tableau software (data) earnings report: q4 2015 ... · tableau's mission is to help people...

EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75

CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&

TableauSoftware(DATA)EarningsReport:Q42015ConferenceCallTranscriptThefollowingTableauSoftwareconferencecalltookplaceonFebruary4,2016,04:30PMET.Thisisatranscriptofthatearningscall:

CompanyPart icipants

JoniDavis;TableauSoftwareIncorporated;DirectorofIRChristianChabot;TableauSoftwareIncorporated;CEOTomWalker;TableauSoftwareIncorporated;CFO

OtherPart icipants

MarkMurphy;JPMorgan;AnalystRaimoLenschow;BarclaysCapital;AnalystJesseHulsing;CowenandCompany;AnalystSteveAshley;RobertW.Baird&Co;AnalystBrentBracelin;PacificCrestSecurities;AnalystBradSills;BofAMerrillLynch;AnalystBrentThill;UBS;AnalystPhilWinslow;CreditSuisse;AnalystJohnDiFucci;Jefferies&Co;AnalystKarlKeirstead;DeutscheBank;AnalystKeithWeiss;MorganStanley;AnalystSteveKoenig;WedbushSecurities;AnalystMattHedberg;RBCCapitalMarkets;AnalystTomRoderick;StifelNicolaus;AnalystDevonSurrey;WilliamBlair&Company;Analyst

MANAGEMENTDISCUSSIONSECTION

Operator :

Atthistime,IwouldliketowelcomeeveryonetotheTableaufourthquarter2015earningscall.

(OperatorInstructions)

JoniDavis,youmaybeginyourconference.

JoniDavis (DirectorofIR):

Goodafternoon.Thankyouforjoiningustoday.WithmeonthecallareTableau'sChiefExecutiveOfficer,ChristianChabot,andChiefFinancialOfficer,TomWalker.

Ourpressreleasewasissuedearliertoday,andispostedonourwebsite.Thiscallisbeingbroadcastliveviawebcast,andfollowingthecall,anaudioreplaywillbeavailableintheInvestorRelationssectionofthewebsite.ChristianandTomwillbeginwithpreparedremarks,andthenwe'llopenthecallforquestions.

Beforewebegin,IÕdliketoremindyouthatduringtoday'scall,wewillbemakingforward-looking

statementsregardingfutureeventsandfinancialperformance,includingourguidanceforfirstquarterandfullyear2016.Wecautionyouthatsuchstatementsreflectourbestjudgmentbasedonfactorscurrentlyknowntous,andthattheactualeventsorresultscoulddiffermaterially.

PleaserefertothedocumentswefilefromtimetotimewiththeSEC,inparticular,ourmostrecentlyfiledquarterlyreportonForm10-QandourannualreportonForm10-K.Thesedocumentscontainandidentifyimportantriskfactorsandotherinformationthatmaycauseouractualresultstodifferfromthosecontainedonourforward-lookingstatements.

Anyforward-lookingstatementsmadeduringthecalltodayarebeingmadeasoftoday.Ifthiscallisreplayedorreviewedaftertoday,theinformationpresentedduringthecallmaynotcontaincurrentoraccurateinformation.Exceptasrequiredbylaw,weassumenoobligationtoupdatetheseforward-lookingstatementspublicly,ortoupdatethereasonsactualresultscoulddiffermateriallyfromthoseanticipatedintheforward-lookingstatements,evenifnewinformationbecomesavailableinthefuture.

Duringthecall,wewillalsodiscussnon-GAAPfinancialmeasures.Thesenon-GAAPfinancialmeasuresarenotpreparedinaccordancewithgenerallyacceptedaccountingprinciples.

AreconciliationoftheGAAPandnon-GAAPresultsisprovidedintoday'spressrelease.Theprojectionsthatweprovidetodayexcludestock-basedcompensationexpense,whichcannotbedeterminedatthistimeandarethereforenotreconciledintoday'spressrelease.

Withthat,it'smypleasuretoturnthecallovertoChristian.

Christ ianChabot (CEO):

Thankyou,Joni.Thankyou,everyone,forjoiningustodaytodiscussTableau'sfourthquarterandFY15results.

Tableau'smissionistohelppeopleseeandunderstanddata.Andlastyear,wemadeexceptionalprogressadvancingthatcause.Wereleasedinnovativenewproducts,expandedourcustomerbaseandgrewourbusinesssubstantially.

InQ4,Tableaugeneratedrecordrevenueof$202.8million,up42%overourbreak-throughresultsinQ4of2014.Wefinishedthefullyearat$653.6million,up58%fromtheprioryear.Ourrevenuegrowthandstrongoperatingperformancealsoledtorecordnon-GAAPoperatingincomeof$67.4millionfortheyear.

Ourfocusoncustomeradoptionresultedinincreasedmarketshare.2015wasanotherrecordyearforcustomerschoosingTableau.Hereareafewupdatesonourprogress.

InQ4,weaddedmorethan3,600newcustomeraccounts,bringingourtotaltomorethan39,000worldwide.ThegrowingvolumeofcustomerschoosingTableauspeakstoboththeimmensepopularityofourproducts,andourabilitytodeliverinnovationthatdrivesdemand.

Forthefullyear,weaddedmorethan12,500customeraccounts.Thatmeansthatinoneyear,wegrewourtotalcustomeraccountsbynearly50%,andupbymorethan105%fromjusttwoyearsago.Duringthequarter,wesignedarecord414salesordersgreaterthan$100,000,includingthosefrommorethan20customerswhospentmorethan$1millionduringthequarter.

Tableauhasaloyal,engagedandsatisfiedcustomerbase.In2015,wehadanotheryearofmaintenancerenewalratesgreaterthan90%.This,coupledwithourfastgrowingcustomerbase,givesusasolidfoundationforlong-termgrowth.

Ourproductsarehavinganoticeableimpactacrossarangeofsectorsandindustries.IntheUS,88%of

theFortune500arenowTableaucustomers,includinganastounding96%oftheFortune100.

Drillingdownonthat,100%ofthetop20financialsectorcompaniesrepresentedintheFortune500areTableaucustomers.100%ofthetop20technologysectorcompaniesareTableaucustomers.AndTableau'scustomerbaseincludesthetenlargestUStelecommunicationscompanies,includingthefivelargestUSwirelesscompanies.

InQ4,TableauwelcomednewcustomerssuchasDominos,DuralFlorist,HDFCBank,Oxy10and[Provence]andEclipse.Andweexpandedrelationshipswithexistingcustomers,includingNationwideInsurance,BostonScientific,NewStar,DeloitteAustralia,GrabTaxi,ClarkCountySchoolDistrict,QuickenLoans,UnileverUK,WellsFargo,andeBAY.

LetmeshareafewstoriesabouthowourcustomersareusingTableau.TheClarkCountySchoolDistrict,orCCSD,inLasVegas,NevadaisthefifthlargestschooldistrictintheUnitedStates.CCSDbeganimplementingTableauserverandTableaudesktopinthe2015/2016schoolyear.

CCSD'scentralofficestaffuseTableauproductstosupportstudentachievement.Forexample,thedistrict'shighschoolcohortanalysisapplicationletsschoolstaffseewhichstudentsareontrackandofftrackforgraduationingrades9through12.

AnothercustomerstorycomesfromSingaporebasedGrabTaxi,asmartphoneorientedCompanyonamissiontorevolutionizetransportationintheSoutheastAsiaregion.Thecompanygeneratesmassiveamountsofdatatomakedailybusinessdecisions.

UsingTableauonline,ourcloudproduct,GrabTaxiisabletopulldatafromAmazonRedShiftintoTableauonlineandsharecustomizeddashboardswithhundredsofpeople.Thisisanamazingbusinessintelligencevictorydeliveredcompletelywithcloud-basedtechnology.

ChristelBouvron,theHeadofAnalyticsandBusinessIntelligenceatGrabTaxitoldusthatTableauonlineplaysanintegralroleinkeepingafingeronthepulseofthebusiness.Shesaidthatbusinessleadersnowwakeupwiththelatestperformancenumbersintheirinbox.Usersacrossthecompanydrillintodashboardsandvisualizationstoanswerfurtherquestions,they'veshiftedtheirmindsettomakingdata-drivendecisions.

