $259.5 million, up 20% year-over-year. We continue to win larger scale deals with enterprise customers, particularly of cloud. We ended the quarter with 678 customers at $100,000 or more of ARR, up from 642 at the end of Q3. These customers represent 67% of our total ARR. Our dollar-based net expansion rate for the period was 107% in constant currency compared to 107% last quarter. This metric is revenue-based, and as a result, does have some structural headwind as we rotate our business toward the cloud due to the fully ratable recognition of those revenues.

We are pleased to see net expansion stabilize in Q4. Cloud net expansion remains well above the overall average. Professional services revenue was $7.2 million for Q4 and $28 million for the full-year. Professional services revenue declined 9% year-over-year, consistent with our continued shift toward cloud, which generally requires less in professional services. Before moving to profit and loss items, I'd like to point out that unless otherwise specified, all expense and profitability metrics discussed today are on a non-GAAP basis. A full reconciliation between GAAP and non-GAAP results can be found in our earnings press release issued today, which is posted on the Investor Relations portion of our website.

For the fourth quarter, total gross margin was 81%. Subscription gross margin for Q4 was 87%. Subscription gross margin remained at 87% for the full-year in line with 2019. We expect a modest impact to subscription gross margin as our cloud business grows. Professional services gross margin was 24% this quarter, benefiting from better utilization and remote work environment. Q4 is typically the highest margin quarter for professional services. We'll start discussing trending sales efficiency each quarter. Reminder, sales efficiency through our customer acquisition costs, we define customer acquisition costs as our non-GAAP sales and marketing expenses divided by the change in total ARR [Phonetic] for the period, effectively, the amount required to generate $1 of net new business. Given typical seasonality, we view this metric on a trailing four-quarter basis to monitor overall trends.

In FY2020, CAC ended at $3.2 million [Phonetic] down from a peak of $3.5 million [Phonetic] as of Q2. We are particularly pleased with the trend at the end 2020. During our Investor Day Conference in the fall, we described 2020 as being a year of investment for Talend. One significant investment was developing a go-to-market strategy that better aligns our sales motions with customer needs. As Christal mentioned, we've rolled out a four-segment strategy, small business, mid-sized business, enterprise and strategic enterprise accounts. We have further focused much of the team by hunter and farmer roles. These changes went into effect this January. This structure will drive greater effectiveness in each sales motion, enabling us to maintain strong new logo growth, sell new cloud ARR into our existing customer base and improve net expansions over time.

We changed our cloud strategy for existing premise customers and will prioritize cross-selling cloud rather than specifically focusing on migrations. Seeding cloud into new initiatives and scenarios will create a more efficient pull of migrations over time. As a result, we are not depending on as large a migration impact on Cloud ARR in 2021, as our sellers prioritize this cross-sell strategy. As we continue to progress toward profitability, we incurred an operating loss for the quarter of $1.4 million or 2% of revenue. For fiscal year 2020, we incurred an operating loss of $16.3 million or 6% compared to an operating loss of $19.4 million or 8% in 2019. We outperformed our guidance due to strong sales execution and careful management of expenses throughout the end of the year.

Free cash flow was negative $4.1 million for Q4 and negative $32.7 million for the full-year, in line with our original expectations. Cash and cash equivalents ended at $163 million as of December 31st, up quarter-over-quarter benefiting from normal course options exercise and ESPP activity, as well as foreign currency benefit.

Shifting to our outlook, we are pleased with our performance versus guidance and with our execution throughout 2020. With the leadership team now fully ramped and greater stability as the impact of COVID subsides, we expect to operate with tighter precision in 2021. Consistent with last year, we will be providing guidance on an annual basis for Cloud ARR and free cash flow and will provide both quarterly and annual guidance on total revenue and non-GAAP loss from operations. We will not update our Cloud ARR target each quarter. Our guidance assumes current business conditions and foreign exchange rates as of January 31, 2021. We expect to end 2021 with $160 million of Cloud ARR, representing 47% year-over-year growth, including $5 million to $10 million of migrations.

