Talend Reports Second Quarter 2017 Financial Results

REDWOOD CITY, Calif.–(BUSINESS WIRE)–Talend
(NASDAQ: TLND), a global leader in cloud
and big
data
integration software, today released financial results for the
second quarter ended June 30, 2017.

“We continue to execute on our growth strategy, delivering 41% revenue
growth and continued operating margin improvement,” said Mike Tuchen,
Talend CEO. “Our subscription revenue grew 46% year-over-year in
constant currency. We saw large enterprise customers continue to adopt
Talend with a 56% year-over-year increase. Additionally, our dollar
based net expansion rate of 125% on a constant currency basis further
validates the long-term strategic value of the Talend Data Fabric.
Reinforcing our commitment to remain on the cutting edge of technology,
we released a major update of big data integration solution, including
market leading support for hybrid and multi-cloud enterprise IT
environments. As we enter the third quarter we continue to see growing
awareness and increasing enterprise adoption.”

Second Quarter 2017 Financial Highlights
(in thousands, except per share data)
       
Three Months Ended June 30, Six Months Ended June 30,
2016 2017 2016 2017
 
Revenue:
Total Revenue $ 25,381 $ 35,813 $ 48,137 $ 68,678
Year-over-Year % Change 38 % 41 % 36 % 43 %
 
Subscription Revenue $ 21,222 $ 30,280 $ 40,519 $ 57,819
Year-over-Year % Change 40 % 43 % 40 % 43 %
Year-over-Year % Change – on a constant currency basis 40 % 46 % 41 % 47 %
 
IFRS operating margin -30 % -18 % -28 % -20 %
Non-IFRS operating margin (1) -27 % -13 % -25 % -14 %
 
Net loss:
IFRS $ (8,059 ) $ (7,754 ) $ (13,327 ) $ (15,172 )
Non-IFRS (1) $ (7,328 ) $ (5,790 ) $ (11,885 ) $ (11,329 )
 
Net loss per share:
Net loss per share – basic and diluted $ (2.02 ) $ (0.27 ) $ (3.34 ) $ (0.53 )
Non-IFRS net loss per share $ (1.84 ) $ (0.20 ) $ (2.98 ) $ (0.39 )
 
Shares outstanding used in computing per share amounts – basic and
diluted
3,990 28,884 3,985 28,786
_________________

(1) Non-IFRS financial measures exclude stock-based
compensation, amortization of acquired intangibles and share
issuance costs related to follow-on offering.

 

For the second quarter of 2017, Talend substantially improved its
operating leverage with IFRS operating margin improving to -18% from
-30% and Non-IFRS operating margin improving to -13% from -27%, compared
to the second quarter of 2016.

A reconciliation of IFRS to non-IFRS financial measures is provided in
the financial tables below. An explanation of these measures is also
included below, under the heading Non-IFRS Financial Measures.

Recent Business Highlights

  • Became the first integration provider to support Cloudera Altus to
    simplify running large-scale data processing applications in the
    public cloud
  • Unveiled multi-cloud big data integration solution for major cloud
    platforms including Amazon, Google, and Microsoft Azure
  • Announced a native high-performance Snowflake Connector to streamline
    cloud data migration
  • Named award-winning software industry veteran Nora Denzel to Talend
    Board

Financial Outlook

Talend’s outlook assumes similar business conditions and foreign
exchange rates as of July 31, 2017.

Third quarter of 2017:

  • Total revenue is expected to be in the range of $37.0 million to $38.0
    million.
  • Non-IFRS loss from operations is expected to be in the range of $(5.9)
    million to $(4.9) million.
  • Net loss is expected to be in the range of $(9.3) million to $(8.3)
    million and non-IFRS net loss is expected to be in the range of $(6.0)
    million to $(5.0) million.
  • Net loss per basic and diluted share is expected to be in the range of
    $(0.32) to $(0.29) and non-IFRS net loss per share is expected to be
    in the range of $(0.21) to $(0.17).
  • Basic and diluted weighted average share count of 29.0 million shares.

