Tableau Q2 Earnings: Impressive Growth In Customer Base And Revenues

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Tableau Software (NYSE:DATA) recently released its quarterly earnings report. [1] The subscriber base and revenues both registered an uptick during the quarter. Tableau’s customer base has grown immensely with the increase in demand for data discovery based Business Intelligence (BI) software, and we believe that the company is well on track to acquire 66,000 customers by 2021. Tableau’s “Land and Expand” strategy has been very successful thus far, and will continue to help the company grow its revenues in the years to come. Consequently, we believe that Tableau’s revenues will increase from $413 million in 2014 to over $2 billion by the end of our forecast period.

See our complete analysis for Tableau

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Tableau Continues To Grow Revenues And Gain More Customers

Tableau’s total revenues amounted to $149.9 million for Q2 2015, an increase of 65% over the prior year period. [2] The company’s license revenues jumped 60% while its maintenance and services revenues saw an uptick of 75%. Tableau is confident this strong growth will continue and expects full year revenues to be in the $617-627 million range, with a mid-point ($622 million) that is comfortably above the consensus average of $619 million. [3] The company also experienced robust growth in its customer base and added around 3,000 new customers for the quarter. [1] Tableau’s subscriber tally currently stands at 32,000, and we believe the company will continue to add new customers in the coming years. The business analytics software industry is in the midst of a secular trend of growth and Tableau has been one of the beneficiaries. Tableau has featured as a leader in Gartner’s Magic Quadrant for Business Intelligence and Analytics Platforms for the last three years and its business discovery platform is considered the gold standard in the data discovery segment. [4] [5] Consequently, we believe that Tableau’s subscriber base will be north of 66,000 by 2021.

Tableau Is Moving In The Right Direction

The emphasis on ease of use and visualization in business intelligence software has fueled Tableau’s growth. However, that does not mean that enterprise requirements can be ignored. According to Gartner, the Business Intelligence and Analytics industry is expected to grow at a compounded annual growth rate of 8.7% through 2018. [4] Gartner introduced the concept of governed data discovery that refers to platforms that can address enterprise-level IT requirements as well as assist business users (non-IT) in data discovery. No vendor has addressed both these aspects so far, but there is an indication that this convergence will happen. Governed data discovery strives to find the right balance between allowing creativity so that end users can experiment with the data and maintaining just enough centralized control so that enterprise tasks can run smoothly.

In keeping with this concept, Tableau has introduced more enterprise-related features related to visual analytics, performance, scalability and data preparation with its new product Tableau 9.0. [6] Tableau 9.0 also employs technologies such as parallel queries, vectorization, smarter query caches and Query Fusion which improve the software’s speed and efficiency. [7] The company also announced in May that it has secured the services of renowned statistician, academic and author Leland Wilkinson. [8] Considered a pioneer in the data visualization field, Wilkinson created the SYSTAT statistical package in the early 1980’s and has developed various visualization systems since then. Wilkinson has been brought on-board to further research and development efforts in the areas of predictive analysis, scientific visualization and statistical graphics. Wilkinson is an impressive addition to Tableau’s R&D team, which has grown by 50% last year, highlighting the company’s commitment to improving and enhancing its products. Tableau’s in-memory computing (IMC) technology is complementary to data discovery. It reduces the number of data transactions required while analyzing data by storing the entire database in random access memory (RAM) which is more accessible to the processor. The IMC engine calculates aggregations rapidly and maintains associations in the data, which makes analysis faster and more real-time.

Tableau closed 482 enterprise-level transactions (worth $100,000 or more) in the first six months of 2015, an increase of 74% from the prior year period. [2] We believe that Tableau’s growing focus on enterprise-level capabilities, along with its decidedly superior data discovery platform, will give it an edge over its competitors in an increasingly dynamic business analytics market. Accordingly, we expect continued growth in average revenue per customer and currently forecast this driver to be north of $17,000 by 2021.

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Notes:
  1. Tableau Reports Second Quarter 2015 Financial Results, July 29, 2015, Tableau Press Release [] []
  2. Tableau’s SEC Filings [] []
  3. Tableau Software (DATA) Christian Chabot on Q2 2015 Results – Earnings Call Transcript, July 29, 2015, Seeking Alpha []
  4. Magic Quadrant for Business Intelligence and Analytics Platforms, 23 February 2015, Gartner [] []
  5. A Leader. Again., Tableau Press Release []
  6. Tableau Software (DATA) Christian Chabot on Q1 2015 Results – Earnings Call Transcript, May 8, 2015, Seeking Alpha []
  7. Tableau 9.0 Brings Interactive Speed and Enriched Flow to Data Analytics, April 7, 2015, Tableau Investor News []
  8. Tableau Expands R&D Team with Renowned Statistician Leland Wilkinson, May 26, 2015, Tableau Investor News []