Talend SA (NASDAQ:TLND) Q2 2017 Earnings Conference Call August 3, 2017 4:30 PM ET
Cynthia Hiponia – Investor Relations
Mike Tuchen – Chief Executive Officer
Thomas Tuchscherer – Chief Financial Officer
Jesse Hulsing – Goldman Sachs
Bhavan Suri – William Blair
Raimo Lenschow – Barclays
Brent Bracelin – KeyBanc Capital
Albert Chi – JPMorgan
Tyler Radke – Citi
Good day and welcome to the Talend Second Quarter 2017 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Cynthia Hiponia, Investor Relations for Talend. Please go ahead, ma'am.
Thank you, Operator. This is Cynthia Hiponia, Talend Investor Relations and I am pleased to welcome you to Talend's conference call to discuss its second 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 the 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 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. The forward-looking statements in this presentation are based on the 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.
Thanks, Cynthia and thank you all for joining us today. We are pleased with our second quarter results. We achieved record revenue of $35.8 million in the second quarter, up 41% year-over-year while substantially improving our operating leverage. Some of the highlights in the June quarter include our industry leading big data and cloud solutions delivered a combined subscription revenue growth rate of over a 100% year-over-year for the tenth consecutive quarter.
Our subscription revenue grew 46% on a constant currency basis. Our non-IFRS operating margins include the minus 13% in the quarter compared to minus 27% in the year ago period. In the second quarter, we continue to see strong demand for our solutions with enterprise companies and the cloud geographies. Let me walk you through some key customer wins and expansions in Q2.
Large global enterprises are continuing to adopt Talend. In the second quarter, we saw a 56% increase in the number of enterprise customers over the same period last year. We again see the move towards the cloud forcing customer to evaluate the current legacy architecture and choose Talend for their new platform.
As an example of the new enterprise customer, we are pleased to announce the TD Bank, became a customer during Q2. TD Bank is one of the largest retail and commercial banks in the U.S. with more than 9 million customers. TD Bank has made a strategic commitment with Hadoop, Cloudera and Talend. Using big data to drive deeper operational visibility and new insight into the customers at a lower cost in their traditional systems.
In Talend, TD Bank will be combining, merging and cleaning data from across their lines of business to empower employees with self-service access to the latest information on the business and customers. TD Bank selected Talend because of our open sourced architecture, performance on Big Data use cases and our innovative native approach that allows them to take full advantage of the latest innovations in the Big Data ecosystem now and in the future.
Another great new enterprise customers, CA Technologies; CA is working with Talend and Microsoft Azure to deepen their insight into their customers experience across their products. CA selected Talend to combine data from over 40 different systems to create a true 360 degree view of their customer. This insight will help them to build new customer adoption in the retention programs that are highly targeted to each customer’s needs.
CA chose Talend because of the flexibility of our open sourced architecture, our ability to connect to a wide range of cloud and on premises data sources and our unique pricing models. As I mentioned earlier, cloud adoption continues to accelerate. In the U.S., DMD was another great customer win for Talend in combination with AWS. DMD is a leading provider of marketing and communication services for the medical community.
As a data company, DMD is constantly looking for innovative ways to leverage new data sources. With Talend and Amazon EMR, they can provide real-time Big Data analytics that deliver new insight to the business. They chose Talend because of our flexible native Big Data architecture and our high grade and multi-cloud connectivity. Another key growth driver for Talend is to grow in international and emerging markets.
We have several notable international customer wins in Q2. In the UK, we found one of the largest suppliers of low carbon electricity as part their drive to improve customer experience. They selected Talend to consolidate their business and residential customer information into Amazon AWS. This information is currently stored in several SAP systems and across various billing and CRM applications.
Consolidating the data, we’ll give the company’s ability to see all of their customers in a combined way and make better energy predictions that could reach the massive cost savings. We also added Office Depot Europe, which is one of the largest suppliers of workplace to solutions, operating in 14 countries across Europe. They selected Talend to ingest data into their new data life that a lot of the retailer that create a single source of data taken from numerous system across the business to improve the level of insight and eight decision making.
