[http://investor.talend.com/phoenix.zhtml?c=254382&p=irol...](http://investor.talend.com/phoenix.zhtml?c=254382&p=irol-newsArticle&ID=2362301)
This doesn't look like happiness to me. I need the more experienced folks on the board to help me out.
**Second Quarter 2018 Financial Highlights**
(in thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
2017 ** 2018 2017 ** 2018
Revenue:
Total Revenue $35,813 $49,755 $68,678 $96,568
Year-over-Year % Change 41 % 39% * 43 % 41% *
Subscription Revenue $30,280 $42,027 $57,819 $81,813
Year-over-Year % Change 43 % 39% * 43 % 41% *
Year-over-Year % Change 46 % 34 % 44 % 34 %
- on a constant currency basis
IFRS operating margin -18 % -18 % -20 % -20 %
Non-IFRS operating margin (1) -13 % -7 % -14 % -9 %
Net loss:
IFRS $(7,754 ) $(8,739 ) $(15,172 ) $(18,854 )
- basic and diluted
Non-IFRS (2) $(5,790 ) $(3,553 ) $(11,329 ) $(8,541 )
Net loss per share:
Net loss per share $(0.27 ) $(0.29 ) $(0.53 ) $(0.64 )
Non-IFRS net loss per share $(0.20 ) $(0.12 ) $(0.39 ) $(0.29 )
If I'm reading this right.... and I freely admit I am new to this...
1) Total Revenue Growth slowed 2pts
2) Subscription Growth slowed 4 to 10pts
3) Loss per share increased... ? Don't understand the IFRS/Non-IFRS stuff.
If SHOP was a sell for decelerating growth, is not TLND a sell for the same reason???
Trying to learn from the Masters.
Thanks,
Mark
9 Likes
Here was the thesis I surmised from SHOP…
“we believe that deceleration of growth rates and reduction in margins will result in lower multiples being afforded the stock and therefore, we’d expect share price stagnation or decline.”
Is this the case for TLND or no? If not, what distinguishes SHOP from TLND in the numbers?
Seems the decelerating growth rates is the same at the very least.
Mark
2 Likes
going through the conference call now, maybe the differentiator is a dollar based net expansion rate of 124%… rather impressive.
Just trying to understand how you guys think.
M
Still working through this… operating margins improved.
Thus the thesis would still hold. While revenue growth slowed, margins improved and net dollar expansion rate remained high.
The share price is getting trimmed… I assume on the growth rate slowing. Curious to hear other’s opinions. I’ll stop now…
M
ProdigalFool17: If I’m reading this right… and I freely admit I am new to this…
1) Total Revenue Growth slowed 2pts
2) Subscription Growth slowed 4 to 10pts
3) Loss per share increased… ? Don’t understand the IFRS/Non-IFRS stuff.
If SHOP was a sell for decelerating growth, is not TLND a sell for the same reason???
IFRS is an international version of GAAP. Thus, just as we normally look at Non-GAAP numbers, for Talend you want to pay attention to Non-IFRS.
As for the rest … I have been wondering at the market reaction myself, so here is what I see:
I am reasonably happy with this quarter. Growth is slowing, but not by a large amount. Currency conversion rates are unfavorable and thus hurting revenue but nothing unexpected or excessive. This is the cost of business for an international company and if you look at the subscription revenue on a constant currency basis you will note that this quarter is growing inline with previous quarters.
**Subscription Revenue (on a constant currency basis)**
1 2 3 4
2016 44.00% 48.00%
2017 47.00% 46.00% 41.00% 34.00%
2018 35.00% 34.00%
**FY FQ Revenue Revenue TTM Revenue Growth**
2016 2 $ 25,400.00
2016 3 $ 27,391.00
2016 4 $ 30,456.00
2017 1 $ 32,865.00 $ 116,112.00
2017 2 $ 35,813.00 $ 126,525.00
2017 3 $ 38,398.00 $ 137,532.00
2017 4 $ 41,519.00 $ 148,595.00
2018 1 $ 46,813.00 $ 162,543.00 139.99%
2018 2 $ 49,800.00 $ 176,530.00 139.52%
__2018 3* $ 52,600.00 $ 190,732.00 138.68%__
__2018 4* $ 57,387.00 $ 206,600.00 139.04%__
_* Projected, assuming best case scenario_
Revenue growth seems reasonable and forward projections (assuming the high end of guidance) look like more of the same as we’ve seen before. The only item worthy of note is that projected YoY revenue growth for next quarter will be very low. Yet as the year-end projection is inline with recent quarters this does not seem a big area for concern.
