Talend S.A.
Q1 2017 Earnings Call Transcript

Published: 12 May 2017

[Operator:]

Good day and welcome to the Talend First Quarter 2017 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Cynthia Hiponia. Please go ahead, ma'am.

[Cynthia Hiponia:]

Thank you. This is Cynthia Hiponia, Talend Investor Relations, and I am pleased to welcome you to Talend's conference call to discuss its first quarter 2017 earnings results. With me on the call today is Talend's CEO, Mike Tuchen; and CFO, Thomas Tuchscherer. During the course of today's presentation, our executives will make forward-looking statements within the meaning of the federal securities laws. Forward-looking statements generally relate to future events or our future financial or operating performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from those contemplated by these forward-looking statements. Forward-looking statements in this presentation include, but are not limited to, statements related to our business and financial performance and expectations and guidance for future periods, our expectations regarding our strategic product initiatives and the related benefits, and our expectations regarding the market. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in the press release that we issued earlier today, as well as those more fully described in our filings with the Securities and Exchange Commission including the Annual Report on Form 20-F filed on March 07, 2017. The forward-looking statements in this presentation are based on information available to us as of the date hereof, and you should not rely on them as predictions of future events, and we disclaim any obligation to update any forward-looking statements except as required by law. Please note that other than revenue, or as otherwise specifically stated, the financial measures to be discussed on this call will be on a non-IFRS basis. The non-IFRS financial measures are not intended to be considered in isolation, or as a substitute for results prepared in accordance with IFRS. We have provided a reconciliation of these non-IFRS financial measures to the most directly comparable IFRS financial measure in our press release. Let me now turn the call over to Mike Tuchen, Talend's CEO.

[Mike Tuchen:]