Full year 2017:

  • Total revenue expectations are raised to the range of $146.2 million
    to $148.2 million.
  • Non-IFRS loss from operations is expected to be in the range of
    $(23.1) million to $(21.1) million.
  • Net loss is expected to be in the range of $(35.6) million to $(33.6)
    million and non-IFRS net loss is expected to be in the range of
    $(24.8) million to $(22.8) million.
  • Net loss per basic and diluted share is expected to be in the range of
    $(1.23) to $(1.16) and non-IFRS net loss per share is expected to be
    in the range of $(0.85) to $(0.78).
  • Basic and diluted weighted average share count is adjusted to 29.0
    million shares to reflect a longer holding period of options by our
    employees.

These statements are forward-looking and actual results may differ
materially. Refer to the section under the heading Forward-Looking
Statements below for information on the factors that could cause our
actual results to differ materially. An explanation of non-IFRS measures
is also included below under the heading Non-IFRS Financial Measures.

Conference Call Information

Talend will host a conference call and live webcast for analysts and
investors at 4:30 p.m. Eastern time on August 3, 2017. Parties in the
United States and Canada can access the call by dialing (888)-221-9591,
using conference code 3769170. International parties can access the call
by dialing (719)-325-2352 using conference code 3769170.

The webcast will be accessible on Talend’s investor relations website at http://investor.talend.com
for one year. A telephonic replay of the conference call will be
available through Thursday, August 10, 2017. To access the replay,
parties in the United States and Canada should call (866)-375-1919 and
enter conference code 3769170. International parties should call
(719)-457-0820 and enter conference code 3769170.

Non-IFRS Financial Measures

In addition to disclosing financial measures prepared in accordance with
International Financial Reporting Standards (‘‘IFRS’’) as issued by the
International Accounting Standard Board (‘‘IASB’’), this press release
and the accompanying tables contain certain non-IFRS financial measures.

Non-IFRS financial measures do not have any standardized meaning and are
therefore unlikely to be comparable to similarly titled measures
presented by other companies. Talend considers these non-IFRS financial
measures to be important because they provide useful indicators of its
performance and liquidity measures. These are key measures used by our
management and board of directors to understand and evaluate our core
operating performance and trends, to prepare and approve our annual
budget and to develop short and long-term operational plans. In
addition, investors often use similar measures to evaluate the
performance of a company. Non-IFRS financial measures are presented for
supplemental informational purposes only for understanding the company’s
operating performance. The non-IFRS financial measures should not be
considered a substitute for financial information presented in
accordance with IFRS, and may be different from non-IFRS financial
measures presented by other companies. Please see the reconciliation of
non-IFRS financial measures to the most directly comparable IFRS measure
included in this release below.

Non-IFRS gross profit is calculated by adjusting gross profit to
eliminate the impact of stock-based compensation expense and
amortization of acquired intangibles.

Non-IFRS gross margin, expressed as a percentage, is
calculated as non-IFRS gross profit divided by total revenue.

Non-IFRS loss from operations is calculated by adjusting loss
from operations to eliminate the impact of stock-based compensation
expense, amortization of acquired intangibles expense and share issuance
costs related to follow-on offering.

Non-IFRS operating margin, expressed as a percentage, is
calculated as non-IFRS loss from operations divided by total revenue.

Non-IFRS net loss is calculated by adjusting net loss to
eliminate the impact of stock-based compensation expense, amortization
of acquired intangibles and share issuance costs related to follow-on
offering.

Non-IFRS cost of revenue is calculated by adjusting cost of
revenue to eliminate the impact of stock-based compensation expense and
amortization of acquired intangibles.

Non-IFRS operating expenses is calculated by adjusting operating
expenses to eliminate the impact of stock-based compensation expense,
amortization of acquired intangibles and share issuance costs related to
follow-on offering.

Non-IFRS sales and marketing expense is calculated by adjusting
sales and marketing expense to eliminate the impact of stock-based
compensation expense and amortization of acquired intangibles.

Non-IFRS research and development expense is calculated by
adjusting research and development expense to eliminate the impact of
stock-based compensation expense and amortization of acquired
intangibles.

