Tableau Software (DATA) Christian Chabot on Q4 2015 Results - Earnings Call Transcript

| About: Tableau Software (DATA)

Tableau Software, Inc. (NYSE:DATA)

Q4 2015 Earnings Call

February 04, 2016 4:30 pm ET

Executives

Joni Davis - Director-Investor Relations

Christian Chabot - Chairman & Chief Executive Officer

Thomas Edward Walker - Chief Financial Officer

Analysts

Mark R. Murphy - JPMorgan Securities LLC

Raimo Lenschow - Barclays Capital, Inc.

Jesse Hulsing - Goldman Sachs & Co.

Steven M. Ashley - Robert W. Baird & Co., Inc. (Broker)

Brent Bracelin - Pacific Crest Securities

Bradley Sills - Bank of America Merrill Lynch

Brent Thill - UBS Securities LLC

Philip Alan Winslow - Credit Suisse Securities (NYSE:USA) LLC (Broker)

Karl E. Keirstead - Deutsche Bank Securities, Inc.

Melissa A. Gorham - Morgan Stanley & Co. LLC

Steve R. Koenig - Wedbush Securities, Inc.

Matthew George Hedberg - RBC Capital Markets LLC

Tom Roderick - Stifel, Nicolaus & Co., Inc.

Bhavan S. Suri - William Blair & Co. LLC

Operator

Good afternoon. My name is Laurie and I will be your conference operator today. At this time, I would like to welcome everyone to the Tableau Fourth Quarter 2015 Earnings 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. Thank you.

Joni Davis, you may begin your conference.

Joni Davis - Director-Investor Relations

Good afternoon and thank you for joining us today. With me on the call are Tableau's Chief Executive Officer, Christian Chabot; and Chief Financial Officer, Tom Walker.

Our press release was issued earlier today and is posted on our website. This call is being broadcast live via webcast, and following the call, an audio replay will be available in the Investor Relations section of the website. Christian and Tom will begin with prepared remarks, and then we will open the call for questions.

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 first quarter and full year 2016. 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 most recently filed Quarterly Report on Form 10-Q and our Annual Report on Form 10-K. These documents contain and identify important risk factors and other information that may cause our actual results to differ from those contained in our forward-looking statements.

Any forward-looking statements made during the call today 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. Except as required by law, we assume no obligation to update these forward-looking statements publicly or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future.

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 exclude 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 - Chairman & Chief Executive Officer

Thank you, Joni. Thank you, everyone, for joining us today to discuss Tableau's fourth quarter and fiscal year 2015 results. Tableau's mission is to help people see and understand data. And last year, we made exceptional progress advancing that cause. We released innovative new products, expanded our customer base, and grew our business substantially. In Q4, Tableau generated record revenue of $202.8 million, up 42% over our breakthrough results in Q4 of 2014. We finished the full year at $653.6 million, up 58% from the prior year. Our revenue growth and strong operating performance also led to record non-GAAP operating income of $67.4 million for the year.

Our focus on customer adoption resulted in increased market share. 2015 was another record year for customers choosing Tableau. Here are a few updates on our progress. In Q4, we added more than 3,600 new customer accounts, bringing our total to more than 39,000 worldwide. The growing volume of customers choosing Tableau speaks to both the immense popularity of our products and our ability to deliver innovation that drives demand. For the full year, we added more than 12,500 customer accounts that means that in one year, we grew our total customer accounts by nearly 50%, and up by more than 105% from just two years ago.

During the quarter, we signed a record 414 sales orders greater than $100,000, including those for more than 20 customers who spent more than $1 million during the quarter. Tableau has a loyal, engaged and satisfied customer base. In 2015, we had another year of maintenance renewal rates greater than 90%. This, coupled with our fast-growing customer base, gives us a solid foundation for long-term growth.

Our products are having a noticeable impact across the range of sectors and industries. In the U.S., 88% of the Fortune 500 are now Tableau customers, including an astounding 96% of the Fortune 100. Drilling down on that, 100% of the Top 20 financial sector companies represented in the Fortune 500 are Tableau customers. 100% of the Top 20 technology sector companies are Tableau customers. And Tableau's customer base includes the 10 largest U.S. telecommunications companies, including the five largest U.S. wireless companies.

In Q4, Tableau welcomed new customers such as Domino's, Bill's Grove Florist, HDFC Bank, (05:22) and Eclipse. And we expanded relationships with existing customers, including Nationwide Insurance, Boston Scientific, NuStar, Deloitte Australia, GrabTaxi, Clark County School District, Quicken Loans, Unilever UK, Wells Fargo and eBay.

