Near-Term Headwinds For Tableau Software Aren't Going Anywhere

Despite fourth-quarter results topping the Street's view, William Blair kept its Market Perform rating on Tableau Software Inc DATA, citing headwinds from potential greater-than-expected uptake of ratable licenses.

For the first quarter, Tableau sees revenue of $195 million–$205 million, above consensus of $191.9 million. Non-GAAP EPS was guided to ($0.15)–($0.08) vs. consensus at ($0.04).

Guidance

Though first-quarter guidance was strong, FY 2017 outlook was lower due to ratable mix assumption. The company continues its shift towards a ratable model, with ratable accounting for over 50 percent of bookings and about 40 percent of revenues.

For 2017, Tableau projects revenue at $850 million–$890 million, above consensus of $863.4 million at the midpoint. However, the company expects 25–35 percent ratable mix for license bookings, versus prior 35 percent assumption. Further, EPS expected to be about breakeven versus consensus $0.14.

Commentary

Analyst Bhavan Suri believes the fourth-quarter upside was driven by deals that slipped out of the third quarter and typical enterprise seasonality.

As such, his checks show underlying momentum of the business has not improved and the near-term headwinds (e.g., competition from low-cost vendors, elongated enterprise sales cycles and muted expansion activity) remain intact.

“Taken in combination with our limited forward-looking visibility and management’s commentary that alluded to the potential for greater-than-expected uptake of ratable licenses to drive a downward guidance revision,” Suri wrote in a note.

Suri noted that he would not be surprised to see cloud revenue double again in 2017, which could result in flat to slightly negative overall revenue growth.

At last check, shares of Tableau surged 16.49 percent to $56.16.