We expect this continued cloud momentum to drive an acceleration of our total ARR growth in the second half of this year as cloud approaches half of ARR exiting 2021.Total ARR growth acceleration will be gradual as we further rotate the business to cloud, driven by an improvement in sales efficiency in the second half of 2021 as measured by the CAC metric I discussed earlier. We expect free cash flow to be between negative $15 million and $20 million for the full-year. We remain committed to reaching cash flow breakeven on a sustained basis between the end of 2021 and the first half of 2022.

Before turning to our revenue guidance, please note, professional services will remain a drag on overall revenue growth in 2021. Acceleration of subscription revenue growth will lag acceleration of total ARR growth. Q4 '20 subscription revenue included some multi-year premise benefit, which we don't expect to reoccur in Q1 of '21. Given currency movements over the last year, FX will provide a revenue growth tailwind of approximately 5% in Q1 and 3% for the full-year based on rates today.

And lastly, Cloud ARR is the single best measure of our growth and progress. For the first quarter of 2021, total revenue is expected to be in the range of $77.5 million to $78.5 million. Non-GAAP loss from operations is expected to be in the range of $8 million to $7 million. For fiscal year 2021, total revenue is expected to be in the range of $327 million to $329 million. Non-GAAP loss from operations is expected to be in the range of $26 million to $24 million. Our Q1 and 2021 guidance for net income and EPS is included in our press release and investor presentation issued today and available on our website.

We are excited to launch into 2021 building on last year's momentum. It's energizing to see the investments we have put in throughout the year began to take shape in 2021. We are closely watching the effect of go-to-market changes we implemented at the beginning of this year and there is still much work and opportunity ahead of us. We will continue to transform as a business for scale and sustainable growth to deliver on the expectations of our customers, employees, partners and our shareholders.

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

Questions and Answers:

Operator

Thank you. [Operator Instructions] We'll take our first question from Jack Andrews with Needham. Please go ahead.

Jack Andrews -- Needham -- Analyst

Well, good afternoon. Thanks for taking my question. I guess a question for Christal, I wanted to better understand, you talked about being is -- your goal is you're moving toward a strategic solutions provider for the C-suite. So I was wondering if you could maybe just help frame us a bit more, how are you getting -- how many C-level type conversations are you having and how are you able to get in front of them? Is this -- are you able to leverage partners for these types of conversations or are your direct sales efforts paying off, just any sort of context about how you're building that funnel over time?

Christal Bemont -- Chief Executive Officer

Sure. Good afternoon, Jack. How are you?

Jack Andrews -- Needham -- Analyst

Perfect [Phonetic].

Christal Bemont -- Chief Executive Officer

We are -- great. We've got a series of things that as we evolve the conversation, I think that are going on that are important to point out. The first one is outside of what we're doing, we see the market itself evolving in terms of the leads and the utilization and the participation of users across the entire business showing up in things like citizens, integrators and analysts and data sciences. So we see that the market itself evolving beyond the conversations which are really important that we have today with IT and moving across the entire business. In addition to that, we've talked about data health and the Trust Score in particular.

And that is an area where we really see that rolling up to the entire business is something that an entire organization has importance around in terms of how they measure the overall health of their business or line of business and then making sure that they have visibility to it. Those conversations are taking place in both of those tranches to make sure that we can support the way that the business is evolving and the needs of the users at the business level, as well as at the C-suite level. So these are things that we are continuing to evolve and we think that they're going to take hold and be even more strategic over time.

Jack Andrews -- Needham -- Analyst

Great, thanks for that. And just as a follow-up question, want to ask about Snowflake, I guess, congratulations on this 1,000 customer milestone. I know you've been working with Snowflake for a long time. I remember joint press releases back two years, three years ago between Talend and Snowflake. So could you just help us understand, what specifically has enabled you to reach this milestone and how can you continue to gain share within the broader Snowflake customer base?