**FY FQ EPS EPS TTM**
2016 2 $ (1.84)
2016 3 $ (0.20)
2016 4 $ (0.13)
2017 1 $ (0.19) $ (2.36)
2017 2 $ (0.20) $ (0.72)
2017 3 $ (0.11) $ (0.63)
2017 4 $ (0.28) $ (0.78)
2018 1 $ (0.18) $ (0.77)
2018 2 $ (0.12) $ (0.69)
__2018 3* $ (0.09) $ (0.67)__
__2018 4* $ (0.06) $ (0.45)__
_* Projected, assuming best case scenario_
I have always been a bit concerned about Talend’s high losses. If a company is operating at a loss in a high growth environment I want a clear indication that they are moving towards profitability. The current EPS projects seem to indicate the company is moving in a good direction.
Another important note is their guidance. Here is the full year guidance provided this quarter and the previous quarter:
Full year 2018 (as of 10 May 2018)
• Total revenue is expected to be in the range of $202.6 million to $204.6 million.
• Loss from operations is expected to be in the range of $(32.4) million to $(30.4) million and non-IFRS loss from operations is expected to be in the range of $(13.8) million to $(11.8) million.
• Net loss is expected to be in the range of $(33.3) million to $(31.3) million and non-IFRS net loss is expected to be in the range of $(14.8) million to $(12.8) million.
• Net loss per basic and diluted share is expected to be in the range of $(1.11) to $(1.04) and non-IFRS net loss per share is expected to be in the range of $(0.49) to $(0.43).
• Basic and diluted weighted average share count of 30.0 million shares.
Full year 2018: (as of 6 August 2018)
• Total revenue is expected to be in the range of $204.6 million to $206.6 million.
• Loss from operations is expected to be in the range of $(39.3) million to $(37.3) million and non-IFRS loss from operations is expected to be in the range of $(15.1) million to $(13.1) million.
• Net loss is expected to be in the range of $(39.7) million to $(37.7) million and non-IFRS net loss is expected to be in the range of $(15.5) million to $(13.5) million.
• Net loss per basic and diluted share is expected to be in the range of $(1.32) to $(1.26) and non-IFRS net loss per share is expected to be in the range of $(0.52) to $(0.45).
• Basic and diluted weighted average share count of 30.0 million shares.
Look at the lines I have highlighted in bold. Revenue guidance has increased for FY2018 while EPS guidance has decreased. This means operating margins are getting worse. Not by a lot, but enough to take note of. Overall, operating margins are still headed in the right direction.
Going through the transcript of the earnings conference call, I noted two interesting bits:
In Q2, our overall dollar-based net expansion rate was 124% on a constant-currency basis. This is the 17th consecutive quarter that we’ve had a dollar-based net expansion rate over 120%.
I have not been tracking dollar-based net expansion rate as they report the number only in the earnings call and not the press release, but a quick check back through transcripts indicates this is a good number inline with previous quarters.
Our subscription revenue grew by 39% year-over-year, driven in large part by our strong growth of big data and cloud, and strong performance in Europe.
The growth in Europe is a big point in the call. This is fantastic, but it also seems likely it is contributing to the poor conversion rate (strong Euro) and slightly higher projected operating margins.
Conclusion
The market after-hours reaction (-8.62%) seems excessive. I don’t see anything amazing yet I also don’t see anything particularly bad. My best guess for the bad market reaction is the combination of slightly slowing growth and less than stellar guidance for the remainder of the year.
I don’t see anything bad but I don’t see anything particularly good either, especially compared to my other investments. This leaves me inclined to shift my money out of Talend into one of my companies with better prospects…
Any comments? Alternate interpretations to what I am seeing?
14 Likes
I don’t see anything bad but I don’t see anything particularly good either, especially compared to my other investments. This leaves me inclined to shift my money out of Talend into one of my companies with better prospects…
Hi othalan, When I sold out of Talend in March I felt pretty much the same way. I wrote:
Talend, had nothing wrong at all (except a lot of stock-based compensation), but I needed cash to add to some companies that were selling off unreasonably… Talend was sitting still during the sell-off, buoyed by hope of an acquisition after Mulesoft was acquired. Talend may be acquired, at a good premium, but that’s not why I buy stocks. I have nothing against it and may buy back in sometime in the future, depending.
I haven’t been tempted to buy back particularly because all my current positions are doing just fine for the moment.
Saul
11 Likes