Thanks, Cynthia, and thank you all for joining us today. 2017 is off to a strong start. We achieved record revenue of $32.9 million in the first quarter up 44% year-over-year while substantially improving our operating leverage. Some of the highlights of the March quarter include our industry leading big data and cloud solutions delivered a combined subscription revenue growth of over 100% year-over-year for the ninth consecutive quarter. Our subscription revenue grew 47% on a constant currency basis. Our non-IFRS operating margins include the minus 16% in the quarter compared to minus 23% in the year ago period. We were free cash flow positive in the first quarter and we completed the successful follow-on for existing shareholders. Our performance in the first quarter was driven by strong adoption by enterprise companies, in certain international markets and growth of our installed base drove added expense strategies. Let me now walk you through some key customer wins and expansions in Q1. Large global enterprise companies are continuing to adopt Talend. In the first quarter we saw 60% increase in the number of enterprise customers over the same period last year. And notable example of this is the addition of one of the world's leading suppliers of greeting cards [ph] with operations in over 60 countries. This fortune 500 company chose Hadoop as a strategic platform and selected Talend for its big data integration capabilities to consolidate their 30 year [ph] key systems and create better insights into digital ARPU, customer churn and global procurement initiatives. In Q1 we also signed one of the world's largest [indiscernible] company. Talend and Hortonworks were chosen to centralize data analytics for products, customers, raw materials, transactions, trades and forecasting. One of the oldest universities of America selected Talend to create new research, learning and education delivery models as well as help them evolve and become more of an on-demand business. And the cloud service strategy helped them select Talend to increase scalability, agility and efficiency. We continue to grow internationally. In the UK, Tesco, the fifth largest food retailer in the world is expanding [indiscernible] to Talend to create a standard product catalog to optimized inventory and supply chain management. Tesco elected Talend through our open source approach and the ability to adapt to meet future deals. Another new international customer in the quarter is Argos a leading UK retailer. They selected Talend to manage the integration of customer data following the recent merger of Argos and Sainsbury's which together operate over 2000 stores. The project will allow Argos to create a single source of customer data and remove the costs associated with maintaining separate systems. Talend was selected due to the open source nature of our solution which offers greater flexibility towards supporting their evolving requirements. We're also pleased with the growth that we're seeing in the Asia Pacific region. In Australia [indiscernible] an existing customer of Talend selected Talend to support migration of their core banking systems that will change every aspect of the bank's operations and their back end systems and their customers' digital experience. Talend's data integration and data quality capabilities are all in considered [indiscernible] financial and debt tracking systems will become even more critical in the next phase of the core banking migration. Our success in emerging markets is a key growth driver for Talend as we continue investing in sales and marketing in those regions. Recently we opened an office in Bangalore, India. Bangalore is an important hub for Talend with its [indiscernible] development teams of many of our largest customers. Here we will also be tremendously helpful as we continue to deepen and extend our relationships with large SI partners like Accenture, Capgemini, Cognizant and Wipro. They all have significant presence in India. I am excited by our new India presence which I view as an important part of our overall global business strategy. We believe our ability to retain and expand subscription revenue over time is an indicator of our position as a strategic solutions provider and the long term value of the Talend Data Fabric. In the first quarter our dollar base and that expansion rate was 125% on a constant currency basis. This is the 12th quarter in a row that we've had a net dollar base expansion rate over the 120%. In the third and fourth quarters of 2016 we announced that HP has offered Talend then expanded their use of Talend to support their new Hadoop based enterprise data warehouse project. In Q1 HP increased their investment in Talend again to support a new base of the project as part of their initiative to modernize their IP infrastructure. These sustained investments in one of the world's largest PC manufacturers underscores Talend's increasing ability to meet the needs of the largest enterprises in the world. In addition, we signed and expansion deal with one of Talend's longest standing financial services customers and an expansion of one of the top 10 pharmaceutical and bioscience companies. These customer wins and expansions are strong market validations of the leadership of Talend's next generation integration solutions. Reinforcing our commitment to remain on the cutting edge of technology, in March we announced the First Apache Beam Powered solution for self service Big Data Preparation. Apache Beam is an integrated technology initiated by Google and now an Apache open source project co-sponsored by Talend. Beam offers a unified programming model for executing batch and streaming data processing pipelines that are portable across a variety of runtime platforms, such as Spark, Blink [ph], Apax [ph] and Google data cloud. Talend has been collaborating on the development of Apache Beam with Google and others since 2015. We see this as the natural extension of our [indiscernible] platform and a way to provide even greater data agility to our customers. Moving forward Apache Beam will become a key element of the Talend Data Fabric. During the quarter we also announced that Talend Data Fabric is certified on MapR Converged Data Platform. We also support the MapR platform in the latest version of our big data Sandbox. Additionally we became the first integration provider to support MapR screens, the new big data screening system. Support for technologies like Apache Beam as well as the new capabilities from MapR are examples of our [indiscernible] to ensure Talend customers can leverage the validated cloud and big data market innovations. We continue to advance our relationships with our partners. One of the world's leading providers of IT consulting services has committed to train more than 1500 of their associates on Talend's solutions. We're delighted that a recognized leader in big data and cloud services has shown to align with Talend and make a substantial commitment. It is this type of support from our partner community that has helped quadruple the number of consultants trained on Talend in 2016 versus 2015. It is also in our view a clear reflection of the interest that SI is receiving for Talend from large enterprise customers. And we saw commitment this year from our leading SI we expect that the number of consultant trained in 2017 to triple or more than 2016. Adding this many skilled Talend consultants in the market will continue to support our growth with the large enterprise customers globally. And finally, in the first quarter we completed a successful follow-on offering for existing shareholders. We are pleased with the participation from both new and existing investors which allowed us to upsize the offering and increase support. In summary, we're pleased with our cloud start in 2018. Let me now turn the call over to Thomas who will discuss our financial results in more detail and provide our outlook for Q2 and the full year of 2017.

[Thomas Tuchscherer:]

