Tableau Software's (DATA) CEO Christian Chabot on Q1 2014 Results - Earnings Call Transcript

May. 5.14 | About: Tableau Software (DATA)

Tableau Software Inc. (NYSE:DATA)

Q1 2014 Earnings Conference Call

May 5, 2014 05:00 PM ET

Executives

Jay Peir - IR

Christian Chabot - CEO

Tom Walker - CFO

Analysts

Brian White - Cantor

Karl Keirstead - Deutsche Bank

Daniel Ives - FBR

Steve Ashley - Robert W. Baird

Greg McDowell from JMP Securities

Brent Thill - UBS

Greg Dunham - Goldman Sachs

Jesse Hulsing - Pacific Crest

Phil Winslow - Credit Suisse

Keith Weiss - Morgan Stanley

Abhey Lamba - Mizuho Securities

Derrick Wood - Susquehanna International

Srini Nandury - Summit Research

Operator

Good afternoon. My name is Shellon and I will be your conference operator today. At this time, I would like to welcome everyone to the Tableau Software First Quarter 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. (Operator Instructions). Thank you. Mr. Jay Peir, you may begin your conference.

Jay Peir

Thank you and good afternoon, everyone. 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 be making forward-looking statements regarding future events and financial performance, including our guidance for our second 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 our 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 first quarter 2014 earnings call. Following the great Q4 Tableau posted a strong first quarter, delivering total revenues of $74.6 million. This represents an 86% increase over the prior year’s first quarter. Our business was strong across the board. We grew license revenues 83% and maintenance and the services revenues 92% for the prior year. We added over 1,800 new customer accounts and we continue to see adoption expand within our existing customer base.

During the first quarter, we also continued to experience returns on our international investments. Our international sales comprised 23% of overall revenues in the quarter, up from 19% in Q1 of 2013 and 22% in Q4 of 2013. The EMEA, APAC and Latin America regions all grew revenues over a 100% from their prior year’s Q1. As we grow our business globally we continue to make investments in sales, marketing, infrastructure and leadership. This past quarter we closed 120 transactions over $100,000 each as compared to 77 in Q1 of 2013, representing growth of 56%. We are pleased with the number of large deals in Q1 given the seasonality of these deals.

During the first quarter Tableau was positioned in the upper right of Gartner’s Magic Quadrant Report for Business Intelligence and Analytics platforms. This was the second year in a row that Tableau was recognized as a leader. Gartner’s report evaluated 27 different business intelligence centers on 17 criteria and positioned Tableau in the leaders’ quadrant. Tableau is helping people answer questions, solve problems and generate meaning from data in a way that has never before been possible.

During the quarter, we added over 1,800 new customer accounts, bringing our total to over 19,000 customer accounts worldwide. Some of the new accounts include American Eagle Outfitters, the Oregon Community Foundation, North Coast Medical, Kayak Software, Physicians Mutual, Grenadier Energy Partners, the Achievement Network, Aforia Association of Realtors and the Memphis Grizzlies. We continue to grow our business with the land and expanse strategy. During the first quarter we expanded relationships with many of our existing customers including Brooke Sports, the Cleveland Indians, Brooklyn Public Library, BookIt.com, Criterio, Starwood Hotels & Resorts, TripAdvisor and WWF International.

Now let me share a few stories of how customers are using Tableau. Cobalt is North America’s largest provider of automotive marketing services with approximately 10,000 dealer sites. Cobalt’s data warehouse, the largest in the market shopping automotive data warehouse in the world stores 15 terabytes of data and is growing three to five times each year. Approximately a 1,000 users across Cobalt’s business insights, advertising and development teams use Tableau to make the data driven decisions.

Allergan operates in 100 countries around the world providing treatment options for patients in eye care, neurosciences, obesity intervention, medical aesthetics, medical dermatology and urologics. Allergan in Europe has used Tableau since 2011 and the results have sparked interest across the Company. Today the customer service department credits Tableau with allowing it to support 50% business growth with no additional headcount, speed once monthly reports to every 15 minutes and reduce the six hour report process to just 30 minutes.

Copa Airlines, the main air carrier of Panama schedules more than 100,000 flights each year in the Americas and the Caribbean. Copa Airlines uses Tableau to gain insight into the millions of rapidly changing passenger transactions that are the core of its business. With Tableau, Copa can now complete analysis that used to take a week in a matter of minutes. Tableau has spread broadly at Copa from the human resources department and finance to planning and operations. I am pleased to announce that Tableau Online, our cloud analytics product now has over 1,000 customers. We reached this milestone just nine months after releasing the product, which is the fastest any of our products have been adopted after launching. Small and large organizations alike across a range of industries are now harnessing the power of Tableau in the cloud.