Office Depot evaluated Talend, hand-coding and another integration vendors and chose Talend because of our development productivity, subscription pricing and open sourced approach. Additionally in Australia, we added online education services. OES provide high quality engaging online courses rising from vocational training to masters level. OES uses this data to improve business decision making and to enhance the online education experience for both students and staffs.
Following an extensive review of a number of data integration solutions, OES chose Talend tightly integration with Amazon AWS and our data profiling capabilities. We believe that our ability to retain and expand subscription revenue over time is an indicator of our position as a strategic solution provide and the long-term value of the Talend Data Fabric.
In the second quarter, our dollar based net expansion rate was 125% on a constant currency basis. This is the 13th quarter in a row that we've had a dollar based net expansion rate over 120%. In the fourth quarter of 2016, you may recall that one of the world’s largest fast-food chain selected Talend and that migrated to AWS to better understand the customers preferences enhance their in-store experience through the first line of mobile applications and ultimately drive more sales and increase brand loyalty.
In Q2, they added additional user license to support the migration from teradata to redshift. This customer has seen their migration project already accelerate by a full quarter through the use of Talend in just their first six months. In Japan, one of the world’s largest faster manufacturers significantly extended the reach of Talend to build a 360 degree customer view to measure customer experience and sentiment across the various channels. The group is consolidating its data from SAP and Oracle exit-data to AWS redshift in across 20 countries. The Talend was selected because of our ability to combine batch and real-time integration in a single platform in our D24 through Amazon AWS.
In Europe, a longstanding Talend customer is one of the world’s top construction companies that selected Talend to ingest massive amounts of IoT data coming from the process brand as part of their industry 4.0 initiative. And finally, our major U.S. manufacturers purchased an additional $250,000 of subscription to bring their annual spend with Talend over $1 million. These customer wins and expansions are a strong market validation of the leadership of Talend’s next-generation integration solutions and our ability to support enterprise customers as they make their inevitable transition to modern, hybrid and multi-cloud enterprise.
Reinforcing our commitment to remain on the cutting edge of technology, we delivered our summer 2017 release of Talend Data Fabric in the second quarter. This is a significant upgrade of our Talend Data Fabric platform, that’s optimized managed hybrid and multi-cloud environments. Talend Summer 2017, helps customers seamlessly manage information across Data DS [ph], Cloudera Altus, Snowflake, Google Cloud Platform and Microsoft Azure, leaving customers to rapidly integrate, clean and analyze data to fuel innovation and gain a competitive edge.
According to IDC, more than 50% of IT organizations already utilize a multi-cloud approach and another 20% have planned to implement a multi-cloud strategy within 12 months. CIOs must designed their IT infrastructure with agility as a top priority to deliver in a constantly changing hybrid, multi-cloud world. Using Talend Data Fabric, customers can develop data pipelines on any of the leading cloud platforms with peace of mind in knowing whatever they develop will be able to run on the latest cloud and open source innovations.
The newer capabilities in Talend's Summer 2017 allows customers to speed multi-cloud pipeline development, accelerate migration to the cloud, take development work designed for one cloud platform and reuse it with other cloud platforms, and deliver data quality with machine learning at big data scale.
We continue to strengthen our relationship with our ecosystem partners. In the second quarter, we announced that we’re working with Cloudera as the first integration provider to support Cloudera Altus, a newly released Platform-as-a-Service offering that simplifies files running large-scale data processing applications in the public cloud. Companies can use a combination of Altus and Talend to reduce overall data management costs and to accelerate and simplify hybrid, on-premise and Cloud to big data projects.
And finally, we're thrilled to welcome Nora Denzel to the Talend Board. Nora brings three decades of experience in the enterprise software industry, with a number of key positions at Intuit, HP Enterprise, Legato Systems and IBM. As we move to the next stage of our global growth and product expansion, both experience as world class organizations will be a valuable resource of Talend.