Tableauproducedourbesteverresultsinternationally.IampleasedtoreportthatinQ4,ourinternationalrevenuegrewto26%oftotalrevenue.Wenowhave17,000customeraccountsacross150countries.

In2015,weopenedanewofficeinParisandinChina.Earlyresultslookpromisinginournewregions.Justlastmonth,weannouncedopeningofadatacenterinEuropetosupportourgrowingcustomerbasethere.Weremainconfidentaboutthelong-termpotentialoftheglobalopportunityaheadofus,andwearemaintainingourinvestmentplan.

Themarketforvisualanalyticssoftwareisvast,andthefundamentaltechnologywearebringingtoitimproveseveryday.In2015,wecontinuedourcadenceofrapidproductreleases.WedeliveredTableau9inApril,Tableau9.1inSeptember,andTableau9.2inDecember.

AtourcustomerconferenceinOctober,welaidoutplanstofurtherdevelopourproducts.Weremainfocusedonproductinnovation,andadvancingourplatformtobringevenmorevaluetoourgrowingcustomerbase.

WeareexcitingaboutreleasingTableau9.3andTableau10,thenextstepinourjourneytohelppeopleachievemorewithdata.Thosereleaseswillincludeinnovationsinadvancedanalytics,performance,scalability,datapreparation,enterprisecapabilities,cloudandmobile.

WeareexcitedtoseeTableauPublicgrowandthrive.In2015,wehadthehighestgrowthofnewauthorsinthehistoryofTableauPublic.In2015,over80,000authorspublishedover200,000newworkbooks.Todate,morethan150,000authorshavepublishedatotalofmorethan470,000visualizations.

WeareseeingTableauPublichighlightedinmajorpublications,andaddressingsomeofthemostimportantissuesinthenews.TableauPublichelpsbringdataandfactstotopicsasdiverseasglobalCO2emissions,thecostofattendingthe2015worldseries,andeventhehistoryofthemonarchyintheUK.OnepopularvisualizationinQ4featuredMackenzieanalyzingdataondetailedworkactivitiesandautomationtechnology.

Inclosing,Tableau'ssuccesswastheresultofstrongcustomergrowth,productadoption,internationalexpansionandoperationalexcellence.IremainoptimisticthatTableauisthebestpositionedtoaddressthelargeandgrowingmarketopportunityforeasyvisualanalytics,andwecontinuetopowertheinvestmentenginethatsetsusupforthenextphaseingrowth.

I'dliketorecognizethetremendouseffortandcommitmentofour3,000employeesworldwide.It'sbeenanamazingyear,andIlookforwardto2016.

Thankyouforjoiningusheretoday.IwillnowturnthecallovertoTom.

T omWalker (CFO):

Thankyou,Christian.Goodafternoon,everybody.

IwanttostartoutbyacknowledgingtheTableauteam.Thankyouformaking2015anotherrecordyear.

IwouldliketoexpandonChristian'scommentsabouttheTableaubusinessmodel.One,weareaddressingthehugemarketofbringinganalyticstothemasses.Two,wehaveoutstandingbusinessattributes,solidrevenuegrowth,astrongcustomeracquisitionengine,agrowingandloyalcustomerbaseandpositivecashflow.

Three,wetakealong-termview,andarecontinuingtoinvestinproductinnovationandremainfocusedonourmarketopportunity.Andfour,wehaveanexceptionalteamandastrongculturethatisdedicatedtoempoweringorganizationsbyhelpingtheirpeopleseeandunderstandtheirdata.

WecontinuetoseehealthygrowthinthenumberofcustomerschoosingTableau.Duringthequarter,weaddedmorethan3,600newcustomeraccounts,andendedtheyearwithmorethan39,000customeraccounts.

Fortheyear,weaddedmorethan12,500customeraccounts,upfromtheover9,100weaddedinallof2014.Asareminder,thenumberofcustomeraccountsaddedinanygivenquartercanfluctuate.

Nowlet'sturntothenumbers,andIwillprovideyouwithmoredetailsandthengiveguidanceforQ1andfullyear2016.Fourth-quartertotalrevenuegrewtoarecord$202.8million,up42%fromthe$142.9millioninQ42014.ThisfollowstheexceptionallystrongQ42014.

Forthefullyear,totalrevenuewas$653.6million,up58%fromthe$412.6millionwereportedin2014.Internationalcustomerscontributed26%oftotalrevenuethisquarter,thelargestpercentageever.

Toputthisinperspective,internationalrevenuewas23%ofthemixin2014and20%ofthemixin2013.Internationalrevenuegrewto$53.7millioninQ4,up63%yearoveryear.Forthefullyear,ourinternationalrevenuewas$164.3million,up75%yearoveryear.

TotalrevenuethisquarterfromtheUnitedStatesandCanadawas$149.1million,up35%yearoveryear.TotalrevenuefortheyearfortheUnitedStatesandCanadawas$489.3million,up53%yearoveryear,

representing75%oftotalrevenue.

Despiteourstrongmetrics,wesawsomesoftnessinspending,especiallyinNorthAmerica.WedidseeourcustomerscontinuetoexpandtheiruseofTableauintheorganizations,butnotatthesamecadencewe'dhistoricallyexperienced.

AsChristianmentioned,weclosedarecordnumberofdealsover$100,000inQ4.Thisisatestamenttoourlandandexpandstrategystillreapingstrongsuccesswithinourcustomerbase.Giventhechallengingspendingenvironment,ourresultsweresolid,especiallyperiodtolastyear'sbreakoutQ4.

Nowlet'sdiscussourrevenuestreams.InQ4,licenserevenuegrewto$133.1million,up31%yearoveryear.Fortheyear,licenserevenuewas$423.8million,up51%fromtheprioryear.

Lookingatthemixoflicenserevenuesfromnewversusexistingcustomers,licenserevenuesfromexistingcustomeraccountsmadeup75%ofperpetuallicensesalesrecognizedin2015.Thisisupfromthe71%reportedin2014.AsareminderanexistingcustomeraccountmeansthattheywereacustomeraccountonorbeforeDecember31,2014.

Maintenanceandservicesrevenuegrewto$69.6millioninthequarter,up68%yearoveryear.Fortheyear,maintenanceandservicesrevenuegrewto$229.8million,up73%fromtheprioryear.

Ourmaintenancerenewalratescontinuedtoexceed90%,whichisastrongindicatorofthecontinuedusageofourproductswithinourexpandingcustomerbase.Maintenanceandservicescontinuetobeanimportantandgrowingrecurringrevenuestream.

Now,Iwillspendafewminutesdiscussingmarginsandoperatingexpenses.Unlessotherwisenoted,allreferencestooperatingmetricsareonanon-GAAPbasis,whicharereconciledinpressreleasetablesandpostedonourInvestorRelationswebsite.

Grossmarginswere90%forQ4,and90%forthefullyearof2015.Aswediscussedbefore,weexpectourgrossmarginstofluctuateaswecontinuetoinvestinsupport,services,anddeliveryofourofferingsaroundtheglobe.

Forthequarter,totalnon-GAAPoperatingexpenseswere$153.2million,up52%yearoveryear.Asareminder,themajorityofouroperatingexpensesareemployeerelated.

Weinvested$42.1millioninproductdevelopmentinQ4,up58%fromtheprioryear.Forthefullyear,weinvested$148.9millioninproductdevelopment,andweendedtheyearwithR&Dheadcountof772,up52%yearoveryear.

Productinnovationiscriticaltooursuccess,andweplantocontinueinvestingindevelopment.NextupinthejourneyisTableau10.0,whichwelookforwardtoreleasinginthenearfuture.

Salesandmarketingexpensesforthequarterwere$93.9million,up50%fromtheprioryear.Fortheyear,salesandmarketingexpenses$311.5million.Weendedtheyearwithsalesandmarketingheadcountof1,307,up58%yearoveryear.

