Key Takeaways From Tableau’s Q4

After announcing its Q4 earnings, Tableau Software‘s (NYSE:DATA) stock price grew by 16% in after-hours trading on Thursday, February 2. The company comfortably beat both its revenue and EPS guidance for the quarter, and  sustained its growth momentum from the previous two quarters of the year, reporting revenues of around $250 million, in line with the prior year quarter. Licensing revenue declined by over 15%, though this was largely due to the transition from a perpetual licensing to subscription model, with the latter reducing upfront revenue significantly. With reduced upfront costs across all product lines, we expect increased adoption of its products going forward.

The quarter saw the addition of over 4,700 new customer accounts, which took the overall customer count to over 70,000. Tableau was able to close 27 six figure deals and around 590 transactions greater than $100,000 in the quarter. The company’s continued efforts in expanding international reach and higher spending on research and development led to a 9% increase in operating expenses. However, this was a relatively slower rate of growth, as the company has prioritized keeping expenses in check. We expect its net loss to broaden sequentially going forward, as the company will continue to invest significantly in order to remain competitive against software giants Microsoft, Salesforce and SAP.

Currently, we have a price estimate of $64 for Tableau, which is well below the current market price. We expect nearly 20% growth in the company’s overall revenue for the year 2018. We have created an interactive dashboard where you can change the company’s forecast revenue, margins, and other key drivers to gauge how they would impact its expected results and valuation.

Subscription Pricing And Product Innovation Drove Adoption 

Tableau’s licensing revenues saw a 15% year over year decline, while maintenance and service revenues jumped nearly 22% in the last quarter. With the number of customers increasing every quarter, maintenance revenues are expected to see solid growth in the near term.

Tableau generated around 67% of its revenue from the U.S. and Canada, but growth in these relatively mature markets has slowed down. As such, the company is aggressively targeting growth in international markets. International revenues witnessed 5% growth and constituted 33% of the company’s overall revenues (200 basis points above the prior year quarter), which highlights the returns from its increased global footprint.

Please refer to our complete analysis for Tableau

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