Non-IFRS general and administrative expense is calculated by
adjusting general and administrative expense to eliminate the impact of
stock-based compensation expense, amortization of acquired intangibles
and share issuance costs related to follow-on offering.

Free cash flow is defined as net cash from (used in) operating
activities less cash used in investing activities for acquisition of
property and equipment and intangible assets.

Subscription revenue growth on a constant currency basis
represents subscription revenue adjusted to exclude foreign currency
impacts. Subscription revenue on a constant currency basis is calculated
by applying the average monthly currency rates for each month in the
comparative period to the corresponding month in the current period. We
believe the disclosure of subscription revenue in constant currency
provides useful supplementary information to investors considering
potential significant fluctuations in currency rates.

Forward-Looking Statements

This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. Forward-looking statements
generally relate to future events or our future financial or operating
performance. In some cases, you can identify forward-looking statements
because they contain words such as “may,” “will,” “should,” “expects,”
“plans,” “anticipates,” “could,” “intends,” “target,” “projects,”
“contemplates,” “believes,” “estimates,” “predicts,” “potential” or
“continue” or the negative of these words or other similar terms or
expressions that concern our expectations, strategy, plans or
intentions. Forward-looking statements in this press release include,
but are not limited to, our anticipated operating results for the 2017
third quarter and fiscal year, our expectations regarding the evolution
of our marketplace and the goals for our Talend Data Fabric and our
belief that we are well-positioned to capitalize on the growing trends
of Hadoop, Spark, MapR Streams and cloud adoption. Our expectations and
beliefs regarding these matters may not materialize, and actual results
in future periods are subject to inherent risks, uncertainties and
changes in circumstance that are difficult or impossible to predict.
Consequently, you should not rely on these forward-looking statements.
Actual outcomes and results may differ materially from those
contemplated by these forward-looking statements as a result of such
uncertainties, risks, and changes in circumstances, including without
limitation risks and uncertainties related to our ability to continue to
deliver and improve our products and successfully develop new products;
customer acceptance and purchase of our existing products and new
products, including conversion of bookings to sales; our ability to
retain existing customers and generate new customers; the market for
data integration solutions, particularly our big data and cloud
integration solutions, not continuing to develop; competition from other
products and services; and general market, political, economic and
business conditions, including the fluctuation of foreign currency
exchange rates.

The forward-looking statements contained in this press release are also
subject to other risks and uncertainties, and the foregoing list of
factors is not exclusive. Additional risks and uncertainties that could
affect our financial and operating results are included under the
captions “Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operation” and elsewhere in our most
recent filings with the Securities and Exchange Commission, including
our most recent reports on Form 6-K and our Form 20-F filed with the SEC
on March 7, 2017. Our SEC filings are available on the Investors section
of Talend’s website at http://investor.talend.com and
on the SEC’s website at www.sec.gov. The
forward-looking statements in this press release are based on
information available to us as of the date hereof, and we disclaim any
obligation to update any forward-looking statements provided to reflect
any change in our expectations or any change in events, conditions, or
circumstances on which any such statement is based, except as required
by law.

About Talend

Talend (NASDAQ: TLND) is a next generation leader in cloud and big data
integration solutions that helps companies become data driven by making
data more accessible, improving its quality and quickly moving data
where it’s needed for real-time decision making. By simplifying big data
through these steps, Talend enables companies to act with insight based
on accurate, real-time information about their business, customers, and
industry. Talend’s innovative open-source solutions quickly and
efficiently collect, prepare and combine data from a wide variety of
sources allowing companies to optimize it for virtually any aspect of
their business. Talend is headquartered in Redwood City, CA. For more
information, please visit www.talend.com
and follow us on Twitter: @Talend.