Givenourlargemarketopportunity,wehaveremainedfocusedonattractingandhiringexceptionalsalesandmarketingtalent.Asyoumightexpect,thelargenumberofnewhirescanimpactoverallsalesproductivityasweonboardandtrainnewhirestoreachfullproductivity.

Overall,wedidseeadeclineinsalesproductivityinthequarter.Weremainfocusedonbuildingtheteamglobally,andarefocusedonimprovingtheefficienciesandfurtherstreamliningourprocessestosupportfuturegrowth.

In2015,wehiredarecord1,061netnewemployeestoteamTableau,bringingthetotalheadcountattheendofthefourthquarterto3,008.Ourinvestmentsinhiringareimportanttoourfuturegrowth,andweareverypleasedwiththejobourrecruitingandon-boardingteamdoesinattractingthebesttalent.Letmeremindyou,therecanbefluctuationswithrespecttoheadcountadditionsonquarterbyquarterbasis.

Ourfourthquarternon-GAAPoperatingincomewas$30.1million.Forthefullyear2015,non-GAAPoperatingincomewas$67.4millionandouroperatingmarginwas10%.

Switchingtotaxes,inthefourthquarter,incometaxexpensewas$34.1million,primarilyduetotherecognitionofavaluationallowance.Specifically,werecordeda$46.7millionvaluationallowanceagainstourUSdeferredtaxassets.

Wenowhaveathree-yearcumulativeGAAPnetlossadjustedforpermanenttaxdifferences,anditisnotlikelywewillhavesufficienttaxableincomeonaGAAPbasistoutilizeourdeferredtaxassets.Thisallowanceisanon-cashcharge,andhasnoimpactonourcashflow.Overall,ouroveralltaxexpensespartiallyoffsetbytheR&DtaxcreditwhichwaspermanentlyextendedbyCongressinQ4.

Wehaveupdatedourlong-termnon-GAAPtaxrateto30%from43%fortheyearendedDecember31,2015.ThisratetakesintoeffectthepassageofthepermanentR&Dtaxcredit.

InQ4,wepostednon-GAAPnetincomeof$26million,andnon-GAAPdilutedearningspershareof$0.33.Duringthequarter,ourweightedaveragesharecountforGAAPEPSwas72.8millionshares.Asareminder,periodsinwhichwehaveaGAAPnetlossbutareprofitableonnon-GAAPbasis,ourpresentationofnon-GAAPEPSwillusethedilutedshareaccount.

Accordingly,ourweightedaveragedilutedshareaccountfornon-GAAPEPSwas78.5millionshares.Adetailedreconciliationisavailableinthepressreleasetables,andpostedonourInvestorRelationswebsite.

Forthefullyear2015,wepostednon-GAAPnetincomeof$48.1millionandnon-GAAPdilutedearningspershareof$0.62.Forthefullyear2015,ourweightedaveragesharecountforGAAPEPSwas71.7millionsharesandournon-GAAPEPSdilutedshareaccountwas77.7millionshares.

Weincreasedourstrongcashposition.Onthebalancesheet,cashandcashequivalentsattheendofQ4was$795.9million,up$45.7millionfromthepriorquarter.Accountsreceivableswere$131.8million,andourDSOswerefewerthan65days,consistentwithpriorperiods.

Nowontoouroutlookfor2016.Basedonwhatwe'reseeingintheenvironmentandthebuyingpatternsofourcustomers,wearetakingaprudentstanceaswebegintheyear.WeexpectQ4Q1seasonalitytobeamplifiedasouroverallrevenuescontinuetogrow.

ForQ1,weexpectrevenueintherangeof$160millionto$165million.Usingthehighendofthisrange,thisrepresentsapproximately27%year-over-yeargrowth.

ForQ1,weareexpectingnon-GAAPoperatinglossofbetween$8millionto$13million.WeexpectaQ1non-GAAPlosspershareintherangeof$0.08to$0.12pershare.Becauseweexpectanon-GAAP,lossweanticipatethefirstquarterbasicanddilutedsharecounttobeapproximately74millionshares.

Forthefullyearof2016,weexpecttotalrevenuestobeintherangeof$830millionto$850million,representingannualgrowthofapproximately30%atthehighendofthisrange.Webelieveit'simportanttocontinueinvesting,andexpect2016tobeanotherinvestmentyear.

Forthefullyear,weareexpectingouroperatingincometobebetween$25millionand$40million,and

anoperatingmarginof5%atthehighendofthisrange.Ouroperatingresultswillvaryonaquarterlybasis.

Ourlong-termnon-GAAPeffectivetaxrateis30%.Weexpectfullyearnon-GAAPEPStobeintherangeof$0.22to$0.35pershare,assuming80milliondilutedshares.

For2016,weexpectouroverallcapitalexpenditurestobeapproximately$100million,aswemakelong-terminvestmentsinourofficesandinfrastructure.Wealsoexpecttoaddapproximately1,000netnewemployeesin2016.

Insummary,asweembarkon2016,weremainoptimisticaboutthemassiveaddressablemarket,excitedaboutourupcomingdevelopments,andcommittedasevertoempoweringorganizationsbyhelpingtheirpeopleseeandunderstandtheirdata.Thankyouforjoiningustoday.

NowIwillturnthecallovertotheoperatorforQ&A.

Operator,canwestartourQ&Aplease?

QUESTIONS&ANSWERS

Operator :

(OperatorInstructions)

MarkMurphywithJPMorgan.

MarkMurphy(Analyst-JPMorgan):

Yes,thankyou.Christian,soIamcuriousifyouseesignsofthemarketplacegoingthroughaHadoopdigestionphase,whichmightbebyextensioncausingagrowthdecelerationacrosstheentiredataandanalyticsmarket?

Becauseclearly,thewholespacehasdeceleratedandhitaroughpatchinQ3andQ4of2015.AndIthinkwe'retryingtounderstandtheunderlyingdynamicthere,whetheryouthinkthatismoremacrodrivenandsomethingthatwe'llseeacrossabroadrangeofsoftwareandtechnologycompanies?Orwhetheryouthinkthatthisismorethananalyticsdigestionphaseorsomethingelse?

Goodquestion.IseeHadoopasanincreasinglypervasivepartofcompanies'analyticalenvironments.It'sanimportanttechnology,andit'sspreadingprettyquicklyandisgreatforanumberofusecases.

Wehavebeeninvestinginseeingthattrendcomingforacoupleyears.Soinourpartofthemarket,businessanalytics,dataanalysis,reporting,businessintelligence,wehaven'tseenthatasaspecialeffect.BecauseevenwhencustomersdeployHadoop,theywanttoseeandunderstandthedatainit.

Iwilladdthatinourtravels,Ithinktherehavebeensurveysonthisthatshowsimilarresults.Butinourtravels,we'venoticedthatHadooptechnologiesaremoreoftenbeingusedindataintegrationandETLanddatapreparationtasks.Manyofthemareofaverybatchorientednature.

AndsoalthoughthatmaybeaffectingETLvendorsanddatabasesanddatawarehouses,itisn'tsomethingthatissomehowcausingthedecelerationinbusinessanalyticsspenders.Atleastasfarasweseeit.

AndIwillclosebyaddingthatourpartnershipswithmanyofthegreatHadoopprovidersouttherearereallytight,ourengineeringteamstalkandcollaborate.Weoftenaremarketingateachothers'events,andthatincludesandCloudera,andHortonworksandseveralothers.Sothat'smyviewonit.

Thankyou,Christian.Then,Tom,Ihadaquickoneforyou.Iamjustwondering,canyoucommentonhowmaterialisanymixshiftyoumightseegoingonawayfromdesktopslicensepurchasesorbookingsandtowardserverlicenses?

BecauseIguessIamcurious,totheextentthattheservertransactionscanbemuchlarger,butpresumablytheydorequiremorepreplanning,morebuyin,andpossiblyalongersalescycle.Iamcuriousifyouseethatactivitychangingorbuildingupinapipelinesuchthat,perhapsthereisapausethatrefreshesatsomepointassomeofthoseservertransactionsclose?

