Talend (TLND) released better-than-expected second-quarter 2019 results after the market closed Wednesday, showcasing continued momentum in its shift to a recurring-revenue model thanks again to the strength of its burgeoning cloud solutions.
And while the cloud integration specialist followed by reducing its full-year revenue outlook for the second time in as many quarters, management was quick to explain the encouraging source of its downward revision. With shares up more than 15% in after-hours trading, let's dig deeper to see what Talend accomplished over the past few months, and what investors should watch for the rest of the year.
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Talend results: The raw numbers
| Metric |
Q2 2019 |
Q2 2018 |
Change |
|---|---|---|---|
|
Revenue |
$60.6 million |
$49.8 million |
21.8% |
|
GAAP net income (loss) |
($18.3 million) |
($8.7 million) |
N/A |
|
GAAP net income (loss) per diluted share |
($0.60) |
($0.29) |
N/A |
GAAP = generally accepted accounting principles. Data source: Talend.
What happened with Talend this quarter?
- Adjusted for items like stock-based compensation and acquisition costs, Talend's non-GAAP net loss arrived at $6.4 million, or $0.21 per share, widening from an adjusted net loss of $3.6 million, or $0.12 per share, in the year-ago period.
- These results compared favorably with Talend's guidance provided in May, which called for an adjusted net loss per share of $0.35 to $0.31 on lower revenue of $59.8 million.
- Subscriptions revenue climbed 25.9% (30% at constant currency) to $52.9 million, and professional services revenue fell 0.5% to $7.7 million.
- Annual recurring revenue (ARR) grew 28% (29% at constant currency) to $218 million.
- Talend's dollar-based net expansion rate was 118% at constant currencies -- with anything above 100% indicating renewing clients are spending more with their refreshed contracts.
- Cloud revenue more than doubled on a year-over-year basis for the 12th straight quarter, and represented 43% of new ARR (up from 36% last quarter).
- Total customer count exceeded 3,500 this quarter, including more than 1,500 cloud customers; 525 enterprise customers generated 68% of total subscription revenue.
What management had to say
CEO Mike Tuchen lauded "strong momentum" in the cloud business, adding:
We are excited about the progress we have made advancing our cloud strategy. We are landing cloud customers at an increasing pace and laying a foundation for future growth. We're pleased to report that we now have over 1,500 cloud customers. We continue to gain market and mind share, and for the fourth consecutive year we were recognized as a Leader in the 2019 Gartner Magic Quadrant for Data Integration Tools. We are confident our transition to the cloud remains on track and the progress we have made positions us for long-term growth.
Looking forward
For the third quarter, Talend anticipates revenue in the range of $61.5 million to $62.5 million, which should translate to a net loss per share of $0.25 to $0.22.
That said, it also revised its full-year revenue outlook to a range of $246 million to $248 million (down $2 million from both ends of its old range), with an adjusted net loss per share of $0.92 to $0.98 (improved from its previous outlook for a per-share loss in the range of $0.95 to $1.01).
Regarding that top-line guidance reduction -- and with echoes of its deceivingly strong outlook provided last quarter -- management elaborated on it during Wednesday's subsequent conference call. It said that reported revenue growth this year is once again being hindered by a combination of a faster-than-expected shift to recurring sales through Talend Cloud, foreign exchange rates, and (as its revenue mix shifts to the cloud) a resulting moderation for its expected professional services segment growth.
With that in mind, it's no surprise to see Talend stock up big in after-hours trading right now.