People continue to share insights on Tableau Public, our free online product that lets people share interactive data on the public web. This past quarter, authors published dashboards about movie production sites, projected megacity populations, popular baby names, state collage ROIs and repeat lottery winners. My favorite this quarter was an analysis of the highly competitive sport of cup stacking. Yes, I mean the stacking of plastics cups in specific sequences in as little time as possible. It appears Germany holds the most cup stacking world records at the post collegiate levels while the U.S. is the world record leader at use level.

In closing Q1 was a terrific start to the year. We continue to land new customers, support and expand our existing customers and deliver impressive financial performance. We ended the quarter with 1,360 employees and I’d like to acknowledge their contributions to our success. Thank you for your energy, efforts and passion.

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

Tom Walker

Thank you, Christian. Good afternoon everyone. I will recap our first quarter results and then discuss the financial highlights in more detail. Later I will update you on our outlook for the second quarter and FY ’14. We will conclude with a Q&A session.

Total revenues for the first quarter were $74.6 million, an increase of 86% year over year. First quarter revenue over performance was driven by strength across the board, highlighted by our international momentum, the Gartner recognition that Christian discussed earlier, and our new customer acquisitions. Q1 license revenues were $48.4 million, up 83% from last year. As a reminder, we do have some subscription and term license revenue, which represents less than 10% of revenues. This has been a growing -- this area has been growing and we expect that to continue. Our maintenance and services revenues in Q1 were $26.1 million, an increase of 92% compared to the first quarter of last year.

Switching to our business model drivers, we do thousands of transactions of all sizes throughout a given quarter. Transactions come from both new and existing customers. We call this our land and expand strategy. On the customer adoption side, we added over 1,800 new customer accounts in Q1, bringing the total customer accounts to over 19,000 at the end of March. The 1,800 net new adds was in line with our Q4 net new adds, a strong indicator of our business momentum given that Q1 tends to be our seasonally lightest quarter.

Overall, our total customer accounts grew over 50% as compared to the first quarter of March 2013. On a large transaction side, in Q1 we closed 120 transactions over $100,000 each as compared to 77 in Q1 of 2013, representing growth of 56%. As we have previously discussed, this metric can fluctuate on a quarter by quarter basis. From a geographic standpoint, Q1 revenues from the United States and Canada were $57.8 million representing 77% of total revenue. On the international front we continue to witness returns from the investments we’ve been making with international sales comprising 23% of total revenues.

All three regions EMEA, APAC and LatAm, experienced triple digit growth compared to the prior year first quarter. We continue to believe that international expansion represents a significant investment and a long opportunity for Tableau.

Our total headcount at the end of first quarter was 1,360, an increase 63% or 526 net new hires from Q1 of 2013. As you can you, we’ve continued ramping up or hiring with 148 net new hires in Q1. Sales and marketing headcount ended Q1 at 603, up 67% from Q1 2013. Research and development headcount ended at 368, up 62% from Q1 2013.

During 2012 and the first part of 2013, we hired on average approximately 100 new hires per quarter. We stepped this up in recent quarters with an average of approximately 160 new hires in the last two quarters. Our recruiting team is doing an excellent job making sure we find the best candidates.

Our overall headcount pipeline is strong and you should anticipate our hiring trend continuing in 2014 across all areas of the business with a focus on sales and marketing and development teams. Please be aware there could be fluctuations with respect to net new adds on a quarter-by-quarter basis.

Next, I’ll spend a few minutes on margins and operating expenses. 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 web site. In Q1 our non-GAAP gross margin was 91%, primarily as a result of the continued investment in our global support and operations. We expect our gross margin to be lower than last year as we continue to expand and invest in our global support and operations.

For the quarter, total non-GAAP operating expenses were $61.6 million, up 55% year over year. As a reminder a majority of our operating expenses are employee related and we continue to focus on expanding this theme and investing for the long term.

Our first quarter operating income measured on a non-GAAP basis was $6.1 million. This was better than expected and primarily the result of our top-line performance. Income tax expense on a GAAP basis for the quarter was $3.5 million. The expense was higher than the statutory rate due primarily to the non-deductible stock based compensation. Additionally the federal R&D tax credit expired as of December 31, 2013 and us are not available to be used as an offset.

In Q1 we posted a non-GAAP net loss of $0.4 million on a non-GAAP -- and a non-GAAP loss per share of $0.01. During the quarter our weighted average diluted share count was 63.4 million shares.