T omWalker (CFO):

Hello,Mark,yes,thisisTom.Sooverall,let'sjustrefreshontheoverallmodel,becauseIthinkourmodel,thewholelandandexpandmodel,whetherit'sdesktoporserver,weallowpeopletogetstartedwithavery,verysmallfootprintandtheycanexpandovertime.

Sowithrespecttothat,weareseeinggood,asyousawfromthecustomeracquisitionnumbers,weareseeingverygoodcustomeracquisitionnumbersthatwearegettingourfootprintinorganizations,andtheycontinuetogrow.Iwouldn'tnecessarilybreakoutdesktopversusserver,becausebothareactuallygrowingquitewellforusandthey'rebothverymuchpartsoftheequation.Alotoftheauthoringisdoneindesktop,andthenalotofthesharingandcollaborationisdoneinserver.

Butgiventhenatureofourtechnologyandalotofpeople--youcangetstartedwithoneConTableauonlineonTableauserver,ortenpackonTableauinpremise.Sotheygetstartedprettysmallandtheyexpand.

Thebeautyofourmodelisitletspeopleexpandatapacetheywantto.It'snotthatthey'rebuyingsomuchaheadofthecurve,asmuchasthey'rebuyingastheytheneedinsidetheirorganizations.

Thankyou.

Thankyou,Mark.Operator,canwehaveournextquestionplease?

Operator :

RaimoLenschowofBarclays.

RaimoLenschow(Analyst-BarclaysCapital):

Thanksfortakingmyquestion.Tom,couldIgobacktosomeofthecommentsyoumade?Youtalkedaboutontheexpansionside,thecustomerexpandedbutmaybenotatthesamerate,andthenyoumentionedsalesproductivityalittlebitwhichismoreaconjecturenewhires.

Canyoutalkalittlebit,whenyouanalyzethequarterandtherootcausesthere,whatwasthedriver?AlotofthefolksonthestreetareconcernedaboutPowerBI.

Whenyoulookedintothedealsandthemomentumthatyouhadthere,whatwasthedriverforguysnot

expandingasmuchorpausing?Helpusunderstandthatalittlebitbetter.Thankyou.

T omWalker (CFO):

Hello,Raimo.Yes,thisisTom.

Sooverall,Ithinkmycommentinmypreparedremarkswereaboutthesoftnessinspendingthatwesawinourcustomerbase.AndthengettingbacktohowIcommentedwithMarkis,thatpartofourmodelallowspeopletoexpandatapacethatworksforthem.AndIthinkwhatwewereseeinginsideofourcustomerbaseifmorecautioninhowtheywerespending,andhowtheywereallocatingdollars.

Sothat'smoreofwhatIwouldcallhighlighttoisthatwejustsawthat.Andthebeautyofourmodelis,itallowspeopletoexpandinsmallerincrementsiftheywant.

Withrespecttotheoverallcompetitivemarket,ifyoulookattheinternaldatathatwecollect,ourwinratesarenotchangingatallactually.Sowearereallythemassanalyticscompanybringingthistechnologytoalotofdifferentpeoplewhodon'tknowwhatBIareoranalytics.They'vejustgotquestionsandthey'vegotdata.SotheoverallwinratesIwouldn'tsayhavechangeddramatically,wejustsawsoftnessintheoverallspending.

Thelastthingyouaskedaboutwasaboutsalesproductivity.Asyouknow,wehavebeengrowingatavery,veryfastpaceoverthelastfewyears.Soyouwouldexpectproductivitynumberstocomedown,butthere'salsostuffthatwehavetodototightenourapproach.

Sowearefocusingonthat.We'vegottherightsalesleadershipinplace,andwe'rereallylookingforwardto2016,quitefrankly.Becausethetechnologyiscomingout,10.0isarmedthecornerandallgood.

Thenjustmaybeonefollowup.IfIlookatthebeatontheoperatingprofitside,whichisobviouslybiggerthanwhatwehadmodeled.Howmuchofthatwasplanned,andhowmuchofthatwassalesguysdidn'tneedtohitthequotaattheendoftheyear,ordidn'tgetquitethesalesacceleratorssothatgaveyouanaturalbenefitonthecostside?

T omWalker (CFO):

Overall,wehadTC,andwehaveourcustomerconferenceinQ4,soalotofthatweareexpectingsomemoreexpenses.Expensesjustcameinalittlelighterthanweexpectedoverall.

SoIwouldn'tpointtoonethingoranotherbecauseoverallwehitourguidance.Weweretargetingthat,andsowedidwellthere.

Perfect.Okay.Thankyou.

Thankyou,Raimo.Operator,canwehaveournextquestionplease?

Operator :

JesseHulsingwithGoldmanSachs.

JesseHulsing (Analyst-CowenandCompany):

Thanksfortakingmyquestion.Christian,inyouropening,youtalkedaboutTableau'scustomerbase,andIthinkyousaid88%ofthefortune500and96%ofthefortune100.

Ononehand,that'sfantasticandshowsjusthowpervasiveTableauhasbecome.Ontheother,Iguessitcouldraisequestionsaboutpenetration.Canyoutalkaboutyourthoughtsonpenetrationversussaturation?

Andhowdoesyourstrategyshiftnowthatyou'velandedinallthesebigcustomers?Doyouaddmoreproducts?DoyoudomoreM&Ainordertobuildaboutyourportfolio?Thankyou.

That'sagreatquestion.Infact,whenwewerereviewingthescriptIwasalittleworriedaboutaddingthoseforfearofexactlythisquestionofmakingitlooklikewehadsoldtoeveryone.Therealityis,inthevastmajorityoftheaccounts,andIdon'thaveastatistichandyforyouonhand,butinthevastmajority,thecustomershaveonlyjuststartedwithTableau.

Wewillbealiveinseveralgroupsorbiginonedivisionorbiginonebusinessunit,butnotyetinITortheoppositeandsoondowntheline.Sowedon'tseeanysignsofmarketsaturation.ThereareafewaccountsthathavegonesobigwithTableauwewillprobablyatsomepointhitawall,butthatisverymuchthesideshowandnotthemainstory.

Sowiththat,Icanansweryourquestionwhichis,yes,webelievewecangrowthebusinessprettyrobustlygoingforward.Continuingtoselltotheexistingbase,sayingnothingaboutbringingonnewcustomersbytheway,becauseofthatlowpenetrationpoint.

Iwillclosebysaying,butnottotheexclusionofnotlaunchingotherproducts.SoalthoughIdon'thaveanyonetoannouncerightnow,wewillprobablydothataswell.Sotherealanswertoyourquestionisboth,watchthisspaceandexpectalotfromus.

JesseHulsing (Analyst-CowenandCompany):

Thankyou.

Thankyou,Jesse.Operator,canwehaveournextquestionplease?

Operator :

SteveAshley,ofRobertW.Baird.

SteveAshley(Analyst-RobertW.Baird&Co):

Terrific.IguessIwilljustkeepdrillingonthesametopichere.IfwelookattheNorthAmericanbusiness,wasthereanydifferencebetweenyourcommercialbusinessandyourenterprisebusiness?

T omWalker (CFO):

Hello,Steve.ThisisTom.

Overall,theenterprisepartofthebusinessisabiggerdollaraggregateamount,sothatmakesupabiggerpartofourNorthAmericanbusiness.ButthecommentsthatIhadaboutsoftspendingIwouldsaywesawbothexpansionofthecommercialbusinessandtheenterprisebusinessboth.SoIwouldn'tcalloneout.

TheotherthingI'vegottoclosewithisfromanacquisitionstandpoint,againgettingbacktothestrongcustomeracquisitionengine,adding3,600newcustomeraccountstherebodedverywell.Sowe'reseeinggoodtractionthere,andthatbodeswellforthefuture.

Andwasthereanyvariancebetweenthedirectandtheindirectchannelbusiness,NorthAmerica,intheperiod?