 
TALEND S.A.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER DATA
(in thousands, except per share amounts)
       
Three Months Ended June 30, Six Months Ended June 30,
2016 2017 2016 2017
 
Revenue
Subscriptions $ 21,222 $ 30,280 $ 40,519 $ 57,819
Professional services 4,159   5,533   7,618   10,859  
Total revenue 25,381 35,813 48,137 68,678
Cost of revenue
Subscriptions 3,065 3,970 5,559 7,631
Professional services 3,333   4,185   6,128   8,502  
Total cost of revenue 6,398 8,155 11,687 16,133
Gross profit 18,983 27,658 36,450 52,545
Operating expenses
Sales and marketing 16,946 20,820 31,822 40,554
Research and development 4,889 6,447 9,166 12,102
General and administrative 4,681   6,891   8,940   13,440  
Total operating expenses 26,516   34,158   49,928   66,096  
Loss from operations (7,533 ) (6,500 ) (13,478 ) (13,551 )
Finance income (expense) (468 ) (1,228 ) 234   (1,569 )
Loss before income tax expense (8,001 ) (7,728 ) (13,244 ) (15,120 )
Income tax (expense) benefit (58 ) (26 ) (83 ) (52 )
Net loss for the period $ (8,059 ) $ (7,754 ) $ (13,327 ) $ (15,172 )
 
Shares outstanding used in computing per share amounts – basic and
diluted
3,990 28,884 3,985 28,786
 
Net loss per share – basic and diluted $ (2.02 ) $ (0.27 ) $ (3.34 ) $ (0.53 )
 
 
UNAUDITED STOCK-BASED COMPENSATION AND AMORTIZATION OF ACQUIRED
INTANGIBLES EXPENSE
Total stock-based compensation and amortization of acquired
intangibles expense included in the Unaudited Consolidated
Statements of Operations is as follows:
 
Three Months Ended June 30, Six Months Ended June 30,
2016 2017 2016 2017
(unaudited)
Cost of revenue – subscriptions $ 17 $ 74 $

34

$ 95
Cost of revenue – professional services 17 42

32

81
Sales and marketing 210 676

389

1,078
Research and development 128 355

274

554
General and administrative 359   818  

713

  1,325  
Total stock-based compensation and amortization of acquired
intangibles expense
$ 731   $ 1,965   $

1,442

  $ 3,133  
 
 
TALEND S.A.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION

(in thousands)
     
December 31, 2016 June 30, 2017
 
Assets
Current assets:
Cash and cash equivalents $ 91,023 $ 95,410
Trade receivables, net 38,016 33,309
Other current assets   6,559     7,190  
Total current assets 135,598 135,908
Non-current assets:
Property and equipment, net 2,543 2,967
Goodwill 2,912 3,157
Intangible assets, net 509 390
Other non-current assets 3,089   3,116  
Total non-current assets   9,053     9,630  
Total assets $ 144,651   $ 145,539  
Liabilities
Current liabilities:
Trade and other payables $ 21,270 $ 23,300
Provisions 759 642
Deferred revenue 74,119 87,675
Borrowings   143     9  
Total current liabilities 96,291 111,626
Non-current liabilities:
Provisions 553 679
Deferred revenue 29,776 25,775
Borrowings   6     6  

Total non-current liabilities

  30,335     26,460  
Total liabilities   126,626     138,086  
Equity
Share capital 2,980 3,011
Share premium 194,992

197,036

Foreign currency translation reserve 1,551 1,048
Share-based payments reserve 7,574 10,552

Other reserves

50

Accumulated losses   (189,072 )   (204,244 )
Total shareholders’ equity (deficit)   18,025     7,453  
Total liabilities and shareholders’ equity (deficit) $ 144,651   $ 145,539  
 
 
TALEND S.A.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
   
Six Months Ended June 30,
2016 2017
 
Cash flows from operating activities:
Net loss for the period $ (13,327 ) $ (15,172 )
Adjustments to reconcile net loss to net cash from operating
activities:
Depreciation 565 710
Amortization of intangible assets 159 154
Unrealized gain foreign exchange (650 ) 1,439
Non-cash finance costs 44

