One year on for Tableau and the analysis is not so gruesome
- Summary:
- Last February Tableau Software had a "gruesome" day on Wall Street. Wind forward by twelve months and things seem to be heading in the right direction for new CEO Adam Selipsky.
This time last year, Tableau Software had a day that Dennis Howlett described aptly as “gruesome”, with a 50% drop in share price on soft guidance. Flash forward 12 months, an there’s a new CEO in situ and the data visualisation firm turned in encouraging enough numbers to send the stock price up 15%. What a difference a year makes.
For its fourth quarter numbers, the firm still turned in a loss, but reported revenue of $250 million, up 24% year-on—year. License revenue grew to $152.2 million for the quarter, up 14% year-on-year, but it’s to the firm’s subscription model push that CEO Adam Selipsky points. In Q4, 10% of license revenues were ratable, compared to 6% in Q4 2015 and 11% in the prior quarter:
Our customers are clearly moving toward subscription-based model, and we're working aggressively to enable that shift, from optimizing our sales licensing and messaging to innovation in products like Tableau Online. Importantly, subscriptions align our interest with those of our customers, which we love, and it lowers the cost of entry for customers, which we believe should stimulate more users over time.
He adds:
A big thing that customers want from us and that we can do to help get more and more of them into this market is to lower the upfront cost for them and to reduce the risks that they take. And the way we're doing that is precisely by subscription. So, obviously, for example, one-year commitment is going to be a lot lower price point than buying a perpetual license, and therefore the lot less risky bet for a customer to make.
It’s the combination of the subscription model forcing Tableau to focus on product and inciting customers to make the move that will be powerful, he suggests:
Giving our audience a subscription-based option will make our product better by sharpening our ability to constantly deliver industry-leading software. It will also make it easier and less risky for organizations to get started on Tableau by lowering their initial investment and provide more flexibility to scale as they need. We believe this should help grow more Tableau customers over time.
Customers
Tableau added over 4,000 new customer accounts in Q4, with some 589 of these transactions being greater than $100,000, up 42% year-on-year, while the quarter also saw 25 customers with total spend greater than $1 million, up 14% Internationally, outside of the US and Canada, the firm acquired more than 8,000 new customer accounts in 2016, up 24% year-on-year.
New customers include AT&T Mexico, Bank of Israel, Munich Re-Automation Systems and Saudi British Bank, while there was also expansion of investment by existing customers including CarMax, American Family Insurance and OVO Energy.
Selipsky says he’s become aware of the business drivers since taking up the CEO seat:
I've had the opportunity to speak with numerous customers over the last 90 days, and it's clear to me that more and more organizations are feeling the weight and the urgency to make sense of their data. These organizations are seeking more than a basic tool that can do charts. They're looking for a visual analytics platform that helps them transform their organization to make better decisions with data faster. This can only happen if that platform provides customers the freedom to deploy rapidly, perform sophisticated analysis, and explore questions that they might not even have anticipated.
He adds that the firm has chalked up:
the largest deal in our Company's history, a highly-respected Fortune 50 company who chose to partner with Tableau because we're making them more agile and more efficient with their data-driven decision-making. They're now rolling out Tableau to well over 50,000 users across the globe. It's the kind of customer win that we had in mind when we imagined how Tableau would impact the future of enterprise analytics.
He cites as a case in point a HDFC Bank, the largest private retail lending bank in India.:
HDFC chose to expand and scale self-service data discovery and analytics across key departments such as wholesale banking, retail assets, credit risk, marketing, and outbound call analytics. With Tableau, HDFC Bank now has automated their reports, enabling their stakeholders to view dashboards and make intelligent business decisions on-the-go.
Selipsky admits that there are still challenges ahead and not just sales ones:
What we're really seeing is that enterprises are more and more trying to deploy Tableau as a mission-critical technology platform in very broad fashion, thousands to tens of thousands of users. So, that is the great news. The other news is that we have to up our game across the company in order to deliver on their requirements.
We really need to speak better and as well as we can to all sorts of audiences across the enterprise, ranging from end user to IT to security departments. It certainly goes back all the way into product development where we need to not only innovate around our data and analytics capability, but also around really important areas like security, governance and compliance. We really can't be a mission-critical enterprise platform without those three things.
He concludes:
Customers are pushing us hard on a lot of different dimensions, and they should be. There's a lot left to accomplish. I think we're still very, very early in our and our customer's journey to really using analytics as a core every day central component of how important decisions are made.
My take
Baby steps, but in the right direction, although there has clearly been a benefit accrued in Q4 from some big deals that didn’t close in Q3 coming in and boosting the numbers. Selipsky is only one quarter into the CEO role, so it will be 2017 that demonstrates his ability to execute on both the corporate mission and his personal vision.