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Will Microsoft Acquire Tableau in 2017?

Posted on Tuesday, May 9th 2017

According to an IDC report published last year, worldwide revenues for Big Data and Business Analytics are estimated to grow from $130.1 billion in 2016 to over $203 billion in 2020. The growth is expected to be driven by banking, discrete manufacturing, process manufacturing, federal/central government, and professional services, which accounted for nearly half of worldwide Big Data and Business Analytics investments.

Tableau’s Financials

Data analytics firm, Tableau (NYSE: DATA) recently reported its first quarter results and its lower than expected loss helped drive the stock upwards. Its Q1 revenues grew 16% over the year to $199.9 million, missing the Street’s forecast of $200.9 million. Loss per share of $0.03 was significantly better than the market’s projected loss of $0.11 per share.

By segment, License revenues were flat at $97.2 million. Maintenance and Services revenues grew 36% to $102.7 million. Ratable License bookings accounted for 26% of total License bookings, compared to 12% a year ago. The company closed nearly 300 transactions worth more than $100,000 during the quarter. It added more than 3,300 customer accounts in the quarter, to end with more than 57,000 customer accounts.

Tableau’s Market Expansion

As part of its market expansion initiative, Tableau recently released a new subscription pricing option. The new subscription pricing for all of its products, including Tableau Desktop, Tableau Server, and Tableau Online, reduces the initial investment costs that the customers have to pay. The pricing thus eases the ability of the customer to implement Tableau. Tableau is hopeful that by reducing the upfront investment, it will be able to attract more customers to its services.

Toward the end of the quarter, Tableau also released its latest version Tableau 10.2. The latest upgrade offers advanced analytic capabilities and provides enterprises with tools to deliver self-service analytics at scale. For instance, it allows advanced mapping capabilities through a new spatial file connector that will allow customers to leverage their spatial data directly in Tableau for easy geospatial analysis. It has also simplified data preparation by simplifying the integration of tables from a database and leveraging database structure and schemes more efficiently. Tableau visualizations can also now be conformed to the current Web Content Accessibility Guidelines drafted by the Web Accessibility Initiative. It offers keyboard support and function for common visualization elements and offers assistive technologies such as screen reading to help the customer’s visualizations reach the largest possible audience.

Tableau’s Increasing Competition

Despite the product innovations, Tableau must deal with some significant competition. Earlier it was Microsoft that was increasing its footprint in the market with the Power BI offering. And now, it is the mighty Alphabet. In March this year, Alphabet announced Data Studio as a function of the Google Analytics Suite 360. The Data Studio integrates information from Google Sheets, AdWords, YouTube, BigQuery, and other products into interactive, customized reports. The service is available as both free and paid versions and helps organizations as well as individuals work on comprehensive and collaborative projects.

To continue to combat this competition, Tableau will find it even more difficult to reach profitability. It will not only have to enhance its product offering, but also make sure it spends heavily on marketing. The rising competition coupled with distant profitability prospects continue to put pressure on Tableau. However, the case for Microsoft acquiring Tableau continue to remain strong.

Tableau’s stock is trading at $60.05 with a market capitalization of $4.7 billion. It had fallen to a 52-week low of $41.41 in December last year. It had reached a high of $63.34 in August last year.

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