Let me now turn the call over to Thomas, who will discuss our financial results in more detail and provide our outlook for Q3 and the full-year 2017.
Thanks Mike. Today, I will review the financial results for the second quarter of fiscal year 2017, as well as provide our outlook for the third quarter and full fiscal year 2017.
Total revenue for the second quarter with $25.8 million, an increase of $10.4 million from the second quarter of 2016, representing 41% year-over-year growth. Our subscription revenue for the quarter was $30.3 million, an increase of $9.1 million from the second quarter of 2016, or 43% year-over-year growth.
In consequence currency, subscription revenue grew 46% year-over-year. The strong demand for our big data and Cloud offerings, continued to strive growth in subscription revenue, which together continue to grow by over 100% year-over-year for the tenth quarter in a row.
From a geographic perspective, the Americans represented 49% of the subscription revenue and grew at 50% year-over-year. As we mentioned in past earnings call the U.S. has been an expansion market for us. As we were founded in France, and we believe that it continues to present great growth potential. Although still a small portion of our subscription revenue, Asia-Pacific is showing great potential with hundred percent plus growth rate this quarter.
Professional services revenue for the quarter was $5.5 million, an increase of $1.4 million or 33% from the prior year quarter. The increase was primarily due to implementation of services and training for new customers.
For the quarter ending June 30, 2017, our net dollar base expansion rate was 125% in constant currency. It has been above 120% in constant currency for now 13 consecutive quarters. I would like to remind investors that our net dollar base expansion rate can fluctuate quarter-over-quarter, reflecting the mix of new versus existing customers in 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 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 second quarter increased to 78% from 75% for the same period a year-ago. The increase was due to higher subscription revenue mix, and also better margins in our professional services business.
Operating expenses for the second quarter were $32.3 million, an increase of $6.5 million or 25% 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 $20.1 million, an increase of 20% year-over-year. The increase was primarily the result of higher personnel expenses due to carrying headcount and increases in marketing program expense.
Our sales and marketing expenses were lower than our historical seasonality. Primarily due to expected infrastructure upgrades that got pushed from Q2 to Q3. We do expect that our sales and marketing expenses will continue to grow in absolute dollars as we continue to invest in our growth.
Our sales and marketing headcount increased from the prior year by 26% to approximately 312 employees. R&D expenses for the quarter were $6.1 million, an increase of 28% year-over-year. The increases driven by an increase staff expenses due to greater head-count especially in France.
Our R&D headcount reached 208 employees at the quarter representing 14% growth over the same period of last year. We expect an increased rate of engineering headcount growth for Q3 as the cost of new hires will start pass to end of this summer in our French R&D centers.
G&A expenses for the quarter was $6.1 million an increase of 41% year-over-year. The increase is largely attributable to the increase in professional and outside services as we added personnel to support our growth and the ongoing requirements of being a publicly listed company.
Our G&A headcount reached 92 employees from June 30, 2017 representing 18% growth for the same quarter in the prior year. We ended the quarter with approximately 755 full time employees compared to 617 employees at end of the second quarter from the prior year.
We incurred an operating loss for the quarter of $4.5 million compared to the second quarter of the prior years operating loss of $6.8 million. Our business experienced substantial improvements in operating leverage. The operating margin improved to minus 13% from minus 27% in the same quarter a year ago. Net loss for the quarter improved to $5.8 million compared to a net loss of $7.3 million in the prior year period. The year-over-year improvement was achieved despite an unrealized FX loss of $1.3 million, which was primarily due to the depreciation of the dollar against the euro and its impact on our dollar cash balances.
Free cash flow for the quarter was negative $1.2 million compared to free cash flow of negative $2.1 million in the second quarter in the prior year. We intend to continue to our balance 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 June 30, 2017 we have cash and cash equivalents of approximately $95 million. As we discussed during our IPO, and on all of our prior earnings call I would like to remind investors that we do not view calculated billings and I think it was a leading indicator of the performance of our business.
