Tableau's Plunge Drags Salesforce, Workday on Growth Concern

Christian Chabot.

Christian Chabot.

Source: Tableau Software
  • Salesforce drops most since 2008; Workday biggest since 2012
  • Investors worried of spillover effect ahead of earnings

Tableau Software Inc., a maker of data-analysis and charting software, saw its value plummet by half Friday after falling short of fourth-quarter estimates, dragging down bigger software companies such as Salesforce.com Inc., Adobe Systems Inc. and Workday Inc.

Tableau reported license revenue -- a key metric -- that fell short of estimates for the first time since its 2013 initial public offering, according to Abhey Lamba, an analyst at Mizuho Securities USA Inc. Software investors were concerned, and shares of Salesforce tumbled 13 percent, the biggest single-day decline since October 2008. Workday dropped 16 percent, its biggest plunge since October 2012 and Adobe’s 8.3 percent fall was the largest since September 2010.

While Tableau doesn’t compete directly with the other companies, investors dumped shares as they worry that faster-growing software providers would stumble, according to Mark Moerdler, an analyst at Sanford C. Bernstein & Co. Tableau’s weakness was particularly disappointing for a quarter that’s traditionally been strong for its business.

“Tableau is one of the high-growth names within the industries,” said Moerdler, who noted that Workday and Salesforce are scheduled to report quarterly results later this month. “So people say, ‘If they got hit, do we know if the other guys are going to have that bad a hit?”’

The Standard & Poor’s software application industry index, which includes Salesforce and Adobe, fell 8.7 percent Friday.

Unexpected Results

Tableau reported results late Thursday. And while the company only narrowly missed projections, Tableau had been exceeding estimates for license revenue in previous quarters, Lamba said. Growth of 31 percent in license sales was also slower than the 57 percent jump posted in the third quarter. That weakness may indicate customers are slowing purchases and that Tableau is being hurt by rival products from the likes of Microsoft Corp., which sells its Power BI data-analytics product for as little as an eighth of the price, Lamba said.

“For a Q4, for them to miss a license number is not going to be viewed positively,” Lamba said. “It’s an indication of greater competition. Increasingly Microsoft Power BI is showing up in the conversation.” In the first and second quarters of the year, license revenue rose 74 percent and 60 percent, respectively. In fourth quarter of 2014, the jump was 75 percent.

The shares declined 49 percent to $41.33 at the close in New York, the biggest drop since the company’s initial public offering in May 2013.

Slower Spending

Customers have slowed spending, particularly in North America, Chief Financial Officer Tom Walker said on a conference call with analysts.

“Customers are expanding in smaller buckets,” he said, especially compared with the year-earlier fourth quarter.

For the first quarter, the company forecast a loss, excluding some items, of 8 cents to 12 cents a share on sales of $160 million to $165 million. Analysts on average were projecting revenue of $180 million, according to data compiled by Bloomberg. For the year, profit will be 22 cents to 35 cents on sales of $830 million to $850 million, Tableau said.

“Over the years, the competitive dynamic has become more crowded and difficult,” Chief Executive Officer Christian Chabot said on the call, adding that win rates remain “stable.” “It has gotten thicker and thicker.”

Total fourth-quarter revenue rose 42 percent to $202.8 million. Profit, excluding certain costs, was 33 cents a share. On average, analysts had predicted sales of $200.7 million and profit of 16 cents.

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