Tableau Tries to Fix Missteps as It Sees Slower Growth

  • CEO expecting tough year ahead for technology purchases
  • Chabot says new salespeople need more training, management

Tableau Software Inc. is having to adjust to a new reality -- going from one of the fastest-growing data analysis software companies to one that may have bitten off more than it can chew.

The company’s stock, which topped $128 in July, closed at $37.22 on Feb. 8 after license revenue missed analysts’ estimates for the first time. Chief Executive Officer Christian Chabot blamed a weakening economy but is also taking responsibility for a mismanaged, rapid staff expansion that left some new sales employees under-trained and not selling enough.

"We are under no illusion it was all macro-economic," he said. "We’ve acknowledged that we wished sales productivity were higher.”

Now it’s up to Chabot to fix it even as he predicts a tough climate in 2016. In the first quarter, Tableau is forecasting sales of as much as $165 million, less than the $180 million analysts were estimating. The weakness in license revenue may indicate customers are slowing purchases and that Tableau is being hurt by rival products from the likes of Microsoft Corp.

Belt Tightening

"We do believe 2016 will be a year of belt-tightening and it’s going to be a fairly difficult year for information-technology spending," Chabot said in an interview in his office in Seattle’s Fremont neighborhood. "We have taken that into account in our forward investment plan."

Tableau plans a year of increased sales representative training, product education to make sure staff are familiar with their wares and better instruction for managers.

The 13-year-old company, which Chabot said began to expand internationally later than it should have, added more than 1,000 employees over the past year -- almost half of them in sales and marketing -- more than a 50 percent increase in its workforce. Last year Tableau almost doubled the number of offices it has to 16. Now that pace will slow to about 30 percent growth in hiring, Chabot said.

Tableau boosted revenue by 78 percent in 2014 and 58 percent in 2015. This year that pace will slow to a 29 percent increase, according to analysts polled by Bloomberg. The rapid growth in previous years led the company to hire just as quickly.

"Tableau has been in a hypergrowth mode," Chabot said. "That brings with it great opportunity and also inherent difficulties. We do feel we have a large number of sales staff who could be more optimally productive, who need more training, who have some execution issues."

Some analysts worry the issues are bigger than just fixing the sales force. Tableau is shifting to a cloud version of its software, which is sold as an annual subscription, but customers for that product stand at just over 3,000 out of Tableau’s 39,000 clients. At the same time, rivals including Microsoft and Salesforce.com Inc. are focused on analysis tools for the cloud, and market leader Amazon.com Inc. has announced plans for a product too. 

While Tableau is shifting to software delivered over the Web, its heavy reliance on licensing for now will weigh on the company amid a climate of spending cuts, since subscriptions often perform better than selling the software outright, said Bloomberg Intelligence analyst Mandeep Singh.

"You can’t be a high growth company in this environment and rely on a license model," he said. "It’s the nature of a license model that whenever things go bad in the economy, people are more careful about buying software licenses because you are buying everything up front."

Lagging in Mobile

Another hurdle is catching up in mobile. Tableau only just added a separate app for Apple Inc.’s iPhone in the past quarter -- Chabot wishes they’d had one sooner because that did hurt them with some customers.

Tableau was early to the market for data analysis and still has the easiest-to-use option, much beloved by academics and people analyzing internal company applications and data, said Singh. But rivals are trying to catch up quickly, making it imperative for Tableau to spend the year innovating and not just selling better.

"This space is very competitive," Singh said. "Tableau had a head start, but everyone will catch up."

(Company corrects details in 13th paragraph on release of mobile product.)
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