Calculated billings, does not take into account changes in pre-billed subscription duration professional services, subscription contracts 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 call we are targeting a pre-billed subscription duration of 1.25 years for new business sales in 2017. This quarter pre-billed subscription duration for new business sales came in at approximately 1.3 pre-billed subscription duration for renewal subscription came in at approximately 1.1 years with a total blended pre-billed duration for all of our subscription bookings at approximately 1.3 years.
In the same quarter a year ago, our pre-billed subscription duration was of approximately 1.4 years for new business subscriptions. 1.3 years for renewals and a blended pre-billed subscription duration of 1.3 years for all of our subscription bookings. This intended lower pre-billed subscription durations consistent with our previously announced strategy to minimize discounts and reduce the complexity of our sales cycle.
Before I give our guidance I would like to emphasize some key financial highlights. Our net dollar based expansion rate has been above 120% for now 13 consecutive quarters reflecting our efficient open source supported regeneration approach and strong customer retention and up-sell.
Our subscription revenue grew by 46% in constant currency, partly driven by 100% plus revenue growth of our big data and cloud offerings. Our operations have continued to demonstrate substantial operating leverage as our operating margin improved to minus 13% from minus 27%.
Now for the Q3 and 2017 fiscal year guidance which assumes similar business conditions and foreign exchange rates as of July 31, 2017. For the third quarter of 2017, we expect total revenue in the range of $37 million to $38 million, non-IFRS loss from operations to be in the range of $5.9 million to $4.9, net loss to be in the range of $9.3 million to $8.3 million and non-IFRS net loss to be in the range of $6 million to $5 million, net loss per basic and diluted share to be in the range of $0.32 to $0.29 and non-IFRS net loss per share to be in the range of $0.21 to $0.17, basic and diluted weighted average share count expected to be of 29 million shares.
For the full year 2017, we are raising our total revenue guidance and expected to be in the range of $146.2 million to $148.2 million, which at the midpoint represents 39% year-over-year growth. Non-IFRS loss from operations is remaining unchanged from our prior guidance and is expected to be in the range of $23.1 million to $21.1 million. At the midpoint this reflects that 600 basis point improvement in our operating margins over fiscal year 2016.
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. Our net loss guidance for the year is updated to take its recount, the unrealized FX loss observed in Q2 that I mentioned previously. Net loss from 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 $0.38. Basic and diluted weighted average share count is expected at 29 million shares.
Thank you. Let me turn the call back to Mike for some final remarks.
Thank you, Thomas. Before we open up for question, let me make a few closing remarks. We recently celebrated our one anniversary of the public company. I’m proud of our achievements at our first year and I’m excited about the growing awareness and positive momentum, we are seeing across all geographies. We continue to execute our growth strategies achieving 41% revenue growth in the second quarter while substantially improving our operating margins.
Our third quarter and full year 2017 guidance reflects our confidence in our investments in sales and marketing combined with industry leading platform position us well in the fast-growing market. As I look at the goals, we laid out when we first became public. It’s clear that we demonstrated our ability to deliver outstanding results against them each quarter.
Let me briefly summarize the key priorities on the first year’s results. First grow with big data in the cloud. We’ve seen over a 100% growth in big data cloud each quarter for the last 10 quarters. Second, target large enterprise companies, we’ve seen our enterprise customer count increase from 186 to 291 over the last year representing 56% growth.
Third, expand our solutions within existing customers. We delivered net expansion rate above 120% each quarter, including 125% in Q2. Next continue to expand our total ecosystem. We have seen accelerating momentum with Global SI, a public cloud leader in the big data platforms including our announcement this quarter in Cloudera Altus.
And finally, continue to lead the market with integration. We’ve rolled out a continuous stream of market leading capabilities and features consolidated for assets including Data Preparation, Data Stewardship, and most mentioned hybrid and multi-cloud users. [Indiscernible] has both recognized this market leading innovation by putting it in the respective leadership quadrant to the first time in the last year.
And I want to thank the entire Talend team, our customers and our partners, for their commitment and hard work with Talend in producing these exceptional results.