Thanks Mike. Today, I will review the financial results for the first quarter of fiscal year 2017 as well as provide our outlook for the second quarter and fiscal year 2017. Total revenue for the first quarter was $32.9 million, an increase of $10.1 million from the first quarter of 2016 representing 44% year-over-year growth. Our subscription revenue for the quarter was $27.5 million an increase of $8.2 million from the first quarter of 2016 or 43% year-over-year growth. In constant currency subscription revenue grew 47% year-over-year. The strong demand for our big data and cloud offerings continue to drive growth in subscription revenue which together continue to grow by over 100% year-over-year for the ninth quarter in a row. Americas represented for the first time half of our subscription revenue and grew at 49% year-over-year. Due to our French founding the U.S. is an ex-French market for us and we believe that it continues to present great growth potential. Professional services revenue for the quarter was $5.3 million an increase of $1.9 million from the prior year quarter. The increase was driven primarily due to implementation services for new customers. For the quarter ending March 31, 2017 our net dollar base expansion rate was 125% in constant currency. I would like to remind investors that our net dollar based expansion rate has been above 120% in constant currency for new 12 consecutive quarters. You will also remember that it can fluctuate quarter-over-quarter reflecting the mix of new versus existing customers in the reported quarter. Before moving to profit and loss items, I would like to point out that unless otherwise specified all of the expense and profitability metrics that I’ll be discussing going forward are non-IFRS results. A full reconciliation between IFRS and non-IFRS results can be found in our earnings press release issued today and available on our website. Our total gross margin for the first quarter was 76%. Operating expenses for the first quarter were $30.1 million, an increase of $7.4 million or 32% year-over-year. The increase in dollar terms was driven primarily by an increase in sales and marketing expenses. Sales and marketing expenses for the quarter were $19.3 million, an increase of 32% year-over-year. The increase was driven by greater headcount as we continue to add regional quota carrying sales positions as we invest in growth. This quarter we had the opportunity and decided to accelerate the recruitment of quota carrying headcounts relative to our internal plan. Bringing on quota carrying headcount earlier in the year allowed them to participate in our annual sales training event and start their productivity ramp sooner. Our sales expenses for the quarter reflect this high investment as well as our expanded annual sales training event. Our sales and marketing headcount increased from the prior year by 36% so approximately 299 employees. R&D expenses for the quarter were $5.5 million, an increase of 32% year-over-year. The increase was driven by an increase in staff expenses due to greater headcount especially in France. Our new R&D site in Nantes, France has now been open for slightly more than a year and we have been able to increase headcount to close to 40 employees. Our R&D headcount reached 201 employees at the end of this quarter representing 18% growth over the same period of last year. G&A expenses for the quarter were $5.3 million an increase of 37% year-over-year. The increase was largely attributable to increase in headcount to support our growth and the incremental requirements of being a publicly listed company. Our G&A headcount reached 89 employees on March 31, 2017 representing 21% growth from the same quarter in the prior year. On an IFRS basis our G&A expenses for the quarter included $0.7 million of nonrecurring professional services fees related to our successful March follow-on offering. These were included in our IFRS income statement as we decided not to include any share component in our offering due to the cash positive nature of our business and to dilution to shareholders. We ended the quarter with approximately 722 full time employees compared to 566 employees at the end of the first quarter from the prior year. We incurred an operating loss for the quarter of $5.2 million compared to the first quarter of the prior year's operating loss of $5.2 million. Our business expense substantial improvement in operating leverage as our operating margin improved to minus 16% to minus 23% in the same quarter a year ago. Net loss for the quarter was $5.5 million compared to a net loss of $4.6 million in the prior year period. Free cash flow for the quarter was $2 million increasing from $1.7 million from the first quarter of the prior year. We intend to continue our balanced plan approach and going forward we anticipate remaining free cash flow positive on an annualized basis with normal seasonal quarterly fluctuations. Turning to the balance sheet; as of March 31, 2017, we had cash and cash equivalents of $95 million. As we discussed in our IPO and on our prior earnings call, I would like to remind investors that we do not view calculated billings as a good leading indicator of the performance of our business. Calculated billings does not take into account changes in pre-billed subscription duration, professional services and certainly renewal dynamics. We provide forward guidance on a revenue basis as we believe this is a more meaningful and accurate reflection of our business operation and financial position. As discussed in our prior earnings calls we are aiming for pre-billed subscription duration of 1.25 years for our new business sales in 2017. This quarter pre-billed subscription duration for new business sales came in at approximately 1.3 years. Before I give our guidance I would like to remind our investors of some key financial highlights. Our net dollar based expansion rate has been above 120% for now 12 consecutive quarters reflecting our efficient open source supported regeneration approach and strong customer retention and up-sell. Our subscription revenue grew by 47% in constant currency partly driven by 100% plus revenue growth of our big data and cloud offerings. Our operations have shown substantial operating leverage as our operating margin improved to minus 16% from minus 23%. This quarter reflects our strategy to continue to seize the opportunity that we see in the market for our products by investing in growth while at the same time continue to improve our operating leverage. We are committed to our balanced planned approach of maximizing revenue growth and continuing to be free cash flow breakeven to slightly positive on an annualized basis. Now for the Q2 and 2017 fiscal year guidance which assumes similar business conditions and foreign exchange rates as of March 31, 2017. For the second quarter 2017 we expect total revenue in the range of $34.8 million to $35.8 million, non-IFRS loss from operations to be in the range of $6.9 million to $5.9, net loss to be in the range of $9.5 million to $8.5 million and non-IFRS net loss to be in the range of $7 million to $6 million, net loss per basic and diluted share to be in the range of $0.33 to $0.29 and non-IFRS net loss per share to be in the range of $0.24 to $0.21, basic and diluted weighted average share count of 28.9 million shares. For the full year 2017 our guidance reflects the increased investments in sales and marketing in the first quarter. We are raising our total revenue guidance and expected to be in the range of $144.3 million to $146.3 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 $24.4 million to $32.4 million and non-IFRS net loss is expected to be in the range of $23.4 million to $21.4. Net loss per basic and diluted share is expected to be in the range of $1.19 to $1.12 and non-IFRS net loss per share is expected to be in the range of $0.81 to $0.74. We are adjusting our guidance on basic and diluted weighted average share count to 29 million sharesfrom 30 million shares. Our employees are deciding to hold on to their options longer than initially expected thereby lowering the associated dilution for the year. Thank you. Let me turn the call back to Mike for some final remarks.

