The world continues to migrate its software applications to the cloud, and there's a flood of data going there with it.
To make sense of all the information, Talend's (TLND +0.00%) Data Fabric platform pulls data from a variety of programs into a single data lake (repository for raw data), then helps companies make sense of it. This service is extremely useful for customers, as experts estimate that nearly 80% of data scientists' time is being spent on preparing data for analysis.
The company reported second-quarter 2018 results that again showed strong growth in the cloud. Talend's subscription-based business is scaling, and at this rate, the company soon may be reporting an operating profit. That could be a great sign for investors who have been patiently waiting as they invest heavily in order to capitalize on the sizable market opportunity.
Let's take a closer look at Talend's second-quarter results.
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Talend results: The raw numbers
| Metric | Q2 2018 | Q2 2017 | Year-Over-Year Change |
|---|---|---|---|
| Revenue | $49.8 million* | $35.8 million | 39% |
| Operating income | ($8.8 million) | ($6.5 million) | N/A |
| Adjusted earnings per share | ($0.12) | ($0.20) | N/A |
Data source: Talend. *Revenue in Q2 2018 benefits from the new revenue regulation standard IFRS 15, which went into effect on Jan 1, 2018. Adjusted earnings per share exclude stock-based compensation and the amortization of intangible assets.
What happened with Talend this quarter?
Talend continues to strengthen its partnerships with cloud providers and its relationships with enterprise customers.
- The company adopted the new IFRS 15 standard, which impacts the recognition of revenue and cash flows from customers. Talend's subscription and overall revenue each benefited from approximately $0.6 million due to the adoption of this standard. Note that Q1 2017 results still are reported under the previous revenue-recognition standard.
- Subscription revenue grew 39%, to $42 million. On a constant-currency basis, it expanded by 34%.
- Adjusted operating margin improved by 600 basis points, to negative 7%.
- Sales in the Asia-Pacific region grew over 100% for the fifth-straight quarter.
- The company appointed Equinix Chief Product Officer Brian Lillie and Tableau Executive Vice President of Product Development Mark Nelson to its board of directors.
- Talend also received some accolades this quarter. It was named a leader in Forrester Research's "Big Data Fabric Wave" publication, and also named a leader in Gartner's Magic Quadrant for Data Integration Tools (for the third consecutive year). These industry-specific awards can often help Talend land new business more easily by lowering customer acquisition costs, and help it keep existing customers (by improving retention rates).
What management had to say
CEO Mike Tuchen drew attention to the company's success in the cloud and suggested that its future could look even better: "We continue to see our cloud business accelerate with cloud subscription growing over 100% year-over-year for the eighth consecutive quarter. With the launch of our Summer 2018 release, which enhances enterprise cloud capabilities, we believe we are well positioned for continued cloud momentum."
Looking forward
As Tuchen noted, the 100% growth in cloud-based revenue was Talend's eighth-straight doubling in year-over-year comparisons. Customers are very clearly embracing the cloud, and Talend isn't having problems pivoting its business to continue to serve them there: Talend Data Streams is now available through Amazon (AMZN +1.63%) Web Services (AWS).
In addition to strong cloud growth, Talend still receives two-thirds of its subscription revenue from its 427 enterprise customers. Its absolute enterprise customer count grew 47% year over year.
With the enterprise contributing a dependable recurring revenue stream, and with AWS bringing in a flood of new cloud-based business, Talend looks like it's in great shape. Management once again raised full-year guidance to $205.6 million -- up from a forecast of $203.6 million last quarter -- which would reflect 38% growth over full-year 2017.
