After an annual gain of 19%, Talend negotiates $ 2 below the price of the privatization of Thoma Bravo

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Almost five years ago, a software company with a Parisian parent company went public. Its stock has since grown at an average rate of 19% to about $ 64 a share, $ 2 below the price at which it is slated to privatize in the third quarter of 2021.

Unless another company comes along and offers a much higher price, I see no reason to buy now.

But the winding journey of Talend, an “open-source data integration company” based in Redwood City, Calif., Is a fascinating thread – including a knowledgeable CEO of a public company Michael Tuchen who took over in January 2014, changed its strategy, adopted it public in 2016, and was replaced seven years later.

Christal Bemont, formerly at business travel and spending software provider Concur (acquired in 2014 by SAP), has been the CEO of Talend since January 2020.

Its future at Talend is unclear following the March 2021 announcement that Thoma Bravo, a private equity firm, will pay $ 2.4 billion to privatize Talend by Q3 2021.

Talend Expectations Exceed Q4

Talend provides open source software through its Data Fabric platform which “integrates data and applications” into traditional and cloud computing environments.

Deriving most of its revenue from the Americas, Talend’s products include “Data Lakes in the Cloud, Google Cloud Platform, Cloud for Snowflake, AWS Cloud, Data Integration, API and ‘application integration,’ according to Morningstar.

A key element of Talend Data Fabric is its Talend Trust Score which “assesses the data stored on Snowflake

SNOW
platform for reliability and measures the health of data by diagnosing and resolving data integrity issues in multicloud environments ”, according to Alpha Research.

Talend’s growth is slowing. After all, the company’s three-year compound revenue growth rate of 24.6% is faster than its fourth quarter 2020 growth – which exceeds its growth forecast for 2021.

How? ‘Or’ What? According to SeekingAlpha, Talend’s fourth quarter revenue rose 17% to $ 78.9 million – about $ 3 million more than expected, while its net loss of $ 19.6 million was almost $ 8 million. dollars worse than the previous year.

Talend’s 2020 revenue of $ 287.5 million was 16% higher than it was in 2019. Unfortunately, its negative free cash flow nearly doubled in 2020 to -32.7 million. dollars against -16.7 million dollars in 2019.

Talend’s 2021 forecast – of 14% revenue growth – is slightly lower than analysts’ expectations. For 2021, Talend projects revenues of between $ 327 million and $ 329 million – with a midpoint $ 1.28 million below market expectations of $ 329.28 million, SeekingAlpha noted.

Why is Talend’s growth slowing? One problem could be that the data integration market is very competitive – hosting competitors such as Informatica, IBM, SAP, and Oracle. Landing in Gartner’s 2020 Magic Quadrant as the market leader in data integration tools was not enough to accelerate the company’s revenue growth.

How Mike Tuchen got around Talend

Talend was founded in 2005. But as I learned from my interview with Forbes in June 2018 with him, Tuchen hired as CEO in January 2014 in the midst of a fundraiser for the company. .

He had extensive experience in the software industry, but had never listed a company or was its CEO afterwards. He previously served as CEO – from May 2008 to October 2012 – of security data and analytics provider Rapid7. (I recently interviewed the current CEO of Rapid7. Corey Thomas).

Tuchen oversaw a change in strategy that resulted in tremendous growth. As he told me in June 2018, “When I joined the board in 2013, we had around 300 people and [in June 2018 we had]1000. Our turnover was around $ 50 million in 2013 and we [expected]203 million dollars in 2018 sales [36.6% more than 2017 revenue], “he explained.

After Tuchen became CEO, Talend changed their marketing strategy. As he put it, “In 2013 we sold to mid-sized companies and smaller customers. But the market was confused about the company. 72% of our clients stayed with us every year and we had no clear advantage in our position. We had to be more efficient in the way we sold. We have changed the team, the strategy and the way we set ourselves and achieve goals. ”

The changes Tuchen made worked – resulting in a 73% increase in sales productivity. “We have changed our strategy from a low-end disruptor to a next-generation leader. Due to rapid changes such as the move to the cloud and the use of data lakes [— a storage repository that holds raw data in its native format until it is needed —] we had the opportunity to be a leader. “

Talend focused on a specific set of customer groups. “We targeted early adopters in financial services, retail, high tech and manufacturing (companies using sensor data). We improved the way we described the benefits of our products and the way we hired and trained our salespeople. As they hit their goals right away, our attrition rate dropped, ”said Tuchen.