[Mike Tuchen:]

Thank you, Thomas. Before we open up to question let me make a few closing remarks. The first quarter of 2017 was a productive period for Talend as we executed on our business strategy. As demonstrated by our continued over 100% growth in big data and cloud and 60% increase in enterprise customers. In addition to the strong adoption by new large enterprise customers, we saw continued expansion of our solutions across many existing customers leading to 125% expansion rate. We announced new capabilities from MapR and support for Apache Beam. Our strengthening partnerships in Q1 with [indiscernible] further validates the growing awareness and momentum of Talend solutions in the marketplace. We are pleased with our ability to extract world class talent on a global basis and in Q1 the [indiscernible] hiring of quota carrying sales headcount. We plan to continue to invest in sales and marketing as we expand internationally we're remaining cash flow positive and improving our operating leverage. With that, Thomas and I are happy to take your questions.

[Operator:]

[Operator Instructions] And we’ll take our first question from Jesse Hulsing with Goldman Sachs. Please go ahead.

[Jesse Hulsing:]

Yes, thank you. Mike you mentioned I think if I heard this right, you expect a number of SI consultants trained on Talend to triple this year. First, is that a function of more outreach and I guess better bid in development on your end or are you seeing partners increasingly come to you? And second, can you give us a sense of how partner influenced deals are trending?

[Mike Tuchen:]

Yes, hey Jesse. It is really mostly the latter where we talked a little bit last quarter about the inflexion point that we really experienced over the course of 2016 and that we'll continue to experience in 2017 where and when you are a small company it is really hard to attract the interest of an SI, Global SI to really make a commitment to Talend. But now, given that our position in the market and as the world is really starting to appreciate the potential of big data and cloud all of the major SIs are making a bet on big data and cloud in building practices and now they're realizing that in order to be successful they need specific skills on Talend. And so they're coming to us, they're asking for training. It's something obviously that we're thrilled to work with them on. In terms of the overall percentages right now our mix continues to be fairly stable. I think it's reasonable to think that this might start to shift up in the coming quarters, but right now we're seeing about 20% of our opportunities are being sourced from our SI partners and we engage with them from a deployment perspective on more than half of our business.

[Jesse Hulsing:]

And then one for Thomas and your prior guidance for the first quarter and raised your revenue guidance for the year, but maintained your operating margin guidance. It sounds like you pulled forward some hiring of quota carrying reps. I guess you're guidance kind of implies that you are maybe planning to hire more significantly expected to for the year, is that the right way to think about it and can you walk us through your plans for investment? Thank you.

[Thomas Tuchscherer:]

Yes, thanks Jesse for the questions. So we - you're right we early hired, we had the opportunity and actually we decided to seize that opportunity and to hire head of our internal plan quota carrying headcount in Q1. I think going forward for Q2 and onwards we are going to stick to our recruiting plan right, so we're not, you're not going to see that repeat that you saw in Q1. In Q1 again we had an opportunity to do it and it also made sense relative to our annual still training event that we hold at the beginning of the year to ramp those new hires. So I don't think you'll see that happening in Q2 and the subsequent quarters.

[Mike Tuchen:]

And just to give a little color on that Jesse, we’re in a situation right now where we're able to get really A+ talent from a lot of actually some of our competitors in the industry. I was just doing a kick out we have internal events to welcome new hires and I was giving a welcome to some of them. I just went around the room to see where people are coming from and it was really incredible how many of them were coming from some of the large competitors and that we saw that opportunity. We’re seeing the great talent meaning in and we decided to go ahead and just pull them in a few months earlier because the big, you know once a year annual training event that we do is a really nice way to frontload their ability to get successful.