And finally before I turn it over to questions, I’m excited to announce that Talend will be announcing its first Analyst Day on November 14 in New York City. More details following the coming weeks, but we’re looking forward to the opportunity for our executive team to provide further details on Talend’s strategy over the next few years as integrations in the big data and cloud platforms continue to initiate our customersmanaged data.
With that, Thomas and I are happy to take your questions.
[Operator Instructions] And we will take our first question from Jesse Hulsing with Goldman Sachs.
Yes, thank you guys. Mike, I have a question for you, then a quick question for Thomas. I’m curious if you'd give us the, I guess, the general state of the underlying big data market. We’ve seen some mixed results from pure-play distributors and a decent chunk of your business. And a lot of your growth over the last couple of years has come from integration projects related to the heavy deployment. I’m wondering what you're seeing there? Are you still seeing that curve move in the right direction or is that – that hasn’t started the plateau? And I guess related to that, when you look at the mix of cloud versus on-prem big data deployment, how’s that trending?
Yes. I think that last point is exactly the point. We've been talking about them together as big data and cloud from the beginning since we've been seeing and anticipating further progress to move to cloud, and that continues. And we saw another few points move in that direction this quarter as well. And so big data and cloud continue to grow the 100% EBITDA from, Thomas and we think that the center of gravity is increasingly shifting the cloud.
And evenly, many of the sensitive premise big data deployments are actually hybrid deployments that we’re seeing with part of working down on-premise and part of working down on cloud, are the ultimate destination being done, covering the data life in the cloud. So we’re seeing that move continue to update and I think that’s going to – just keep going like freight train for the coming years.
And Thomas, the euro had –
If you’re on a speaker phone, please pick up your handset or press your mute button. Once again, I’m unable to hear you. There’s no response, I’ll disconnect this line. Now please call back.
Sorry about that. Can you hear me okay now?
Thomas, currently the euros has started to move in your direction and it has depreciated versus the dollar meaningfully since you last provided guidance. I'm wondering; one, how much of a tailwind is that currency move into full year revenue versus your expectation, the last time you set guidance. And two, on the deferred revenue side, was that a tailwind [indiscernible]. Thank you.
Yes. So, as I mentioned that the 50% of our business is in the U.S. and the rest is outside of U.S. But 35% I would say is in euro denominated currencies. So we still saw – in Q2 we still saw a headwind on a year-over-year basis, on our subscription revenue. We were 46% growth year-over-year in constant currency and 43% in national currency.
To your point, Jesse, as the euros are depreciating against the dollars. So I expect that headwind to turn into potentially a tailwind if it continues on that trend in Q3 and perhaps even in Q4, depending of course in terms of what’s the exchange rate does. In terms of – on the deferred revenue side, we – I think the impact is very similar to our overall subscription revenue, so I’d leave it at there for now.
That’s it. Thank you.
And we’ll take our next question from Bhavan Suri with William Blair.
Hey guys, congratulations. Nice job there on both in the net dollar expansion rate and growth in cloud. Just a couple of quick questions here. I want to touch my first on the expense on the enterprise in this. You obviously talk about adding enterprise customers. When you also look at the net dollar expansion rate I guess, first of all, I'm assuming about to that confirmation, is it higher and then if I thought just given fairly biggest on more close, more complexity, more unstructured to my structured data and more hybrid going on.
And is that for kidding, I'm not sort of – not only, it’s a breakout that’s do you see the big use cases sort of accelerating towards both deployments even your ties to Microsoft, Google and Amazon or in sort of status quo for now to sort of think about architecture is going forward.
Hey Bhavan, yes, you are absolutely right that the expansion rate in larger account higher than expansion in smaller accounts and it make sense considerably as well, because in smaller accounts, the sort feel maybe all of they ever need are in a large account, even a relative large initial selling with system via small fraction what they need overtime. And so that’s why enterprise accounts are much more valuable to us and why is that – before that continue to expansion really matters going forward.
