Contact: Scott Denne
European data-integration company Talend has set its sights on a US listing. Should Talend make it to the public markets, it would become the second venture-backed tech IPO of the year. Last week’s offering by Twilio showed that Wall Street still has an appetite for growth stocks – it currently trades at more than double its IPO price. Talend does little to satisfy that hunger. While Talend and Twilio both posted accelerating growth rates last year, Talend’s topline jumped just 21%, compared with Twilio’s 88%.
Talend’s unveiled IPO prospectus shows that it put up $76m in revenue last year, amid signs that growth is accelerating as subscription revenue increases and services fees hold steady. Subscription revenue rose 27% to $63m while services fees stayed flat at $13m. That pushed its growth rate up three percentage points from 2014’s figure and caused the topline to grow 34% year over year (YoY) in the first quarter. Losses have persisted. Talend has generated a net loss of $19-22m for each of the three years covered by the filing. Its first-quarter numbers show a similar trajectory for 2016.
A secondary sale of the company’s stock last summer valued the business at about $250m. At that level, the company would trade at 3x trailing revenue. We would expect it to price up from that level. Yet it’s hard to envision Talend trading at a multiple beyond that of its open source compatriot Red Hat. For comparison, the latter company garnered a 5.5x multiple on 18% growth YoY last quarter and trailing 12-month revenue of $2.1bn. Talend’s valuation could also be pulled down by fears over the ‘Brexit’ decision, as more than half of its revenue comes from the EMEA region.
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