tableau software (data) earnings report: q4 2015 ... · tableau's mission is to help people...
TRANSCRIPT
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page1of22
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
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page2of22
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
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page3of22
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.
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page4of22
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,
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page5of22
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.
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page6of22
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
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page7of22
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.
JoniDavis (DirectorofIR):
Operator,canwestartourQ&Aplease?
QUESTIONS&ANSWERS
Operator :
(OperatorInstructions)
MarkMurphywithJPMorgan.
MarkMurphy(Analyst-JPMorgan):
Yes,thankyou.Christian,soIamcuriousifyouseesignsofthemarketplacegoingthroughaHadoopdigestionphase,whichmightbebyextensioncausingagrowthdecelerationacrosstheentiredataandanalyticsmarket?
Becauseclearly,thewholespacehasdeceleratedandhitaroughpatchinQ3andQ4of2015.AndIthinkwe'retryingtounderstandtheunderlyingdynamicthere,whetheryouthinkthatismoremacrodrivenandsomethingthatwe'llseeacrossabroadrangeofsoftwareandtechnologycompanies?Orwhetheryouthinkthatthisismorethananalyticsdigestionphaseorsomethingelse?
Christ ianChabot (CEO):
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.
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page8of22
AndIwillclosebyaddingthatourpartnershipswithmanyofthegreatHadoopprovidersouttherearereallytight,ourengineeringteamstalkandcollaborate.Weoftenaremarketingateachothers'events,andthatincludesandCloudera,andHortonworksandseveralothers.Sothat'smyviewonit.
MarkMurphy(Analyst-JPMorgan):
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.
MarkMurphy(Analyst-JPMorgan):
Thankyou.
JoniDavis (DirectorofIR):
Thankyou,Mark.Operator,canwehaveournextquestionplease?
Operator :
RaimoLenschowofBarclays.
RaimoLenschow(Analyst-BarclaysCapital):
Thanksfortakingmyquestion.Tom,couldIgobacktosomeofthecommentsyoumade?Youtalkedaboutontheexpansionside,thecustomerexpandedbutmaybenotatthesamerate,andthenyoumentionedsalesproductivityalittlebitwhichismoreaconjecturenewhires.
Canyoutalkalittlebit,whenyouanalyzethequarterandtherootcausesthere,whatwasthedriver?AlotofthefolksonthestreetareconcernedaboutPowerBI.
Whenyoulookedintothedealsandthemomentumthatyouhadthere,whatwasthedriverforguysnot
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page9of22
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.
RaimoLenschow(Analyst-BarclaysCapital):
Thenjustmaybeonefollowup.IfIlookatthebeatontheoperatingprofitside,whichisobviouslybiggerthanwhatwehadmodeled.Howmuchofthatwasplanned,andhowmuchofthatwassalesguysdidn'tneedtohitthequotaattheendoftheyear,ordidn'tgetquitethesalesacceleratorssothatgaveyouanaturalbenefitonthecostside?
T omWalker (CFO):
Overall,wehadTC,andwehaveourcustomerconferenceinQ4,soalotofthatweareexpectingsomemoreexpenses.Expensesjustcameinalittlelighterthanweexpectedoverall.
SoIwouldn'tpointtoonethingoranotherbecauseoverallwehitourguidance.Weweretargetingthat,andsowedidwellthere.
RaimoLenschow(Analyst-BarclaysCapital):
Perfect.Okay.Thankyou.
JoniDavis (DirectorofIR):
Thankyou,Raimo.Operator,canwehaveournextquestionplease?
Operator :
JesseHulsingwithGoldmanSachs.
JesseHulsing (Analyst-CowenandCompany):
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page10of22
Thanksfortakingmyquestion.Christian,inyouropening,youtalkedaboutTableau'scustomerbase,andIthinkyousaid88%ofthefortune500and96%ofthefortune100.
Ononehand,that'sfantasticandshowsjusthowpervasiveTableauhasbecome.Ontheother,Iguessitcouldraisequestionsaboutpenetration.Canyoutalkaboutyourthoughtsonpenetrationversussaturation?
Andhowdoesyourstrategyshiftnowthatyou'velandedinallthesebigcustomers?Doyouaddmoreproducts?DoyoudomoreM&Ainordertobuildaboutyourportfolio?Thankyou.
Christ ianChabot (CEO):
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.
JoniDavis (DirectorofIR):
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.
