Tableau Software's CEO Discusses Q4 2013 Results - Earnings Call Transcript

Feb. 4.14 | About: Tableau Software (DATA)

Tableau Software, Inc. (NYSE:DATA)

Q4 2013 Earnings Call

February 4, 2014 5:00 PM ET

Executives

Jay Peir – VP, Corporate Development

Christian Chabot – CEO and Co-Founder

Tom Walker – CFO

Analysts

Brent Thill – UBS

John DiFucci – JPMorgan

Melissa Gorham – Morgan Stanley

Greg Dunham – Goldman Sachs

Phil Winslow – Credit Suisse

Jesse Hulsing – Pacific Crest

Greg McDowell – JMP Securities

Brian White – Cantor Fitzgerald

Derrick Wood – Susquehanna

Matt Slauson – RBC

Jim Warren – FBR

Operator

Good day ladies and gentlemen. [Technical Difficulty]. Later we will conduct the question-and-answer session and instructions will be given at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Jay Peir, Vice President, Corporate Development. Please go ahead, sir.

Jay Peir

Thank you and good afternoon, everyone. We are hosting this conference at Seattle Washington one of the best support team in the world. With me on today’s call are Tableau’s CEO, Christian Chabot and CFO, Tom Walker. As a reminder, today’s conference call is being broadcast live via webcast. In addition, a replay of the call will be available on our website following the call. By now, you should have received a copy of our press release that was distributed this afternoon. If you have not it is available on the Investor Relations section of our website.

Before we begin, I would like to remind you that during today’s call, we will make forward-looking statements regarding future events and financial performance, including our guidance for our first quarter and full fiscal year 2014. We caution you that such statements reflect our best judgment based on factors currently known to us and that the actual events or results could differ materially. Please refer to the documents we file from time-to-time with the SEC. In particular, our final perspectives for our initial public offering, our 10-Q, and our Form 8-K filed today with our press release. These documents contain and identify important risks and other factors that may cause our actual results to differ from those contained in our forward-looking statements.

Forward-looking statements made during the call are being made as of today. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. We disclaim any obligation to update or revise any forward-looking statements. We will provide guidance on today’s call, but will not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum.

During the call, we will also discuss non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the GAAP and non-GAAP results is provided in today’s press release. The projections that we provide today excludes stock-based compensation expense, which cannot be determined at this time and are therefore not reconciled in today’s press release.

With that, it’s my pleasure to turn the call over to Christian.

Christian Chabot

Thank you, Jay. I’d like to thank everyone for joining us today on Tableau Software’s fourth quarter and fiscal year 2013 earnings call. Following an exceptional third quarter, Tableau posted a record fourth quarter delivering total revenues of $81.5 million. This represents a 95% increase over the prior year fourth quarter. For the full year, we posted total revenues of $232.5 million, growth of 82% over 2012. Tableau has achieved a compound annual revenue growth rate of 89% over the past three years.

During the quarter, we added over 1800 new customer accounts bringing our total to over 17,000 customer accounts worldwide. I’m pleased to say we closed 179 transactions greater than $100,000 in the quarter. This compares to a total of 276 transactions greater than $100,000 in the first nine months of the year. Our fourth quarter results were bolstered by seasonality which we typically experience in the fourth quarter. This past quarter, we saw returns from our investments in international growth. Our international sales comprised 22% of our overall revenues in the quarter, up from 19% in the first nine months of the year. Our international growth has been driven by the efforts and dedication of our international teams, and I want to thank them for their excellent contributions.

As we have previously discussed, Tableau has successfully grown its business using a land and expand strategy. During the fourth quarter, we expanded relationships with many of our existing customers including Google, PepsiCo, Capital One, Deutsche Telekom, Delta Airlines, La Poste, Bristol-Myers Squibb, Ford Motor Company, and Nordstrom. In addition, we added many new customers including Yelp, Tiger Airways, Land O’Lakes, Nestle Brazil, MainPower New Zealand, and Russell Investments.

Let me share a few stories of how customers are using Tableau. BNP Paribas, the French banking giant has standardized on Tableau Software, now connecting to analyzing critical data takes minutes instead of days or weeks. The BNP Paribas division in Southwest France now has the ability to visualize geocoding trends in support for bank sales and the marketing campaigns. It is increasing its competitiveness using shared data of some 2000 branches across the region. International Gaming Technology is a Las Vegas based designer and manufacturer of computerized games. IGT uses Tableau to provide a 360 degree view of player and customer data for casinos.

A single casino can collect a billion data points from its slot machines each year. Analysis of that data has changed how slot machines are built and designed over time. Our third customer story is Kelly Services. Kelly Services is a leader in providing workflow solutions. The company deployed Tableau to create insights on workforce strategy for their global client base. Kelly estimates that the Talent Supply Chain portal it launched with Tableau is freeing up a minimum of 10 hours per week for their Operations Managers, who now have more time to advise their customers on best practices.

In product news, we released Tableau 8.1 this past November. Tableau 8.1 delivers new features for enterprise customers in particular, including 464-bit support SAML authentication, support for external load balancers and IPv6 support. It also provides users with more advanced analytics capabilities by integrating with the open source statistics program R. Tableau 8.1 makes business analytics faster and easier for everyone. As for future releases, we expect Tableau version 8.2 to be released in Q2 of this year and Tableau version 9 to be released in the first half of next year.