Christal Bemont -- Chief Executive Officer

We've -- we're really proud of our relationship with Snowflake and as we are with our entire ecosystem of partners. It's important as we look at how we provide strategic value in a combined way to our customers. I think we're starting to really hit our stride in particular with the way that we not only show up for Snowflake in particular to provide a place in moving the customers to the cloud, but just taking it one step further and looking at what we have going on in terms of the Talend Trust Score and making that available. I think Snowflake, when they look at what they're trying to do to make sure that there is good quality data that customers can use in a meaningful way. Their strategy is aligned with ours very much in that same pattern. So we look at it as an opportunity to really start to align to provide more strategic value in a collaborative way. So we're looking forward to what we can do with them and our joint combination of value.

Jack Andrews -- Needham -- Analyst

Great, thanks, and congratulations on the results.

Christal Bemont -- Chief Executive Officer

Thanks, Jack.

Adam Meister -- Chief Financial Officer

Thanks, Jack.

Operator

Next, we'll move to Chad Bennet with Craig-Hallum.

Chad Bennet -- Craig-Hallum -- Analyst

Great, thanks for taking my questions and phenomenal job on the quarter and year-end. So just a few questions for me. So just maybe first for Christal. Just on the go-to-market changes that I think you mentioned were instituted earlier this year, the hunter and farmer model. So I guess, do you feel like just from a cross-sell, upsell opportunity into the base that there was just opportunity there that -- I just -- I just assume naturally you -- easy for me to say, you'd be able to cross-sell and upsell into your base, on-prem base with your cloud products, but do you feel like there was you were kind of missing opportunities there in the past couple of years as the company has transitioned? And do you think this will actually, I assume you do because you're doing it, but accelerate that net retention number as soon as the back half of the year?

Christal Bemont -- Chief Executive Officer

It's really good questions and I'd say it's two-fold. First of all, when we think about what we're trying to do with the business, it's about driving efficiencies. So you think about lining up resources and how you can really drive for certain profiles of individuals that are maybe more hunter or farmer, as well as creating a repetitive and predictable kind of patterns that allow us to really get a, what I call a flywheel going. So those are -- that's certainly one part of the strategy is making sure that we can also even bring -- bring this to our reps in terms of the fact that they can benefit from waking up every day and having a repeatable process.

And so we think that it's good for our customers in terms of being able to have unique conversations with them that are in our installed base, as well as bringing net new logos in the door, it's good for our business from an efficiency standpoint, and it allows us to really be, I believe, more effective in terms of tailoring that message and bringing it across. So it really is about just honing skills and really driving operatal -- operational efficiencies and really increasing the effectiveness overall in terms of those conversations we're having.

Chad Bennet -- Craig-Hallum -- Analyst

Got it, makes sense. And then maybe one quick follow-up clarification for Adam. Just, Adam, you reiterated for reacceleration, I believe in overall ARR in the second half of the year, basically, what you guys said at the Analyst Day a few months back. But if I just want to make sure kind of we're understanding this correctly, I mean, you just put up ARR growth of 19%. And I believe a few months back, you -- at least we were conceptually talking about mid-teens ARR, overall ARR growth accelerating up to 20% in the second half of the year.

Now that we're in the upper teens, you guys have exceeded your expectations in ARR growth, does that imply overall ARR growth kind of low-20s in the second, not to get too cute on this, but also it's kind of the same question on subscription, it's great to see the overall rev guide increase from where you had it, but you just put up a 20% plus subscription quarter on the high-end of the guide implies a mid-teen subscription growth for this year, anymore kind of color there?

