Saul / Bear, or any other that wants to comment…
So the panic appears to be about one stock here, but I understand and really am comfortable with that one. Volatility is part of the game with high growth stocks. Especially ones that appear to have been on the momentum players lists. You take the good with the bad.
My question has more to do wth TLNDs earnings. Although the report seemed to be outstanding, one thing I don’t understand is the increasing losses. I get that they aren’t making money yet, but the losses seem to continue to grow with no real explanation other than we are spending to support future growth.
My question is to Saul, but others are free to answer. How is TLND different from other “story” stocks that you specifically talk about in the knowledge base. I won’t go back to pull the quote but there are a number of passages in there about I want to own a company that is making a profit. I am not interested in a stock that tells me that it is doing great and will be making a profit in a couple of years. Why doesn’t this describe TLND exactly? I understand not making a profit early in the growth phase but a huge revenue increase and an even bigger increase in losses?
Please don’t take this as a criticism. i understand the stocks, such as SHOP where it is not positive earning yet, but in SHOPs case, it is getting closer every quarter. Adjusted earnings are starting to grow and free cash flow is growing as well. In TLNDs case, losses seem to be growing as fast in the wrong direction as revenues are in the right direction.
I am just curious. When i saw the report come out, I thought the stock price might drop a bit. When it didn’t I was tempted to reduce or get out and switch into another name that I like better…
For the moment, I am thinking and trying to learn.
Randy
Long TLND and SHOP
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a huge revenue increase and an even bigger increase in losses?
Randy,
The answer was in my review: http://discussion.fool.com/bear39s-decq-earnings-thoughts-vol3-3…
Also, most of the Restlet acquisition costs were absorbed this quarter, although they still lost 0.01 less than expected, but they’ll lose much less in Q1 2018.
When they made the acquisition they changed their guidance for the Dec quarter. If you listen to the conference call, they even break down the one-time costs related to this acquisition.
Also as I said, It seems like they just ate a sub-par growth quarter to pay it forward to Q1 2018…
It seems that way because revenue was “only” up 36% in the Dec quarter, but they’re guiding for it to be up 39% at the midpoint, almost 41% at the high end, and they might do better than that.
So you can look forward to just what you’re asking for – higher revenue growth and lower expenses!
Bear
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Thanks Bear,
I did read the transcript. So the one time expenses with the acquisition weren’t excluded from the adjusted earnings? That is unusual, isn’t it. Seems like exactly the type of thing they should be taking out.
It does make me feel better, i may have to try to back that out myself and see how earnings would have looked.
Randy
Long TLND
So the one time expenses with the acquisition weren’t excluded from the adjusted earnings? That is unusual, isn’t it. Seems like exactly the type of thing they should be taking out.
Yeah, sorry, this was probably confusing:
When they made the acquisition they changed their guidance for the Dec quarter. If you listen to the conference call, they even break down the one-time costs related to this acquisition.
In the first sentence I was saying that they were planning for increased expenses – not necessarily just the one time costs broken down in this call, but the salaries of the people they acquired, investments in new products these people are working on, etc. I ran that thought together with the next sentence and it was confusing.
Point is, even with the on-going expenses from the acquisition investment and other investments, they are forecasting a much smaller loss next quarter!
Bear
My question is to Saul, but others are free to answer. How is TLND different from other “story” stocks that you specifically talk about in the knowledge base. I won’t go back to pull the quote but there are a number of passages in there about I want to own a company that is making a profit. I am not interested in a stock that tells me that it is doing great and will be making a profit in a couple of years. Why doesn’t this describe TLND exactly?
Randy, I think I’ve explained my feelings about this several times, but here’s another. There’s a big difference between a biotech with “great” prospects but no revenue, or a company with a terrific machine that they hope will make money in the future, and a company like Talend which has large, rapidly growing revenue (enterprise growing at over 100%). The difference is that if you are selling refrigerators, next year you have to sell them all over again to a different set of customers. On the other hand, a SaaS company sells a new customer and then has that same revenue, and usually more, every quarter, forever. They are well aware of this and thus feel that it makes sense for them to grab every customer they can, while they can, even if it meals plowing back all their gross margin profits into sales and marketing. I agree. They pay those marketing commissions this quarter, but they are only balanced by this quarter’s subscription payment. They may thus show no profit, or even a loss on the first quarter’s sales, depending on commissions. But, they’ll recognize another subscription payment next quarter, and the one after, and the one after, and the one after…without the commissions.
Hope that clears it up.
Saul
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