As we grow our business, we will continue to make investments in our research and development infrastructure and leadership team. To that end, I’m excited to welcome Dave Story as our new Vice President of Mobile and Strategic Growth. Dave brings to Tableau over 14 years of Executive Management experience from some of the world’s best known product line. Prior to Tableau, he served as CTO of LucasFilm, CTO of Move Incorporated, VP of Product Development and Product Management at Adobe, and CTO for Intuit’s Small Business and Personal Finance Group. Dave will be instrumental in helping us scale our development organization as we continue to invest in innovation.

In the fourth quarter, people continue to use Tableau Public to share insights on the public web. Tableau Public is our free online product that lets people publish interactive data to the public web. This past quarter, Data Enthusiasts published interactive data about the Olympic Torch Relay, alternative fuel stations, worldwide food availability, World Cup odds, and Mike Didka’s career. My personal favorite was an analysis of the popularity and ratings of zombie movies across the world. According to the data, Indonesia has an impressively robust zombie followings behind the U.S., U.K., and Mexico.

In conclusion, 2013 was a tremendous year for Tableau. We continued to win new customers, support and expand our existing customers, and deliver strong financial performance. We also expanded our team considerably. We ended 2013 with 1212 employees. We are bringing on exceptional talents in all areas. People who know how to evangelize change within the world’s largest company, people who know how to build the products that can be used by millions of people, people who know how to build business systems trusted by the who is who of global industry and by public market investors as well. Our employees are the cornerstone of our success, and I want to thank them all for their talent, dedication, and passion.

With that, I’ll turn the call over to Tom for discussion of our financials.

Tom Walker

Thank you Christian. Good afternoon everyone. Now, I will recap our fourth quarter and year-end results and then discuss the financial highlights in more detail. Later I’ll conclude with our outlook for Q1 and fiscal year 2014 followed by our Q&A session. Total revenues for the fourth quarter were $81.5 million, an increase of 95% year-over-year. For all of 2013, total revenues were $232 million, an increase of 82% over 2012. Fourth quarter revenue over performance was driven by strength across the board, but I’d like to call out a few specific factors.

Seasonality. As we’ve discussed in the past, Q4 is generally our strongest quarter of the fiscal year. This year, Q4 particularly benefited from end-of-year budget spending from our customers. Large transactions. We posted a record number of large deal transactions for the quarter, specifically in Q4 we closed a 179 transactions over $100,000 each. This is roughly three times the average of 60 per quarter we closed in 2012. As we have previously discussed, this metric can fluctuate on a quarter-by-quarter basis.

Next, international. Internationally, we saw early returns from the investments we’re making as international sales comprised 22% of total revenues. In particular, EMEA was exceptionally strong with triple digit growth year-over-year. So, all in all, we made good progress during the quarter. Q4 license revenues were $58 million, up 93% from last year. For the year, license revenues were $159.9 million, an increase of 78% over 2012. License fees include perpetual and term licenses. Perpetual licenses comprised more than 90% of our license revenues in 2013 consistent with 2012. As a reminder, we do have some subscription and term license revenue. This area has also been growing, and we expect that to continue. Our maintenance and services revenues in Q4 were $23.4 million, an increase of 100% compared to last year. Maintenance and services revenues for the year was $72.5 million, up 92% over 2012. Our maintenance renewal rates continued to exceed 90%.

Switching to the business model drivers, our business results was a consequence of our land and expand strategy. This bolt down to thousands of transactions of all sizes throughout a given quarter from both new and existing customers. On the customer adoption side we added over 1800 new customer accounts in Q4 bringing the total customer accounts over 17,000 at the end of the year. Our total customer accounts grew just over 50% year-over-year. As a reminder, our customer adoption in 2013 benefited from the two major factors. The record awareness we received from our IPO the launch of Version 8 including the worldwide product Road Show and our record attendance breaking Annual Customer Conference.

As we discussed during our IPO, in any given year we generated majority of our sales from customers previously acquired. On the revenue from perpetual license sales recognized in 2013 66% was attributable to existing customer accounts – to the existing customer account base meaning there were customer account on or before December 31, 2012. This compares to the existing customer license sales contributing 64% in 2012 and 59% in 2011. From a geographic standpoint, Q4 revenues from the United States and Canada was $63.9 million representing 78% of total revenues. Well international revenues were $17.6 million or 22% of total revenues for the quarter. For 2013, our international revenues were $45.7 million or 20% of total revenues up from 17% in 2012 and 16% in 2011. We continue to believe that international expansion represents a significant investment and long-term opportunity for Tableau.

Next, I’ll spend a few minutes on the margin operating results. Unless otherwise noted all references to our expenses and operating results are on a non-GAAP basis, which are reconciled in the press release tables and posted on our Investor Relations website. In Q4, our gross margin was 93% bolstered by our strong license revenue growth. For the year, our gross margin was 92%. We expect our gross margins to decrease as we continue to expand and invest in our global support and operations. Our total headcount at the end of the fourth quarter was 1,212. This represents an increase of 17% from the prior quarter or 173 net hires versus the 109 in the third quarter. Year-over-year our headcount grew 62%.