T omWalker (CFO):

No.Iwouldn'tsaytherewasavariancebetweenthose.Alotoftheeffortsthatwearemakingchannel,specificallyinNorthAmerica,wehavebeenmakingthoseinvestmentswithSIs,bothglobalandregionalSIsandthenour[reseller]network.SoallthatIwouldn'tsaywasachangeoradifferencefromourdirectbusiness.

Perfect.Thanks.

Thankssomuch.Operator,canwehaveournextquestionplease?

Operator :

BrentBracelinwithPacificCrestSecurities.

BrentBracelin (Analyst-PacificCrestSecurities):

Thanks.Iwillaskaquestiononthelandexpandstrategyhereaswell.IguesstheonemetricIwantedtodrilldownonwasgrowthinnewcustomeraddsactuallyexceededlicensegrowthforthefirsttime.Obviouslycompetitionhascertainlyincreasedinthelastyear,notslowingtheabilitytolandnewcustomers,butit'sreallytheexpandpartofthebusinessthatIwantedtoaskaquestionon.

Howdoyouknowthisisjustcautionamongstcustomersversuslongerevalcyclesorpricediscountingplayingabiggerfactorwiththatexpandcomponent?Andasapivottothat,Tom,yourguidanceisalittlebitlowerthanwhatyouformallygaveasanearlyview.Whatareyoufactoringin,alowerassumptionontheexpandgoingforwardormoreconservativetobothlandandexpand?

T omWalker (CFO):

Soontheexpansionbusiness,Ithinkwhatweareseeingthereistheabilityforourcustomerstoexpandinsmallerincrementshasalwaysbeenavailable.That'stheuniquenatureoftheTableaulandandexpandmodel.SowhenImentionedthatexpansion,thecustomersareexpandingit'sjustthatinQ4wesawincrementallyit'ssmallerbuckets.

SothatisjustsomethingthatinthepastQ4,let'ssay2014,theywereexpandinginlargerincrements.It'sjustoneofthesetrends.Thebeautyofourmodelisthey'recontinuingtoexpandtheirusageandgrowtheTableaufootprintthere.Sweexpectthemtocontinuetogrow.

BacktotheotherquestionChristianhadaboutsaturation,wedon'tthinkthatweareatthatpoint,anywherenearthatpointwithourcustomers.Withrespecttotheguidancethough,Ithinkyouhititrightonthehead.

Wetakeintoconsiderationallthefactorsthatwehave.AndlookingatQ4andlookingathowthe

existingcohortperformed,wewanttobasicallymakesurethatwearecautiousandtakethatprudentapproachgoinginto2016.

Wearefocusedaseverontheproduct,andwe'refocusedaseverastheglobalopportunity,andwe'llkeepdoingitandkeepchippingaway.It'sallaboutexecution.

BrentBracelin (Analyst-PacificCrestSecurities):

Great.Thankssomuch,Brent.Operator,canwehaveournextquestionplease?

Operator :

BradSillswithBankofAmericaMerrillLynch.

BradSills (Analyst-BofAMerrillLynch):

Hey,guys.Thanksfortakingmyquestion.Youmentionedsomedeclineinsalesproductivity,anditsoundslikewinratesareholding.

Anythingoperationallythatyouthinkyouneedtoaddress?Orinthelarge--asyouaregoingafterlargerdealsizeswithinthelargeraccountbase,doyoufeelthatthedeclineinproductivitycouldbefixedsomehowbyhiringmoretalent,moreenterpriseclasssalespersonnel?

T omWalker (CFO):

Brad,thisisTom.Christian,youcancomeinafterifIdon'tcoverit.

Butoverall,no,Ithinkthesalesproductivity,abigfactordoeshavetodowiththegrowth.Q3wasjustatremendousgrowthperiodforus.Butweareconstantlytweakingthemodel,thetrainingandthethingsthatwedowiththesalesorganization.

We'vegottherightsalesmanagementinplace,andwefeelreally,reallyconfidentinourabilitytocontinuetoexecute.So2016,youdoplanning,youlookatterritories,youdoallthethingsyoudo.

Butoverall,Iwouldn'tthinkthatalotofthingshavetochange.Wejusthavetomakesurethatweareempoweringpeopletobevery,verysuccessful.Andthat'swhatourfocusis.

Thanks.Oneforyou,Christian,afterhavingspenttimeoverinEurope,anylearningsintermsofdifferenceinadoptioncyclesinsomeofthedifferentregionsinEuropeversustheUS?

Theheadlineishowlittledifferentthereis,interestinglyenough.Thebusinessintelligence/businessanalyticsindustryascommonlysizedissomewherebetween13billionand15billion,andthat'sthepenetratedpart.AndifyouputafewmultiplesonthatfortheunpenetratedpartandaddthefactthatthemodelfordoingbusinessanalyticsischangingreallydramaticallytowardtheTableauwayofdoingthings.

Youareremindedwhenyougotoanothergeography,beitEngland,orGermany,orFrance,oranyofthemajormarkets,youareremindedhowmuchcustomershaveincommon.They'rerunningWindowsandLinux,theirdatabasesareOracle,DB2,SQLServer,Hadoop,andsoondowntheline.They'reputtingmoreoftheirdatainthecloud,andsoondowntheline.

Andamongotherthings,they'retiredoftheoldwayofdoingthingswithregardtoslowmovingdata

projectsandarelookingforanewway.SoalthoughIcancalloutsomenicedifferencesbetweenthetwogeographiesalongthevectorofpartnersandlocalizationandSIinvolvementandthatkindofthing,Idon'twanttoelevatethatabovetheheadlineofthisindustryisgoingthrougharevolution.

Therevolutionisglobal,andIthinkTableauispositionedtobealeaderinallofthemajorgeographies.InfactIwilladd,youmayhavenoticed,wejustopenedanEUdatacenterforthefirsttime.SowearereallyenthusiasticabouttheopportunityinEurope,inparticular.

Thanks,guys.

Thankssomuch,Brad.Operator,canwehaveournextquestionplease?

Operator :

BrentThillwithUBS.

BrentT hill(Analyst-UBS):

Christian,giventhematerialslowdowninNorthAmerica,howdoyoureshapeyoursalesforceinQ1?Istherechangesthatyouaremakingintermsofare-orginQ1?IknowthatJanuary7,Kellymentionedherdecisiontoresign.

Anytimewehaveseensalestransitionslikethis,therehashistoricallybeenaprettylagandhiccup.Howdoyoumanagethroughthattoensurethatdoesnothappen?

Yes,wedon'tanticipateachangeinsalesmethodology,modelororganization.TheheadlinenewsintermsofchangeisKellyWrightafter11yearsofexceptionalserviceanddedicationhasdecidedtoretireattheendofthisyear.Sothatwillbeanotablechange,andverybigshoestofillthere.

Butintermsofthewayweattackmarkets,we'vegotanSNBgroup,we'vegotamiddlemarketgroup,we'vegotanenterprisegroup.Wehaveratiosofsalesengineerswhohelpwithsales.WehaveSIpartnerships.

Justgothroughallthemajordimensionsofhowwegotomarket.Wedon'texpectanybigchangesthere,andinfact,theattritionatTableauandinoursalesforcegenerallyisverylowandstable.SoIexpectwe'llbeabletogothroughthistransitionprettysmoothly.

IjustwanttogobacktoRaimo'squestionaroundthecommoncharacteristicthattheUScustomersmentioned.Ijustwanttohopefullybeclearonthis,thatthey'resayingtoyouthatthey'vetakenseatsthatthey'redigestingthoseseats,butthey'rejustnotmovingtheexpansionseatthatthecadencethatperhapsmanyofuswouldhavelikedtohaveseen.Butbeyondthat,thereisreallynootherchangethatyouareseeing,butyouanticipatethatthey'lljustcomebackbutitisunclearexactlywhentheycomebackinsidethatNorthAmericanmarket.

T omWalker (CFO):

Brent,thisisTom.That'sabsolutelyright.Exactly.Sowecontinuedtoseeexpansion,licenserevenue,whichisadditionallicenseseatsoruserseatsinsideofourcustomersacrosstheboard.Itwasjustata

smallerpacethanwehadseenhistoricallywiththosecohorts.