Let me share a few stories about how our customers are using Tableau. The Clark County School District, or CCSD, in Las Vegas, Nevada is the fifth largest school district in the United States. CCSD began implementing Tableau Server and Tableau Desktop in the 2015-2016 school year. CCSD central office staff use Tableau products to support student achievement. For example, the District High School Cohort Analysis Application lets school staff see which students are on track and off-track for graduation in grades 9 through 12.

Another customer story comes from Singapore-based GrabTaxi, a smartphone-oriented company on a mission to revolutionize transportation in the Southeast Asian region. The company generates massive amounts of data to make daily business decisions. Using Tableau Online, our cloud product, GrabTaxi is able to pull data from Amazon Redshift into Tableau Online and share customized dashboards with hundreds of people. This is an amazing business intelligence victory delivered completely with cloud-based technology.

Christel Bouvron, the Head of Analytics & Business Intelligence at GrabTaxi, told us that Tableau Online plays an integral role in keeping a finger on the pulse of the business. She said that business leaders now wake up with the latest performance numbers in their inbox. Users across the company drill into dashboards and visualizations to answer further questions. They've shifted their mindset to making data-driven decisions.

Tableau produced our best ever results internationally. I'm pleased to report that in Q4, our international revenue grew to 26% of total revenue. We now have 17,000 customer accounts across 150 countries. In 2015, we opened a new office in Paris and in China. Early results look promising in our new regions. Just last month, we announced the opening of a data center in Europe to support our growing customer base there. We remain confident about the long-term potential of the global opportunity ahead of us, and we are maintaining our investment plan.

The market for visual analytic software is vast, and the fundamental technology we are bringing to it improves every day. In 2015, we continued our cadence of rapid product releases. We delivered Tableau 9 in April, Tableau 9.1 in September and Tableau 9.2 in December.

At our Customer Conference in October, we laid out plans to further develop our products. We remain focused on product innovation and advancing our platform to bring even more value to our growing customer base. We are excited about releasing Tableau 9.3 and Tableau 10, the next step in our journey to help people achieve more with data. Those releases will include innovations in advanced analytics, performance, scalability, data preparation, enterprise capabilities, cloud and mobile.

We are excited to see Tableau Public grow and thrive. In 2015, we had the highest growth of new authors in the history of Tableau Public. In 2015, over 80,000 authors published over 200,000 new workbooks. To date, more than 150,000 authors have published a total of more than 470,000 visualizations. We are seeing Tableau Public highlighted in major publications and addressing some of the most important issues in the news.

Tableau Public helps bring data and facts to topics as diverse as Global CO2 Emissions, the Cost of Attending the 2015 World Series, and even the history of the Monarchy in the UK. One popular visualization in Q4 featured McKinsey analyzing data on detailed work activities and automation technology.

In closing, Tableau's success was the result of strong customer growth, product adoption, international expansion and operational excellence. I remain optimistic that Tableau is best positioned to address the large and growing market opportunity for easy visual analytics. And we continue to power the investment engine that sets us up for the next phase of growth. I'd like to recognize the tremendous effort and commitment of our 3,000 employees worldwide. It's been an amazing year, and I look forward to 2016.

Thank you for joining us here today. I'll now turn the call over to Tom.

Thomas Edward Walker - Chief Financial Officer

Thank you, Christian. Good afternoon, everybody. I want to start up by acknowledging the Tableau team. Thank you for making 2015 another record year.

I'd like to expand on Christian's comments about the Tableau business models. One, we're addressing a huge market of bringing analytics to the masses. Two, we have outstanding business attributes, solid revenue growth, a strong customer acquisition engine, a growing and loyal customer base, and positive cash flow. Three, we take a long-term view and are continuing to invest in product innovation and remain focused on our market opportunity. And four, we have an exceptional team and a strong corporate culture that is dedicated to empowering organizations by helping their people see and understand their data.

We continue to see healthy growth in the number of customers choosing Tableau. During the quarter, we added more than 3,600 new customer accounts and ended the year with more than 39,000 customer accounts. For the year, we added more than 12,500 customer accounts, up from the over 9,100 we added in all of 2014. As a reminder, the number of customer accounts added in any given quarter can fluctuate.

Now, let's turn to the numbers, and I'll provide you with more details. And then, I'll give guidance for Q1 and full year 2016. Fourth quarter total revenue grew to a record $202.8 million, up 42% from the $142.9 million in Q4 2014. This follows the exceptionally strong Q4 2014. For the full year, total revenue was $653.6 million, up 58% from the $412.6 million we reported in 2014. International customers contributed 26% in total revenue this quarter, the largest percentage ever. To put this in perspective, international revenue was 23% of the mix in 2014 and 20% of the mix in 2013.

International revenue grew to $53.7 million in Q4, up 63% year-over-year. For the full year, our international revenue was $164.3 million, up 75% year-over-year. Total revenue this quarter for the United States and Canada was $149.1 million, up 35% year-over-year. Total revenue for the year for the United States and Canada was $489.3 million, up 53% year-over-year, representing 75% of total revenue.

