Tableau Software (
) may be rewriting the definition of a fast-growth technology
The data analytics software company offered its best case to
date for the title earlier this month when it blew away analysts
views for its fourth quarter highlighted by year-over-year
quarterly revenue growth of 95%. Analysts had expected 60%
Investors responded in kind, sending shares soaring by over
12% on Feb. 5, a day after its Q4 results.
The stock is up 45% this year after ending 2013 up 122% from
its IPO offering price of 31 on May 17.
Tableau Software is one member of an emerging club of young
gun software players catching on with investors as they challenge
multibillion technology stalwarts such asOracle (
) andIBM (
) with innovative methods for managing electronic data, says
Derrick Wood, an analyst for Susquehanna Financial Group.
"That is the appetite these days, you look across the
),Splunk (SPLK), Tableau, all of these stocks are just up and to
the right, and it's such a dynamic time in technology and some of
these vendors are very disruptive with big growth curves, and
valuations are getting bid up on an appetite to own these names,"
Tableau's software lets companies sift through data from
multiple departments and arrange that information in charts and
The primary difference between Tableau and some of its rivals
is that its software can be used by most office staff without the
help of information technology departments, says Steven Ashley,
an analyst for Robert W. Baird & Co.
"Tableau is coming into the market with tools that provide
better visualizations of data that the common man or knowledge
worker can use," he said.
In the quarter, Tableau reported a per-share profit, minus
items, of 20 cents due to a one-time tax benefit vs. 4 cents in
the year-earlier period. Analysts polled by Thomson Reuters had
expected a break-even quarter. Revenue in the quarter jumped 95%
to $81.5 million vs. the same quarter last year.
For the current period, the company said it expects revenue of
$61 million to $63 million, or growth of 52.5% to 57.4% from the
year-earlier quarter. Analysts had expected $60 million, or
growth of 50%.
Many investors have a one-track mind when looking at Tableau,
says Daniel Ives, an analyst for FBR Capital Markets.
"They are buying on the revenue growth; at the end of the day
you can count on one hand the type of quality companies that are
growing at this pace in these types of secular areas," he said.
"Relative to expectations, they kind of blew the cover off the
In the quarter, Tableau's license revenue grew 92.9% to $58
million vs. the year-earlier period. Revenue from maintenance and
service shot up 99.6% to $23.4 million.
Tableau released a new version of its software in November and
is planning another new version in Q2 and yet another next
During a conference call with analysts to discuss its
earnings, CEO Christian Chabot said Tableau expanded
relationships with several large existing customers,
includingGoogle (GOOG) andFord Motor (F).
Tableau's ability to find ways for customers to use its
software is providing the fuel for much of its growth, Ives
"The new products help, but once Tableau gets in the door they
are really able to expand their overall presence and that has
been on their keys to success," he said.
Is it enough? Analysts expect Tableau's year-over-year revenue
growth to begin to decelerate to 57% in Q1 and 45% in Q2 after a
steady climb from 62% to 95% the past four quarters.
And Q1 is a particularly slow period for software
Many of Tableau's deployments are in specific departments
rather than across a company. Pushing beyond that boundary could
compromise the business model that has made Tableau a favorite
among knowledge workers and the reason for its success, Wood
"If they want to get into the market in signing bigger
platformwide deals, they are going to need to tailor not just to
the business user but to IT," he said. "When you start getting
into bigger deployments, there is a need for security and schema
and structure and compliance -- all of that stuff that IT needs
to be in control of."
Investing In The Business
In the quarter, Tableau's sales and marketing costs rose 72.9%
to $40.1 million vs. the year-earlier period while R&D
spending climbed 76.2% to $18.2 million vs. the same quarter last
Tableau's global message is gaining traction. Its
international business represented 22% of revenue in Q4 vs. 18%
in the prior quarter.
Growth does come at a price.
"The biggest challenge is managing rapid growth," Ashley said.
"If you are growing your business at 70%, 80%, 90% (annually) you
have to hire 70% or 80% or 90% more people, more office space
(and) more computer capacity."
Tableau must keeping pushing the big boys such as Oracle and
SAP, said Ives: "There is a big opportunity in the installed base
that is the traditional analytics vendors and it's really going
after that opportunity. That is really the golden nugget."