As we’ve indicated previously, we’ve been ramping up the R&D, we’re extremely pleased with the level of R&D activity. Our recurring team has been a busy crew and I’d like to thank them for their excellent hard work. We continue to add headcount across all areas of the business with a focus on sales and marketing to development teams. We ended the year with sales and marketing headcount at 534 a 66% year-over-year growth and R&D at 329, 60% year-over-year growth. For the past eight quarters, we’ve added an average of over a 100 new hires per quarter as we looked into 2014 our plan is to make accelerated investments in hiring.

For the quarter, total non-GAAP operating expenses were $61.5 million, up 65% year-over-year. As a reminder, the majority of our operating expenses are employee related and we continue to focus on expanding the team and investing for the long term. Our fourth quarter operating income measured on a non-GAAP basis was $14.1 million. This is better than expected and primarily the result of our top line performance. In Q4, we posted non-GAAP net income of $14 million and non-GAAP diluted earnings per share of $0.20. As you can see we did have a tax benefit for the quarter. The benefit was driven by R&D tax credits. It’s worth noting that as of today these had not been extended into 2014. During the quarter, our weighted average diluted share count was $70.3 million shares.

Next, I will briefly review the balance sheet. Cash and cash equivalents at the end of Q4 were approximately $252 million, up $26 million from the prior quarter. Accounts receivable was $61 million and our DSOs were fewer than 65 days consistent with prior periods. Deferred revenues were $69 million up $15 million from the prior quarter.

Now, I like to move on to our guidance for Q1 and the full year 2014. For the first quarter, we expect total revenues to be in the range of $61 million to $63 million. Using the high-end of this range, this represents 58% year-over-year growth. This 58% growth is comparable for the growth in our sales and marketing headcount from the start of 2013 to the start of 2014. As a reminder, we typically experience seasonality in the first quarter. As a result, Q1 is our lightest quarter to calendar year and a sequential decline of a particularly strong Q4 is not unusual given the nature of our business.

In terms of operating expenses, we plan to continue to make investments throughout the company. For Q1, we’re expecting operating losses of $6 million to $8 million on a non-GAAP basis. We anticipate our first quarter basic share count to be between $62 million and $63 million shares. For the 2014 full year, we’re expecting total revenues of a range of $320 million to $325 million representing annual growth of approximately 40% at the high end. It’s worth noting that – it’s worth recognizing that 2013 was an exceptional year for us and we are – and our focus going forward is on long-term sustained growth. For the full year, we’re expecting non-GAAP operating losses of between $15 million and $20 million. We plan to continue to invest aggressively to position the business for long-term success.

This concludes my remarks. Thank you for joining us today. Now, I would turn the call over to the operator so we can answer any questions you folks might have.

Question-and-Answer Session

Operator

Thank you. (Operator instructions). Your first question comes from the line with Brent Thill with UBS.

Brent Thill – UBS

Good afternoon. Great finish to the year. Christian, can you just walk through – I know you’ve always had a go-to-market model of land and expand, but can you just talk about some of the stronger enterprise agreements that you’re starting to see, you mentioned in the script some pretty impressive names, if you could just walk through what you’re seeing there. And just a quick follow up for Tom, as you mentioned, your sales capacity I think was at a – I think you said 58% clip in the back half. Can you give us your sense of kind of your plans for 2014? Thanks.

Christian Chabot

Yes, thanks for the question. I think the headline is really more the same. We posted an exceptionally large big deal number, which is our over 100k deal metric that we report. And that is really the continuing operation and evolution of our land and expand model. The vast majority of those are further expansion business based on accounts that we had already acquired previously. And so, we haven’t seen any big change in the nature and scope of the deals we are signing. Now, I think what you’re probably after is the higher end deals and the more strategic deals and the bigger ticket prices, again in a 100% of cases where we’re signing a particularly big deal, it’s an expansion of some success we’ve already had with the account. And furthermore, our model continues to not be fundamentally about signing ELAs. We’re tending to license based on named user counts and CPU counts on the server side, and although we do periodically enter into a creative deal or negotiation, it is very much the exception and really just we expect more of the same going forward.

Tom Walker

Hi, Brent. This is Tom. So, your question was about sales capacity for 2014. And so, we don’t give specific guidance for that, but if you look at our past and know that like our general hiring is try to be aligned with our overall revenue expectations. And so, generally speaking, we’ve hired ahead of the curve for the last few years with respect to hiring, and we expect to continue to do that. But from an overall standpoint of hiring, I would say it’s going to be in line with our overall revenue expectations for 2014.

Brent Thill – UBS

Thank you.

Operator

Thank you. Your next question comes from the line of John DiFucci from J.P. Morgan.

John DiFucci – JPMorgan

Thank you. I’ll echo Brent’s remarks. So, this is pretty impressive quarter guys. International – everything was impressive, but international grew even faster. And I guess for you it’s sort of new areas you’re entering, but I’m just wondering if you can comment on what’s happening there and you mentioned Europe in particular where we’ve seen sort of mixed macro messages from along the way anyway from other companies. Do you think you’re seeing – do you – how much that do you think is macro related versus you entering new regions?

