After A Strong Q4, Uncertainty Sets In For Tableau Software

Shares of Tableau Software Inc DATA surged 14 percent in the pre-market hours Friday on better-than-expected fourth-quarter results. But, Wunderlich analyst Bill Choi prefers to remain on the sidelines, citing uncertainty from ratable mix for FY 2017.

Quarter Review

Driven by strength in the enterprise and large deal activity, Tableau reported fourth-quarter revenue of $250.7 million, well above consensus of $230.3 million, and EPS came in above consensus of $0.13 at $0.26. Deferred revenue and billings too topped Street view.

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).

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.

The Look Forward

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.

Analyst's Commentary

“[W]e believe that downside risk remains despite management's conservative full-year guidance as visibility around the mix of ratable revenue in 2017 is unclear,” Choi wrote in a note.

As such, Choi cut his 2017 EPS estimate to $0.05 from $0.14. Choi, who has a Hold rating on the stock, however, raised his price target to $55 from $50.

Shares of Tableau closed Thursday’s trading at $48.21. In the pre-market hours, the stock was seen up 15.02 percent at $55.45.