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Data integration software provider Talend SA slightly beat Wall Street earnings estimates for its fiscal third quarter on revenue that matched analysts’ forecasts, but the news wasn’t all good today.

The company also issued fourth-quarter guidance that was slightly below consensus estimates and said its on-premises data transformation business is contracting faster than expected, sparking a selloff in its shares after hours.

The company also said it acquired Stitch Inc., maker of a self-service data integration software, for $60 million.

Talend’s third-quarter loss of 9 cents per share was a penny better than consensus estimates of a 10-cent loss. Revenue rose 32 percent to $52.07 million, better than Wall St expectations of $51.84 million.

For the fourth quarter, though, Talend said its losses will come in at 12 to 16 cents per share, considerably more than analysts’ expectations of a 9-cent loss. The company forecast revenue of between $56.6 million and $57.4 million, with the low-end number coming in just below consensus estimates.

“We’re basically reiterating guidance for Q4. Analysts want to see a raise,” Talend Chief Executive Mike Tuchen (pictured) said in an interview with SiliconANGLE.

Talend shares initially slid about 2 percent on the lower fourth-quarter guidance but plunged more than 9 percent after executives told analysts that customers are moving their big data projects to the cloud at a faster pace than they expected. Update: On Thursday, investors bailed out, sending the stock down more than 35 percent by midday.

Talend had been betting on 20 percent-plus growth in on-premises Hadoop big-data software deployments in the quarter, but actual growth came in below 20 percent. “Customers that haven’t adopted on-premises Hadoop are deciding it’s a whole lot easier to go to cloud,” Tuchen said.

Cloud subscription revenue more than doubled for the ninth straight quarter, but still makes up less than half of the company’s sales. New Chief Financial Officer Adam Meister called the shift to a cloud-first sales strategy “the most important strategic priority for 2019.”

Tuchen reiterated that “the prescription is clear: Double- and triple-down on cloud because that’s where the business is going.”

That shift is expected to result in some short-term declines in contract sizes since “new cloud deals are nearly all small,” Tuchen told analysts.

That’s where the Stitch acquisition fits in. The two-year-old Philadelphia-based company provides a service that moves data from one cloud to another, a process called extract/transform/load. It’s sold on a self-service basis with prices starting at $100 per month.

That makes Stitch a door-opener for companies or departments within enterprises that are getting started with data warehousing. “The first part of what we do is take data from somewhere and put it somewhere else,” Tuchen said. “They do it in a far simpler and faster way than we do.” Talend also provides data transformation services, a market Stitch chose not to address.

With just 33 employees and no venture capital, Stitch has a customer base that has been limited to mostly small and midsized businesses. “I think what’s keeping them [there] is that no one has heard of them before,” Tuchen said.

Talend sees Stitch as a way to ease customers into ETL. Organizations typically adopt ETL tools for new data warehousing projects but “but shortly after that they find they need to clean up the data, correct it and blend it together,” Tuchen said. “We can solve that problem, and because we have a relationship [via Stitch], it gives us  chance to be in the conversation.”

Talend will hire the entire staff of the newly acquired company and operate the business as an independent subsidiary for the short term, with plans to invest aggressively in the newly acquired business. “We just bought a first-class ticket to the moon on this new rocket called cloud,” Tuchen said.

Photo: LinkedIn