Christian Chabot

I’ll take the first crack at that, John. I think we’re entering the most fun and satisfying period of our international growth, certainly what we’ve experienced to date, I mean you start from nothing, I mean we’re an American West Coast Silicon Valley born software company. So, inevitably we’re virtually a 100% U.S. in the early days. And then you go to that first big step of just starting something that was about three years ago for most of the regions. And then you get to okay, there is actually an office and a hub and a little presence and goes to that stage.

And now, I think what you’re seeing is really that next step after those two, which is scaling it up. And so, our international businesses today feel a lot like the U.S. did, say three or four years ago where the business operations are coming together, the offices have achieved critical math. A great culture is performing, brand awareness is starting to inflect a little bit, and we expect great things from them going forward. And so, I think internal execution and payoff from our investments is really the most important thing to mention. Sure it does feel like the macro wins have helped us a little bit, Europe in particular as it seems to be in a more favorable spot, but that would be the second thing I would mention.

Tom Walker

Hi, John, this is Tom. I would just add, overall we’re early in our investment cycles international. And so, our Q4 we saw good success and it’s the first time we as a company had more than 20% of international revenues. We think we’re still very early in the investment cycle and kind of growing them. But to Christian’s point, I would echo, there is good opportunities there, and we have been building the teams kind of consistently just like we did a few years ago as here in the U.S, and so it’s just a steady execution.

John DiFucci – JPMorgan

Great. Thanks a lot guys. Nice job.

Christian Chabot

Thanks John.

Tom Walker

Thanks.

Operator

Thank you. Your next question comes from the line of Keith Weiss with Morgan Stanley.

Melissa Gorham – Morgan Stanley

Hi, this is Melissa Gorham calling in for Keith. Thanks for taking my question. And great quarter. I just have a question on the customer acquisition, it accelerated again this quarter. And I was wondering if maybe you could just walk through what’s driving this given that it’s now off of the large base and the customer adds have been pretty impressive. Just wondering if you have any additional color on what’s driving the new customer growth?

Tom Walker

Hi, Melissa, this is Tom. So, the overall is just, if you think about 2013, it was an exceptional year for us from an awareness perspective. And so, we saw good traction on the customer account side, I think the number I reported in my script was the new –total customer accounts grew 50% year-over-year. So, from a standpoint of domestic versus international, both are growing. If you think about the 17,000 customer accounts that we have, we’re early in the life cycle of how many customer accounts we can potentially have. And so, we are focusing our efforts on it, the sales and marketing efforts are absolutely focusing on lead awareness and customer acquisition. And so, it’s nothing different I would call out except that we’re just we’re expanding and we’re investing in marketing, sales, and the product quite frankly in global support. So, we’re able to continue increasing our customer accounts.

Melissa Gorham – Morgan Stanley

Okay, thanks. And then just one quick follow up. You mentioned a strong seasonal Q4 with the benefit from some budget flush. Looking ahead do you think that strong budget flush in Q4 impacts your criteria for Q1 into the rest of 2014?

Christian Chabot

Overall, yes I would think so. I think what we’ve experienced was traditionally we get just over 50% of our revenue in the last part of the quarter we saw loan to the 50s of that for this year. I think also just seeing what our customers do is generally some money is available in our customers and so people were coming back using – they use it or lose it money in a budget cycle to buy Tableau. And so that was something we experienced share and it would have just – it is definitely bigger one it’s one of the things the type we called out as I think one the drivers for our exceptional performance. Looking at that at Q1 that we wouldn’t expect that in other enterprises and have a fiscal year end is of calendar break. And so definitely not expecting that in Q1.

Melissa Gorham – Morgan Stanley

Okay. Thanks so much.

Operator

Thank you. Your next question comes from the line of Greg Dunham with Goldman Sachs.

Greg Dunham – Goldman Sachs

Yes. Thanks for taking my question. I’m going to switch gears a little bit to the product side. You mentioned the release of 8.2, now expected in 2Q. So, that’s helpful. And then you also mentioned the timeline for Version 9. Could you remind us what is expected in Version 9 and has the scope of that product cycle changed at all?

Christian Chabot

This is Christian. We haven’t commented publicly very much on 9 other than to say it will involve improvements in all of our major product directions which I will review shortly. Our next release up is 8.2 and I can be more specific there because it’s a close release and we’ll be going and debate it soon. So, on the 9.0 front I think what I can say for now Greg is that there are six major pillars of Tableau product development, seamless access to data, analytics and statistics for everyone, visual analytics everywhere meaning multi-platform. There is a new direction a new pillar we’ve added which is storytelling and I can comment on that.

A fifth pillar is strengthening our enterprise capabilities and hardening Tableau as an enterprise as a self-service agile business intelligence solutions were on entire enterprise. And then finally the Tableau trademark fast, easy and beautiful. And Tableau 9 being a major release, will include advancements in all of those areas and the team need to work on it today.

