Tableau’s Entry Into China A Good Move As Company Targets International Growth

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Tableau Software

Tableau Software (NYSE:DATA) recently announced the launch of operations in Shanghai. [1] The move will allow the company to better serve customers and partners locally. Tableau has not been able to tap into international markets to the same extent as rivals such as Qlik Technologies (NASDAQ:QLIK). The company should be able to better capitalize on the demand for its software by focusing on international operations. Tableau has already announced that it intends to open a data center in Europe by late 2015, and we believe that the move into China is another step in the right direction.

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Tableau Needs To Focus On International Markets

Tableau is an innovative Business Intelligence (BI) software company, and provides its clients with tools and interactive dashboards to search, query, analyze and visualize chunks of data to generate useful business insights. The business intelligence software industry has been seeing significant growth, and Tableau has been one of the beneficiaries. However, it has not been able to tap into the growth in international markets as successfully as rivals; for the first six months of 2015, Qlik generated close to two-thirds of its total revenues from international markets, while Tableau’s international operations have managed to contribute only 24% of total revenues. [2] [3] However, Tableau’s international operations have been growing more rapidly than its domestic revenues. While Tableau’s domestic revenues grew by an impressive 65% during the first six months of 2015, the company’s international revenues increased by 86% during the same period. [3] The company can capitalize on this demand even further by focusing more on its international operations, and its plans to open a data center in Europe and the move into China are steps in the right direction.

Why China Makes Sense For Tableau

The move to launch operations in China will allow the company to better serve customers and partners locally. According to the press release, China’s business analytics services market grew 16.8% in 2014 and generated around $1.4 billion in revenues. [1] The business analytics market is expected to grow steadily at around 16-17% in the next five years and exceed $3 billion by 2019. Economists expect China’s economy to grow at close to 7% for 2015, making it one of the fastest growing economies in the world. [4] As Tableau has the capability to serve both small and large businesses, further economic growth would provide a great opportunity for the company.

China had 649 million internet users by the end of 2014, the most for any country in the world. [5] The country’s smartphone penetration is also impressive, with close to 520 million Chinese nationals owning a smartphone as of December 2014. [6] This number is expected to cross 700 million by 2018. With a massive amount of internet and smartphone users, China generates an immense amount of data. Tableau specializes in providing tools in order to analyze and make sense of large quantities of unorganized data. As businesses shift their approach and slowly become more analytical and data-centric, Tableau could find many new customers in the Chinese market.

Tableau had more than 32,000 customers as of June 30, 2015. [3] The company’s customer base has grown immensely with the increase in demand for data discovery based Business Intelligence (BI) software, and the enhanced focus on international markets should help in sustaining this growth.

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Notes:
  1. Tableau launches operations in China to help customers harness power of data, August 19, 2015, Tableau Investor News [] []
  2. Qlik’s SEC Filings []
  3. Tableau’s SEC Filings [] [] []
  4. China hits bull’s-eye again with 7% GDP growth, July 14, 2015, CNN Money []
  5. China’s internet population hits 649 million, 86 percent on phones, February 3, 2015, Reuters []
  6. Majority of China’s Mobile Phone Users Will Use Smartphones Next Year, December 22, 2014, eMarketer []