Tableau Software is a data visualization company, that aims to bring cheap analytics to millions of business owners and regular users. Based on core technologies originally developed at Stanford University, their products reduce the complexity, inflexibility any expense associated with traditional business intelligence applications. DATA makes 32% of revenues from Maintenance and Services (growing by 83%), while 68% comes from software licensing (75% growth YoY).
DATA is a first mover in Big data analytics industry, which is expected to grow by at least 25% until 2018 to $46 Billion (source ReportsnReports.com). Investment bank Cowen and Co. expects Tableau to capture 30% of business intelligence license market by 30%. According to Tableau's website, total data volume will reach 20 Exabytes by 2020, growing by 48% annually.
Companies like Microsoft and IBM have already realized the potential of this business and are developing or have already launched their own products. While they have larger resources than Tableau, no big data analytics company grows revenues and acquires customers as fast as Tableau. They are reinvesting all money into sales and R&D as can be seen on their financials:
DATA is a first mover in Big data analytics industry, which is expected to grow by at least 25% until 2018 to $46 Billion (source ReportsnReports.com). Investment bank Cowen and Co. expects Tableau to capture 30% of business intelligence license market by 30%. According to Tableau's website, total data volume will reach 20 Exabytes by 2020, growing by 48% annually.
Companies like Microsoft and IBM have already realized the potential of this business and are developing or have already launched their own products. While they have larger resources than Tableau, no big data analytics company grows revenues and acquires customers as fast as Tableau. They are reinvesting all money into sales and R&D as can be seen on their financials:
Wall Street expects revenue growth of 70% for this stock, while management is more conservative at 45%. The tricky part about Tableau Software are it's profits. Since the company reinvests everything back in the business, it is hard to tell what it's margins will be. As such it is difficult to compare it to any other publicly available stock. Only QLIK Technologies (QLIK) comes close, trading at 5x sales (vs. 17.5 for DATA), although they grow much slower at 20% per year. Valuation is very difficult, when there are few companies to compare to and DATA generates no profits.
Why I'm going long
Tableau offers free trials on most of their products, so customers can try them out easily and decide whether to pay for more or not. Vast majority of accounts expand over time, which demonstrates that the software is popular and can spread quite quickly. Revenues are growing quickly, and Wall Street has noticed this stock some time ago, which is also reflected in it's valuation. DATA has demonstrated innovation and acquires customers at an incredible pace. Their customer conference, which is meant to build a community of enthusiasts and get feedback for their products had 180 attendees in 2008, and 5500 in 2014. At the end of last year, Tableau had 13 patents issued for their software and 25 more pending. One big risk is their issuance of stock, last year they increased number of shares outstanding by 11%, what's always a big risk in technology stocks.
I believe the company has a lot of market potential with current products, plus can develop market leading software for the future. Going long today at open with a stop loss like I always do (wouldn't recommend buying this stock without SL).
Why I'm going long
Tableau offers free trials on most of their products, so customers can try them out easily and decide whether to pay for more or not. Vast majority of accounts expand over time, which demonstrates that the software is popular and can spread quite quickly. Revenues are growing quickly, and Wall Street has noticed this stock some time ago, which is also reflected in it's valuation. DATA has demonstrated innovation and acquires customers at an incredible pace. Their customer conference, which is meant to build a community of enthusiasts and get feedback for their products had 180 attendees in 2008, and 5500 in 2014. At the end of last year, Tableau had 13 patents issued for their software and 25 more pending. One big risk is their issuance of stock, last year they increased number of shares outstanding by 11%, what's always a big risk in technology stocks.
I believe the company has a lot of market potential with current products, plus can develop market leading software for the future. Going long today at open with a stop loss like I always do (wouldn't recommend buying this stock without SL).
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