Butwedon'thaveanyreasontobelievethatthey'renotgoingtocontinuetoexpand.AsImentionedbefore,Tableau10isrightaroundthecorner.Sowe'vegotalotofgoodnewsandwe'llcontinuetoinnovateandbringcustomersthebestanalyticssolutiononthemarket.

Sojusttobeclear,thiswasexistinginstallbasecustomersyousawtheweakness,notinnew.Orwasitinboth?Thenetnewandexisting?

T omWalker (CFO):

Iwouldfocusprobablymorebecausetheexistingisthelargerportionnow,asyouheardinthepreparedremarks.75%ofourperpetuallicenserevenuecomesfromtheexistingbase.Sothat'sabsolutelywhereIwouldfocus.

Becausetheacquisitionmetricsarereally,reallysolid,asyousaw,3,600newcustomeraccounts.Youknowthatinitialaverageordersizeissub$10,000,soallofthatisworkingquitewell.

SothesoftnessthatIamseeingismoretowardstheeveryyearweupdateannualcohortsandwelookatthebuyingbehavior.AnditjustseemedsofterinQ4,especiallywhenyoucompareitto2014'smonstrousQ4.

Thankyou.

Thanks,Brent.Operator,canwehaveournextquestionplease?

Operator :

PhilWinslowwithCreditSuisse.

PhilWinslow(Analyst-CreditSuisse):

Thanks,guys,fortakingpharmaceuticalIquestion.Actually,thereistwoofthem.Firstonthequestionofnewdeals.

Ifyoulookatthesmallerendofthespectrumhere,andtheoneoffsorthehandfulofcustomersputtingintheircreditcardanddownloadingtheproduct.Doyouseeanychangethereatthelowend,callitvolumebusiness?

Obviously,youguyssawadecelerationinthegrowthindealsworth$100,000,butwonderingifyoucouldtalkaboutthedollarthere.Becausesometimesthere'sobviouslyadifferenceindealsize.Anykindofcolorthere,itwouldbegreat.

T omWalker (CFO):

Hey,Phil,thisisTom.Sooverall,thenewdeals,asIjustmentionedonthepreviousquestion,wasfromanacquisitionstandpoint.Thecustomeracquisitionengineisgoingquitestrongwith3,600newcustomeraccounts.SoIwouldn'tseeadisruptioninthevolumethere.

Wecontinuetofocusonit.We'vegotpartofthesalesteam,asyouknow,focusedoncustomer

acquisitionandwewillcontinuetodothatandgoafterit.Becauseweareproudofthe39,000customeraccountswehave,butwearelookingforwardtoaddingalotmoretotheTableaufranchise.SoIwouldn'treallycommentanymoreonthat.

Andthenwithrespecttothelargedeals.Thatfluctuates,itebbsandflowsonanyquarterlybasis.WealwaysexpectedQ4tobethestronger,thelargerandaggregatenumber.Sohittingtheover400waswonderful,butwedidseesoftnessinspend,alotofthoselargerdeals.

Sowithoutbreakingoutthosespecifics,wedidrecordnumbersthatshowsthatweareexpandingourfootprintwithourorganizations,alotoflargeorganizations.Butitwasn'tatthesameclipthatwehadseenhistorically,andespeciallycomparedtoQ4of2014.

PhilWinslow(Analyst-CreditSuisse):

Gotit.Thanks,guys.

Thanks,Phil.Operator,canwehaveournextquestionplease?

Operator :

JohnDiFucciwithJefferies.

JohnDiFucci(Analyst-Jefferies&Co):

Hey,guys.Thanksforthequestion.ThisisJoeonforJohn.Ihaveaquicktwopartquestion.

Internationalisthelargestit'severbeen.HowshouldwethinkaboutbreakdownbetweentheinvestmentofinternationalNorthAmericagoingforward,specificallywiththe1,000newemployeesyouexpecttohire?

AlsoontheFXside,myunderstandingit'sjustJapanthataffectsFXonthetopline.Isthatcorrect?One.Andthetwois,what'sthebreakdownontheoperatingsideoftheexpenses?

T omWalker (CFO):

Okay.HeyJoe,thisisTom.Sooverallontheheadcountside,sotheinvestments,ifyoubreakitdownwheresalesandmarketingis,clearlythesalesandmarketinginvestmentsfromapercentagestandpointwouldbelargerinternationallythantheyaredomestically.Becausetheteamismorematureandbothouthere.SoIwouldcommentthatforwardfacinginternationalsalesandmarketinginvestmentsisabsolutelywherewearegoing.

Iwouldalsoaddontheinternationalfrontwouldbearoundthesupport,sotechsupportecosystemandstuffthatwedotosupportourglobalgrowingcustomerbase.ThenwithrespecttoFX,you'vegotitright.Forthemostpart,wearedollardenominatedwiththeexceptionofJapan,again,andtheoverallFXimpacttherewasminimal.

JohnDiFucci(Analyst-Jefferies&Co):

Thanks,guys.

Thankyou.Operator,canwehaveournextquestionplease?

Operator :

KarlKeirsteadwithDeutscheBank.

KarlKeirstead (Analyst-DeutscheBank):

Thanks.IfImay,oneforChristianandoneforTom.

Christian,youandotherexecutiveshavetalkedalotaboutthehugepotentialfordatatomovetothepubliccloudinfrastructuremodel.AndIamwondering,isitpossiblethatthisspendingpauseisatallrelatedtoenterprise'smaybejuststeppingbackandrethinkingtheirdataresidencyalternatives,orisittooearlyforthat?

ThenforTom.Tom,thereareplentysoftwarecompaniesthathavemovedbeyondtheirhypergrowthstage,growthslowstosay30%andthereisapredilectiontoshowmoreoperatingmarginandleveragewhentheydeceleratedowntothathigh20%sor30%level.

Youarenotdoingthat.Isthatbecauseyouthinkthisspendingslowdownistemporaryandgrowthcanaccelerate?Thanksforanythoughtsonthat.

Greatquestion.Moreandmorecustomersareconsideringthecloudfortheirdataprojectsgenerally,andforbusinessanalyticsaspartofthat.Andsothatsituationseemstogroweveryyearinareallyniceway.

Asitis,Tableauispositionedwithahybridmodelwhichwethinkistherightonetohaveoverthenextfivetotenyears.BythatImean,customerscanchoosetodeployourtechnologyonsiteintheirownprivatedatacenters.TheycanchoosetodeployitonAWSandpubliccloudinfrastructure,asyousay,ortheycanchooseourownhostedservice,Tableauonline.

Furthermore,anyofthosethreemightbeusingTableauproductsinconjunctionwithcloudhosteddata.Soitdoesn'tmatterwhichcategoryyouarein.Moreandmoredataisgoingintobothcloudapplicationsandgeneralpurposeclouddatabases.

SoTableausalesareout,they'resetprettywelltocapturethemovementtowardthecloudinthatsense.Sotofinallyansweryourquestion,yes,IthinkitwouldbetooearlytosaythattherehasbeensomeaccentuatedpausetoreconsiderstrategythatwouldhaveaffectedTableauperse,becausewearealreadyplayinginallofthethreeplaces.

ButIwillendwiththefinalpointthough,butdon'tletthatcomeacrossasmoreandmoreisn'tgoingthere,becauseitis.Itisbeingtakenmoreandmoreseriously.Peoplearegettingovertheirlegacyconcernswithcloudtechnology,andTableauisveryfocusedoninvestinginthatarea.

Okay,thanks.And,Tom?

T omWalker (CFO):

Hello,Karl.ThisisTom.Withrespecttooperatingmargin,Ithinkitismoreaboutourinvestmentstrategy.Ithinkitcorrelates100%withthewaywelookattheopportunityandthemarketopportunity.

Wethinkit'senormous.Wethinkproductinnovationisextremelyimportant,andwewanttocontinuetogoafterthemarketopportunity.