[Jesse Hulsing:]

Great, thank you, guys.

[Operator:]

We’ll take our next question from Mark Murphy with J.P. Morgan. Please go ahead.

[Mark Murphy:]

Yes, thank you very much. Mike, so I wanted to ask you about your Hadoop linkages, would you be able to approximate what percentage of your new bookings were directly tied to Hadoop projects in this quarter? And also just would you consider your partnerships and your positioning which is very broad across the company then across the architectures, do you think you were better off if Amazon gains more share than Hadoop, Perino [ph] or if Cloudera or Hortonworks or MapR, et cetera, just wondering which way would be most beneficial to you?

[Mike Tuchen:]

Yes, it's a really interesting question, the second one. So let's start with your first question, we don't break out Hadoop specifically. We break out big data and cloud. Big data is mostly Hadoop and not entirely. There's - some are going to be in Cassandra [ph] and a lot of other kind of big data related things that live in there and of course there's a bunch of it that's in the cloud these days so we tend to put those together. Big data and cloud we talked about in Q4 had crossed over to be more than 50% of our new sales and it's continuing to march up in that trajectory, has not affected as much up a little faster than even that we thought. So it's now north of 50 haven't yet reached 60, but I think it's reasonable to say that on that kind of progression a little more than two thirds, at some point in this calendar year at some quarter more than two thirds of our business will end up being from big data and cloud. In terms of who wins and so on, right now we work with everyone and you know our goal is to make sure that we can partner with them and support all of the innovation that you to be the different people are bringing to market. And from a customer perspective give them the agility to be able to take advantage of any of these, either if they're staying with their current provider or if they want to move and from our perspective the reality of the market is right now. We win in the way the market is shaping up right now which is in a very heterogeneous multi cloud kind of world. And if you were to turn the clock back a couple years on the cloud side it was really strongly centralizing in AWS way out in front. And this year we're starting to see over the last 12 to 18 months is yours making a really strong push and we're seeing probably 30% of our sales opportunities right now or with Azure, that's a big change from where it was a couple of years ago and so for us really the best market structure that you could ask for is, simply a continued strong multi vendor market.

[Mark Murphy:]

Okay, well said. I wanted to ask you as well about the pricing environment and so when you're out there in competitive wakeup situations, where is your pricing landing relative to whether it's Informatics or IBM or others. Are you are you finding and I know it's more about total cost of ownership than the initial pricing but is there any way you can compare and contrast a bit as where your subscription pricing is landing relatively or what those discussions are like?

[Mike Tuchen:]

You bet. We're always going to be a more attractive price than the other folks and you know might be three times or so cheaper. It varies from deal to deal, but importantly what we find is that in any of these big data and cloud scenarios I don't think I've ever heard of a deal that ultimately came down the price because you have to win on having the best solution in the market. And right now in the kind of big data and cloud world what we're finding is that it’s – we're so strongly differentiated that and the reason why that business continues to explode and go over 100% for us right now is our sales team is realizing that if customers have a big data or cloud problem by and large as long as we can find and engage with that customer we'd probably win that deal technically. And then we simply have to navigate the politics around it. And the fact that we're more exactly priced is great, but it can't be all about that is manufactured going to be primarily about that. That's the cherry that happens at the very end of the conversation.

[Mark Murphy:]

Thank you very much.

[Operator:]

We’ll take our next question from Walter Pritchard with Citi. Please go ahead.

[Tyler Radke:]

Hi thank you. Good afternoon. This is Tyler Radke on for Walter. Mike you mention that, that big data and cloud I think it was over 50% of your new bookings. I was wondering if you could share with us when you think on a total revenue basis when that big data and cloud will hit that 50% or when it will exceed traditional data integration?

[Mike Tuchen:]

Tyler, I think you, you pointed that to me but this sounds more like a Thomas kind of question, so I'm going to hand it to him. Thank you, I appreciate that.

[Thomas Tuchscherer:]

So, Tyler hi. I think in terms of, in terms of the crossover point between big data and cloud and the rest of our product portfolio, it will cross over in 2017 where big data and cloud combined will become the largest component of our subscription revenue. I'm not sure that it will become the majority, but it will become the biggest bucket of our subscription revenue. In terms of which quarter, I can't give out that you know that specifically, but I expected the crossover in terms of the largest component of big data and cloud being the largest component to cross over 2017.

