Personal Finance

Why Tableau Shares Plunged Today

Person using Tableau software on a laptop

What happened

Shares of data visualization specialist Tableau Software (NYSE: DATA) have plunged today, down by 9% as of 10:45 a.m. EDT, after the company reported third-quarter earnings results. Results didn't meet expectations, while the shift to a subscription model hurt Tableau's guidance.

So what

Revenue in the third quarter grew 4% to $214.9 million, which translated into non- GAAP earnings per share of $0.08. Both top- and bottom-line results fell shy of consensus estimates, which called for $219 million in sales and $0.09 per share in adjusted profit.

Person using Tableau software on a laptop

Image source: Tableau.

Tableau is in the process of shifting its customer base to subscriptions instead of traditional software licenses. Subscription annual recurring revenue jumped 204% to $139.2 million.

Now what

On the conference call, CFO Thomas Walker said revenue in the fourth quarter should be in the range of $235 million to $245 million, while the Street was expecting closer to $251 million in sales. Walker added:

This outlook assumes the mix of ratable license bookings will represent approximately 46% to 51% of our license bookings for the quarter. This is a significant increase over the 20% mix in Q4 of 2016. Our Q4 guidance primarily reflects increased expectations regarding our Q4 ratable mix as more and more customers choose subscription over perpetual licensing.

Subscriptions recognize revenue over time instead of up front as traditional licenses do, but provide greater visibility while generating recurring revenue. If anything, the transition is going very well, and the short-term dip in recognized revenue is a small price to pay.

10 stocks we like better than Tableau Software

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Tableau Software wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of October 9, 2017

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Stocks

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More