Another solid quarter for Tableau Software Inc. lifted the company’s shares in after-hours trading Wednesday as it speeded up its transition to a subscription-based business model.

The big data visualization company reported a profit of 10 cents a share before certain costs such as stock compensation. The second-quarter profit was well ahead of forecasts by Wall Street analysts, who had expected a minor loss this quarter. Tableau also reported revenue of $212.9 million, just above Wall Street’s expected $211.3 million.

The big story this quarter was the growth in Tableau’s new subscription business model. The company said subscription bookings now account for 37 percent of bookings. In addition, the company reported subscription revenues for the first time, saying it pulled in $103.5 million for the quarter. That’s a 175 percent increase from the same quarter a year ago.

Tableau Chief Executive Officer Adam Selipsky said that even he was surprised at the subscription growth, saying it was faster than the company’s own projections. “The move to a subscription model represents our ongoing commitment to helping our customers adopt and scale Tableau with greater flexibility and reduced risk,” he added.

Selipsky took over the reins at Tableau last year, making it a priority to expand the company’s subscription-based Tableau Online product. Like most software companies, Tableau sees big advantages to be made from converting customers from perpetual licenses to subscriptions. In addition to the recurring revenue, there’s also a widespread belief that the flexible nature of the subscription model allows software companies to expand their target market to a larger audience.

With that in mind, Tableau recently announced subscription prices for its entire suite of products, saying it was part of a “continuing shift” towards a full subscription business model.

But although Tableau seems to be taking the transition in its stride, it could still face challenges ahead, and not just because of its business model, warned Holger Mueller, principal analyst and vice president at Constellation Research Inc.

“For single or few-product companies, these strategy changes more often than seldom prove to be commercially challenging, but the direction is the right one in the long term,” he said. “A loyal customer base is a given, so it will come down to how Tableau’s products can compete in the upcoming era of Artificial Intelligence and machine learning, which changes visualization substantially both from a product capability and user perspective.”

Despite those concerns, investors seemed pleased with Tableau’s progress so far, with the company’s shares rising nearly 4 percent in after-hours trading, to $67.88 per share.

Image: Tableau