Greg Dunham – Goldman Sachs

Okay, great. And one quick one for you Tom. I like the clarity you mentioned 66% of license from existing customers, if I got the number for the year. And that actually compared to 64% and 59% in 2012 and 2011. Is that correct?

Tom Walker

Yep, that’s right Greg and that’s perpetual license fees. So, isolating that just like we did in the S1 just re-updating you guys for your models based on what the metric that we said we’d on an annual basis. But you got it right, 66% was perpetual was from the existing base.

Greg Dunham – Goldman Sachs

Yes. So, despite the record customer add number, it still it’s more driven by existing. I guess the follow up question will be is there any reason why the new customers added this year are kind of act in a different way from customers acted – the way they acted in the past? And that’s it. Thanks guys.

Tom Walker

Yes. No, and I wouldn’t say we have any reason to think that they would behave any differently so.

Operator

Your next question comes from the line of Phil Winslow with Credit Suisse.

Phil Winslow – Credit Suisse

Hi guys. Congrats on another really fantastic quarter, just wanted to echo that. Two questions for you. First you guys done this cohort analysis a few analysis in the past. And wondering it feel like I guess sort of the frequency or the rate of up sell to these cohorts is increasing from sort of initial result as they get bigger, is that correct? And also wondering if you could just talk about just about new customer deal size, I think obviously this is line of expense though but just are you seeing the increase in just the new customer deal size could?

Christian Chabot

Okay.

Tom Walker

Hi, Phil, this is Tom. And so, I’ll cover your second question first. So, if you think about the overall average initial order size so that has not changed. So, consistently that has been under $10,000 and that has been the case. So, there is no change from that metric at all. I think that part of model the whole line is being modeled as people – customers be able to join the franchise with memo risk and really get it under the wings for the expand so that has not changed. With respect to the cohorts, the adoption I wouldn’t say the pattern has changed with continuously robust expansion business but both parts of the engine the land and the expand engine are both performing quite well. And tell you’re right, who has upsales there is a phenomenal job making sure that the sales team is focused not only on acquisition but also expanding making customers more successful.

Phil Winslow – Credit Suisse

Got it. Thanks guys.

Tom Walker

Okay. Thanks Phil.

Operator

Your next question comes from the line of Jesse Hulsing with Pacific Crest.

Jesse Hulsing – Pacific Crest

Hey, guys. Thanks for taking my question and [indiscernible]. When you were presenting…

Christian Chabot

Yes, I like it. Yes. We may Jay say that by the way just he’s the menu heart.

Jesse Hulsing – Pacific Crest

I guess that he wants to back. When you – from a competitive perspective I guess to change gears a little bit. We focused a lot on the land and expand. A number of your larger competitors have been moving down into the market that you plan with free of rates cheap products and that’s been the theme this year. I guess to dive a little bit deeper, what – I mean what’s your strategy for dealing with 3 and as these products mature and as we assume that they will and what’s your strategy for dealing with that?

Christian Chabot

Well the headline as I said you’ll remain the same because this is the category of technology that is defined by product excellence about all other things. We’d think about it probably speaking before I go into some details is that I guess one thing I think to say is a 100% of the revenue that flows through this category of enterprise software, flows through a full function free trial. It’s the nature of bringing easy for everyone visual, affordable self-service technology to a state old industry for the first time it’s very nature is that everyone goes and evaluate it. And so, the beautiful thing going on is that as long as Tableau continue its incredible level of product leadership and it’s very high rate of R&D investment which you can see in our statements. I think we’ll continue to be the best positioned company out there.

Now one little more detail on fee per se. The three experiment in our industry, it sort of the [indiscernible] scrambled to release product by the Goliath that we’ve been seeing. Is it new this year at all, that started about four years ago and had seen – oh jeez there must be five or six big companies whose names you know have dumped some sort of free offering on the market. And I think the impact of that to customers and to Tableau’s performance I think is now pretty evidence. Tableau is a company that has continued to flourish and even outside of Tableau the Renaissance that customers are seeing in the street has continue to grow and that would very little impact or help from the traditional providers. So, we remain paranoid and vigilant but as confident as ever that we have the research and development machine to seize the opportunities that’s in unrest.

Jesse Hulsing – Pacific Crest

And kind of as a follow up to that I mean when you look at your results this year and I guess in late 2012 also it seems like there is a floodgate that opened in the June quarter it kind of carried into Q3 and Q4 and that coincided with obviously the IPO but also the release of Tableau 8. I mean do you feel like that was the meaningful driver for the results that we’ve seen or is it just a number of things kind of coinciding at ones that created kind of research and demand that we’ve been seeing.

Christian Chabot

Yes, I’m glad you brought the level Jesse. I think that they were two factors to call out as feeling a bit special last year. It was the IPO and the release of Tableau 8. Going – we really see well Tableau’s growth and success to levels we hadn’t seen before and I think are appropriately viewed as special factors. Now we had exceptional execution across the company in sales and marketing and development and customer support and international expansion and so that’s not important thing to be said, there is a lot of great business built-in factors have come together in our favor but if there are two special factors those are them I think that’s well said.

