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Tableau Software Saw A Few Glitches In Q3

Despite Q3 Print Behind It, Tableau Has A Few Glitches Left To Unkink, Says KeyBanc|NYSE: DATA

KeyBanc Capital Markets said it still sees potholes ahead for Tableau Software Inc NYSEDATA, as it grapples with inconsistent execution and increasing competition.

Low Visibility Into Revenues

Analyst Brent Bracelin said two major transitions, namely new leadership and subscription pricing, limit his visibility into revenue growth for Tableau Software next year, with the possibility of it slowing to a paltry 3 percent. However, the analyst sees a 35–45 percent increase in subscription and maintenance revenue.

3Q Review

KeyBanc noted that the company delivered an earnings beat despite license revenue falling short, with internal execution issues and a dynamic competitive landscape troubling the results. The firm attributed the license shortfall to a lengthening sales cycle. The firm managed to circumvent the license revenue weakness by tighter management of operating expenses.

Lowering Estimates, Price Target

The firm lowered its estimates for the company, following up on a cut last week, marking the fourth cut of this year. The reduction was blamed on a greater-than-anticipated mix shift to subscription pricing and a weaker spending environment.

KeyBanc models revenues of $825 million, down from its previous estimate of $987 million, equating to 3 percent total growth. Nevertheless, the firm sees recurring revenues increasing by 41 percent year-over-year, offset by a 39 percent drop in perpetual-driven revenue.

The firm has an Outperform rating on the shares of Tableau Software, while it lowered its price target to $60 from $70.

That said, the firm believes the potential for subscription and maintenance revenues could limit the downside in the shares below $40.

At last check, shares of Tableau Software were down 12.91 percent at $43.12.

Nov 2016William BlairDowngradesOutperformMarket Perform
Nov 2016Drexel HamiltonDowngradesBuyHold
Oct 2016OTR GlobalDowngradesPositiveMixed

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