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Bear of the Day: Tableau (DATA)

Zacks

Tableau Software (DATA), the exciting $4.9 billion provider of data visualization software and analytics for enterprise customers, is once again in the cellar of the Zacks Rank. This is not because estimates have come down further recently, but rather because they haven't started going back up yet.

The stock is stuck in that no-man's land for earnings estimate revisions where we are not sure if they are going to continue southward, or forge a fresh turnaround.

Since a mixed Q1 earnings report on May 3 — a beat on adjusted EPS loss of 3-cents per share, but a miss on GAAP — the stock has actually ground its way higher.

And on June 13, Goldman Sachs upgraded shares to a Buy rating and the investment bank raised their price target to $78 from $59. Yet, we still saw no meaningful EPS estimate revisions higher.

But to visualize the potential turnaround that could take place, we can do no better than take a look at the proprietary Zacks Price & Consensus chart, which plots the stock price history against the changes in annual earnings estimate consensus…



As you can see, 2017 earnings estimates started out strong, but then reality set in. And this is always the challenge for an exciting SaaS technology company with optimistic Street expectations that fails to deliver, quarter after quarter.

Missed On Top Line, But Business is Growing

Tableau realized sales of $199.9 million, missing the Zacks consensus estimate of $201 million for Q1.

Ratable license books were 26% of the company’s total license bookings, up from 12% in the prior-year quarter. The company said it closed 294 transactions greater than $100,000, up 10% year over year.

Tableau added more than 3,300 customer accounts in the quarter. The company now has 57,000+ customer accounts.

"Customers enthusiastically embraced our subscription licensing offerings in Q1, as reflected in our 26% ratable license bookings mix," said CEO Adam Selipsky. "Subscription reduces risk for our customers, lowers their upfront investment and we expect will lead to higher demand for Tableau over time.”

The Meaning of DATA

In the digital age, we are flooded in information and the new data sources are multiplying exponentially with the Internet of Things. Tracking and measuring data to make business decisions has never been more important for corporations.

But the deluge of data can be overwhelming, and knowing how to track, measure, and decide has become a giant rabbit's hole for many.

The solution is learning to harness and harvest the flood of data in new, compelling, and scientifically relevant ways.

So the folks at Tableau ask… What happens when you put together an Academy Award-winning professor, a brilliant computer scientist at the world's most prestigious university, and a savvy business leader with a passion for data?

You get solutions for one of the most challenging problems in software: making databases and spreadsheets understandable to ordinary people.

The mind behind Pixar, Stanford Professor Pat Hanrahan realized too it was a project that could change the world. A founding member of Pixar and chief architect for RenderMan, Pat had already transformed the world of animated film. He says…

"We create pictures that answer questions, but we do it for businesses that want to know things about their data."

Hanrahan and a team of Stanford Ph.D.s realized that computer graphics could deliver huge gains in people’s ability to understand data. The breakthrough arose when they brought together two computer science disciplines for the first time: computer graphics and databases. Their invention VizQL™ let people analyze data just by building drag & drop pictures of what they wanted to see.

Let's hear how the company describes their mission…

We help people see and understand their data.

Eight words that drive everything we do. And they’ve never been more important.

In 2020 the world will generate 50 times the amount of data as in 2011 and 75 times the number of information sources (IDC, 2011). Within these data are huge opportunities for human advancement. But to turn opportunities into reality, people need the power of data at their fingertips. Tableau is building software to deliver exactly that.


Bottom line on DATA: If they execute on their mission, this exciting company could become the Adobe (ADBE), or maybe even the Microsoft (MSFT) of the 21st century. When the Zacks Rank turns around, and you can visualize it on the Zacks Price & Consensus chart, you'll want to be a buyer.

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