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page11of22
TheotherthingI'vegottoclosewithisfromanacquisitionstandpoint,againgettingbacktothestrongcustomeracquisitionengine,adding3,600newcustomeraccountstherebodedverywell.Sowe'reseeinggoodtractionthere,andthatbodeswellforthefuture.
SteveAshley(Analyst-RobertW.Baird&Co):
Andwasthereanyvariancebetweenthedirectandtheindirectchannelbusiness,NorthAmerica,intheperiod?
T omWalker (CFO):
No.Iwouldn'tsaytherewasavariancebetweenthose.Alotoftheeffortsthatwearemakingchannel,specificallyinNorthAmerica,wehavebeenmakingthoseinvestmentswithSIs,bothglobalandregionalSIsandthenour[reseller]network.SoallthatIwouldn'tsaywasachangeoradifferencefromourdirectbusiness.
SteveAshley(Analyst-RobertW.Baird&Co):
Perfect.Thanks.
JoniDavis (DirectorofIR):
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
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page12of22
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.
BradSills (Analyst-BofAMerrillLynch):
Thanks.Oneforyou,Christian,afterhavingspenttimeoverinEurope,anylearningsintermsofdifferenceinadoptioncyclesinsomeofthedifferentregionsinEuropeversustheUS?
Christ ianChabot (CEO):
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
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page13of22
projectsandarelookingforanewway.SoalthoughIcancalloutsomenicedifferencesbetweenthetwogeographiesalongthevectorofpartnersandlocalizationandSIinvolvementandthatkindofthing,Idon'twanttoelevatethatabovetheheadlineofthisindustryisgoingthrougharevolution.
Therevolutionisglobal,andIthinkTableauispositionedtobealeaderinallofthemajorgeographies.InfactIwilladd,youmayhavenoticed,wejustopenedanEUdatacenterforthefirsttime.SowearereallyenthusiasticabouttheopportunityinEurope,inparticular.
BradSills (Analyst-BofAMerrillLynch):
Thanks,guys.
JoniDavis (DirectorofIR):
Thankssomuch,Brad.Operator,canwehaveournextquestionplease?
Operator :
BrentThillwithUBS.
BrentT hill(Analyst-UBS):
Christian,giventhematerialslowdowninNorthAmerica,howdoyoureshapeyoursalesforceinQ1?Istherechangesthatyouaremakingintermsofare-orginQ1?IknowthatJanuary7,Kellymentionedherdecisiontoresign.
Anytimewehaveseensalestransitionslikethis,therehashistoricallybeenaprettylagandhiccup.Howdoyoumanagethroughthattoensurethatdoesnothappen?
Christ ianChabot (CEO):
Yes,wedon'tanticipateachangeinsalesmethodology,modelororganization.TheheadlinenewsintermsofchangeisKellyWrightafter11yearsofexceptionalserviceanddedicationhasdecidedtoretireattheendofthisyear.Sothatwillbeanotablechange,andverybigshoestofillthere.
Butintermsofthewayweattackmarkets,we'vegotanSNBgroup,we'vegotamiddlemarketgroup,we'vegotanenterprisegroup.Wehaveratiosofsalesengineerswhohelpwithsales.WehaveSIpartnerships.
Justgothroughallthemajordimensionsofhowwegotomarket.Wedon'texpectanybigchangesthere,andinfact,theattritionatTableauandinoursalesforcegenerallyisverylowandstable.SoIexpectwe'llbeabletogothroughthistransitionprettysmoothly.
BrentT hill(Analyst-UBS):
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
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page14of22
smallerpacethanwehadseenhistoricallywiththosecohorts.
Butwedon'thaveanyreasontobelievethatthey'renotgoingtocontinuetoexpand.AsImentionedbefore,Tableau10isrightaroundthecorner.Sowe'vegotalotofgoodnewsandwe'llcontinuetoinnovateandbringcustomersthebestanalyticssolutiononthemarket.
BrentT hill(Analyst-UBS):
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.
BrentT hill(Analyst-UBS):
Thankyou.
JoniDavis (DirectorofIR):
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
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page15of22
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.
JoniDavis (DirectorofIR):
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.
JoniDavis (DirectorofIR):
Thankyou.Operator,canwehaveournextquestionplease?
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page16of22
Operator :
KarlKeirsteadwithDeutscheBank.
KarlKeirstead (Analyst-DeutscheBank):
Thanks.IfImay,oneforChristianandoneforTom.