[Mike Tuchen:]

Yes, it's the large individual component, but still not the majority.

[Thomas Tuchscherer:]

Not the majority. Yes.

[Tyler Radke:]

Got it. That makes sense. And then I guess I'll take on Thomas here. I know you guys don't encourage us to look at billings, but by nature that's kind of what we're trained to do with these types of models. Could you give us any type of qualitative or quantitative commentary around how the ACV the new ACV in the quarter compared to the billings or just directionally how we should think about kind of that the new business growth in the quarter?

[Mike Tuchen:]

Yes, so during the, I think during the call I mentioned our new, our duration for new ACV bookings being approximately 1.3 years, right so that's sequentially down relative to all of 2016 and that's typically I think the, that the color that we give in terms of a metric associated to the calculated billing.

[Tyler Radke:]

And that's something that we've been planning to do and been really telegraphing very broadly. Our target for duration last year was 1.4 years and our target for duration this year is 1.25 so we're very marginally north of the target it is not quite dilatable [ph] to that rate, but we're targeting for the full year to be roughly 1.25 duration and target down getting very close to 1.0 duration next year in 2018?

[Mike Tuchen:]

And then just last question on the - I just want to understand the context of the 60% growth in I think it was subscription revenue over 100,000 or customer spending over a 100,000. I think that's kind of the first time you've disclosed the metric could you kind of just help us understand you know that accelerating are you seeing, that metric so it offer from, from a bookings perspective.

[Thomas Tuchscherer:]

Yes, so I just wanted to clarify what the metric was. Metric that we released for the first time last quarter actually which is the number of customers that have over $100,000 per year of annual subscription revenue with us and that number of customers has gone up by 60% up to 260 customers and so I want to make sure that it may not have been clear how it was articulated and so we're not talking about the overall dollars worth of bookings we're talking about a customer count. And that number obviously is accelerating really nicely and we view it is the great you know milestone that can metric that gives color into our increasing penetration into the enterprise and our increasing importance to customers because as they're committing to over $100,000 a year in some cases much more than that it means they're starting to make a strategic commitment to Talend.

[Tyler Radke:]

So just to clarify it was 260 customers spending over $100,000 annually with Talend in the quarter and that was up 60% so year ago it was you know 162 or 163.

[Thomas Tuchscherer:]

162 a year ago.

[Tyler Radke:]

Okay, got it.

[Mike Tuchen:]

And we published that in our IR deck, so you'll see the quarterly build out over the last couple of years and we'll flop in the latest number there.

[Tyler Radke:]

Okay thanks.

[Operator:]

[Operator Instructions] We'll take our next question from Brent Bracelin with Pacific Crest Securities. Please go ahead.

[Brent Bracelin:]

Thank you for taking my question. I guess first for Mike here, so if you think about that triple digit growth in cloud and big data now for nine quarters, have you seen any sort of competitor narrow the gap? It seems like a material advantage you have here but just wanted to know if there is anything, any competitive change here as we think about that advantage you have and specifically in cloud and big data.

[Mike Tuchen:]

Hey Brent, we really like our differentiation right now in cloud and big data and our win rates remain ridiculously high and you know kind of shown by the growth rate and the team leaning into it. The other thing that we've seen in the quarter we started to 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 imperiously point to a strong differentiation. The market the way we look at the, the market dynamics is that the large players continue to be challenged and the 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 and so we're in this kind of special period in the middle right now 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 here versus the small player doing something unique and different right now, our bets remain on the small players, but there is not yet at the scale where they're able to have an impact on the market where we can really aside from going out and looking at their website and so on we're not yet seeing them ins sale situations to be any meaningful sense.

[Brent Bracelin:]

Helpful color and then as a follow up to one of the things you said, I think you talked about, I believe 30% now the sales opportunities in the cloud coming from as your, was there some specific relationship between kind of Microsoft and Talend or what do you think is driving that shift that seems like it was material relative to what it was a year or two years ago?

[Mike Tuchen:]

Yes it absolutely is and I don't think it's anything that we Talend are doing. We're now building relationships with both Microsoft and with Google in addition to the strong relationship that we have with Amazon, but this is not a result of a specific outreach by the Talend it is more a result of I believe what's going on in the market. And I've seen other and compared notes with other Cloud players and you know started to get a similar triangulation that Azure seems to be around a third of the new business right now. And so, that's I think a really interesting dynamic in the cloud world.