You have a little firmly broken out the split between exactly what it is, and it's not something that I know that you attracted internally, but it's not a metrics that we're managing seems to be anyway internally in terms of how it breaks out in the cloud. I don’t – if another one that you don’t track internally, I'm not sure to hazard to guess. The major cloud trends that I would point to you, I know we talked about a couple of times has been really the strong rise in Microsoft in over the last six to nine months, really that continue to face its well. That was – if you really go back couple of years ago, everything all about the Amazon and I think it's really interesting competitive dynamic there in the cloud.
Yes, that’s actually good, you mentioned a lot of it, Google relationship, I guess one follow-up for me. Do you guys accelerate some hiring of salesforce in the first quarter? I know obviously take a kind of the ramp as far caliber is something sort of talk a little bit. Have you seen at least productivity when completely little bit each productivity and then, do you expect how is remains of the almost leverage in the back half of the year? Thank you.
Yes. So I'll take that question Bhavan. So in terms of yes, the productivity ramps that we assume and that we can served over the past few years and has remained consistent. We're looking at a – for outside U.S., to looking at essentially four to five quarters, for them to become fully productive. In terms of how we're going on hires, in our trade our fiscal year, typically we recruit more heavily in the first half, right. And those hires in the first half of each fiscal year don’t have really a huge impact on that current fiscal year right there. They are going to be there to impact the growth of the next fiscal year and not the current one. They do contribute a bit, but nor than a major or significant traction. So I imagine a next year we'll replicate the same, the same seasonality where we'll have a lot in the first half of the year on the sales front.
Yes. And hiring early in Q1 and getting the tick up was in attempt of improve things on the margin, but again the main effect is exactly what Tom has described in one quarter end would be part to assume either declare victory or not on that strategy.
You could declare victory. I'll let it go. Thanks guys. Nice job. Thanks for taking my questions.
I appreciate it, but I couldn’t put my hand on the bible and do that Bhavan.
And we'll take our next question from Raimo Lenschow with Barclays.
Barclo – it’s a new name. Hey, couple of questions, hey Mike, on the actually Hortonworks, Hadoop conference here at San Jose, a couple of weeks ago. And one thing that stroke me at some interesting to discussion moved away from line, how do as kind of it's great in technology with the much bigger focus around data quality, et cetera. Is that – was this is my question or do you see that in the fields where that we seem to be more perceptions on Talend and some of your competitors of getting that right. So it feels like the customer base seems to kind of understand data quality is a bigger issue. Can you talk through at least?
You bet. You bet. And what’s going on is that the – in the first few years of the Hadoop wave. A lot of the conversation was about ingest. The idea of creating a Data Lake and taking really just raw data and dumping it in there. And then, company is very quickly started to realize was, okay, well I still need to plan it together and do the transformations. And now of course the next utilization, well, geez, Talend actually clean it up and solve the data quality problem that I really can't give the value out of that I want.
And making not very risky predictions, guaranteed in next few years, the conversations going to be about Master Data Management, but keeping it consistent across multiple data sources and that's been – customer for example. But this is a very, very obvious progression that we've been clearly pushing that happened, because it's the same progression that we saw back in the old data warehousing years ago.
Okay, that helps. And Thomas, I know like billings has a lot of moving parts, so it’s just kind of just the raise has been you had, and then some point you start getting currency benefit. And we try to use it to kind of – as trying to just leading indicator. If you look at your billings numbers like optically is like 15% percent. So it doesn't look like that amazing. Can you just break that down a little bit process, if possible to be like. So was it a good quarter on the billing side. Or wasn’t it. Or was it kind of raw mix. Can you help us here?
Yes, sure. So Raimo, I mean, you know my position right on calculated billings.
I've made it very clear. During our earnings call and road shows. So, yes, in terms of, some of the color or additional color that I can add, I mean I did mention during the prepared remarks, like that our pre-built subscription duration is going down as planned.