Christian,youandotherexecutiveshavetalkedalotaboutthehugepotentialfordatatomovetothepubliccloudinfrastructuremodel.AndIamwondering,isitpossiblethatthisspendingpauseisatallrelatedtoenterprise'smaybejuststeppingbackandrethinkingtheirdataresidencyalternatives,orisittooearlyforthat?
ThenforTom.Tom,thereareplentysoftwarecompaniesthathavemovedbeyondtheirhypergrowthstage,growthslowstosay30%andthereisapredilectiontoshowmoreoperatingmarginandleveragewhentheydeceleratedowntothathigh20%sor30%level.
Youarenotdoingthat.Isthatbecauseyouthinkthisspendingslowdownistemporaryandgrowthcanaccelerate?Thanksforanythoughtsonthat.
Christ ianChabot (CEO):
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.
KarlKeirstead (Analyst-DeutscheBank):
Okay,thanks.And,Tom?
T omWalker (CFO):
Hello,Karl.ThisisTom.Withrespecttooperatingmargin,Ithinkitismoreaboutourinvestmentstrategy.Ithinkitcorrelates100%withthewaywelookattheopportunityandthemarketopportunity.
Wethinkit'senormous.Wethinkproductinnovationisextremelyimportant,andwewanttocontinuetogoafterthemarketopportunity.
Youhaveseenalotofcompetitorsgetattractedtotheoverallmarketspace,andsoitisvery,very
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page17of22
importantforustorecognizehow--wehavebeensayingwhatarichopportunityitisandhowmuchbeyondBIitis.Sowewanttocontinuetogoandbetheleaderthere,andwethinkthebestwaytodothatisthroughinvesting.
Sotherewillbeatimewhenwedon'tthinktheopportunityisasrich,andIbelievethat'swhenwe'llreturntowardsmoreoperatingleverageinthemodel.Butrightnow,weactuallyarebullishontheoverallopportunityandthelong-termopportunity.Wearefocusedonreaching$1billionoverthenextfewyearsintoplinerevenue,andwe'regoingcontinuechippingawayatit.
KarlKeirstead (Analyst-DeutscheBank):
Thankyouboth.
JoniDavis (DirectorofIR):
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.
KeithWeiss (Analyst-MorganStanley):
Okay,thanks.Thenjustaquestiononcashflowfornextyear.Sowehaveyouroperatingmarginguidance,andwehaveourCapEx.Thefirstthingonthat,canyoujustmaybedescribewhatthat$100millioninCapExisgoingtowards?
Thenhowshouldwethinkaboutfreecashflow?Itimpliesthatfreecashflowcouldbenegativenextyear.Isthattherightassumptiontomake?
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page18of22
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.
KeithWeiss (Analyst-MorganStanley):
Thankyou.
JoniDavis (DirectorofIR):
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.
SteveKoenig (Analyst-WedbushSecurities):
Okay.Andthenforonefollowup,canyouallgiveanycoloronanythingnewinthecompetitiveenvironment?Andhowarethepricingdynamicsonthelowend?
Christ ianChabot (CEO):
Overtheyears,thecompetitivedynamichasbecomemorecrowdedanddifficult.TableauandafewothercompanieshavepioneeredthisnewwayofvisualanalyticsthatIdescribedearlier.Andalotof
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page19of22
peoplecaughtgottennotice.
Andsotherearemoreandmorecompanieswithofferingsinthearena.Soithasgottenthickerandthickerovertheyears,sotospeak.Butnotsomuchthatonejumpsout,asTommentionedearlier,fortheopportunitieswe'reengagedwithandhavedatafloor,ourwinratesareactuallystable,andinsomecasesevenhigher.Butweareveryconfidentinthesituationthere.
Andwithregardtothelow-endofferingsthathavecomeonaspartofthatmix,theywillcertainlygrabsomeofthemarketandhavesomelevelofsuccess.Asitturnsout,theproductsdon'treallydoverymuchandarefocusedonaverylowendusecase.Sowedon'tanticipatethatfundamentallyinhibitingTableau'ssuccessoverthelongrun.
SteveKoenig (Analyst-WedbushSecurities):
Gotit.Thankyouverymuch.
JoniDavis (DirectorofIR):
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.
MattHedberg (Analyst-RBCCapitalMarkets):
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
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page20of22
caution.AndIthinkwearewellpositionedtogetthroughthatbecauseofthenature,asImentionedononeoftheearliercallsorearlierquestions,wasabouttheexpansionpart.
