Talend (NASDAQ:TLND) announced first-quarter 2019 results late Wednesday that were technically mixed relative to guidance provided by the cloud integration solutions leader three months ago. But that doesn't mean the company is disappointed with its performance.

To the contrary, Talend's relative strength is being masked in its headline numbers by an acceleration in recurring revenue. So, let's take a closer look at how Talend kicked off the new year and what shareholders should be watching in the coming quarters.

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Talend results: The raw numbers

Metric

Q1 2019

Q1 2018

Year-Over-Year Growth

Revenue

$57.8 million

$46.8 million

23.5%

GAAP net income (loss)

($17.6 million)

($10.1 million)

N/A

GAAP net income (loss) per diluted share

($0.58)

($0.34)

N/A

GAAP = generally accepted accounting principles. Data source: Talend.

What happened with Talend this quarter?

  • On an adjusted (non-GAAP) basis, which excludes items like stock-based compensation and acquisition expenses, Talend incurred a net loss of $9.6 million, or $0.32 per share -- near the low end of guidance provided in February for an adjusted per-share loss of $0.32 to $0.29.  
  • Revenue was above the high end of guidance for a range of $56 million to $57 million. 
  • Subscriptions revenue grew 25.8% (or 31% at constant currencies) to $50 million, while professional services revenue increased 11% to $7.8 million.
  • Annualized recurring revenue (ARR) rose 28% (or 34% at constant currencies) to $205.1 million.
  • Talend Cloud revenue more than doubled from the same year-ago period for the 11th straight quarter and comprised 36% of Talend's new ARR.
  • New product development included general availability of Talend Cloud for Microsoft Azure, support for Databricks' open-source Delta Lake project for processing data at scale in the cloud, and the launch of Talend Spring '19 with Pipeline Designer for Talend Cloud.

What management had to say 

Talend CEO Miche Tuchen noted this was Talend's highest-ever first-quarter revenue performance, adding:

Our results were driven by our continued cloud momentum with Talend Cloud once again growing at over 100%. We strengthened our cloud offering with the recent introduction of Pipeline Designer, which will add to our frictionless channel and ability to land and expand in accounts. During the quarter, we were also recognized by Gartner as a leader in the Magic Quadrant for Data Quality Tools for the second consecutive time, which we view as strong validation of our ability to deliver trusted data.

Looking forward

For the second quarter, Talend expects revenue ranging from $58.8 million to $59.8 million, which should translate to an adjusted net loss per share of $0.35 to $0.31.

Thus -- and despite its top-line outperformance in Q1 -- Talend reiterated its previous guidance for full-year 2019 revenue ranging from $248 million to $250 million, while also lowering its earnings outlook to call for an adjusted net loss per share of $1.01 to $0.95 (down from its old target range for a per-share loss of $0.94 to $0.88).

During the subsequent conference call, CFO Adam Meister explained that a faster-than-expected shift to recurring sales through Talend Cloud will "dampen" the company's reported revenue growth. And Talend is increasing its expected operating expense target for this year by $2 million relative to its previous guidance, Meister added, "partly due to our faster progress toward our goal of exiting 2019 with half of new ARR from the cloud, as well as investments we believe are important to support this shift."

After starting today's trading session in the red, that explains why Talend shares are now trading up around 5% on the news. I think long-term investors should be more than happy with Talend's position today.