[Brent Bracelin:]

Got it. And then my last question for Thomas here. I guess just going back to the decision to kind of accelerate the investment in quota carrying sales reps here in Q1 what do you think is driving the access to A plus Talend in the quarter and as you think about that why do you think given the share gains you have in this space, why would you let up on that in Q1 and not continue to kind of take advantage of the opportunity if the talent is available?

[Thomas Tuchscherer:]

Brent, that's a great question so, you know one of the reasons when we went public one of the reasons that we cited was to increase the overall awareness of the company and one was for customers but two was also for recruitment. And I think we're seeing the effect of that, of the company being much more recognized to prospective hires as well as getting better recognition in terms of our performance, in terms of and in terms of growth. So I think that's helping a lot and it's attracting talent that before was harder for us to attract. So I think that's the, that's one of the benefits of obviously being a publicly listed company. In terms of why we're not going to repeat that in the subsequent quarters we've always been committed to a balanced plan approach we've also always measure in terms of how quickly we can recruit and how long it takes us to ramp these new hires so, we try to remain disciplined and stick to that balance plan approach in the subsequent quarters.

[Brent Bracelin:]

Fair enough. Thank you.

[Operator:]

We’ll take our next question from Raimo Lenschow with Barclays. Please go ahead.

[Raimo Lenschow:]

Hey thanks of taking my question. And Mike you just said you shouldn't look at billings, but we kind of do and that's our stuff and the quick question if I look at Q1 the performance of 40% plus growth in billings versus a column that was particularly tough for you if I look at Q1 last year it's kind of really impressive. If I look and I’m reading too much into it to say look this was kind of actually a stronger quarter than it actually looks even on paper or with anything in terms of timing of renewals et cetera that kind of mixed Q1 like it was actually biggest quarter anyway? And then I have a follow up.

[Mike Tuchen:]

Since you directed this to me although I think candidly that does sound a little bit like a Thomas question I will actually take a bite it. You know honestly there's always going to be all kinds of opaque mechanic that fit inside of the renewal base and so on and billings is I’d say a risky business. They are best to look from the outside and try to draw any speculation on what I look at this and say and therefore, there is some untold miracle to be had there. No I wouldn't you know spend much of time on that. I think we're happy with the quarter. We like the way that you know the quarter shaped out but it's not I don't think there's any big story to be had there and I don't know if there's any more color on that, that Thomas is going to go into.

[Thomas Tuchscherer:]

No, I think I'd just let go what Mike said. I think it…

[Raimo Lenschow:]

Yes, okay perfect. Okay that’s helps, so it's just like a normal kind of, kind of normal strong execution that we've seen before. Okay perfect then as we are on the topic, Thomas can you talk a little bit about what you guys are doing on 606, I'm sure there's probably something in the filings that's coming out there. But what you guys do on 606 and is that kind of also I don't know how far you're down the road there, it's not solving our problem in terms of looking at billings decrease we can actually probably look at bookings then at that point, I’m not quite sure how your disposals are shaping up around that, but any comments around 606 please?

[Thomas Tuchscherer:]

Yes and of course. Yes and Raimo I know you've published some great research on that topic so yeah on 606 I mean we, yes it’s a key topic for us this year and we've been working on it with our auditors with KPMG. Some of the, I think some of the comments that I'm willing to make is that we expect at the impact on our financials to be relatively minimal and that's primarily due to the open source nature of our business model, where 606 we would be you know requires to carve out the license portion of our subscription revenue and due do the open source nature of our business model that we believe that the license portion of that would be needed to be carved out from a subscription revenue would be relatively small. So I think some of the preliminary view that we have with, with our auditors is that the financial impact would be relatively minimal. Will communicate more obviously as we get closer to have an official position but for the time being I would again I would expect minimal impact.

[Raimo Lenschow:]

Okay perfect, okay and then on, do you know already what you guys doing around backlog is closure which basically means that we can look at booking.

[Mike Tuchen:]

Not completely big that yet Raimo, so I think that will be part of our fuller disclosure once we're closer towards the end of the year.

[Raimo Lenschow:]

Perfect. Thank you, well done.

[Mike Tuchen:]

Thank you.

[Operator:]

We'll take our next question from Bhavan Suri with William Blair and company. Please go ahead.

[Bhavan Suri:]

Hi guys. Thanks for taking my question and it's great to see continued acceleration you guys are doing a nice jobs congrats on that. I guess let me just start off with the data part of the business really quickly. Obviously Altrex's report and they saw pretty good traction there we picked up you know pretty generally across the board strong demand this also was data prep, how are you guys doing, you know last quarter you sort of mentioned you've had entered few deals POCs run rate, just an update would be great?