Jesse Hulsing – Pacific Crest

Had one quick follow up for Tom. Deferred revenue was quarter four was up pretty meaningfully quarter-over-quarter and I guess stronger seasonally than it was last Q4. Is there anything unusual there that now which we point it to? Thanks guys.

Tom Walker

Yes, that’s an unusual. There was a – there is a huge term license deals subscription deals that are in there also. So, we saw a handful of deals that deferred but nothing as the ordinary that I’d call out.

Jesse Hulsing – Pacific Crest

Great. Thanks.

Tom Walker

You’re welcome.

Operator

Thank you. Your next question comes from the line of Greg McDowell with JMP Securities.

Greg McDowell – JMP Securities

Great. Thank you, very much. Hi, guys. Echo the congratulations and also extend congratulations to Professor Hanrahan, on his upcoming award. My first question for you Christian, I’d love to hear your views on the expansion of the market opportunity specifically as it relates to some of the pillars you talked about earlier for example how does storytelling expand your market opportunity?

Christian Chabot

Well, we’re continuing to add capabilities that expand the opportunity in front of us. I mean to take one step back I mean we do view the broad opportunity available to us over the coming years. As we outlined it really during the IPO and in the IPO in the S1 and the perspectives of what not which is there literally tens of millions of organizations of all shapes and sizes and geographies that could benefit from business analytics and better understanding the information and their data bases in a spreadsheet but which were hamstrung by the complexity and cost of traditional solutions.

So, in that sense nothing to change, that’s still very much the opportunity we’re excited about and our pursuing. And of course, year by year we need to chip away at how we address the different part to that market. And I think – I think if there were if you recall out storytelling probably isn’t the first one in terms of just fundamentally improving our ability to penetrate that vast expands. Of an opportunity I think the first two I would list would be Tableau Online which shows our move into the cloud. Tableau Online is a fully hosted version of our Tableau Server Technology. And the second is our investments in mobility that Tableau has invested quite a bit over the years and making sure that fast easy analytics is available on Tablets both IOS and Android and even in the cases on phones. So, those which we were to probably made the most progress from an R&D perspective and from a sales and marketing perspectives and in both of those areas those investments are going.

Now looking forward I would just say that even sticking with those two – we have our work it out for us, I mean I think Tableau Online has a SaaS offering as a software-as-a-service offering is virtually and its life cycle and it’s going to see a lot more investment in customer uptake. And likewise, I think in mobile environments, we’re just beginning to see the true impact of these new devices and how they change people’s work life and expand opportunity for people to benefit for being in the work place. So those were two what I call – I think for today’s call.

Unidentified Analyst

Okay, great. Thank you, Christian. One quick follow-up for you Tom. To the extent you are comfortable talking about the number of large deals that 179 transactions they were 100k. Is there anything you can share on sort of ASP within those large transactions and how that has trended year-over-year and for example, I know last quarter, the quarter was influenced by somewhat of a mega transactions. So can you just give a little color around those large deals to the extent you can? Thanks.

Tom Walker

Sure. Hi, Greg. One thing I did want to clarify and I’m not sure if Christian said it properly. So I’m just making sure, previous questions about the deals that are greater than $100,000 those were not all existing customers, so we do have customers out of the gate do purchase over $100,000. So I just want to clarify there wasn’t all or nothing between existing and the new business.

With respect to the ASP, we don’t necessarily, as you know we don’t breakout those numbers. We think there is going to be a lot of fluctuations from quarter-to-quarter. They are 179, it’s a 179 and thousands and thousands and thousands of transactions. So to put in perspective, it’s what happened. It’s also just highlights the fact and I think this is what Christian was alluding to before about the ELA question. Customers can come back and purchase and that makes sense for themselves.

And so sometimes people come back and they don’t want to go out and buy a seven figure deal. They just want to keep chipping away different departments. So we allow them to do that. And so in terms we think there is going to be so much variability, we just want to give a perspective of how people are spending over time. And that’s why we are going forward, we will always hope its greater than $100,000 odd deal metric.

Unidentified Analyst

Great. Thanks guys.

Operator

Thank you. Your next question comes from the line of Brian White with Cantor Fitzgerald.

Brian White – Cantor Fitzgerald

Yes. Congrats. Christian maybe you can talk a little bit about some themes we should think about for 2014. It sounds like international starting to kick-in. You are making some big investments in 2014, so you obviously see something out there, so maybe talk about big picture themes, we should think about for 2014?

Christian Chabot

Yes. I will call out three. Great, you asked the question, thinking and thanking to reflect. I think the first is international. That one we talked about quite a bit. It’s time for Tableau EMEA and Tableau APAC and even Tableau Latin America to take their performance and their penetration of those markets up to the next level and they are really positioned both to do it. Again, they are now all out of kind of what you may call the angry start-up years getting situated, getting a nexus of people together and having that first semblance of brand recognition and starting road shows showing our products and signing partners and all the things that just make our regions successful. They are all out of the gate. And are really scaling up. We are leading into those investments as we have mentioned. And we continue to expect great things from them.

I mean, we all know what a successful American high-tech software company looks like a scale. We know exactly what that looks like. And their revenue is anywhere between 40% and 60% non-U.S. And so draw line between where we are now and that point some numbers we are seeing today and you can see that will remain a theme for a number of years to come. So that’s number one item. I’m glad you mentioned that one.

