Talend

Investment Analysis Clubs Saul’s Investing Discussions
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Honestly, ETL is pretty boring stuff to me…Why is Talend interesting to this board?

Hi Smorgasbord, Perhaps the current Talend isn’t the boring company you remember. For example, not only is the current growth rate of revenue well over 40% per year, but the rate of growth of revenue is accelerating enormously.


**Rate of growth of revenue yoy (percent)**
2015:   15   19   22   28  =  21
2016:   34   38   40   45  =  40
2017:   44

In the conference call they sound pretty euphoric and you might want to give it another look In the CC the CEO said the following.:

"Q. – If you think about that triple digit growth in cloud and big data for nine quarters now, have you seen any sort of competitor narrow the gap?

A. - We really like our differentiation right now in cloud and big data and our win rates remain ridiculously high, which is evident from the growth rate. We measure the deal cycle, and what we found was that big data and cloud had not just the highest win rates but also the shortest deal timing and so all of those basically are ways to clearly point to a strong advantage.

The market dynamic is that the large players continue to be challenged and long term I think most of the competitive battle is going to be fought with very small players that are trying to get up to scale right now. So we’re in this kind of special period in the middle right now (with no functioning competitors) and we’ll see how long that lasts.

But if I were to make a bet between a large player really, getting strongly focused and executing well, versus a small player doing something unique and different, our bets remain on the small players, but they’re not yet at the scale where they’re able to have an impact on the market…

"We’re now building relationships with both Microsoft and with Google in addition to the strong relationship that we have with Amazon

Our net dollar based expansion rate has been above 120% in constant currency for 12 consecutive quarters…

We are committed to our balanced planned approach of maximizing revenue growth and being free cash flow breakeven to slightly positive on an annualized basis"

In March, Herman Potter posted this on the board:

“I asked a very sharp 21 yr old (my son’s friend, who has been working for IBM), to look into Talend. His response follows”:

Talend is seeking to streamline the process known in computing circles as “Digital Plumbing”. That is, essentially taking data they’ve collected from several sources and either aggregating them into a new more useful set or converting them into a different or more useful output format.

For example, a company might take a database consisting of previous customer purchasing preferences and then combine it with a database of the customers address or city of residence to create a heat map of where in the country their products are selling best.

Generally this process requires some pretty in depth programming and database knowledge, but Talend has created a program which centralizes and streamlines this whole process. However, while the program is easier for a layman/non-programmer to use it still retains enough flexibility and extensibility to be used by more technical people.

Generally this level of data analysis and aggregation is only available to the bigger tech companies like Facebook, IBM, Apple etc. because the price point is so high. So their product is seeking to open up data analysis and aggregation capabilities that were once limited to the likes of Facebook to any company that exists in a data driven environment.

Now I wouldn’t say what they are doing is revolutionary in terms of technology but their idea is solid, their tech is good and the market they’re catering to is booming.

It’s my 6th largest position at 7.3%, and it’s a great company and has been a great investment.

Saul

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Thanks Saul
I will put it on my watchlist.
I know no one here is interested in AAOI but I’ve made 50% in a few months from it and still holding on.
Also long SHOP and would like to see a beat this week with that.
Looking forward to seeing your monthly portfolio.

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Looking forward to seeing your monthly portfolio.

Hi MusiCali, I posted it this weekend.

http://discussion.fool.com/my-portfolio-at-the-end-of-july-2017-…

Saul

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I know no one here is interested in AAOI but I’ve made 50% in a few months from it and still holding on. - MusiCali

Oh,no, you are not alone, MusiCali! I’ve had great success recently in trading AAOI. Bought at ~ $66. Sold at ~ $91.00. Bought back at ~ $89.00 (market sentiment seemed to shift). Sold at $98.89 (keeping a 1% stub). Stock volatility can be loads of fun if prices break one’s desired way, but the opposite often happens, too. I’m keeping a close eye on this stock, but I’m flying blind. I’ve got lots more research to do. In the meantime, I’m relying on charts and technical indicators to guide my opportunistic trades.

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Perhaps the current Talend isn’t the boring company you remember.

Well, ETL is boring (to me at least), but it’s good to hear that as a business they’re doing well for you.

It strikes me that Talend’s sales hook is with Hadoop - if you need ETL for Big Data (Hadoop/Cloud), they’re a better choice than companies like Informatica. One item to track is that if their Hadoop related business gets too big as a percentage, have they pigeon-holed themselves growth-wise?

As for the “Digital Plumbing” thing, well that’s that ETL is, but it’s not at all “only available to the bigger tech companies like Facebook, IBM, Apple, etc.” Price varies based on needs and volume, and there are many providers. Gartner points out that people think companies like Informatica charge more than they actually do. That’s good for Talend, of course.

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Smorg,

I keep tapping you for your insider IT knowledge. Feel free to ignore me if it becomes too bothersome.

It strikes me that Talend’s sales hook is with Hadoop - if you need ETL for Big Data (Hadoop/Cloud), they’re a better choice than companies like Informatica. One item to track is that if their Hadoop related business gets too big as a percentage, have they pigeon-holed themselves growth-wise?

I am under the impression that Hadoop is going to be widely implemented throughout businesses on an incredibly large scale. However, your statement seems to suggest otherwise.