Adam Meister -- Chief Financial Officer

Yeah, sure, happy to. So, first off, hey Chad, welcome to the call first and foremost. So we -- we are really pleased with where Q4 landed and Q3 as well. The consistency in growth between Q3 and Q4, I think clearly shows that the glide path from here for '21 is -- is one that's pretty clear for us and for investors we hope. We do look at the business on both on an actual growth basis, but on a constant currency basis as well. And so as I think about just how much FX rate means over the course of 2020, we want to make sure investors kind of look through that and can kind of understand irrespective of where currency movements are, what the underlying trajectory looks like. And so exiting this year at 19% total growth, 15% on a constant currency basis, think about that as a baseline really for how we think about acceleration, and we'll continue to report on a constant currency basis throughout the year. On the second part of your question just around subscription revenue, it's obviously going to lag a little bit, right. Subscription revenue growth trend will follow ARR by a quarter or two. And so really look for that inflection in total ARR innovate a little bit for when that's going to show up in subscription.

Chad Bennet -- Craig-Hallum -- Analyst

All right. Thanks again. Nice job.

Operator

Next we will take Tyler Radke with Citi.

Tyler Radke -- Citi -- Analyst

Hey, thanks, and hope you both are doing well. Christal, I wanted to ask you about the new logos that we saw in the quarter, looked like you added over 1,000 cloud customers and perhaps total customers. I guess, first, what would you kind of attribute the acceleration in new logos to in terms of go-to-market motion, and maybe help us give us a sense for this mainly mid-market customers that you're seeing, and how do you kind of go out to those customers and expand them in 2021?

Christal Bemont -- Chief Executive Officer

Thanks. It's good to hear from Tyler. We are -- I think this is kind of pointing to where we see opportunity in the future with this year and how we set things up from a go-to-market standpoint. Not to put aside that, I'll just say Q4 is where you'll start to see more of a pop for a bigger -- bigger population of new logos. But I believe that what we'll really see going forward is when you start to look at, certainly, more units will come from small business and mid-market, some of that comes from our kind of digital or product-led, and some of that will come from just the execution on how we start to focus and really start to lean into those lanes.

But I think what you'll start to see is that those will start to pay off, I would say probably more over the back half of the year in '21 as we really get those motions honed. Looking back at Q4, we -- you're really proud like Adam said of where we landed. And we think that's a really big part of how we're starting to structure the -- both increasing the footprint across our customer base, but then grabbing those net new logos that will come from all the way across small business to enterprise.

Tyler Radke -- Citi -- Analyst

Great, thank you. And Adam, a follow-up for you, just on the net expansion rate, it looked like it stabilized here this quarter being consistent with last quarter. Do you think we're -- we've kind of reached the low point there? I know you didn't use the word down-sells this quarter, which is nice to hear. So just curious on your thoughts and how we should be thinking about that metric going forward?

Adam Meister -- Chief Financial Officer

Yeah, thanks for the question, Tyler, good to hear from you. We were really happy to see that stabilize in Q4, particularly given there is just an accounting kind of mechanical headwind that we've talked about over the last couple of quarters that pressures that. So I think you can -- you can look at that as early an indication that, that momentum with existing customers is strong. The expansion within our cloud customers as we've continued to say is much better than the overall, that number is really starting to get -- to be a bigger level and starting to contribute to the overall total.

I'm not going to call bottom yet, right. We still have to get through some of the sales changes that we're talking through. We got to see those really come into effect strongly. The clouds are parting clearly a little bit on COVID and kind of the overhang on IT spending, but I think we want to give that a quarter or two. But what I can say is, I feel like the trend you've seen in the last couple of quarters, really the slope of that has changed. And I think we're going to operate within a point or two where we're at right now over the next couple of quarters.

Tyler Radke -- Citi -- Analyst

Cautiously optimistic. All right. Thanks so much.

Operator

Next, we'll move to Pree Gadey with Barclays.

Preetam Gadey -- Barclays -- Analyst

Hey guys, good afternoon. I wanted to ask a little bit more about the Snowflake metrics that you guys provided, you said business tripled in fiscal '20. Is there any metrics you can share with us in terms of the amount of revenue or ARR that's tying to Snowflake or something like the conversion of the three products that you have to a clean [Phonetic] product?