[Mike Tuchen:]

Yes, you bet. We're beating our internal targets for it. Of course it's still early days and relative to you know $100 million plus business is still a smaller part of what we're doing, but we're seeing a ton of interest and excitement across the customer base from it. And it's serving to be a great differentiator in new business conversations and a great reason to have a conversation with our installed base as well. And you know we just did our customer advisory board a month or two back and we had a bunch of people there some of them that were already using it, other ones it had and you know for the people that were already using it and the dozen or so people that were there, companies represented, almost everyone walked away saying, you know what I have a use case for that too, and just seeing that kind of reinforcement and excitement was really great for us. So yes, we remain very bullish on the prospects of that.

[Bhavan Suri:]

Great, great and then and then when you look at, as you touched on the enterprise business a bunch you've sort of given a metrics of over a $100,000 customers. I guess a couple questions, first just any color on sort of what percentage of business that is today because obviously that range could be pretty big? And then sort of as you think about it is there sort of an active, you sort of talked about hiring leading sales reps with enterprise specific focus, so I just don't see how that sales, enterprise sales rep pipeline is going through, do you continue, is that where the investments are being made or can you drive it, so that as a bigger part of growth or just across the board?

[Mike Tuchen:]

Yes, we have in the U.S. we we've been building what we call a Pod model. I’m answering the second part of the question so, in the U.S we've been building a Pod model where almost all of the field is working in tandem with an enterprise rep and corporate sales or inside rep working in tandem together. And with just this calendar year separated out just a half a dozen or so reps worldwide to be you know a segmented enterprise sales team and we expect to expand that going forward as part of our broader push into the enterprise that we've been working on over the last several years as well. So, when we talk about enterprise reps we're probably being a little loose, sometimes we're talking about the - those six specific enterprise segment reps and many times we're just talking about the field portion of our pods. So that's probably just a little bit of additional color just explaining how we think about the business. In terms of how is that pipeline going, I tell you it's just talking to our sales recruiting team and they're already through the current quarter and looking into the next quarter and so, we remain having a very strong pipeline. And as we talked about we decided opportunistically when we saw that at the end of the calendar year going into Q1 that we just accelerated a few of those hires and bringing them in early. Right now we're choosing to be more disciplined about it, but there is a really nice pipeline right now lining up.

[Bhavan Suri:]

That’s great to hear. And then two questions from me Mike just sort of broadly speaking first just you know you obviously talked a little bit about Azure, a little bit about Google. When you think about Google and sort of them opening up the machine learning and sort of you know if you think about analytics Google tends to come to mind before the other two and you think about sort of where you guys played. Do you think that Google ends up having, ends up being a platform where you guys end up being more closely tied given sort of the way they think of analytics versus Microsoft with Microsoft Applications and you know Amazon with infrastructure and open platforms, how do you think about that sort of on a long term perspective and your relationship specifically with Google given sort of their folks now would expect?

[Mike Tuchen:]

Yes, Google certainly has a strong focus on analytics and their machine learning, the feedback we get from our customers is what they're doing with TensorFlow really is leading right the industry right now. We see very strong analytics focused by the way from Microsoft and I think what the offerings in Amazon are strong as well. But what we're doing right now is we're working to partner with all three of the cloud players, it turns out that we have a strong technical partnership with Google right now. We talked a little bit on the call about Apache Beam which is right really important piece of infrastructure technology that we're, we're literally partnering with Google on co-sponsoring that project and leading that project as part of the Apache community. And so technically I think it's fair to say that we have the best support for the Google Analytics infrastructure. And really in terms of how that ultimately turns into business is going to be shaped more by Google's impact on the market and less by our ability to partner with them technically because you know technically I think we have as we tech talked about the closest technical relationship that it's possible to have and you know really truly strong support for their entire offering.

[Bhavan Suri:]

That’s helpful. Thanks guys. Thanks for taking my questions and congrats again on the acceleration and the solid numbers.

[Mike Tuchen:]

Thanks.

[Operator:]

And this concludes today's question and answer session. At this time I'll turn the conference back over to management for any additional or closing remarks.

[Cynthia Hiponia:]

Great, thank you everyone for joining us this afternoon and we look forward to speaking with you again on our next earnings call.

[Operator:]

And this concludes today's call. Thank you for your participation. You may now disconnect.