Next I will briefly review the balance sheet. Cash and cash equivalents at the end of Q1 were approximately $617 million, up $364 million from the prior quarter primarily as a result of our March follow on offering. Accounts receivable was $50.5 million and our DSOs were fewer than 65 days, consistent with prior periods. Deferred revenue were $73.5 million, up $4 million from the prior quarter and up 84% from Q1 2013.

Now I’d like to move on to our guidance for the second quarter and provide you with an update for the full year 2014. For the second quarter we expect total revenues to be in a range of $75 million to $80 million. Using the high end of this range, this represents 60% year over year growth. This 60% growth is comparable to the growth in our sales and marketing headcount from the end of Q1, 2013 to the end of Q1, 2014.

In terms of operating expenses, we plan to continue to make investments throughout the Company. For Q2 we are expecting operating losses of $1 million to $6 million on a non-GAAP basis. We expect an increase in expenses, partially due to our worldwide company meeting being held this week and an increased marketing expenditures, including those related to the 8.2 release coming out later this quarter.

As you’ve seen in prior quarters, our operating margins also vary based on the ebb and flow of recruiting. For the second quarter we anticipate our basic share count to be between 67 million and 68 million shares. For the full year 2014, we are raising our prior guidance of total revenues from a range of $320 million to $325 million to a range of $340 million to $350 million representing annual growth of approximately 51% at the high end. This is up from our prior guidance of 40% annual growth. For the full year we plan to continue investing for long term success and we expect to be anywhere from breakeven to a loss of $10 million on a non-GAAP operating basis.

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

Question-And-Answer Session

Operator

(Operator Instructions) Question comes from Brian White from Cantor.

Brian White - Cantor

I’m wondering if you could just remind us, are we still on track for Tableau 8.2 in the June quarter and Tableau 9.0 for the first half of next year. Thank you.

Tom Walker

Hi Brian, this is Tom. Yes, so we are still expecting 8.2 to be released towards the end of this quarter and 9.0 is scheduled for the first half of 2015.

Brian White - Cantor

Okay, and just a follow up….

Christian Chabot

Well this is Chris, let me add. 9.0 We’ve given very loose guidance because we have no release date set for it. So loose guidance, first of next year. We have no release date, nor do we want to message past that right now. It may or may not be first half of next year. But loose guidance is there, 8.2 is a different story and that’s all.

Brian White - Cantor

Understood and maybe just walk us through your mobile strategy. You made a big hire a few months ago. Could you just walk us through where Tableau is in the mobile?

Christian Chabot

Well, Tableau has a really nice mobile offering today. By that I mean there is a really nice and easy to use downloadable a free native client for both the iPAD and Android platform. People can get today. I’d like to think of it as our 10. Clearly mobile strategy took shape many years after our desktop strategy and our original service strategy but that said, it’s a robust offering. By that I mean it’s fully multi-touch enabled, it’s really easy to use, it has really nice response times and on top of that it overcomes what has been considered the classic shortcoming of mobile analytics solutions generally speaking, which is that in many mobile analytic solutions on the market today require customers to author content separately for the mobile device. And this is considered annoying to most customers who might go through the effort to make some nice dashboard or some report or some nice visualization with their data to find they have to recreate the whole thing for their mobile community using a different a different set of interfaces and rules. And so our 1.0, although it’s early in our development cycle solves that classic problem and as a result has been really nice for us competitively. So that’s what you make call, the good news. I would say the challenging news is just the 1.0. It’s quite early and the addition of data storing and building up that team generally speaking, it’s an area we’re investing in very aggressively and I think you’re going to expect exciting thing from us in that area over the coming years.

Operator

Your next question comes from the line of Karl Keirstead from Deutsche Bank.

Karl Keirstead - Deutsche Bank

Mine is for Christian and it's about Hadupe. It definitely feels like Hadupe is gaining traction as a new data store in the enterprise segment and I’m wondering if you could give us any color on the extent to which Tableau users are actively using the tool to draw from Hadupe repositories and what Tableau offers versus the niche Hadupe analytics plays that are getting funded and gaining a little bit of attention these days. Thank you.

Christian Chabot

Yes. Great question. Let me start with the second half of the question. Tableau is fundamental proposition on the Hadupe platforms as opposed to other analytics alternatives is our classic ease of use. You may know that customers are very fond of Tableau generally speaking, because we drastically reduce the development requirements and the complexity of getting results out of data base platforms. Compared to other BI platforms in reporting packages Tableau easy and fast and for everyone it require very little development.

