Tableau Software, Inc. (DATA) Information Technology - Software | Reports May 5, After Market Closes

Key Takeaways

• The Estimize consensus is looking for earnings per share of -$0.06 cents on $165.96 million in revenue, 4 cents higher than Wall Street on the bottom line and $2 million on top.
• Tableau, like its peers, has put up sequential earnings beats the past 2 years but continues to watch shares plummet.
• Last quarter license revenue grew 31%, down from the 57% rate they reported in Q4 2014.

After one of the worst reports of the Q4 earnings season, Tableau (DATA) looks to kick off fiscal 2016 on a much different note. Like many of its peers, earnings and revenue continue to top expectations, but that simply hasn’t been enough to satisfy investors. Despite reporting a 13 cent beat on EPS in the fourth quarter, a warning that the benefit of certain tax assets would not be realized sent the stock into a freefall with shares essentially cut in half. For Tableau and other technology companies, future guidance has been the biggest factor that influences the market during earnings season.

Unfortunately, this quarter is shaping up to more of the same. The Estimize consensus is looking for earnings per share of -$0.06 cents on $165.96 million in revenue, 4 cents higher than Wall Street on the bottom line and $2 million on top. Shockingly, per share estimates have climbed 42% from -$0.10 cents at the start of the quarter. This still reflects a 169% loss on the bottom line while sales are pegged to grow 28%. This trend of unprofitability coupled with large revenue growth has become far too common with companies in this space that are in heavy investment cycles.

While on the surface it looked like Tableau had a good fourth quarter, a deeper dive shows that growth is decelerating. Last quarter’s 31% license growth is down from the 57% rate that Tableau posted in Q4 2014. A large portion of the decline can be attributed to systemic obstacles that the whole industry is facing like currency headwinds, weak spending conditions and macroeconomic volatility. Meanwhile, Tableau also operates in a highly concentrated data visualization industry where it must compete with big name tech companies like Oracle (ORCL) and IBM (IBM). The recently launched Business intelligence tool from Microsoft (MSFT) has also put a great deal of pressure on Tableau.

Fortunately, Tableau holds a dominant position in data visualization tools with many industry leaders praising the product as leaps and bounds ahead of the competition. Tableau has been aggressive in expanding that lead with more strategic pricing and discounting measures on top of broader enterprise license agreements. However, the big question tomorrow won’t be whether they can hit their number but how the future is looking.

Photo Credit: NATS Press Office