Tableau in 2015: Year in Review

The year 2015 was expected to be a tough one for leading business intelligence company Tableau (NYSE:DATA), but the company powered through the fears of increased competition eating into its growth. The year saw major updates in the business intelligence tools offered by software giants Salesforce.com (NYSE:CRM) and Microsoft (NYSE:MSFT). At the same time, Tableau’s biggest rival Qlik (NYSE:QLIK) released Qlik Sense Enterprise, a visualization tool for businesses that competes directly with Tableau. Despite the tightening race in the business intelligence and visualization market, Tableau consistently achieved solid performance throughout the year. We believe that a strong product portfolio and dominant position in the industry will help it continue to perform well in 2016.

The tightening race in the business intelligence market led to concerns among investors that Tableau may not be able to sustain its historically high growth rate for much longer. A spate of share sales by Tableau’s officers during the year was an additional cause of concern among already jittery investors. The combination of these two factors led to a drop of over 40% in Tableau’s share price, from its 52-week high of $131 to $76 by September 2015. Its shares have since recovered by 25% due to the strong performance in the third quarter, but still remains 25% lower than the 52-week high.

In this report, we take a look at some of the major developments that impacted Tableau in 2015.

Our price estimate of $110 for Tableau is about 15% higher than its current market price.

See our complete analysis for Tableau here

Increased Competition

As mentioned earlier, 2015 saw a ramp-up in competition in the business intelligence and visualization software industry. Global corporate giants such as Salesforce and Microsoft increased their stakes in the $18 billion industry ^[1] by releasing major software updates during the year. At the same time, Amazon’s cloud arm, Amazon Web Services (AWS), introduced a new analytics product Quicksight to compete directly with Tableau. Tableau’s key rival Qlik was not far behind and introduced Qlik Sense Enterprise 2.0 for data-driven analytics and visualization.

However, with the exception of Qlik, the products offered by these companies do not have the depth of features compared to that offered by Tableau. According to Tableau’s CEO Christian Cabot, the platform offerings like those of Salesforce and AWS are “fairly light and shallow”. Perhaps, more importantly, they are designed primarily to cater to customers of their own cloud platform. They also do not have a presence in the on-premise segment and are available only over the cloud, unlike Tableau. Additionally, Tableau has been positioned as the leader in Gartner’s 2015 Magic Quadrant for Business Intelligenve and Analytics platforms, which is a good indicator of a company’s competitive strength. Tableau beat software giants like Microsoft, Oracle and SAP to take the leadership position in the Quadrant in 2015. ^[2]

Because of these factors, we believe that the new competitors like Salesforce and Amazon do not pose a meaningful threat to Tableau, so far. (Read: Just How Big a Threat is Amazon’s Quicksight to Tableau and Qlik?)

Consistent Growth in Customer Base

Tableau added over 8,700 customers in the first three quarters of 2015 alone, bringing its total customer base to over 35,000. The company has grown its customer base at an increasing pace in the last five years, which indicates not only the success of its products but also its ‘land and expand’ strategy, whereby free-ware products are offered to encourage paid adoption across the organization.

In 2015, the focus turned from domestic markets to international markets. Revenues from international markets significantly outpaced revenues from the United States and Canada in 2015. (Read: A Closer Look at Tableau’s Q3 Earnings: International Expansion and New Products Driving Top-Line Growth) While part of the benefit may be due to the smaller base of international revenues, there is no denying that Tableau realizes the importance of expanding beyond its home base. Consequently, the company entered the lucrative business intelligence market in China in 2015 (Read: Tableau’s Entry Into China A Good Move As Company Targets International Growth) and expanded its operations in Europe with a new data center for its cloud business.

Expansion Plans

A rapid product release cadence has been a hallmark of Tableau. The company continued updating its products regularly in 2015 and introduced Tableau 9.2 and Vizable. It also announced new partnerships with Amazon Web Services and Deloitte Consulting, among others. ^[3]

The notable aspect in Tableau’s strategy is that, despite its consistently solid growth, it does not appear to have become complacent. It has already taken note of the emerging popularity of cloud computing and mobile usage among business users and is working on solutions to leverage these trends. In August, Tableau made its first ever acquisition by purchasing Infoactive, a 3-year old startup that converts data into mobile-infographics. ^[4] The acquisition was followed by the launch of Vizable in October, which is a standalone mobile product designed to address this growing medium among business users. ^[5]

Tableau plans to invest more in R&D in the next two years than it has in the last 10 years combined. The investments will be dedicated towards organic as well as inorganic developments in visual analytics, data integration, data preparation, server administration, cloud deployment and mobile analytics. ^[3] The company also recently announced plans to hire 1,000 new employees in 2016, which further underscores its aggressive expansion plans. ^[6]

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1. Business Intelligence and Analytics Software Market, MarketsandMarkets, August 31, 2015 [↩]
2. Magic Quadrant for Business Intelligence and Analytics Platforms, Gartner, February 23, 2015 [↩]
3. Tableau Fiscal 2015 Third Quarter Earnings Call Transcript, Seeking Alpha, November 6, 2015 [↩] [↩]
4. Tableau Acquires Infographics Startup Infoactive, Tableau Press Release, August 4, 2015 [↩]
5. Tableau Launches Vizable, A Breakthrough Mobile App for Data Exploration, Tableau Press Release, August 4, 2015 [↩]
6. Tableau Software set to hire another 1,000 employees in 2016…, GeekWire, December 14, 2015 [↩]