The second one I think that just feels like a theme is Tableau for the Mac. If you have been studying the Tableau community as I know you have been or for at least some period of time but the story goes back even further year-after-year even back before when its actionable one of our biggest customer request was, hey, where is the Mac question? You even can’t hear what he said. It’s just not a priority, not a priority, not a priority. But I’m pleased to say starting sometime ago we didn’t start investing in that direction and we expect release from that this year.

In fact, we even demonstrated an early version of it at our customer conference last year. And so although we don’t expect any sudden big surge from that release, even if not like this big backlog around it, it’s not that kind of thing. But, I would call out as a thing that would just feel different. That is in fact a huge community of people. There is a lot of excitement in particularly within the Tableau community and we are very excited to add that dimension to our business you might say.

Third, and this is maybe an unexpected one. But, I just want to kind of get some things we can feel the texture of what’s going on at Tableau that third is that customer conference. About five years ago we decided to try to collect a handful of customers and convene them and went to a hotel in Seattle called the Edgewater Hotel and sipped coffee and looked at the rain and talked about data. I think we had 150 people on a rainy day type of thing it’s funny to even think about. And we just started growing year-by-year and so flash forward boy what we come to realize, what we come to realize is that this world of data and analytics needs a dream force.

Where is the dream force for data? We’ve just have stumbled into this, just this is incredible thirst out there people of all the different job professions all the different industries all the different levels of the company from executive down to junior marketing analyst. There is this incredible thirst in data enthusiast and to a part time analyst who want to be using fax more in their jobs and to help create data driven cultures for their companies and to seize the opportunity known on competing analytics and there hasn’t been a great venue for them or a great event for them. And I believe Tableau’s customer conference TCC is becoming it. And so this year in Seattle we expect to go to conference by a big double digit percentage growth once again.

We are bringing the conference home which is maybe another reason I mention it this year we’ll actually be in Seattle a bit of a home coming conference and we think it will be another great step in just putting Tableau on the map and increasing our engagement with customers.

Unidentified Analyst

Okay well great. Sounds like a great year.

Unidentified Company Speaker

Thank you.

Operator

Your next question comes from the line of Derrick Wood with Susquehanna.

Derrick Wood – Susquehanna

Hi great congrats on the quarter. I was hoping you could give an update us on your indirect channel efforts and if there are new levers developing there at all?

Tom Walker

Hi Derrick this is Tom. So, indirect is still long redhead historically it’s never contributed more than 25% of overall revenues in any given quarter that’s unchanged. Right, what we are doing is continue to invest in it and make sure that we are embracing the channel. So when you look in the channel domestically versus international there is two different kind of make up there. So, over all going to have a bigger play when we deal with the international market that Christian was eluding, was talking about before. We’re continuing to make those investments to make sure that we are embracing them and working with them.

The other part of the channel that I think is kind of its more indirect is our technology partnerships. So in July of last year we added Amazon Redshift and we continue to add data connectors and those are technology partners and there might not be formal relationships but because we have such an agnostic view of data sources we’re going to connect everything on multiple different data sources that also helps the channel because we’ve got two [indiscernible] with amazing data base because they’re data sources and Tableau is just a coverage solution complimenting that so that continues to go well and development continues to invest in that area.

And then the other place that I caught is our OEM partnerships. Well historically been a single digit percent of our overall revenue it is a growing and flourishing area and the team there which is really, really well planning new customer ends. So it’s still early lot to do and we continue to invest and focus on it.

Derrick Wood – Susquehanna

Great thanks for that color. And I had a question on guidance I guess that’s for you Tom. I mean it looks like Q1 calls for about 78% growth and you guys for 40% growth for the year or so. To get there it looks like growth would have to materially kind of decelerate though out the year. I mean it’s just a high degree of conservatism or are there other elements we should be considering that would lead to some deceleration?

Tom Walker

Yeah so first I don’t its 78% I said 58% just to make sure you had that right there. So for Q1 the overall revenue target is 50 at the high end of the range $53 million is 58% just make sure you had that right. And so overall I called out actually in the script a few areas that we thought in 2013 it was a secular year by anybody’s account so that’s going to make all of 2014 really a tough comparable and so we recognized that and the goal is to grow and sustain long term growth and so while we’re not we’re all focusing on the overall percent it’s the increase. And so when you look at Q1 we look at our pipeline our forecast and what we the measures that we have. We’re comfortable with our 58% guidance that we pitch for.

Looking at the full year it’s just, we’re one month into the year and so, we will update you each quarter as we continue to make progress and that’s what we did consistently last year. But right now we don’t want to be I think you used the word overly conservative that’s not our goal. Our goal is to make sure that we’re thoughtful in a way that we’re putting out our plan and making sure that we can execute it and update it as we move forward. So, with respect to the 320 to 325 for the year that’s 40% growth but that’s $325 million those are exceptional numbers and that’s good growth for Tableau.

Derrick Wood – Susquehanna

Yeah okay, thanks that makes sense. I appreciate it. Thanks.

