UPDATED 18:18 EDT / MAY 05 2016

NEWS

Tableau beats estimates, says pricing will be more aggressive

Investors might not have liked what they saw in Tableau Software Inc.’s first-quarter earnings results, but customers should have reasons to cheer.

The business intelligence powerhouse beat quarterly earnings estimates with break-even results, compared to consensus estimates of a 10-cents-per-share loss. Revenues were up 32 percent to nearly $172 million versus a consensus estimate of $164 million. The company also guided full-year revenue expectations upward from $835 million to $855 million and raised earnings per share estimates to 41 cents against the current analyst estimate of 33 cents

Nevertheless, Tableau stock was knocked back about six percent in after-hours trading, although it was recovering from after-hours lows as this story was posted.

The company booked 3,500 new customer accounts and closed 268 transactions of $10,000 or more, up eight percent year-over-year. It also signed 10 customers to contracts of greater than $1 million. “It was a pretty good quarter for meaty deals,” said CEO Christian Chabot.

However, investors have come to expect more from the company that, until the fourth quarter of last year, had typically beat earnings expectations by between seven and 17 percent. Tableau stock plummeted following its previous earnings report, losing more than half of its value in a single day on slightly weaker revenue guidance. The news was seen as evidence that the big data market in general is slowing, and similar stocks suffered as a result.

The only down note in this quarter’s results was on the hiring front. While the company added 168 employees in the quarter to reach 3,000 people worldwide, Chabot noted on the earnings call that the company is scaling back its hiring plans by half. That would still mean hiring 500 people this year.

Executives were bullish on the company’s prospects for the rest of this year, particularly in cloud subscriptions and sales to existing customers. “We have a huge market opportunity and a growing and passionate customer base,” Chabot said.

Tableau is focusing its marketing investments on demand generation for the rest of this year in the belief that its existing customers are ready to expand use of its platform – which is known for its ease of use – more aggressively in their organizations. “In talking to customers and hearing them want to go broader and bring Tableau to more casual users, we’re being flexible with them to enable that,” said CFO Tom Walker.

Correspondingly, the company will get more aggressive on pricing, particularly for enterprise-wide deals. “We’re actively trying to discount more at the high end,” Chabot said.

However, executives said the company is seeing no significant pricing pressure, despite a more competitive market. “I don’t pick up a perception that Tableau is expensive,” Walker said. “In fact, customers tell us they come to us because it’s so affordable.”

Executives talked up the company’s Tableau Online cloud offering in particular, noting that its $500 per user per year price is the lowest in its portfolio. Walker dismissed speculation that online subscription revenues would cannibalize software licenses. “Regardless of whether we’re on-premise or in the cloud, we’re ambivalent,” he said.

Tableau doesn’t break out online revenues, but the company said it doubled cloud revenue from last year and now has 4,000 online customer. Its earnings report noted that overall license revenue grew 14 percent in the quarter, compared to 32 percent overall revenue growth. That would indicate that cloud growth is accelerating. “We are all over our investments in public cloud infrastructure,” Chabot said. “It’s the first thing enterprise IT wants to talk about.”


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