Adam Meister -- Chief Financial Officer

Hi, Pree, good to hear from you, I'll take that one. We're not going to get into any specifics on kind of revenue or business breakdown with any particular partner. We have seen Snowflake have a lot of traction in the market. Obviously, that tripling is going to be a pretty significant portion of overall Cloud ARR, but look there's a lot of success that AWS and Azure continue to have. And we think that our partnerships with all of them is very important as we keep pushing forward on this overall data shift to the cloud. So we'll keep working hand in glove with those guys on opportunities. And as Christal mentioned that we really think that there is this very interesting backdrop where the customer demand around expectations on cloud warehousing really is going to a wall-to-wall conversation very quickly.

And as Snowflake and AWS and all these players start to encounter that, that conversation, there is a more urgent need for an Integration and governance solution in conjunction, and that I think is very exciting for us, right. We've been kind of calling for a while that the cloud integration market will naturally follow the cloud data warehousing market. I think that the growth we saw with Snowflake over the last year is really consistent evidence of that. And as we see opportunities coming through in the beginning of this year, we're excited with what that's going to go.

Preetam Gadey -- Barclays -- Analyst

Great, thank you. And I guess a similar question around what Tyler was asking you. How close is this -- the Stitch and the Talend Data Fabric sales working together. I just want to get an idea of all these new cloud customers that you have that are on Stitch, are they being up-sell to the full Data Fabric product as well?

Christal Bemont -- Chief Executive Officer

Yeah, I'll take that one, hi, Pree, good to hear from you. We see a combination of use cases. We see Stitch as certainly something that supports a land in some cases where if you think about across an entire organization, you may and we believe have different use cases that depending on who the users are in terms of the constituents within the organization, what their needs are, and we also see it as a land in a net new logo that then expand to needs that they may have over time that are more complex. And so we see both of those playing out, and we have customers that are leveraging the Talend Data Fabric, as well as Stitch in both of those ways.

So we think it's one of the things that makes us unique for sure to be able to, what we call meet our customers where they're at, but I think more importantly, it's our ability to make sure that as we're working with our customers and they maybe need to start in one place that we can -- we can grow with them. And that's really important to us from a sustainability long-term growth company that we see that we have straight alignment on.

Preetam Gadey -- Barclays -- Analyst

Great, thank you, guys.

Operator

Next, we'll move to Mark Murphy with JPMorgan.

Matthew Coss -- JPMorgan -- Analyst

Hi, good afternoon. This is Matt Coss on behalf of Mark Murphy. Just a quick question for you, Adam, your net new cloud ARR, it looks like the expansion sequentially, the growth in that number was the highest it's been, I think we've been keeping track. Was there any business that was pulled forward or any sort of large deal, particularly large that might explain that?

Adam Meister -- Chief Financial Officer

Hey, Matt, good to hear from you. So I wouldn't point anything that was particularly large that got pulled in. I think what you're continuing to see out of -- of an Christal's organization is just consistent, strong execution in the pipeline that we have in the quarter, and we're really enthused with the progress we've made around that over the last year. And now with some of the sales design changes that we've rolled out, I think that's going to be a force multiplier. So I wouldn't point to anything in particular at Q4 that, that would suggest a counterbalance in Q1. It's just great blocking and tackling from the sales organization.

Matthew Coss -- JPMorgan -- Analyst

Okay. And then on your capex outlook, are there any other data center opening plans like Europe in December, and then maybe how should we think of capex for this year?

Adam Meister -- Chief Financial Officer

Yeah, the data center roll-outs for us are a huge capex item, right. So there is a little bit of overinvestment that we'll make in capacity for those, but they're typical kind of AWS or Azure environments, they're very flexible. Last year, we did open a new office timeline in COVID of course. We did open a new office in France that we've been planning for a long time, and so the capex was a little elevated over the course of 2020. It will go down a bit from where it was for 2020 into 2021.