Do what degree do you see Hadoop getting deployed?

Thanks a bunch.

A.J.

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Hadoop is often preferable if your data is really big. For many enterprises, however, your data sets won’t ever get that big. This article is pretty good for laymen: http://www.hostingadvice.com/how-to/what-is-hadoop/

Not everything will go to Hadoop. If you need real time processing, Hadoop probably won’t be your first choice, although with things like Spark and in-memory cascade processing performance can be vastly improved.

There’s no way to say how far Hadoop will go. Programmers often use the tools with which they’re familiar rather than the ones that are optimal for the situation at hand, so you’ll find instance where people are using Hadoop but shouldn’t as well as cases where people really should be using Hadoop but aren’t. Data sets do grow over time, so one needs to be careful about making decisions that are applicable not only for today, but in 5-10 years time. Then again, too much future planning may be a waste of time as your company shifts completely within the next 5 years.

BTW, I’m not an IT insider. I deal with IT on a close basis all the time, but I’ more on the software development side of things. I can handle basic areas, and am pretty good at translating things into laymen’s terms, but there are people on this board with much deeper knowledge than I on many many things.

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Despite my generally negative attitude about selling product to IT organizations, I’m long Talend. There’s a key sentence in the quote above in Saul’s initial post to this thread:

Generally this process requires some pretty in depth programming and database knowledge, but Talend has created a program which centralizes and streamlines this whole process. However, while the program is easier for a layman/non-programmer to use it still retains enough flexibility and extensibility to be used by more technical people.

A product of this nature that puts powerful functionality in the hands of the end user has, IMO, a unique position in the market. There’s not a user group in the world that doesn’t want to circumvent IT if possible (just look at the growth of use in Excel spreadsheets and Access databases in operational units - not always a good thing, like a mission critical finance spreadsheet I once reviewed that put three engines on a two engine vehicle. Ah, but for the details, they just couldn’t understand why their estimates were always so much higher than actuals).

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Yes, ETL (or ELT, depending on data volumes and where the most mips reside) is boring stuff. Not only is it boring, it is of absolutely no interest to anyone outside of an IT organization. But the well established players in the field (you referenced Informatica Power Center, that is one of several) were addressed in the recent Talend conference call quoted by Saul:

But if I were to make a bet between a large player really, getting strongly focused and executing well, versus a small player doing something unique and different, our bets remain on the small players, but they’re not yet at the scale where they’re able to have an impact on the market…

It’s the same conundrum Cisco finds itself in, their entire business is built around legacy h/w products. A disrupter like Arista is taking that market away by providing software switches rather than hardware switches which have to be manually inserted to racks and manually patched into network circuits. So much easier and more efficient to sit at a control console and reconfigure things with a mouse.

I have not studied Talend closely from a technology perspective (I used to do that sort of thing professionally, I’m retired now and happy to no longer do that sort of thing), but from what I’ve gleaned, Talend does have a disruptive product. This might well be one of those “silver bullets” that at least hits the target area if not a bullseye.

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For a lot of things like big data, there is an adoption curve. There is an early period where there is a lot of buzz, but few real production implementations. Longer term, it may turn into a standard where everyone is doing it, or it can turn out to be a flash in the pan and what everyone is doing is something else. This pattern has happened over and over again in the software biz. Right now, it seems like big data is a necessity, e.g., to incorporate IoT, but it is non-trivial that we are not very good at getting information out of these unstructured collections of large amounts of data. We are very good at getting information out of relational databases … although it would amaze you how bad people are at it in specific cases, despite how mature a discipline is. But, big data is still very new … seems important and there are some exciting examples … but what really happens from here is far from certain.

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I have not studied Talend closely from a technology perspective (I used to do that sort of thing professionally, I’m retired now and happy to no longer do that sort of thing), but from what I’ve gleaned, Talend does have a disruptive product. This might well be one of those “silver bullets” that at least hits the target area if not a bullseye.

Does anyone want to engage in a pro/con discussion along these lines? I don’t know the space nor Talend’s offerings enough to know whether it’s a disrupter or not, but I suspect not.

I’ll offer the following as “evidence,” but I want to make it clear that I don’t really have a position. My hope is that the discussion helps us all understand Talend and its products better.

Talend has this comparison blog page: https://www.talend.com/blog/2017/06/16/an-informatica-powerc…, which says:

Both tools are doing essentially the same thing – moving data from source to target but they go about achieving it in different ways. Both approaches have their merits. It is important to understand these pros and cons before designing your ETL job.

The first thing we need to understand is that even though both tools have a graphical user interface and both extract data from sources, transform and load it to a target, their implementations are different. Talend generates native Java code allowing you to run anywhere. PowerCenter, on the other hand, generates metadata that is stored in a RDBMS repository that their proprietary engine uses to run.

I haven’t used either company’s GUI tool, but this makes it sound like they’re more similar than different, with the main difference being the implementation, not how things are presented to users.

Here’s a more in-depth comparison based on user reviews: https://www.g2crowd.com/compare/informatica-integration-vs-t…

From what I can tell, the main differences are that Informatica is typically run on-Premise while Talend is setup specifically for the Cloud and Hadoop.

I could be/probably am wrong, but am offering this to have a good discussion. I don’t own Talend or any company in this space, so I don’t have a dog in this hunt.

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