While we’re ongoing with that of course is that on Hadupe platform, that tape of proposition is even more attractive, because Hadupe is in essence a development platform. And so customers are finding that anything they can do to put that Hadupe data into those hands of people and reduce the development weight of making it useful is very attractive.

And so the rise of the Hadupe community and ecosystem has been really nice for us in a sense that this is folded into our typical -- selling the model into our typical stories and our typical manner of working with customers.

Now to the first half of the question, I think most Hadupe answers, sort of what’s the market state of Hadupe, answers have to still go with feel. There isn’t a lot of good hard data out there. And so the feel I will give you is that, it’s out of their early innings. People are doing much more than just talking about it. But I wouldn’t yet call it advanced. It’s pretty aware that you need a customer moving major parts of their data base and BI strategies to Hadupe. It isn’t -- I think people kind of want to hear that it is but it really isn’t happening. You hear those stories but there are still few and far between. But in those cases where it is happening and some customer names come to mind that I can’t mention but in those cases where it is happening, Tableau is folding really nicely into the situation because we’ve been investing it. We’ve been investing in Cloud era and map R and some of the other platforms pretty aggressively and have nice story there. And of course final point being that I think we’re nice rounded out solution for our customers because even those actively using Hadupe as a data source of course still have data in other platforms and Tableau is helping them access of that data, no matter where it lays.

Operator

Your next question comes from the line of Daniel Ives from FBR.

Daniel Ives - FBR

Can you just sort of talk about maybe the sales process, how are things are changing now over the last six to nine months in terms of going into customers, land and expand strategy? Does it feel different today, given that, you're really starting to see adoption ramp I mean, you can compare and contrast?

Christian Chabot

I wouldn’t say we’ve seen a big change or big shift. I think once in a while and you meet a company that starts out servicing small deployments and small customers and then tries to usher in a big transition through its people and through its development organization to go serve a totally different kind of customer and go through a big phase change. And that’s just now what’s happening at Tableau. Tableau has been pursuing SMB business, SME business, enterprise business, government business for many years and all of those businesses continue to be predominately lead with land and expand selling.

And by that I mean customers are adopting the technology first and some small team or group or department or initiative. And then as they’re having success growing them from their and so we have pursued land and expand historically because it’s been good for us. We’ve been able to build the business in a very capital efficient way. But make no mistake, we’re well capitalized now. So capital isn’t our constraint. But we’re continuing with land and expand as our predominant selling model even within large accounts because it’s great for the customer. Honestly customers spent so many decades being forced into big multimillion dollar upfront decisions with technology they never ever tried that they’re tired of it and so even big sophisticated buyers are very comfortable advancing in that way. And so we have not seen a fundamental model change.

Now in closing of course we’re doing more and more large deals as we go and grow as a company. But if you drill behind most of our large deals, you would find there was quite a nice incubation period behind them and that the land and expand model was still a key part of it.

Daniel Ives - FBR

Got it. Just a quick follow-on. In terms of M&A, an obviously lot of cash right now. Just give us sort of thoughts how you think about things organically versus through acquisitions over the next few quarters?

Christian Chabot

We view organic development as our primary research and development vehicle. We’re hiring aggressively in our R&D team and are making great investments and we don’t see any big shift coming there. We haven’t done an acquisition to-date but that doesn’t mean we won’t do one. The type will we do look at are technology acquisitions, of what’s communally called tuck in variety and those would be accelerate our development in some of the areas that we think are particularly exciting and so we do actively look at deals. We haven’t found an opportunity right now that we would surface but I do expect it over that over coming years we will do some.

Operator

Your next question comes from the line of Steve Ashley from Robert W. Baird.

Steve Ashley - Robert W. Baird

My question was kind of on the back end of the business. With the recent Gartner report talking about govern, discovery, just wondering how you see your relationship with the central IT department maybe evolving and changing overtime as we go forward.

Christian Chabot

Great question. Now that, unlike the last two questions, that is an area where we actually have seen a shift. I’ve been doing this for about, 10 years I guess little over and I would say every year we have been building this Company, the involvement and leadership of the IT department has grown. In a manner of speaking you might say in those first couple of years the IT department’s involvement in adopting and championing Tableau was virtually zero. It really was. I’m talking about back in ’03 and ’04 and ’05. And ever since then more and more companies, more and opportunities we see have actually been led by IT. Fast forward today, I don’t have a precise statistic for you, but a huge quality of our business is actually championed by IT and I think one of the reasons for that is if you think through our proposition, Tableau’s market proposition to customer is a way of doing business intelligence work, business analytics work, executive dash boarding work in a framework that is much more agile, much more easy to use and importantly much more self-serviced. Customers and all sorts of different groups and all sorts of different skill levels in the company are able to answer their own questions with data on the fly, to complete their own ad hoc projects without a lot of additional help, to move much faster and to feel more empowered with taking fact based decisions. And we’re going with this is that what we’ve seen is IT departments increasingly championing this as the style of BI they want to roll forward with, because too often IT departments have, in essence, become a report factory for the rest of the company.