Matthew Coss -- JPMorgan -- Analyst

All right. And I'm sorry if I missed this earlier and maybe you didn't mention it, but what is Cloud ARR go as a percent of total ARR this year, is that something that you mentioned?

Adam Meister -- Chief Financial Officer

Well, you just look at the total mix. So it's just under 40%, 37.5%, right, on the $108 million versus the $287 million or $288 million [Phonetic].

Matthew Coss -- JPMorgan -- Analyst

Yeah. And do you have ambitions for kind of where that goes -- where that mix goes for 2021?

Adam Meister -- Chief Financial Officer

Yeah, it was buried in my script a little bit. So, I mean, I think when we exit '21, you're going to -- you should expect that cloud is approaching half of the business by the end of the year.

Matthew Coss -- JPMorgan -- Analyst

Okay, that's what I was looking for. Thank you so much, Adam.

Operator

We'll move and take our last question from Bhavan Suri with William Blair.

Kamil Mielczarek -- William Blair -- Analyst

Hi, this is Kamil Mielczarek on for Bhavan Suri. Congratulations on the strong end of the year and the impressive cloud growth. Now that we're looking toward a potentially more normalized environment in the back half of this year, how are you factoring macro changes into your guidance and investment plans for 2021 relative to 2020? And how reliant are your next year growth targets on an improving macro environment or should we think about that as more of an upside driver?

Adam Meister -- Chief Financial Officer

Hey, great to hear from you and really good question. So as some of my comments suggested, we do see the clouds parting, we think that the spending environment is starting to firm up. It's I still think going to take a little improving dollars really start flowing. So we've been balanced in kind of the expectations for first half of the year and how long it would take before we see a return to full -- full kind of normalized spending patterns. So anything I think faster than that you could consider probably upside. And I do think that if we just look at year-on-year compares that will be helpful as well, right. Now there's kind of months past this, I mean, budgets are even a little lower, they're just more stabilized, and we're seeing not a freeze in decision the way you saw them in kind Q1 and into Q2 last year.

Kamil Mielczarek -- William Blair -- Analyst

Right, that's helpful. And can you give us, I mean, a quick update on what you're seeing in the competitive landscape and how should we think about the competitiveness of internal solutions offered by public cloud and other data storage providers?

Christal Bemont -- Chief Executive Officer

Yeah, I'll take that one, and Adam if you have anything to add, please do. Yeah, look, I think this is a place where we stay laser-focused on the evolution of what the business problems are. This is the best way I can put it. The problems that we look to solve are the future and the current state of where losing data and a lot of data at that is just part of the problem. And so when we look at the competitive landscape, there is a focus on that, for sure, but we think it goes beyond just moving data. And that's why we believe on the other side of moving data that what you end up with in terms of the, not just the quality of it, but really elevating it above that to say how do you actually measure what good data looks like.

And that's something that where we really stand alone, and we think that's where we're not only unique, but that's where it brings strategic value to our partners and to our customers for sure. So in our estimation, there is an opportunity for us to continue to lean into that to help organizations, making sure that when they lose the data and they manage the data that they can really use it for the purposes that they needed it in the first place and that's where we'll stay laser-focused.

Kamil Mielczarek -- William Blair -- Analyst

Yeah, that's great to hear. Thank you for taking my questions.

Operator

There are no further questions in our queue at this time. [Operator Closing Remarks]

Duration: 49 minutes

Call participants:

Damaari Drumright -- Vice President, Treasury and Investor Relations

Christal Bemont -- Chief Executive Officer

Adam Meister -- Chief Financial Officer

Jack Andrews -- Needham -- Analyst

Chad Bennet -- Craig-Hallum -- Analyst

Tyler Radke -- Citi -- Analyst

Preetam Gadey -- Barclays -- Analyst

Matthew Coss -- JPMorgan -- Analyst

Kamil Mielczarek -- William Blair -- Analyst

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