Talend Software (TLND) priced their IPO above the range at $18. The company provides data integration software to enterprises who continue to struggle to manage and leverage their growing pile of data - big data, small data, cloud data, etc.

Talend fills a gap in the market for investors after both Informatica and Tibco were acquired in 2015 and 2014 respectively. Just for the sake of starting with these to inform our valuation discussion - Tibco was purchased for $4.3B which was about 4x revenue and Informatica went for $5.4B which was about 5x revenue. (We've made a few adjustments based on the balance sheets and rounded the numbers for simplicity.)

The Never-Solved Problem

Data integration is one of the longest running investment themes in software. There was a major wave new in the 1990’s which included companies offering pure data infrastructure like Informatica and Tibco with their “information bus.” We also had a bumper crop of “enterprise application integration (EAI)” companies like TSI software, New Era of Networks, STC and Vitria software to name some.

Part of the reason the integration problem is never “solved” is that we keep making it harder. Every new technology begets more “legacy” systems. We’ve gone from two-tier to three-tier to now “n-tier” architecture. Into the mix we also added the cloud and myriad new end-points under the “Internet of Things (IoT)” phenomenon.

Talend has the benefit of being the latest, most modern enterprise-class solution in this space today. More traditional players like Teradata (TDC) suffer from older, less flexible and robust technology.  Large software companies like SAP (SAP) and Oracle (ORCL) have their own ecosystem of tools which are useful for getting information in and out of these systems but they are not general purpose solutions.

After the years of M&A we are left with a landscape dominated by large players with the exception of companies like Talend and Boomi (part of Dell) which offers their software as a service rather than on-premis or via open source.

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Disclosure: None. 

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