Tableau’s subscription transition continues to be successful for the data analytics company, according to the company’s February 5 earnings report for the fourth quarter and full year 2018. Tableau reports total annual recurring revenue of $840.9 million, a 41 percent increase year-over-year. More than half of that – $443.2 million – was subscription annual recurring revenue, a 127 percent increase over the fourth quarter of 2017 – quite an impressive growth rate!

“Analytics is becoming more ubiquitous as organizations embrace and reap the benefits from data-driven insights,” said Adam Selipsky, Tableau president and CEO, in a news release. “Our fourth quarter capped a strong year of subscription transition and innovation that helped more and more customers scale Tableau to thousands and tens of thousands of users.”

Other highlights for the fourth quarter include:

• Total recurring revenue (ASC 606) was $336.3 million for the quarter.
• Non-GAAP operating income was $60.0 million.
• GAAP operating loss for the fourth quarter was $3.2 million, and GAAP net income for the same period was $2.8 million.
• Diluted GAAP net income per share was $0.03, and diluted non-GAAP net income was $0.59 per share.
• Tableau repurchased 259,128 shares of Class A common stock for $30.0 million for the quarter.
• Tableau added more than 3,900 customers in Q4, bringing their customer count to more than 86,000.
• Of those customers, 36 were accounts larger than $1 million, a 30 percent increase year-over-year.
• Ratable license booking mix was 79 percent, compared to 51 percent in Q4 2017. Tableau achieved this by lower the price point through subscription offerings, which eliminated the barrier to entry for many clients.

Highlights for the full year 2018 include:

• Total revenue was $1.16 billion.
• GAAP operating loss for 2018 was $89.7 million, and GAAP net loss was $77.0 million.
• Diluted GAAP net loss per share was $0.93, and diluted non-GAAP net income per share was $1.56.

“2018 was a transformative year for Tableau. We added more than 15,700 new customer accounts, accelerated the pace of innovation by delivering more than 140 new features to our end-to-end analytics platform, and welcomed more than 17,000 Tableau enthusiasts at our annual customer conference in October,” said Selipsky in the February 6 earnings call, transcribed by Seeking Alpha.

Selipsky shared additional highlights, including significant transition to the subscription model, a focus on enterprise capabilities, and a dramatic increase each quarter in customers with accounts greater than $1 million.

“This is a testament to end users and IT within large enterprises collaborating to deploy Tableau analytics at scale,” Selipsky added. “As we look to the coming year, our guiding principles are the same as they were when I started at Tableau, a relentless customer focus, innovating rapidly, and acting with urgency. As always, we have plenty of work left to do, but the opportunities to delight our customers are large and growing by the day.”

What’s next? This year, the company is focused on six key areas: continuing subscription growth, refining and evolving their enterprise strategy, making it easier for customers to understand data, making it easier for their customers’ IT departments to deliver reliable, secure data at scale, investing in their partners, including technology partners, and expanding internationally.

Tableau’s CFO Damon Fletcher offered the following guidance for 2019:

• Total ARR for the year between $1.12 billion and $1.15 billion.
• Fiscal year operating margins will range between 12 percent and 14 percent of total revenue.
• Capital expenditures for fiscal 2019 will range between $55 million and $65 million.
• Non-GAAP income per share will range between $1.54 and $1.85.

Despite subscription revenue growth of 127 percent, investors were not impressed with the earnings report. On February 5, the day before the earnings report was released, Tableau Class A common stock was valued at $132.96 per share. The following day, February 6, it dipped to $123.98 per share. It has since rebounded slightly, finishing at $125.78 per share as of 7:27 p.m. EST yesterday. While that drop is disappointing, at this time last year – February 13, 2018 – Tableau stock was valued at $79.80 per share, so it has risen $45.98 per share in a year’s time, an increase of 57.6 percent.

Insider Take: 

Despite the fickleness of their investors, Tableau is knocking it out of the park. Two years ago, the company made a bold move to move away from perpetual licensing to transition to the subscription model. This was a solid move that has propelled the company toward financial sustainability. The company is now close to being 80 percent subscription-based, and the company has reduced the barrier to entry so companies of all sizes can now afford Tableau. The company has a solid plan for growth, expansion and investment, and we anticipate exciting things to come for Tableau in 2019.