And they’re discovering that there is a more agile and self-service BI platform available, they’re increasingly standing up and saying we are moving in that direction. It takes fewer resources. It moves faster and it empowers our people. Why wouldn’t we go in that direction? And so I’m glad that question was asked because that is a definite market change we have experienced over the years. And now flash forward 2014 I would say its going better than ever our opportunities maybe IT driven or maybe business driven.

Steve Ashley - Robert W. Baird

Terrific and then maybe a quick one, Tom. Just a follow, do you know how many shares you would have outstanding if you were prop post the offer in here?

Tom Walker

Roughly 70 million, Steve.

Operator

Question come from the line of Greg McDowell from JMP Securities.

Greg McDowell - JMP Securities

I have a market share question. As we wrap up the earning season for analytics companies, with the exception of you guys’ one theme was certainly softness and tepid license growth rates. So my question is, with a lot of the companies in the analytic space, where it feels like they’re growing below the market growth rate and with you guys growing well above the market growth rate, I wanted to ask if you think your market share gains are accelerating and now that we’re into 2014 is there any change to your thinking on the size of the market and the market opportunity?

Christian Chabot

Good question Greg. We continue to believe that the substantial majority of our opportunity is Greenfield. We haven’t seen a fundamental change in the competitive mix. We win lots of deals but we lose some too. There hasn’t been any big competitive news lately. And so where I’m going with that is that the big growth numbers we’re posting seem to be primarily from people who weren’t really participating in the last generation of business intelligence. And so though we do periodically have replacements, you might say it’s taking market share that is not the feel of most of the opportunities we’re working.

Now when I say that, I will be clear about one point. When you go into a big global 2000 company with tens of thousands of employees, maybe hundreds of thousands employee, just because they had a shelf standard that they would call their enterprise BI standard, doesn’t mean that most of the people were using it, or were empowered to access it, or had the skill level to access it. And so when we find groups and departments within a company where technically there is some shelf standard but they’re not actively using it, nor are licensed to use it, we consider that Greenfield and often those situations aren’t competitive. They don’t feel like we’re taking market share from anyone. Because often the aspirational alternatives were never even considered due to their limitations. And so I’ll come around to where I began. It doesn’t feel like there’s been a fundamental shift there.

Operator

Question comes from the line of Brent Thill from UBS.

Brent Thill - UBS

Christian, I know on 8.2 that wants kind of eager for support from that. I mean when you think about the addressable pipeline that you’re seeing in terms of that being although addressed, can you just help us understand what do you think happens here and is there anything else in 8.2 that you think is interesting to call out.

Christian Chabot

Yes, I’ll start with the Mac. This is something I think is just one of those great long term investments. I can tell right now there’s not a big stack of stuck deals. There’s not a lot of backlog, thank you, just sitting there waiting for some heavy (indiscernible) 33:48. So let me set expectations there. But it continues to be one of the most asked things, by our current customer base on our community in the public blogs. It comes up all the time at customer events, and so we sense a lot of general market enthusiasm for it.

And so over the coming years we expect it to do great things for the Company and in fact if I were to call a few, it probably wouldn’t be the big enterprises. There’ll be some that are just delighted by that of course, you know Apple among them probably, Apple Computer itself. But some others, but you can pull the market share numbers and the install base numbers within big companies and the Mac, the Mac doesn’t dominate.

But there’re a few other segments right. I think it’s actually probably going to have real term impact for us and that has to do with SMBs, SMEs, education and importantly on the Tableau Public platform, now that I mention. Tableau Public is often used by journalists and bloggers and students and small consultants and this type of thing and they’re particularly enthusiastic as well, but again Tableau public tends to be a longer term investment because people participate with our product there and at some later time turn into a commercial customer.

So I’ll end the first part with just we’re really excited about it but it’s more of a long term impact than some immediate hit the day we release it, okay. Yes, and I’m glad you asked about 8.2 generally because there’s quite a few things in there. I’ll call out one, probably my personal favorite and that is storytelling. We showed a little about this, you can see a demo of this from last year’s customer conference that’s available on our website. We showed an early build of it. That’s now of course very advanced and will soon be in customers’ hands and in essence it enables customers to craft data driven stories right within Tableau. They don’t have to take our static images and cobble them together in PowerPoint and then fight the PowerPoint system to be refreshed. Instead a really nice storytelling feature set has been added right to our main product, where people can call out interesting things and tell stories about what’s going on and guide their audience through a thread of persuasion, right within the platform in a way where all the data remains live, all the results are easily refreshed, the entire story can be easily shared on the web.

