Key Takeaways From Tableau’s Q1

After announcing its Q1 earnings, Tableau Software‘s (NYSE:DATA) stock price grew by almost 10% in after-hours trading on Wednesday, May 2. The company comfortably beat its revenue guidance for the quarter, and sustained its growth momentum from the previous year, reporting revenues of around $246 million according to the newly adopted ASC 606 reporting standard and $224 million according to the previous standard. Licensing revenue grew by over 12%, which was largely due to the transition from a perpetual licensing to a subscription model. With reduced upfront costs across all product lines, we expect increased adoption of its products going forward.

The quarter saw the addition of over 4,000 new customer accounts, which took the overall customer count to over 74,000. Tableau was able to close 13 six-figure deals and around 301 transactions greater than $100,000 in the quarter. The company’s continued efforts in expanding the international reach and higher spending on research and development led to a 17% 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 $74 for Tableau, which is below the current market price. We expect nearly 19% 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 12% year over year growth, while maintenance and service revenues jumped nearly 34% 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 68% 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 17% growth and constituted 32% of the company’s overall revenues (200 basis points above the prior year quarter), which highlights the returns from its increased global footprint.