In january 2020 Christal Bemont joins as CEO of Talend

In January 2020, Tuchen was eliminated – replaced by Bemont, a former sales manager at Concur. According to Silicon ANGLE, Tuchen left voluntarily after Talend recruited Bemont as chief revenue officer with the potential to become CEO.

Bemont – recognized for contributing to the 25% annual growth at Concur over her 15 year career there – brought with her a “support staff” including Ann-Christel Graham, as CRO, and Jamie Kiser, as Director of Clientele.

I don’t know why Tuchen left – but a bad quarter at the end of 2018 may have something to do with it. According to SiliconANGLE, Talend stock plunged 35% in one day “on a weak forecast attributed to weaker than expected license sales.”

In January 2020, the stock was up 20%, to just over $ 42 per share. Still, it was still about 40% below its high of $ 70 in fall 2018.

In an April 13 interview, Bemont told me that she joined Talend with a realization that she had at Concur that the value of applications depends on the quality of the data you put in them.

This led Talend to make the decision to provide its customers with a data trust score so that they know how much to trust its accuracy when making the decision.

Bemont management philosophy

Bemont is inspired by CEOs – like former T-Mobile CEO John Legere – who are reshaping the company they run to meet changing customer needs. As I wrote in July 2016, Legere has done what “almost every business should be doing. He listened to his customers complain about his business and his competitors and systematically repaired the damage.

Bemont seems to have picked up on this state of mind in his role as CEO of Talend. As she said, “How do you act? How do you present specific, measurable and quantifiable things? How do you move the business forward even if it goes against what you have done in the past because the customer wants something new? “

Bemont had this experience at Concur. “In 2005, our management decided it was time to stop providing expense reporting services to clients. We have dedicated our entire lives to efficiency. We asked “Why are we doing this?” We decided the solution was to help businesses control their spending ”- to prevent some of the money that would appear on expense reports from being spent in the first place.

Bemont sees Talend as being in the same position as Concur at the time. She aspires to motivate everyone – as Legere did at T-Mobile – by creating a movement that makes all employees think in unison.

As she said, “It only works if people can put their unique personalities to work. What energizes them? What are we good at? I have an hourglass on my desk. We only have a limited number of days on earth. What am I getting out of your life? “

Bemont believes people should spend time doing things they are passionate about. “I want to be a force multiplier. If you are not happy here I need you to find your happy place. I’ll help you find it. I’ll even help negotiate your salary. I’ll give you my cell phone number. “

15 months later, Talend announces a sale to Thoma Bravo

When she joined SiliconANGLE, she told SiliconANGLE that Talend “should consider becoming a billion dollar company”. Maybe the Talend board decided this wasn’t happening fast enough.

15 months after taking over as CEO, Talend announced that Thoma Bravo was taking him private.

Thoma Bravo has acquired a number of software vendors and taken some on the stock market. As I wrote in March 2018, he bought SailPoint in 2014 and made it public in 2017.

Thoma Bravo’s current portfolio includes Qlik, Flexera, Riverbed, Blue Coat and Barracuda Networks as well as the security brands Sophos, Veracode, ConnectWise and Imperva.

Thoma Bravo thinks he can fix what ails Talend. As Seth Boro, Managing Partner at Thoma Bravo said. “We are confident that we can apply our experiences working with market-leading software companies to accelerate Talend’s growth and complete its transition to the cloud,” according to SeekingAlpha.

Talend said selling the business was a good idea. Echoing Chairman Steve Singh’s statement, the company emailed me on April 15 saying, “We believe the transaction [will]benefit Talend and our stakeholders, including our employees, customers and shareholders. At the enterprise level, Thoma Bravo would provide Talend with additional expertise, capital and resources to execute against our vision, accelerate our product innovation and continue our journey to the cloud.

Bemont’s future with Talend “has not been discussed at this point,” according to the email.

Patient investors should keep an eye on this company in a few years to see if Thoma Bravo goes public.



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