So obviously, that has an obvious impact on billings. And obviously, we're doing this for obvious business benefits. And perhaps the other thing that’s we're calling out is that a year ago – in Q2 of a year ago, we had a very strong professional services billings quarter a year ago. So that may have inflated some of the billings of Q2 in 2016. But again I think, you should look at the fact that we're raising, our revenue guidance for the full year as an indication of our confidence in the business.
Perfect. That’s really helpful. Thank you, well done.
We’ll take our next question from Brent Bracelin with KeyBanc Capital.
Thank you. Good afternoon, one question for Mike, one for Thomas. Mike, obviously, business continues to roll here pretty strong subscription growth trends. My question is really around the summer release, I know, it looks like that expanded support for cloud to cloud business, big data business is growing triple digits. What's been the early customer feedback on that product, given it enhances clouds of forward is there a chance that you guys are see acceleration in cloud adoption, walk us through that. And then Thomas, I hold the question for Thomas here.
All right. I’d say, when we have something growing over 100%, I'm not going to be predicting acceleration, we’re happy with it. We're going to keep doubling down on it. You'll feel a whole lot of cloud releases over the next coming quarters, in terms of how it’s being seen. Right now, the market is really, really aggressively asking for multi-cloud support. And you heard the IDC data point that we had – we have 50% of customers are already in more than one cloud and another bunch of them are predicting they're going to move to multi-cloud posture.
And with that going on, you just need to have this – an integration platform that gives you that out of the box. And this really took, what we’ve done logically a couple of years ago, was we had really Tier 1 support for Amazon and not at the same level of support for either Microsoft or Google. And now we have Tier 1 support across the board, best in class the board for any of the cloud platforms and really that’s the posture that we want to maintain going forward.
Helpful color. And then Thomas for you, as we think about that components of the drives calculated billings here, short-term deferred looked like it continued to be strong growing over 40% again this quarter, the big delta on deferred lease was long-term deferred that was flattish. As you think about the drivers that drove kind of long-term deferred to be kind of flat – flattish up 2% year-over-year. Was that tied to mostly too duration and this longer-term kind of professional services contract? Walk us through any additional color on the long-term deferred side. Because again short-term deferred does look like – it is consistently pretty strong here.
Yes. So the long-term deferred is tied to our reduced pre-built subscription duration. And that's the driving factor, right in terms of the decrease or the flatness of the long-term deferred revenue. And again, let me remind you in terms of why we're reducing our subscription, our pre-built subscription duration. One is we don't want our sales guys to spend time negotiation – negotiating and trying to convince customers to prepay multi-year subscriptions.
That increases the sales cycle and typically it also results in heavy discounts in order to convince customers, that’s prepay for multi-year. And we're moving really towards a multi-year commit with annual billings, right. So, that’s a model that sales forces have adopted and it's the model that we think is the right way to maximize the value for the company going forward.
Great. That’s all I had. Thank you.
We’ll take our next question from Mark Murphy from JPMorgan.
Hi, this is Albert Chi on for Mark Murphy. Thanks for taking my question Mike and Thomas. On the topic of multi-cloud support that you mentioned last quarter you said that Azure was about a third of your sales opportunities. Could you update us on that number and where you think that levels out versus AWS and Google? And also is that being driven by the data warehouse solutions or is it more coming from the house Hadoop distributions in those clouds. Thanks.
Yes. I think – as far as we can tell and again these numbers are not precise they're not – some of the systems numbers that Thomas is going to give you. So I think the 60-30 seems to be consistent in Q2 versus Q1. And I would say companies are making decisions about cloud for a number of different things, we certainly talked to plenty of them that are doing it on – deep dive database functionality in each of the different cloud vendors as different strengths that they can articulate and then customers will relay back to us.
Other things that are going right now in Microsoft’s favor because that's really where we're seeing the balance starting to tip a bit is their hybrid used benefit on licensing. So any license that you have – you get a significant discount in the cloud and they're integration with things like Visual Studio. So if you're a Visual Studio.net shop then clearly Microsoft's going to be a natural place to consider.
And so those are the things that I think are tailwinds for Microsoft right now in addition to clearly a strong data platform. But I think Amazon and Google also have strong data platforms.