And if you don’t mind me saying so, it’s unlike anything out on the market, that’s ever been done with data and storytelling. Data driven decision making and good storytelling are two arenas that were destined to be married. But no one has ever done it yet. It takes a great design sense, it takes a lot of experimentation, it takes some really blowing at things being done in the code. And over the last year, our engineers have cracked it. I’ve been using it myself quite a bit. The feedback in the beta has been very strong and I expect it to be really, really nice for the customer base.

Operator

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

Greg Dunham - Goldman Sachs

I guess first off, I am going to follow-up on I think Steve and Greg's question. Because there is a such a disconnect between your performance, even in the large deals relative to some of your peers? And I guess the first is more a macro and deal progression question. Within North America, did you see any dynamics that cause some issues with deal closings in the year or any spots or anything that was different this quarter than in the quarters past?

Tom Walker

Hi, Greg, this is Tom. So, no I mean, we expected seasonality overall from Q4. We had a really strong Q4 last year. And so we were expecting -- and you’re asking more domestically. So U.S. and Canada, with is performance. So we weren’t expecting to see the 178 large deals that we put up in Q4, but the 120 was great. It was good traction, good expansion business and we’re seeing kind of healthy adoption in our current customer base. So I wouldn’t call out any difference there at all. There is seasonality in our business which we’ve mentioned before and we think we’re off to a good start in Q1.

Greg Dunham - Goldman Sachs

And then one more question, because you bring up a great point, is that with every year you give more information on that cohort that bought five years ago. What are you seeing from a dynamic in some of your most mature cohorts? Have you seen anything that has surprised you or anything that you would call out for our investors?

Tom Walker

It’s great to bring that up yes. So the overall cohort, I wouldn’t say it would surprise us, but I think it’s pretty consistent with what we’ve shared before on the financing and on the road shows that we’ve done. There’s a consistent repeat purchasing. So they continue to purchase and expand and I think it highlights one of the things, Christian was taking about before is we’re at the tip of opportunity and so when you look at our penetration and then you won’t [ph] given an account, we’re still very early in almost every account that we’re in. And so there’s ample opportunity for us to continue to bring analytics to more parts of the organization. And so that’s consistent quite frankly. So I don’t think it’s changing it all. Just it’s more of a same.

Operator

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

Jesse Hulsing - Pacific Crest

Another Java, a bigger sample size for Tableau on mind, can you breakdown maybe what the mix is there between new customers and existing customers or accounts within existing customers and are you seeing any trend toward the SMB part of a market versus enterprise part of the market? Thanks.

Tom Walker

Hi, Jesse, this is Tom. So overall -- we’re not going to breakout the overall numbers of the different components that are going on but I will just, I will start with three different buckets of what we’re seeing traction there. So we are seeing people that are net new to Tableau, so have never use our desktop or server on premise products before. So that is the group. We’re seeing a lot of desktop usage. So people are just using our desktop products and have never been using server. So this is a natural way for them to get into the server product. And then in some cases we’re seeing people who are already a Tableau desktop and server customer adding online and usually that’s in a different group or department area, it’s usually bigger organizations. That is what we were seeing in that traction. So it’s not just SME or SMB play. It’s also up and inside the enterprises and kind of just like our on premise solutions we kind of, it’s kind of, it’s a flat and horizontal play across all sizes and geographies and functional areas.

Jesse Hulsing - Pacific Crest

And Tom can you remind us, are the subscriptions from Tableau Online falling into maintenance and service line or is it falling into license? Thanks.

Tom Walker

Yes. It’s falling into the license line. That’s where it is.

Operator

Question comes from the line of Phil Winslow from Credit Suisse.

Phil Winslow - Credit Suisse

I just want an update on just where you stand on your international expansion efforts? I know you’ve been talking about that for a couple of quarters. Just help me get some more detail there? Thanks.