Stock-based compensation 1,281 2,978
Income tax for the year (83 ) 52
Changes in operating assets and liabilities:
Trade receivables (1,545 ) 6,371
Other assets (482 ) (253 )
Trade and other payables 1,469 341
Provisions (87 ) 101
Deferred income   13,250     5,139  
Net cash from operating activities   594     1,860  
Cash flows from investing activities:
Acquisition of property and equipment   (922 )   (998 )
Net cash used in investing activities   (922 )   (998 )
Cash flows from financing activities:
Proceeds from issuance of ordinary shares 288 2,125
Deferred share issuance costs (854 )
Proceeds from borrowings 2,000
Repayment of borrowings   (47 )   (138 )
Net cash from financing activities   1,387     1,987  
Net increase in cash and cash equivalents 1,059 2,849
Cash and cash equivalents at beginning of the period 6,930 91,023
Effect of exchange rate changes on cash and cash equivalents   456     1,538  
Cash and cash equivalents at end of period $ 8,445   $ 95,410  
 
 
TALEND S.A.
IFRS to Non-IFRS Reconciliations
(In thousands)
(unaudited)
       
The following tables detail the reconciliation of IFRS financial
measures to non-IFRS financial measures included in this release:
 
 
Loss from operations: Three Months Ended June 30, Six Months Ended June 30,
2016 2017 2016 2017
 
Loss from operations $ (7,533 ) $ (6,500 ) $ (13,478 ) $ (13,551 )
Stock-based compensation expense 650 1,886 1,281 2,978
Amortization of acquired intangibles 81 78 161 155
Share issuance costs related to follow-on offering               710  
Non-IFRS loss from operations $ (6,802 ) $ (4,535 ) $ (12,036 ) $ (9,708 )
 
Non-IFRS operating margin -27 % -13 % -25 % -14 %
 
Net loss: Three Months Ended June 30, Six Months Ended June 30,
2016 2017 2016 2017
 
Net loss $ (8,059 ) $ (7,754 ) $ (13,327 ) $ (15,172 )
Stock-based compensation expense 650 1,886 1,281 2,978
Amortization of acquired intangibles 81 78 161 155
Share issuance costs related to follow-on offering               710  
Non-IFRS net loss $ (7,328 ) $ (5,790 ) $ (11,885 ) $ (11,329 )
 
 
Share count:
Weighted-average shares outstanding – basic and diluted 3,990 28,884 3,985 28,786
 
Net loss per share:
Net loss per share – basic and diluted $ (2.02 ) $ (0.27 ) $ (3.34 ) $ (0.53 )
Non-IFRS net loss per share $ (1.84 ) $ (0.20 ) $ (2.98 ) $ (0.39 )
 
 
 
Gross profit: Three Months Ended June 30, Six Months Ended June 30,
2016 2017 2016 2017
 
Gross profit $ 18,983 $ 27,658 $ 36,450 $ 52,545
Stock-based compensation expense 34 116 66 176
Amortization of acquired intangibles                
Non-IFRS gross profit $ 19,017   $ 27,774   $ 36,516   $ 52,721  
 
IFRS gross margin 75 % 77 % 76 % 77 %
Non-IFRS gross margin 75 % 78 % 76 % 77 %
 
 
Cost of revenue: Three Months Ended June 30, Six Months Ended June 30,
2016 2017 2016 2017
 
Cost of revenue $ (6,398 ) $ (8,155 ) $ (11,687 ) $ (16,133 )
Stock-based compensation expense 34 116 66 176
Amortization of acquired intangibles                
Non-IFRS cost of revenue $ (6,364 ) $ (8,039 ) $ (11,621 ) $ (15,957 )
 
 
Operating expenses: Three Months Ended June 30, Six Months Ended June 30,
2016 2017 2016 2017
 
Operating expenses $ (26,516 ) $ (34,158 ) $ (49,928 ) $ (66,096 )
Stock-based compensation expense 616 1,770 1,215 2,802
Amortization of acquired intangibles 81 78 161 155
Share issuance costs related to follow-on offering               710  
Non-IFRS operating expenses $ (25,819 ) $ (32,309 ) $ (48,552 ) $ (62,430 )
 
 
Sales and marketing expense: Three Months Ended June 30, Six Months Ended June 30,
2016 2017 2016 2017
 