Youhaveseenalotofcompetitorsgetattractedtotheoverallmarketspace,andsoitisvery,very

importantforustorecognizehow--wehavebeensayingwhatarichopportunityitisandhowmuchbeyondBIitis.Sowewanttocontinuetogoandbetheleaderthere,andwethinkthebestwaytodothatisthroughinvesting.

Sotherewillbeatimewhenwedon'tthinktheopportunityisasrich,andIbelievethat'swhenwe'llreturntowardsmoreoperatingleverageinthemodel.Butrightnow,weactuallyarebullishontheoverallopportunityandthelong-termopportunity.Wearefocusedonreaching$1billionoverthenextfewyearsintoplinerevenue,andwe'regoingcontinuechippingawayatit.

Thankyouboth.

Thanks,Karl.Operator,canwehaveournextquestionplease?

Operator :

KeithWeisswithMorganStanley.

KeithWeiss (Analyst-MorganStanley):

Thankyou.ThisisMelissaGorhamcallinginforKeithWeiss.Ijusthaveaquestionontheguidance.

ForQ1,itlookslikeyouweresayingthatitisgoingtobesubseasonal.Andatthemidpoint,itisabout25%growthforQ1.Thenforthefullyear,IthinkIbelieveyousaiditwas30%growth.

Sothatdoesimplythatisgoingtoacceleratethroughouttheyear.Wonderingifyoucanjusthelpusreconcilethat,andwhatwouldcausethatacceleration?

T omWalker (CFO):

Hello,Melissa.ThisisTom.

Sooverall,whenweputforthguidance,wethinkQ1istheonewehavebetterfocusonrightnow,it'sthemostinformationthatwehave.Soweareputtingitinthere.That'swherewearecomfortablewiththerangeIgave.

Withrespecttotheyear,again,gettingbacktowhatKarlKeirsteadjustasked,isit'salargeopportunity.Wehaveexpandedthesalesandmarketingteamdramaticallyin2015,andweexpectproductivitygainstokickin,albeitatameasuredapproachin2016.

SoIthinkthat'sthereconciliationthatIwouldgiveyouthere.Wearebeingcautiousasweentertheyear,andaswehistoricallyhavedone,every90dayswewillupdateyouasnewinformationcomes.Butoverall,wearebullishonitifitcontinuesgoingforit.

Okay,thanks.Thenjustaquestiononcashflowfornextyear.Sowehaveyouroperatingmarginguidance,andwehaveourCapEx.Thefirstthingonthat,canyoujustmaybedescribewhatthat$100millioninCapExisgoingtowards?

Thenhowshouldwethinkaboutfreecashflow?Itimpliesthatfreecashflowcouldbenegativenextyear.Isthattherightassumptiontomake?

T omWalker (CFO):

Yes.SoIthinkcashflowinmaybethefirsthalfoftheyearwouldbenegative.Ithinkyousawtheannouncementswemadelastyear,inthemidpartoflastyear,aboutsomeofficeexpansion.Alotofthoseexpensesarecomingduein2016.

Soamajorityofthoseexpensesthatwearetalkingaboutinthe$100millionthatImentionedisaaroundfacilitiesandofficeexpansion.NotonlyhereUS,butalsointernationally.

Thenthere'sotherinfrastructureplays.Fortheoverallyear,positivefreecashflowiswhatweareshootingfor.

AsIsaid,Ithinksomeofthoseexpensesaregoingtoputusnegativecashflowinthefirstpartoftheyear,butwe'llcomeoutofit.Fromthecashflowfromoperationsstandpoint,Ithinkitwouldbeconsistentwithattheendoftheyear,itwouldbeconsistentwithwhatwehaveexperiencedthelasttwoyears,andthenyoujustnetoutthecapitalexpendituresthatweweretalkingthere.

Thankyou.

Thankyou.Operator,canwehaveournextquestionplease?

Operator :

SteveKoenigwithWedbushSecurities.

SteveKoenig (Analyst-WedbushSecurities):

Thanksfortakingmyquestion.JustwonderingifyouallasyouparsethesalesdatafromQ4,didyouseedifferencesbyverticalorbytheexistingsideoftheTableaufootprintorbyusecase?Anygranularity,besidesitallexpansions,andanyparticularareasthatwerestrongerorweaker?

T omWalker (CFO):

Hello,Steve.ThisisTom.SoIwilldiveinonthatone.

Sooverallfromaverticalsperspective,no.Iwouldn'tsaythatwesawthat.Asyouknow,youknowprettywellaboutourtechnology.We'reprettyagnostictovertical.Dataisdata,wetreatitallequally.

That'snotnecessarilywhereweareseeingpockets.TheonethingthatIdidmentionwasthattheoverallfromtheexistingbase,andsomebodyaskedthatquestionabouttheexistingcustomercohorts,that'swherewedidseesomesoftness,andparticularlyinNorthAmerica.Butoverall,ourcustomerscontinuetoexpand,andweexpectthemtocontinuetoexpandmoregoinginto2016.

Okay.Andthenforonefollowup,canyouallgiveanycoloronanythingnewinthecompetitiveenvironment?Andhowarethepricingdynamicsonthelowend?

Overtheyears,thecompetitivedynamichasbecomemorecrowdedanddifficult.TableauandafewothercompanieshavepioneeredthisnewwayofvisualanalyticsthatIdescribedearlier.Andalotof

peoplecaughtgottennotice.

Andsotherearemoreandmorecompanieswithofferingsinthearena.Soithasgottenthickerandthickerovertheyears,sotospeak.Butnotsomuchthatonejumpsout,asTommentionedearlier,fortheopportunitieswe'reengagedwithandhavedatafloor,ourwinratesareactuallystable,andinsomecasesevenhigher.Butweareveryconfidentinthesituationthere.

Andwithregardtothelow-endofferingsthathavecomeonaspartofthatmix,theywillcertainlygrabsomeofthemarketandhavesomelevelofsuccess.Asitturnsout,theproductsdon'treallydoverymuchandarefocusedonaverylowendusecase.Sowedon'tanticipatethatfundamentallyinhibitingTableau'ssuccessoverthelongrun.

Gotit.Thankyouverymuch.

Great.Thankyousomuch.Operator,canwehaveournextquestionplease.

Operator :

MattHedbergwithRBCCapitalMarkets.

MattHedberg (Analyst-RBCCapitalMarkets):

Thanks,guys.Tom,Iamcuriousonyourguide.ItsoundslikeyouarestillassumingNorthAmericawillstaysoft,atleastinthefirstpartof2016.Areyouassuminganyslowdownininternationalgrowth,oristhisstilllargelyaUSphenomenonyouareseeing?

T omWalker (CFO):

Hey,Matt.Sooverall,Iwouldexpectthenumbersinaggregatetogetlarger,soweareforecastinggrowth.It'sjustthepercentageiswhatIthinkyouaretalkingabout.

Becauseinternational,thegrowthrateshavecomedownoverthelastfewyearssoIwouldexpectpercentagestocomedown.Butinaggregate,weareseeingahugeopportunitytocontinuetoexpand.SoIwouldn'tchangethat,andevenintheUSorNorthAmericaweareexpectinggrowth.

Weseeitasahugeopportunity.Wedon'tthinkwe'resaturatedinthemarket,andwe'reexcitedaboutbringing--nextupisTableau10toourcustomers.

Maybethenjustasafollowuptothatthen.SothesoftnessinNorthAmerica,whichitdoesn'tsoundlikeinternational--orcorrectmeifIamwrong,butitdoesn'tsoundlikeyousawthatsoftnessinternationally.Isthatfair,andaretherechangestothatassumptionupordownfor2016?

T omWalker (CFO):

Yes.Overall,Iwouldsaytherewascautioninalotofourcustomerspending.SodomesticorNorthAmericamakesup75%oftheoverallrevenuemix.That'snottosaythatthereisnotuncertainty,andeventhoughwearedollardenominatedinternationallythereisdefinitelycurrencythingsthatcausepeopletopauseoruncertainty.