Despite our strong metrics, we saw some softness in spending, especially in North America. We did see our customers continue to expand their use of Tableau in their organizations, but not at the same cadence we historically experienced. As Christian mentioned, we closed a record number of deals over $100,000 in Q4. This is a testament to our land and expand strategy still reaping strong success within our customer base. Given the challenging spending environment, our results were solid, especially compared to last year's breakout Q4.

Now, let's discuss our revenue streams. In Q4, license revenue grew to $133.1 million, up 31% year-over-year. For the year, license revenue was $423.8 million, up 51% from the prior year. Looking at the mix of license revenue from new versus existing customers, license revenues from existing customer accounts made up 75% of perpetual license sales recognized in 2015. This is up from 71% we reported in 2014. As a reminder, an existing customer account means that they were customer account on or before December 31, 2014.

Maintenance and services revenue grew to $69.6 million in the quarter, up 68% year-over-year. For the year, maintenance and services revenue grew to $229.8 million, up 73% from the prior year. Our maintenance renewal rates continue to exceed 90%, which is a strong indicator of the continued usage of our products within our expanding customer base. Maintenance and services continue to be an important and growing recurring revenue stream.

Now, I'll spend a few minutes discussing margins and operating expenses. Unless otherwise noted, all references to operating metrics are on a non-GAAP basis, which are reconciled in the press release tables and posted on our Investor Relations website. Gross margins were 90% for Q4, and 90% for the full year 2015. As we discussed before, we expect our gross margins to fluctuate as we continue to invest in support, services and delivery of our offerings around the globe.

For the quarter, total non-GAAP operating expenses were $153.2 million, up 52% year-over-year. As a reminder, the majority of our operating expenses are employee related. We invested $42.1 million in product development in Q4, up 58% from the prior year. For the full year, we invested $148.9 million in product development. And we ended the year with R&D head count of 772, up 52% year-over-year.

Product innovation is critical to our success, and we plan to continue investing in development. Next up in the journey is Tableau 10.0, which we look forward to releasing in the near future. Sales and marketing expenses for the quarter were $93.9 million, up 50% from the prior year. For the year, sales and marketing expenses were $311.5 million. We ended the year with sales and marketing head count of 1,307, up 58% year-over-year.

Given our large market opportunity, we have remained focused on attracting and hiring exceptional sales and marketing talent. As you might expect, the large number of new hires can impact overall sales productivity as we onboard and train new hires to reach full productivity. Overall, we did see a decline in sales productivity in the quarter. We remain focused on building the team globally and are focused on improving the efficiencies and further streamlining our processes to support future growth.

In 2015, we hired a record 1,061 net new employees to team Tableau, bringing the total head count at the end of the fourth quarter to 3,008. Our investments in hiring are important to our future growth, and we are very pleased with the job of recruiting and on-boarding team does in attracting the best talent. Let me remind you, there can be fluctuations with respect to head count additions on a quarter-by-quarter basis. Our fourth quarter non-GAAP operating income was $30.1 million. For the full year 2015, non-GAAP operating income was $67.4 million, and our operating margin was 10%.

Switching to taxes, in the fourth quarter, income tax expense was $34.1 million, primarily due to the recognition of a valuation allowance. Specifically, we recorded a $46.7 million valuation allowance against our U.S. deferred tax assets. We now have a three-year cumulative GAAP net loss adjusted for permanent tax differences and it's not likely we will have sufficient taxable income on a GAAP basis to utilize our deferred assets. This allowance is a non-cash charge has no impact on our cash flow.

Overall, our overall tax expense is partially offset by the R&D tax credit which was permanently extended by Congress in Q4. We have updated our long-term non-GAAP tax rates of 30% from 43% for the year ended December 31, 2015. This rate takes into effect the passage of the permanent R&D tax credit.

In Q4, we posted non-GAAP net income of $26 million and non-GAAP diluted earnings per share of $0.33. During the quarter, our weighted average share count for GAAP EPS was 72.8 million shares. As a reminder, periods in which we have a GAAP net loss but are profitable on a non-GAAP basis, our presentation of non-GAAP EPS will use the diluted share count. Accordingly, our weighted average diluted share count from non-GAAP EPS was 78.5 million shares. A detailed reconciliation is available in the press release tables posted on our Investor Relations website.

For the full year 2015, we posted non-GAAP net income of $48.1 million and a non-GAAP diluted earnings per share of $0.62. For the full year 2015, our weighted average share count for GAAP EPS was 71.7 million shares and our non-GAAP EPS diluted share count was 77.7 million shares. We increased our strong cash position on the balance sheet, cash and cash equivalents. And at the end of Q4 was $795.9 million, up $45.7 million from the prior quarter. Account receivables were $131.8 million and our DSOs were fewer than 65 days consistent with prior periods.