Tom Walker

Okay. Hi, Phil this is Tom. So overall it’s going well, I think you saw from our opening comments that all three of our international regions, so EMEA, APAC and LatAm all grew triple-digits in Q1. So those early investments that we’re making seem to be doing well. I will, put a disclaimer there. Its early days. These are smaller numbers. But we are seeing good traction and we’re very, very happy with what we’ve seen thus far, but we are going to continue to invest in those areas. I think that’s an important part. It feels very much -- I have said this before in the past, it feels very much like Tableau eight years ago in some of those pockets and we’re continuing to expand where we see the opportunity. We have customers in over 100 countries right now and so we’re going just continue to make those investments. A lot of those investments, unlike eight years ago we’re making head of the curve. So we’ve expanded in Europe. So we’ve hired Henrick over in Germany. Japan is taking off. Australia is taking off. So we’re seeing good traction and good opportunity to make these investments and we’re doing so.

Operator

Next question is from the line of Keith Weiss from Morgan Stanley.

Keith Weiss - Morgan Stanley

I wanted to a little bit about sales productivity. I think sort of profitability and the road to profitability is little bit more on peoples minds than it was a quarter or two ago, last time we were talking and when I look at you guys income statement, we’re looking at two quarters in a row now where your license revenue growth has well exceeded the growth that we’re seeing in sales and marketing spend, which to indicate to me you’re seeing really nice sales productivity gains. So I want sort of pose the question to you, if we can get more granularity into sort of what you’re seeing within your sales force? What type productivity gains are you seeing, if any at all? And maybe a little bit into sort of how you’re looking to invest into that sales capacity through 2014?

Tom Walker

So overall and you think about the size of the team and it’s grown over 60%, sales and marketing has grown over 60% year-over-year and so we continue to focus a lot of time and effort on on-boarding ramping, getting people productive. That being said though, we are adding a lot of people. And so it’s hard to just have productivity gains be on the only story here when we’re expanding internationally and even domestically in the commercial side and in enterprise.

But overall we set our commission plans or comp plans every year. We’re focused on productivity and making sure people have the tools where they can be successful, making sure that Alisa [ph] and the marketing team doing a great job with awareness, helping bringing in some lead flows and trial activity and so all of that is kind of continued investment and so the way we look at it, we’re still at 19,000 customers counts. We want to get a lot more and so we’re not so much focused on the road to profitability because as you’ve seen in the past few years actually, we’ve been profitable. So we’re able to do that. Right now we just want to make that we’re getting our name out there, getting our products out there in the hands of more and more customer accounts, so that we continue to expand. With that said, the ramping of full tenured sales reps is going quite well and the productivity is doing very, very well once they do get fully ramped.

Operator

(Operator Instructions) Question comes from the line of Abhey Lamba from Mizuho Securities.

Abhey Lamba - Mizuho Securities

Tom, I just want to follow up on last question about sales force productivity. Clearly we saw good improvements as Keith mentioned but your guidance for second quarter does not seem to be taking into account any productivity gains. How should we kind of think about that? In what type of scenario should we not expect any productivity gains?

Tom Walker

A lot of the investments that we’re making are long term investments and just hiring new folks in Q1 doesn’t necessarily mean that they will be up and productive in Q1. So those are the type of investments that we’ll continue to make. They’re consistent with what we did last year. The overall guidance for the quarter at the high end in range is 60%. So we did take that up from what we were expecting and I think that bakes into our internal expectations and what we’re comfortable delivering. But overall we’re still very early in a lot of the investment cycles, especially when it comes to international and what I would say indirect or channel investments.

Abhey Lamba - Mizuho Securities

Got it and Christian thanks for your comment regarding IT involvement. What steps have you taken to improve your appeal to them or has it been primarily driven by user demand. And when you look at the functionality in 8.2 is there anything in that, that would increase your attractiveness to the IT departments.

Christian Chabot

Well overall we’ve been investing in making our feature set more attractive to the people who often procure it and deploy it and administer it. And that’s not a one release thing. We’ve been working that for many years. So if you look back at our release history, you’ve seen us add things like multi-tenancy and high availability and nice integration with your permissioning systems and of course scalability, we’re constantly working on that one, the ability to distribute the server across multiple machines. In our last release we added a nice API for programming and automating some elements of the system. And so on. It’s a long list. We could probably list a couple of dozen things already. And it’s a list we’ll continue to invest in. It’s not a one release issue. I think over the coming years you’ll see come out with more and more. In 8.2 in particular, nothing comes to mind. I’d have to take a look at more detail note but nothing immediately jumps. But in 9.0 there will certainly be the next big set of additions.

Tom Walker

Actually I just wanted to see Ashley's [ph] question. You’ve already asked me about the share count. I just wanted to update that. So probably about 72 million, I’d say 70 million but it’s about -- 72 million would be the share count.

Operator

Next question comes from the line of Derrick Wood from Susquehanna International.

