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Tableau Struggling to Keep Up With Market Expectations

Posted on Thursday, Feb 11th 2016

A recent study by IDC on Big Data projects the big data related infrastructure, software, and services to grow at a compound annual growth rate of 23.1% over the period 2014 through 2019. The market is estimated to be worth $48.6 billion in 2019. Another report by MarketsandMarkets projects the Advanced Analytics market, which includes Big Data analytics, to grow 33% from $7.04 billion in 2014 to $29.53 billion in 2019.

Tableau’s Financials

Unicorn player Tableau Software (NYSE: DATA) is a notable company in the data visualization space. It recently announced its fourth quarter results, which failed to impress the Street. Tableau’s stock has taken quite a beating during the past year. Things aren’t looking up either, as was evident from its disappointing outlook and the market’s continued stock downgrades.

Tableau’s Q4 revenues grew 42% over the year to $202.8 million, ahead of the Street’s forecast of $201.2 million. Loss per share of $0.33 was significantly short of the market’s projections of earnings of $0.16 per share.

By segment, license revenues grew 31% to $133.1 million. In the last quarter, license revenues had reported a growth of 57% over the year. Maintenance and Service revenues grew 68% to $69.6 million.

Tableau ended the year with revenues growing 60% over the year to $653.6 million with a net loss of $1.17 per share. That is a surprising result from a company that has been profitable for a while.

For the current quarter, Tableau forecast revenues of $160 million-$165 million with a net loss of $0.08-$0.12 per share. The market was looking for revenues of $179.48 million and an EPS of $0.06 for the quarter. Tableau expects to end the current year with revenues of $830 million-$850 million compared with the Street’s forecast of $871 million. EPS for the year was forecast at $0.22-$0.35 compared with the Street’s projection of $0.62.

Tableau’s Worries

Recently there has been increasing competition in the Big Data analytics space that is hurting Tableau. Qlik Technologies launched its version of a data analytics software Qlik Sense. The product is getting positive reviews from the enterprise and mid-market consumers, especially since the Sense Desktop is available for free. Additionally, bigger vendors are also offering a similar product. Of note is Microsoft’s Power BI data-analytics software that is offered for free and compares with Tableau’s premium priced offering. Additionally, Microsoft’s Power BI is more likely to attract its existing Excel users – a market that Tableau targets. Other bigger competitors include Amazon and which are coming up with similar offerings of their own. Market research suggests that among the available data visualization solutions, Tableau has the most expensive product.

The market is also worried about Tableau’s increasing costs. Tableau’s revenue growth is decelerating over the quarters, but its spending plans remain unchanged. For the reported quarter, Tableau’s R&D spend grew 155% over the year to $17.9 million and sales and marketing costs grew 135% to $13.9 million. The company appears to be focusing on growth instead of profitability.

The market isn’t happy with Tableau at all. Post the result announcement, the stock tumbled more than 45% to $36.60. Its stock is currently trading at $39.86 with a market capitalization of $2.89 billion. It touched a high of $131.34 in July last year.

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