Now, on to our outlook for 2016. Based on what we're seeing in the environment and the buying patterns of our customers, we are taking a prudent stance as we begin the year. We expect Q4, Q1 seasonality to be amplified as our overall revenues continue to grow.

For Q1, we expect revenue in the range of $160 million to $165 million. Using the high-end of this range, this represents approximately 27% year-over-year growth. For Q1, we're expecting non-GAAP operating loss of between $8 million to $13 million. We expect a Q1 non-GAAP loss per share in the range of $0.08 to $0.12 per share. Because we expect a non-GAAP loss, we anticipate the first quarter basic and diluted share count to be approximately 74 million shares.

For the full year 2016, we expect total revenues to be in the range of $830 million to $850 million, representing annual growth of approximately 30% at the high end of this range. We believe it's important to continue investing and expect 2016 to be another investment year.

For the full year, we're expecting our operating income to be between $25 million and $40 million, and the operating margin of 5% at the high end of this range. Our operating results will vary on a quarterly basis. Our long-term non-GAAP effective tax rate is 30%. We expect full year non-GAAP EPS to be in the range of $0.22 to $0.35 per share, assuming 80 million diluted shares.

For 2016, we expect our overall capital expenditures to be approximately $100 million as we make long-term investments in our offices and infrastructure. We also expect to add approximately 1,000 net new employees in 2016.

In summary, as we embark on 2016, we remain optimistic about the massive addressable market, excited about our upcoming developments, and committed as ever to empowering organizations by helping their people see and understand their data. Thank you for joining us today.

Now, I'll turn the call over to the operator for Q&A.

Joni Davis - Director-Investor Relations

Operator, can we start our Q&A, please?

Question-and-Answer Session

Operator

Your first question is from Mark Murphy of JPMorgan. Your line is open.

Mark R. Murphy - JPMorgan Securities LLC

Yes. Thank you. Christian, so I'm curious if you see signs of the marketplace going through a Hadoop digestion phase, which might be by extension causing a growth deceleration across the entire data and analytics market, because clearly the whole space has decelerated and hit a rough patch in the – in Q3 and Q4 of 2015. And I think we're trying to understand the underlying dynamic there, whether you think that that is more macro driven and something that we'll see across a broad range of software and technology companies, or whether you think that that – this is more of an analytics digestion phase or something else?

Christian Chabot - Chairman & Chief Executive Officer

Good question. I see Hadoop as an increasingly pervasive part of company's analytical environment. And it's an important technology, and it's spreading pretty quickly, and is great for a number of use cases. And we've been investing in seeing that trend coming for a couple of years. So, in our part of the market, business analytics, data analysis, reporting, business intelligence, we haven't seen that as a special effect because even when customers deploy Hadoop, they want to see and understand the data in it.

I'll add that in our travels – I think there have been surveys on this that show similar results, but in our travels, we've noticed that Hadoop technologies are more often being used in data integration and ETL and data preparation tasks. Many of them are of a very batch-oriented nature. And so although that may be affecting ETL vendors and databases and data warehouses, it isn't something that is somehow causing the deceleration in business analytics vendors, at least as far as we see it.

Now, I'll close by adding that our partnerships with many of the great Hadoop providers out there are really tight. Our engineering teams talk and collaborate. We often are marketing at each other's events, and that includes Cloudera and Hortonworks and several others. So, that's my view on it.

Mark R. Murphy - JPMorgan Securities LLC

Thank you, Christian. And then, Tom, I had a quick one for you. I'm just wondering, can you comment on how material – is any mix shift you might see going on away from desktop license purchases or bookings and towards server licenses because – I guess, I'm curious – to the extent that the server transactions can be much larger, but presumably they do require more preplanning, more buy-in, possibly a longer sales cycle, I'm curious if you see that activity changing or building up in the pipeline such that perhaps there is a pause that refreshes at some point as some of those server transactions close.

Thomas Edward Walker - Chief Financial Officer

Yeah. Hi, Mark. Yeah. This is Tom. So, overall, let's just kind of refresh on the overall model because I think our model, the whole land and expand model whether it's desktop or server, we allow people to get started with a very, very small footprint and they can expand over time. So, with respect to that, we're seeing good – as you saw from the customer acquisition numbers, we're seeing very good customer acquisition numbers that we're getting our footprint in organizations and they continue to grow.

I wouldn't necessarily break out desktop versus server because both are actually growing quite well for us, and they're both very much parts of the equation, right? I mean, a lot of the authoring is done in desktop and then a lot of the sharing and collaboration is done in server. But given the nature of our technology and allowing people, I think it started with one seat on (26:19) Tableau Online, on Tableau Server or 10/Pack (26:21) on Tableau on-premise. And so, they get started pretty small and they expand. The beauty of our model is it lets people expand at a pace that they want to. It's not like they're buying so much ahead of the curve as much as they're buying, as they see the need in some other organizations.