Derrick Wood - Susquehanna International

I wanted to touch back on competition and Christian, again going back to the comment on increased involvement by IT, are you seeing any change in desire by larger BI vendors to move more into this data discovery or data visualization market and I guess what are the challenges they’re having to try and compete?

Christian Chabot

Well, we’ve seen all of the chapters of this story. In the early days of the company they all and by they I mean the big stack providers of technology, the big incumbent providers of traditional enterprise BI systems, we have seen them go from completely writing off the category to saying okay there might be something there but it’s a niche to finally scrambling and saying, uh-oh, it’s looks like the entire market is going this way, we better do something.

And so yes we’ve seen all of them come out with some kind of entry into the market to essentially catch up with Tableau’s work and that includes Microsoft and MicroStrategy and Oracle and SAS and whole lot of them. And that’s been going on for -- it's started about four years ago I would say and every quarter there is some new news. At least every year that there’re couple of big pieces of new news there.

And I think the answer to the second part of the question is how are they doing? Are they struggling? I think you can see that in our financial results. Their efforts have not an impact on our growth. If anything, they may actually be helping a little bit educating the market. And the reasons they struggle, oh boy! I have a whole speech I give on set. I give a talk where I basically -- what I essentially did was I went and reread Innovators Dilemma, just a classic business book by Clayton Christensen. I think they are having all of the problems that Christensen outlined that big companies do have when they try to innovate at scale. That’s we’ve been seeing and so there’ll be - I probably the longer call to into that in all detail. But it’s the reasons you’ve seen before when disruptive new easy to use technologies come along and the big traditional providers struggle to catch up with it.

Derrick Wood - Susquehanna International

Okay thanks for that color and then one quick one, Tom. On deferred revenue, it was up about $4 million sequentially but I think that was little lower than the sequential increase a year ago. So I guess any reason why that trended down a bit? Is any other dynamic, maybe an increase in portion, in term or a change in renewal or anything to call out there?

Tom Walker

No, overall deferred majority, that would be the maintenance -- is comprised to maintenance but we do have some term and subscription. I think if you look the -- at its up $4 million but if you look year-over-year it’s up 84% versus revenue growth of 86%. So proportionally they’re aligned with gross in both the maintenance area and the license area.

Operator

Next question comes from the line of Srini Nandury from Summit Research.

Srini Nandury - Summit Research

Christian or Tom, as you look into your existing customers who have been with you for at least a year or two, how much more can you penetrate to those accounts? Are you 20% penetrated, 30% penetrated or what?

Tom Walker

This Tom. So overall even now, the accounts that are a year or two old are still continuing to expand the usage and so we’re not very -- I wouldn’t put the 10% or 20%. Usually it’s more the tip of the iceberg of opportunity. If we think about what we’re doing with our products right, we’re bringing analytics to the entire organization, which is not what traditional BI has done in the past and we’re focused on certain functional areas or groups and so what we’re able do as expand throughout organizations. So regardless of what department you’re in, most people are required to analyze data everyday as part of their job. And so we just continue to expand and the sales team has become very, very good at finding those opportunities and expanding to different functional areas and different pockets of an organization. So overall penetration rate of any of our customers I would say would be very small. We still have a lot of opportunity there.

Operator

We have time for one more question. You final question comes from Brent Thill from UBS.

Brent Thill - UBS

Chris and Tom, you had mentioned I think in the last calls that you are seeing a real appetite in the customers to go to enterprise license agreement, that it seemed like its still market sensitivity where they were still licensing on kind of traditional way. Are you see any in shift or planning shift this year as it relates to go to market and how you package your price for a larger seed deployments or is still more the same?

Tom Walker

I think more of the same is the short answer. Here and there we see an account wanting to work with us in a more strategic way, in a bigger picture way and we welcome those conversations as we always have. But if you look at the customer account numbers that we’re posting here, keep in mind we're talking about doing business with thousands and thousands of organizations every quarter. And so I don’t anticipate the ELA style model of selling to be our main story for many years.

Christian Chabot

Yes, I would just add to that is -- we welcome the conversations. If people want to do that, that is awesome. But I think one of the things customers have grown accustomed to or very happy with is -- we're not necessarily forcing those discussions. When it's right for them, we're absolutely ready because if people want to license our technology throughout their organization, we will absolutely engage and help them do so.

Operator

I would now like to turn the call over to Mr. Jay Peir for final comments.

Jay Peir

Thanks everyone for your participation today and with that we conclude our first quarter earnings call. Thank you.

Operator

This concludes today's conference call, you may now disconnect.

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