What Are Tableau’s Key Drivers of Revenue?

Tableau Software (NYSE:DATA) has performed strongly over the past five years, with its revenue growth coming in at around 39% annually. Although the company enjoy a leading position in the business intelligence space, continued growth in expenses in order to compete against software giants such as Microsoft, Oracle and SAP has led to some volatility in its stock price. The company’s decision to shift from perpetual licensing to a subscription-based model appears to be paying off, and the company’s stock rose by over 40% in 2017, despite a notable reduction in licensing revenues. Reduced upfront costs across product lines, and the expectation of increased adoption of its products going forward, suggests an improved growth outlook.

Currently, we have a price estimate of $66 for Tableau, which is below the current market price. We expect nearly 20% growth in the company’s overall revenue for 2018. We have created an interactive dashboard which shows the historical trends and our expectations for the company’s fiscal 2018 top line; you can modify the key value drivers to see how they will impact the company’s results.

Tableau’s strong growth across Licensing and Maintenance revenue is primarily driven by the phenomenal growth in its customer base. The company has witnessed over 43% annual growth in its customer base since 2013. Continued product improvement, feature additions and increased international expansion has driven the customer base over the years. With customer preferences shifting toward cloud-based products, Tableau is leveraging two cost-effective product lines, Tableau Online and Tableau Public, to capitalize on this demand. Both products have seen solid adoption since their launches, which bodes well for the company’s long-term future.