Butoverall,Iwouldn'tthinkthatwasthelargerimpact.TheNorthAmericaiswhatwejustsaw,that

caution.AndIthinkwearewellpositionedtogetthroughthatbecauseofthenature,asImentionedononeoftheearliercallsorearlierquestions,wasabouttheexpansionpart.

Soevenwhenpeopleareexpanding,youthinkaboutcustomersthatmighthavebeeneyeingalargerdeploymentinQ4.Butifthefallbackpositionistheycontinuetoexpand,theyjustexpandinasmallerfootprint,longtermthat'sreallygoodforTableau.Soreally,that'swhatwearefocusedon.

Gotit.ThanksTom.

Thankyousomuch.Operator,canwehaveournextquestionplease?

Operator :

TomRoderickwithStifel.

T omRoderick(Analyst-StifelNicolaus):

Goodafternoon.Thanksfortakingmyquestion.Iamcuriousforyourthoughtsonhowyoumakeadeterminationinhouse,whetheryouthinkthesoftnessoutthereintheendmarketsismoreareflectionofthemacro?

Areyouseeingitinanyparticularverticalsthatmightencourageyoutothinkabouthowyoustaffthebusinessandwhereyoustaffthebusiness?Andwhatarethemetricsthatyoulookatthatwouldtellyou,hey,thisismaybeabroadermacroeconomicissue,notsomuchacompetitivedynamicwinrate,closeratetypeofissue?Iwouldlovetohearwhatmetricsyouaretracking,andhowthoseinformthewaythatyoustaffthebusiness,particularlythesalesforcegoinginto2016.

T omWalker (CFO):

Hello,Tom.ThisisTom.Sooverall,thereisnotaCompanyintheworldthatcansaythatthey'reimmuneonthemacro.Ithinkit'sveryhardtopointtothatandsayanythingaboutit.

Whatwesawwecantalkaboutourcustomerbaseiswesawsoftnessinthespendingthere.Butagain,IthinkChristiancommented,basedoninternaldata,thecompetitivewinratesareunchanged.Weseeourselvesgettinggoodtractionandgoodexpansion,albeitnotatthesamelevelthatwehavehistorically.

Sowearefeelingreally,reallyconfidentthatwecancontinuetoexpandtheTableaufootprint.TheotherthingIwouldfallbacktois,intightspendingtimes,thereisalsoaneedtomakeverygooddecisionsandveryfastdecisions.

SothatisoneofthevaluepropsofTableauisbeingabletonotjustgetaquickdashboardup,but[bringing]insightintoyourdatafastsocompaniescanmakedecisions.SoIthinkit'savery,veryimportantwaythatcompanies,ifthereisasoftspendingenvironment,arebringingvaluetotheirorganizations.

And,Christian,maybeaquickfollowupforyoujustonthattopic,asyouthinkflexiblyaboutperhapshowtoshortensomesalescycles.Alotofdiscussioninthemarketplacearoundpricing,particularlywithsomelowercostcompetitorslikePowerBIoutthereinthemarketplace.Howdoyouthinkaboutthedynamicof

pricing,yourwillingnesstodiscountintheenterprise,yourwillingnesstobemoreflexibleupanddowntheentirecustomerstack,juststrictlyonthenotionofpricesassalescyclesmaybestretchedoutherealittlebit?

Yes.Aswegetintolargerdeals,wediscountandwehavetakenthosediscountratesupabitovertheyearsaswehavebeeninvolvedinlargernegotiations.Generallyspeaking,therehasbeenawaveofveryinexpensiveorsometimesfreeproductsthathaveenteredthemarket.It'sactuallynotnew,itgoesbacksixorsevenyears,theycomeinonewaveaftertheother.

Andinevitably,we'llgetsomeportionofthemarketandhavesomelevelofsuccess.Asyoudoubleclickonthem,however,whatyouquicklyrealizeisifthosecompanieswerenotchargingbargainbasementpricesfortheirofferings,theywouldn'tbesellinganyofthem.Andthereasonis,theproductsjustdon'tdoverymuch.

Theycontainvirtuallynovisualanalyticsadvancements.They'reweak,evenontheanalyticsbasics.Theyhaveverylittledepth,youveryquicklyhitwalls.

Tomwastalkingaboutsimpledashboardsasopposedtoanalyticsystems.They'reoftentiedtooneparticularplatform,orclaimtosupportotherdatabasesbutaren'tperformanceoptimizedforthem.

Someofthemonlyruninthecloud.Someofthemonlyruninoneplatform-specificversionofthecloudandsoondowntheline.Icankeepgoinghere,Idon'twanttogotoolong.

Butascustomersdoubleclickonwhatisactuallyavailabletothemforavery,verylowprice,theywillincreasinglydiscoverthatthoseproductsareunabletomeetmostoftheirneeds.Soasaresult,Tableauisstickingwiththeaffordablemodelwehavetoday.

PeoplecangetwithTableauforaverysmallinvestment.Astheyscaleitup,theycandoitonaverylowcostperuserbasis,andIthinkwe'llhavethebestsolutiononthemarketandonepricedrightforcustomersformanyyearstocome.

Great.That'shelpful.Thankyou,guys.

Thankyou.Ithinkwehavetimeforonemorequestion.Operator,canwehaveourlastquestionplease?

Operator :

DevonSurreywithWilliamBlair.

DevonSurrey(Analyst-WilliamBlair&Company):

Hey,guys.Thanksfortakingmyquestion.Justtwoquickones.

Giventhattheexpansionishappeningandcustomershaveobviouslyprobablyhavealargernumberofpotentialusers,assumethesmallercustomersaresomewhatsaturatedandeverythingelse.Andthelargerguyshavesomelegacyproducts,andthelegacyguysareinnovatingslowerandit'snotagreatproductandit'snoselfserviceoranythingelse.Butit'snotacompetitivewinordisplacementbecausethoseguysalreadyhavetheexistingproduct.

Isthereanysensethatmighthavebeenoneofthereasonswhyexpansionsareslower?AndIguessthe

secondquestionwouldbe,isobviously,asyougetintolargeraccounts,verticalizingtheproductbecauseTableautodayhasbeen,asyousaid,veryhorizontal.Butverticalizingparkandprovidingspecificthingsorsaymarketbasketanalysisforgrocersorturnaroundsforatelco,thingslikethat,doesthatmakesenseinanefforttostartcapturingmoremindsharewithintheselargeaccounts?

Yes.Thefirstpartofthequestion,Ithinkthelargenumberofcompetitivealternativesthatareavailableforcustomerstocheckoutversusafewyearsagoprobablyhadsomeroleinexpansionratios.It'sveryhardtomeasurethatfromourperch.

Onethingthatgivesuscomfortthatit'sprobablynotoverwhelmedbythataretheclosedlossratiosthatTommentionedbefore.Weareactuallyperformingverywellthereagainforopportunitiesweareengagedwith.SoIguessIwillleaveyouwiththehypothesisthatthenumberofthingscustomersarecheckingouthasincreased,probablyplayssomerolethatitdoesn'tfeeltousthatit'stheoverwhelmingfactor.

Withregardtoverticalizationtobetterpenetrateourcustomers,yes,weareincreasinglyinterestedinthat.Wedon'thaveimmediateplans.Andasamatterofstrategy,largelywehavebeenleavingthattoourpartnernetwork.

Youcanprobablyseewhat'shappenedtoourpartnernetworkintermsofrevenuecontributionandcustomercontributionoverthelastsayfourorfiveyears.Alotofthatisintheareaofverticalization.

Actuallyjustafewweeksago,IwasattheTableaupartnerssummitandmetwithacustomerwhobuildsamazingTableauvisualizationsanddashboardsandKPIsforpeopleinthecommercialconstructionindustry.Reallyspecificstuffthatwe'llneverbeexpertsinasourselves,andatthemomentwearemorefondofthepartnerecosystemangleonthatbutIwillcertainlyevaluateiteveryyear.

Great.Thanks,Devon,andthankyoutoeveryonewhojoinedustoday.Andhaveagoodevening.

Operator :

Ladiesandgentlemen,thisconcludestoday'sconferencecall.

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