Mark R. Murphy - JPMorgan Securities LLC

Thank you.

Joni Davis - Director-Investor Relations

Thank you, Mark. Operator, can we have our next question, please?

Operator

Your next question comes from Raimo Lenschow of Barclays. Your line is open.

Raimo Lenschow - Barclays Capital, Inc.

Thanks for taking my question. Tom, could I go back to some of the comments you made. You talked about, on the expansion side, the customer expanded but maybe not at the same rate. And then, you've mentioned sales productivity a little bit which kind of (27:02) of new hires. Can you talk a little bit when you kind of analyze the quarter and the root causes there, what was the driver? I mean, a lot of the folks on the Street are concerned about Power BI. When you looked into the deals and the momentum that you have there, what was the driver for guys not expanding as much or kind of pausing? Help us understand that a little bit better. Thank you.

Thomas Edward Walker - Chief Financial Officer

Yeah. Hi, Raimo. Yeah. This is Tom. So, overall, I think my comment in my prepared remarks were about the kind of softness in spending that we saw in our customer base. And so, I think the – and then getting back to how I commented with Mark is a part of our model allows people to expand at a pace that works for them. And I think what we are seeing inside of our customer base is more caution in how they were spending and how they were allocating dollars. And so, that's more what I would call highlight to is, that we just saw that and the beauty of our model is it allows people to expand in smaller increments that they want, right?

With respect to the overall competitive market, right, if you look at the internal data that we collect, our win rates are not changing at all, actually. So, we are really the mass analytics type company, bringing this technology to a lot of different people who don't know what BI or analytics, right? They just got questions and they've got data. So, the overall win rates, I wouldn't say, have changed dramatically. But we just saw kind of a softness in the overall spending.

The last thing you asked about is about sales productivity. And so, as you know, we've been growing at a very, very fast pace over the last few years. And so, you would expect productivity numbers to come down, but there's also stuff that we have to do to tighten our approach. And so we are focusing on that. But we've got the right sales leadership in place, and we're really looking forward to 2016, quite frankly, because technologies coming out, 10.0 is around the corner and all good.

Raimo Lenschow - Barclays Capital, Inc.

And then just maybe one follow-up. If I look at the beat on the operating profit side, it was obviously bigger than what we had modeled. How much of that was planned, and how much of that was kind of, look, sales guys didn't hit the quota at the end of the year, or didn't get quite the sales accelerator, and so that kind of gave you a natural kind of benefit on the cost side?

Thomas Edward Walker - Chief Financial Officer

Right. I mean, overall, I don't think – we had TC, we had our Customer Conference in Q4. So, a lot of that we were expecting some more expenses. Expenses just came in a little lighter than we expected overall. So, I wouldn't point to one thing or the other because, overall, we hit our guidance, right, we're targeting that. So, we did well there.

Raimo Lenschow - Barclays Capital, Inc.

Perfect. Okay. Thank you.

Joni Davis - Director-Investor Relations

Thank you, Raimo. Operator, can we have our next question, please?

Operator

Your next question is from Jesse Hulsing of Goldman Sachs. Your line is open.

Jesse Hulsing - Goldman Sachs & Co.

Yeah. Thanks for taking my question. Christian, in your opening, you talked about Tableau's customer base. I think you said 88 of the Fortune 500 and 96 of the Fortune 100. On one hand, that's fantastic and shows just how pervasive Tableau has become. On the other, I guess, it could raise questions about penetration. Can you talk about your thoughts on penetration versus saturation? And how does your strategy shift now that you're – you've landed in all of these big customers? Do you add more products? Do you do more M&A in order to build out your portfolio? Thank you.

Christian Chabot - Chairman & Chief Executive Officer

Oh, that's a great question. In fact, when we were reviewing the script, I was a little worried about having those statistics for fear of exactly this question of making it look like we had sold to everyone. The reality is, in the vast majority of those accounts, and I don't have a statistic handy up for you on hand, but in the vast majority, the customers have only just started with Tableau. We will be alive in several groups or big in one division or big in one business unit, but not yet in IT or the opposite and so on down the line.

And so we don't see any signs of market saturation there. There were a few accounts that have gone so big with Tableau. We will probably at some point hit a wall, but that is very much the sideshow and not the main story. And so with that, I can answer your question, which is, yeah, we believe we can grow the business pretty robustly going forward, continuing to sell to the existing base, saying nothing about bringing our new customers, by the way, because of that low penetration point.