Sales and marketing expense $ (16,946 ) $ (20,820 ) $ (31,822 ) $ (40,554 )
Stock-based compensation expense 210 676 389 1,078
Amortization of acquired intangibles                
Non-IFRS sales and marketing expense $ (16,736 ) $ (20,143 ) $ (31,433 ) $ (39,476 )
 
 
Research and development expense: Three Months Ended June 30, Six Months Ended June 30,
2016 2017 2016 2017
 
Research and development expense $ (4,889 ) $ (6,447 ) $ (9,166 ) $ (12,102 )
Stock-based compensation expense 94 322 207 488
Amortization of acquired intangibles   34     33     67     66  
Non-IFRS research and development expense $ (4,761 ) $ (6,092 ) $ (8,892 ) $ (11,548 )
 
 
General and administrative expense: Three Months Ended June 30, Six Months Ended June 30,
2016 2017 2016 2017
 
General and administrative expense $ (4,681 ) $ (6,891 ) $ (8,940 ) $ (13,440 )
Stock-based compensation expense 312 773 619 1,236
Amortization of acquired intangibles 47 45 94 89
Share issuance costs related to follow-on offering               710  
Non-IFRS general and administrative expense $ (4,322 ) $ (6,073 ) $ (8,227 ) $ (11,405 )
 
 
TALEND S.A.
Free Cash Flow
(In thousands)
(unaudited)
       

The following table details our free cash flow for the three and
six months ended June 30, 2016 and 2017, and a reconciliation to
the most directly comparable IFRS measure:

 
Free cash flow:
Three Months Ended June 30, Six Months Ended June 30,
2016 2017 2016 2017
 
Net cash from operating activities (1,618 ) (618 ) 594 1,860
Less: Acquisition of property and equipment   445     559     922     998
Free cash flow $ (2,063 ) $ (1,177 ) $ (328 ) $ 862
 
 
TALEND S.A.
Constant Currency Reconciliation
(In thousands)
(unaudited)
     

The following table details our constant currency reconciliation
for the three months ended June 30, 2017 to the most directly
comparable IFRS measure:

 

 
 
Three Months Ended June 30,

Year-over-Year
Change

2016 2017  
 
Subscription revenue as reported 21,222 30,280 43 %
Conversion impact U.S. Dollar/other currencies     810  
Subscription revenue on a constant currency basis $ 21,222 $ 31,090 46 %
 
       
TALEND S.A.
IFRS to Non-IFRS Reconciliations for EPS Guidance
(In millions)
(unaudited)
 
The following tables detail the reconciliation of IFRS financial
measures to non-IFRS financial measures included in this release:
 
Guidance for the third quarter and full year 2017:
Three Months Ended September 30, 2017 Year Ended December 31, 2017
Low High Low High
 
Loss from operations $ (9.3 ) $ (8.3 ) $ (33.9 ) $ (31.9 )
Stock-based compensation expense 3.2 3.2 9.8 9.8
Amortization of acquired intangibles 0.1 0.1 0.3 0.3
Share issuance costs related to follow-on offering           0.7     0.7  
Non-IFRS loss from operations $ (5.9 ) $ (4.9 ) $ (23.1 ) $ (21.1 )
 
Three Months Ended September 30, 2017 Year Ended December 31, 2017
Low High Low High
 
Net loss $ (9.3 ) $ (8.3 ) $ (35.6 ) $ (33.6 )
Stock-based compensation expense 3.2 3.2 9.8 9.8
Amortization of acquired intangibles 0.1 0.1 0.3 0.3
Share issuance costs related to follow-on offering           0.7     0.7  
Non-IFRS net loss $ (6.0 ) $ (5.0 ) $ (24.8 ) $ (22.8 )
 
Shares outstanding used in computing IFRS and Non-IFRS per share
amounts
29.0 29.0 29.0 29.0
 
Net loss per share:
Net loss per share – basic and diluted $ (0.32 ) $ (0.29 ) $ (1.23 ) $ (1.16 )
Non-IFRS net loss per share $ (0.21 ) $ (0.17 ) $ (0.85 ) $ (0.78 )
 
 
Due to rounding, numbers presented throughout this document may not
add up precisely to the totals provided and percentages may not
precisely reflect the absolute figures.
 

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