Soevenwhenpeopleareexpanding,youthinkaboutcustomersthatmighthavebeeneyeingalargerdeploymentinQ4.Butifthefallbackpositionistheycontinuetoexpand,theyjustexpandinasmallerfootprint,longtermthat'sreallygoodforTableau.Soreally,that'swhatwearefocusedon.
MattHedberg (Analyst-RBCCapitalMarkets):
Gotit.ThanksTom.
JoniDavis (DirectorofIR):
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.
T omRoderick(Analyst-StifelNicolaus):
And,Christian,maybeaquickfollowupforyoujustonthattopic,asyouthinkflexiblyaboutperhapshowtoshortensomesalescycles.Alotofdiscussioninthemarketplacearoundpricing,particularlywithsomelowercostcompetitorslikePowerBIoutthereinthemarketplace.Howdoyouthinkaboutthedynamicof
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page21of22
pricing,yourwillingnesstodiscountintheenterprise,yourwillingnesstobemoreflexibleupanddowntheentirecustomerstack,juststrictlyonthenotionofpricesassalescyclesmaybestretchedoutherealittlebit?
Christ ianChabot (CEO):
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.
T omRoderick(Analyst-StifelNicolaus):
Great.That'shelpful.Thankyou,guys.
JoniDavis (DirectorofIR):
Thankyou.Ithinkwehavetimeforonemorequestion.Operator,canwehaveourlastquestionplease?
Operator :
DevonSurreywithWilliamBlair.
DevonSurrey(Analyst-WilliamBlair&Company):
Hey,guys.Thanksfortakingmyquestion.Justtwoquickones.
Giventhattheexpansionishappeningandcustomershaveobviouslyprobablyhavealargernumberofpotentialusers,assumethesmallercustomersaresomewhatsaturatedandeverythingelse.Andthelargerguyshavesomelegacyproducts,andthelegacyguysareinnovatingslowerandit'snotagreatproductandit'snoselfserviceoranythingelse.Butit'snotacompetitivewinordisplacementbecausethoseguysalreadyhavetheexistingproduct.
Isthereanysensethatmighthavebeenoneofthereasonswhyexpansionsareslower?AndIguessthe
EventDescription:Q42015EarningsCallMarketCapasofEventDate:4.18BPriceasofEventDate:81.75
CompanyName:T ableauSof twareIncCompanyTicker:DAT ASector:T echnologyIndustry:ComputerSof tware&
©2014TheStreet,Inc.Al l R ightsReserved Page22of22
secondquestionwouldbe,isobviously,asyougetintolargeraccounts,verticalizingtheproductbecauseTableautodayhasbeen,asyousaid,veryhorizontal.Butverticalizingparkandprovidingspecificthingsorsaymarketbasketanalysisforgrocersorturnaroundsforatelco,thingslikethat,doesthatmakesenseinanefforttostartcapturingmoremindsharewithintheselargeaccounts?
Christ ianChabot (CEO):
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.
JoniDavis (DirectorofIR):
Great.Thanks,Devon,andthankyoutoeveryonewhojoinedustoday.Andhaveagoodevening.
Operator :
Ladiesandgentlemen,thisconcludestoday'sconferencecall.
Allrightsreserved(c)2014TheStreet,Inc.
Pleasefeelfreetoquoteupto200wordspertranscript.Anyquoteshouldbeaccompaniedby"ProvidedbyTheStreet"andalinktothecompletetranscriptandwww.thestreet.com.Anyotheruseormethodofdistributionisstrictlyprohibited.
THEINFORMATIONCONTAINEDINEACHWRITTENORAUDIOTRANSCRIPT(the"TRANSCRIPT")ISAREPRODUCTIONOFAPARTICULARCOMPANY'SCONFERENCECALL,CONFERENCEPRESENTATIONOROTHERAUDIOPRESENTATION.THETRANSCRIPTSAREPROVIDED"ASIS"AND"ASAVAILABLE"ANDTHESTREETISNOTRESPONSIBLEINANYWAYNORDOESITMAKEANYREPRESENTATIONORWARRANTYREGARDINGTHEACCURACYORCOMPLETENESSOFTHETRANSCRIPTSASPRODUCED,NORTHESUBSTANCEOFAPARTICULARCOMPANY'SINFORMATION.
THETRANSCRIPTSAREPROVIDEDFORINFORMATIONALPURPOSESONLY.THESTREETISNOTPROVIDINGANYINVESTMENTADVICEORENDORSINGANYPARTICULARCOMPANY.