And, of course, by saying – but not to the exclusion of not launching other products. And so – although I don't have any one to announce right now, we will probably do that as well. And so the real answer to your question is both, expect – watch the space and expect a lot from us.

Jesse Hulsing - Goldman Sachs & Co.

Thank you.

Joni Davis - Director-Investor Relations

Great. Thank you, Jesse. Operator, can we have our next question, please?

Operator

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

Steven M. Ashley - Robert W. Baird & Co., Inc. (Broker)

Terrific. I guess, I'll just keep drilling on the same topic here. If we look at the North American business, was there any difference between your commercial business and your enterprise business?

Thomas Edward Walker - Chief Financial Officer

Hi, Steve. This is Tom. Overall, the enterprise part of the business is a bigger dollar aggregate amount. So, that makes up the bigger part of our North American business. But the comments I had about soft spending, I would say, we saw on both the expansion of the commercial business and the enterprise business, both. So I wouldn't call one out. The other thing I'd kind of close with is, from an acquisition standpoint, again, getting back to the strong customer acquisition engine adding 3,600 new customer accounts there boded very well, so we're seeing good traction there. And that bodes well for the future.

Steven M. Ashley - Robert W. Baird & Co., Inc. (Broker)

And was there any variance between the direct and the indirect channel business, North America, in the period?

Thomas Edward Walker - Chief Financial Officer

No, I would say, there was a variance between those. A lot of the efforts that we're making with our channels, specifically, in North America, we've been making those investments with the SIs, both local and regional SIs and then, the reseller networks. So, all of that, I would say, was a changer, different from our direct business.

Steven M. Ashley - Robert W. Baird & Co., Inc. (Broker)

Perfect. Thanks.

Joni Davis - Director-Investor Relations

Thanks so much. Operator, can we have our next question, please?

Operator

Your next question comes from the line of Brent Bracelin of Pacific Crest Securities. Your line is open.

Brent Bracelin - Pacific Crest Securities

Thanks. I'll ask a question on the land and expand strategy here as well. I guess, the one metric I want to drill down on was growth in new customer adds actually exceeded license growth for the first time. Obviously, competition has certainly increased in the last year, not slowing the ability to land new customers, but it's really the expand part of the business that I wanted to kind of ask a question on. How do you know this is just caution amongst customers versus longer eval cycles or price discounting playing a bigger factor with that expand component?

And as a pivot to that, Tom, your guidance is a little bit lower than what you formally kind of gave as an early view. What are you factoring in, a lower assumption on the expand going forward, or more conservative to both land and expand?

Thomas Edward Walker - Chief Financial Officer

Yeah. Okay. So, on the expansion business, I think what we're seeing there is the ability for our customers to expand in smaller increments has always been available. That's the unique nature of the Tableau land and expand model. So, when I mentioned that expansion, the customers are expanding, it's just in Q4, we saw incrementally, it's smaller buckets. And so that is just something that in the past Q4, let's say, 2014, we're expanding larger increments. And so it's just one of these trends.

The beauty of our model is they're continuing to expand their usage and grow the Tableau footprint there. So we expect them to continue to grow (34:45) question Christian had about saturation. We don't think that we're at that point, anywhere near that point with our customers.

With respect to the guidance, though, I think you hit it right on the head as we take into consideration all the factors that we have. And looking at Q4, looking at how the cohorts – the existing cohorts performed, we're going to basically make sure that we are cautious to take that prudent approach coming into 2016. We're focused as ever on the product and are focused as ever as the global opportunity. We'll just keep doing it and chip away. It's all about execution.

Joni Davis - Director-Investor Relations

Great. Thanks so much, Brent. Operator, can we have our next question, please?

Operator

Your next question comes from the line of Brad Sills of Bank of America Merrill Lynch. Your line is open.

Bradley Sills - Bank of America Merrill Lynch

Hey, guys. Thanks for taking my question. You mentioned some decline in sales productivity, and it sounds like win rates are holding. Anything operationally that you think you need to address or in a large as you're going after larger size – deal sizes within the larger account base, do you feel that the decline in productivity could be fixed somehow by hiring more talent, more enterprise-class sales personnel?

Thomas Edward Walker - Chief Financial Officer

Hey, Brad. This is Tom. Christian, you can come in after – if I don't cover it. Overall, no, I think the sales productivity, a big factor does have to do with the growth. Q3 was just a tremendous growth period for us. But we are constantly kind of tweaking the model, the training and things that we do with the sales organization. We've got the right sales management in place, and we feel really, really confident in our ability to continue to execute. So, 2016, you do planning, you look at territories, you do all the things you do, but overall, I wouldn't think that a lot of things have to change. We just have to make sure that we're empowering our people to be very, very successful. That's what the focus is.