Got it. And just one more follow-up. I want to ask about the SI partner traction that you talked about recently. And would you mind talking about a little bit of the growth that you're seeing with the number of certified consultants now in Talend. And I guess given that we're seeing a lot of enterprise growth. Would you say that the SI partners are driving a lot of that? Thanks.
Yes. The SI partners are absolutely a huge help there both in terms of bringing us into deals and of course in helping making those customer successful. So the only real additional color I have aside from the commentary that we had before was actually sat down couple of times with the one SI that had committed to doing themselves 1,500 trained consultants on our platform. And their training is really proceeding apace, I think they're well on track to hit that number by the end of the year. And they walked us through proudly where they stood and what their next steps were and so on.
And we talked about some really strong joint offerings that we're making together with them. And I’d say it’s a very, very positive development business, one that we didn't see anything at all of in the last several years.
Great. Thank you.
[Operator Instructions] We’ll take our next question from Walter Pritchard with Citi.
Hi. Thank you. This is Tyler Radke on for Walter. I wanted to ask you about the enterprise metric you shared in the press release. Enterprise, I think you said revenue from enterprise customers was up or you said large enterprise customers are adopting Talend with 56% year-over-year increase, I just want to clarify. Is that a revenue numbers? Is that a customer number? How should we think about that?
What it is, we publish in our quarterly IR deck, every quarter how many customers count – what's the count of customers that are over $100,000 per year in annual subscription run rate. And so that number is up by 56% from 2016 to 2017 and in particular the number is, it went from 186 customers to 291 and it's not exactly a linear correlation to revenue of that particular segment. Because clearly the distribution of deal size is changing in that mix, I think qualitatively, the distribution deal size is that I expected as likely going up, given the trends in the rest of our business. But I don't actually know, because it's not in metric that we track.
Got it. And Thomas, if I look at your operating margin expansion, certainly in the first half of this year, even with some strong hiring – it's been up – particular this quarter is up double digits year-over-year, if I think in terms of the points on operating margin? Are you – how comfortable are you at with that rate is margin expansion, going forward? And kind of what keeps you from investing the more – from investing the upside because you're growing your subscription revenues faster than your operating expense?
All right. So in terms of the – I mean, you saw that our guidance for our operating loss for the year has remained unchanged on it, Tyler. Right, so we're continuing to win and we're going to continue to invest right in the business in Q3 and Q4. Of course within that the margin guidance that we gave – so I think right now the improvement in Q3 – sorry, improvement in Q2, in terms of operating margin was partly due, as I discussed during the prepared remarks. Right, too you know at some system implementation push out from Q2 to Q3. So I would expect again that for the on a full year basis, that our operating margin stays consistent with what we have previously guided, right so.
Yes, as always jump in just philosophically from the way we think about this is. Having that discipline of a balance model, where we have strong premium revenue growth being cash flow filed it for the year, and making improvement on the operating line. And so that's the balance that we run continue to invest in the business, but not investing all of that revenue growth from the business but showing some attraction on the bottom line as well.
If I could just, anyone last one, as you guys reflect back on your first years as a public company and you look at the growth that, you gives have put up with accelerating revenue. What would you say the – it's been the bigger surprise in terms of the upside that you've seen on the demand.
What I would say is the – we've been very pleased with the attraction and th1e continued growth and it's less of the surprise and more of a continuation with trends right. So we've seen that continuation of big data in cloud. We've seen probably a strong shift to the cloud within that. But that was something that we were talking about and projecting the year ago as well. We've seen the strong growth in the enterprise business. I guess the one that we haven't really forecast, it’s been really nice part of the picture, right now is the really accelerating momentum with the SIs. And so if I were to point to one surprise that one is a really nice one for us.
Thank you. Operator?
And it appears to no further questions at this time.
Great. We thank you everyone for joining us on the call today. And we look forward to updating you again on our next earnings call.
This concludes today’s call. Thank you for your participation. You may now disconnect.