Operator

Thank you. Your next question comes from the line of Matt Hedberg with RBC.

Matt Slauson – RBC

Hey guys this is [Matt Slauson] on for Matt Hedberg. I just have a question about, you’ve been adding a lot of sales force capacity and just where you feel like you are right now as far as their productivity and how much more you can get out of your existing sales force.

Tom Walker

I’ll take that and Christian can jump in you’d like. Hi Matt this is Tom. So overall yeah we continue to hire and we saw the growth over 60% growth in sales and marketing in 2013. So we continue to focus on on-boarding and ramping control making them successful. But and so that’s kind of the same status as we’ve been doing. So there is no real change there. The key is that we’re focused on that. We are seeing into the marketing team that’s generating continues to generate a record awareness and we’re trying to capitalize on that by adding net new logos and then extending those accounts.

From an overall ramping standpoint which I think is what you are getting up before as you know. We break down the, for simplicity purposes four types of sales reps that we have right. We’ve got, if you drew a spectrum you got the acquisition sales managers you have the rep in sales managers those comprise our commercial team right. And the acquisition is focused on that initial land order. Once they’re done they hand it over to the existing team and then they take it there to expand.

And on the enterprise side we have account managers and strategic account managers and those are also focused on not only landing net new logos but expanding their larger account would have more ability to use Tableau widely throughout their organization. So the spectrum of ramp varies our, across the board from folks being in a ramp time of three to six months on one end to nine to 12 plus months on the other end of the spectrum. Those are unchanged so we just continue to kind of invest in their head count as we go and I think you should just expect more of that in 2014.

Christian Chabot

This is Christian. If I would one think I mean I don’t think you would look at what we’re investing in here and say our major priorities are about more productivity per person at this point at least for tending to ramp people honestly as Tom said most priority is on on-boarding. We’re continually trying to find exception sales talent who know how to evangelize disruptive new technology with an even conservative buyers. And that takes a lot of effort and investment and so tends to occupy more of our energy.

Now if I call that two that if you looked it at all you might say okay yeah that’s turning to feel like we’re fundamentally trying to get more out of territories and out of our people. It would be in strategic accounts meaning particularly large buyers of technology and in international. And the reason is that what’s happening now in the market place unlike say three or four years ago is that even big fortune 500 relatively conservative buyers of technology are looking at Tableau’s way of doing things and seeing it as an opportunity for more than just a departmental win or a solution for miscellaneous groups.

They’re increasingly saying we want to move our global BI strategy toward a more self-service and agile orientation. And so we are now in more strategic conversations with senior executive IT buyers within the world’s biggest companies and as a result the strategic accounts, these are strategic account group have higher quarter responsibilities and are focused on a smaller set of account. And then in international I think that one is probably self-explanatory so those are once that were caught out.

Matt Slauson – RBC

Yeah if I could just add on one more question. I know this isn’t really a point of emphasis in the land expense strategy but with that increased margining effort in brand recognition as far as ASPs how much larger would you say those 1800 new accounts are may be then they have been in previous quarter for initial deals?

Tom Walker

Yeah hi Matt this is Tom. So overall we haven’t seen we basically talk about the average quarter size of the initial orders and historically it’s been, it’s up $10,000 so that’s the same comment it’s actually unchanged. So and again I just fall back to I think that’s part of our overall success and being able to get land customers and have them prove out value with very small risk and then go from there. But overall it has not exceeded $10,000 so that kind of gives you the red box to keep it in.

Matt Slauson – RBC

Alright thanks again congratulations on the great quarter.

Tom Walker

Thank you.

Operator

Thank you. And we have time for one more question. Your last question comes from the line of Daniel Ives with FBR.

Jim Warren – FBR

Hey guys this is Jim Warren for Dan Ives. Congrats on a great quarter. So just a quick question around the guidance and I guess how you guys arrive at it and maybe if you could discuss what the biggest delta was in your expectations after this third quarter results came out and then what you posted for the quarter and I guess was it more of a backend loaded as typically as in software?

Tom Walker

Yeah hi this is Tom. So I think I kind of called it out before but just to kind of reiterate. Right yeah it was the end of the quarter was a little more back end loaded than it had traditionally been. So that would, that would be one thing we would call out so we started large deal transactions also increase. And the yeah, the overall just led a seasonality, I mean I think we talked about customers having the ability of extra year end money in their budget that’s absolutely something that I would focus on because that was we did see that come up time-to-time again actually throughout the sales team – it’s great to be on that side of the quarter.

Jim Warren – FBR

Okay great and then in terms of your cash balance its starting to grow nicely. Do you have any plans for M&A or what your processes around that?

Tom Walker

Yeah so you’re right from M&A standpoint historically we haven’t been very [indiscernible] and so we are constantly on the lookout for things and I think we will always be looking for that. I think the once that kind of we focus on over others would part of the more development or technology kind of tuck-in type of acquisitions. But we haven’t done anything to-date on that nothing to report on that right now but those are time that [indiscernible].

Jim Warren – FBR

Great, thanks.

Operator

Thank you, ladies and gentlemen. This does concludes the conference call for today. And we thank you for your participation. And we ask that you please disconnect your lines.

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