Bradley Sills - Bank of America Merrill Lynch

Great. Thanks. And then one for you, Christian. After having spent time over in Europe, any learnings in terms of difference in adoption cycles in some of the different regions in Europe versus the U.S.?

Christian Chabot - Chairman & Chief Executive Officer

Well, the headline is how little difference there is, interestingly enough. The business intelligence/business analytics industry as commonly sized is somewhere between $13 billion and $15 billion, and that's the penetrated part, and if you put a few multiples on that for the unpenetrated part and add the fact that the model for doing business analytics is changing really dramatically towards the Tableau way of doing things.

You are reminded when you go to another geography, England or Germany or France or any of the major markets, you are reminded how much customers have in common. They are running Windows and Linux. Their databases are Oracle, DB2, SQL Server, Hadoop and so on down the line. They're putting more of their data in the cloud and so on down the line. And among other things, they're tired of the old way of doing things with regard to slow moving data projects and are looking for a new way.

And so although I can call out some nice differences between the two geographies along the vector of partners and localization and SI involvement and that kind of thing, I don't want to elevate that above the headline of this industry is going through a revolution. The revolution is global. And I think Tableau is positioned to be a leader in all of the major geographies. In fact, I'll add, you may have noticed we just opened our EU data center for the first time. So we're really enthusiastic with the opportunity in Europe in particular.

Bradley Sills - Bank of America Merrill Lynch

Thanks, guys.

Joni Davis - Director-Investor Relations

Great. Thanks so much, Brad. Operator, can we have our next question, please?

Operator

Your next question comes from Brent Thill of UBS. Your line is open.

Brent Thill - UBS Securities LLC

Christian, given the material slowdown in North America, how do you reshape your sales force in Q1? Is there changes that you're making in terms of a reorg in Q1? I know that January 7, Kelly mentioned her decision to resign. Any time we're seeing sales transitions like this, there's historically been a pretty lag and hiccup, and how do you manage through that to ensure that does not happen?

Christian Chabot - Chairman & Chief Executive Officer

Yeah. We don't anticipate a change in sales methodology model organization. I mean the headline news in terms of change is Kelly Wright, after 11 years of exceptional service and dedication, has decided to retire at the end of this year, so that would be a notable change and very big shoe to fill there.

But in terms of the way we attack markets, we've got an SMB group, we've got a middle market group, we've got an enterprise group, we have great series of sales engineers who help with sales. We have SI partnerships and just go through all the major dimensions of how we go to market. We don't expect anything changes there. And in fact, the attrition at Tableau and in our sales force generally is very low and stable. And so, I expect we'll be able to go through this transition pretty smoothly.

Brent Thill - UBS Securities LLC

I just want to go back to Raimo's question of around the common characteristic that the U.S. customers mentioned to you. And I just want to hopefully be clear on this that they're saying to you that they've taken seeds, that they're digesting those seeds but there's not moving the expansion seeds that the cadence that perhaps many of our sort of like to have seen. But beyond that, there's really no other change that you're seeing that you anticipate that they'll just come back, but it's unclear exactly when they come back inside that North American market.

Thomas Edward Walker - Chief Financial Officer

Yes. Brent, this is Tom. That's absolutely right. Exactly. So we continue to see expansion license revenue which is additional licensees to our user seats inside of our customers across the board. It was just at a smaller pace than we have seen historically with those cohorts. But we don't have any reason to believe that they're not going to continue to expand. As I mentioned before, Tableau 10 is right around the corner. So, we've got a lot of good news, and we'll continue to innovate and bring our customers the best analytics solution on the market.

Brent Thill - UBS Securities LLC

And so, just to be clear, this was existing install base customers, you saw the weakness, not in new or was it in both, that new and existing?

Thomas Edward Walker - Chief Financial Officer

Yeah. I would focus probably more because the existing is the larger portion now. As you heard in our prepared remarks, 75% of our license – perpetual license revenue comes from the existing base. So that's absolutely our focus. The acquisition metrics are really, really solid as you saw, right? 3,600 new customer accounts. That initial average order size is up $10,000. So, all of that is working quite well. So, the flatness that I'm seeing is moving towards the – every year we update the annual cohorts and we look at the buying behavior and it just seemed softer in Q4 especially when you compare it to 2014's monstrous Q4.

Brent Thill - UBS Securities LLC

Great. Thank you.

Joni Davis - Director-Investor Relations

Thanks, Brent. Operator, can we have our next question, please?

Operator

Your next question is from Phil Winslow of Credit Suisse. Your line is open.

Philip Alan Winslow - Credit Suisse Securities (USA) LLC (Broker)

Hi. Thanks, guys, for taking my question. Actually, there's two of them. First, on the question of just new deals. If you're looking at the sort of the smaller and end of the spectrum here and sort of the other one-offs or the handful of customers putting in their credit card and downloading the product, do you see any changes there sort of the very low end, call it, volume business? Obviously, you guys saw a deceleration and just a growth in deals north of $100,000, but I wonder if you can just talk about just the dollar there because sometimes, there's obviously a difference in deal sizes. Any kind of color there would be great.

Thomas Edward Walker - Chief Financial Officer

Yeah. Hey, Phil, this is Tom. So, overall, the new deals as I just mentioned on the previous question was from an acquisition standpoint. The customer acquisition engine is going quite strong, 3,600 new customer accounts. So, I wouldn't see a disruption in the volume there. We continue to focus on it. We've got part of the sales team, as you know, focused on customer acquisition and we'll continue to do that and go after it because we're proud of all the 39,000 customer accounts we have.

We're looking forward to adding a lot more to the Tableau franchise. So, I wouldn't really comment anymore on that. And then, with respect to the large deals, right, that fluctuates, ebbs and flows on any quarterly basis. We always expect that Q4 to be the stronger, the larger aggregate number. So, hitting the over 400 was wonderful. But we did see softness in spend a lot of those in larger deals. And so without breaking out the specifics, right, we did put effective numbers and shows that we are expanding our footprint with our organization, one large organization, but it wasn't at the same clip that we have seen historically, and especially compared to Q4 2014.

Philip Alan Winslow - Credit Suisse Securities (USA) LLC (Broker)

Got it. Thanks, guys.

Joni Davis - Director-Investor Relations

All right. Thanks, Phil. Operator, can we have our next question, please?

Operator

Your next question comes from John DiFucci of Jefferies. Your line is open.

Unknown Speaker

Hey, guys. Thanks for the question. This is Joe (43:47) on for John. I have a quick two-part question. International is the largest it's ever been. How should we think about the breakdown between the investment of international North America going forward, specifically with the 1,000 new employees you expect to hire? And then also just on the FX side, my understanding is just Japan that affects the FX on the top line, but what – is that correct, one? And then, two is, what's the breakdown in the operating side of the expenses?

Thomas Edward Walker - Chief Financial Officer

Okay. Hey, Joe (44:19), this is Tom. So, overall, on the head count side, so the investments, if you break it down where sales and marketing is, clearly sales and marketing investments will be, from a percentage standpoint, will be larger internationally than they are domestically because the team is more mature and built out here. So I would comment that forward phasing international sales and marketing investments is absolutely where we're going. I'd also add on the international front would be around the support, so tech support ecosystem is something we do to support our global growing customer base. And then with respect to FX, you got it right. For the most part, we're dollar-denominated with the exception of Japan, again. And the overall FX impact there was minimal.

Unknown Speaker

Thanks, guys.

Joni Davis - Director-Investor Relations

Thank you. And operator, can we have our next question, please?

Operator

Your next question is from Karl Keirstead of Deutsche Bank. Your line is open.

Karl E. Keirstead - Deutsche Bank Securities, Inc.

Thanks. If I may, one for Christian, one for Tom. Christian, you and other executives have talked a lot about the huge potential for data to move to the public cloud infrastructure model, and I'm wondering, is it possible that this spending pause is at all related to enterprises maybe just stepping back and rethinking their data residency alternatives, or is too early for that?

And then for Tom, Tom, there are plenty of software companies that have moved beyond their hyper growth stage, growth slows to, say, 30% and there's a predilection to show more operating margin and leverage when they decelerate down to the high 20%s or 30% level. You're not doing that. Is that because you think this spending slowdown is temporary and growth can accelerate? Thanks for any thoughts on that.

Christian Chabot - Chairman & Chief Executive Officer

Yeah. Great question. More and more customers are considering the cloud for their data projects generally and for business analytics as part of that. And so that situation seems to grow every year in a really nice way as it is Tableau's positions with a hybrid model, which we think is the right one to have over the next 5 years to 10 years. And by that I mean customers can choose to deploy our technology on site in their own private data centers. They can choose to deploy it on AWS in public cloud infrastructure as you say, or they can choose our own hosted service, Tableau Online.

Furthermore, any of those three might be using Tableau products in conjunction with cloud-hosted data, okay, so it doesn't matter which category, okay, you're in. More and more data is going into both cloud applications and general purpose cloud databases.

And so, Tableau sales are sort of out. They're set pretty well to capture the movement toward the cloud, in that sense. And so, if I may answer your question, yeah, I think it would be too early to say that there's been some accentuated pause to reconsider strategy that would have affected Tableau per se, because we're already playing in all of the three places. But I will end it with a final point, though, but don't let that come across as more and more isn't going there, because it is. It's being taken more and more seriously. People are getting over their legacy concerns with cloud technology, and Tableau is very focused on investing in that area.

Karl E. Keirstead - Deutsche Bank Securities, Inc.

Okay. Thanks. And, Tom?

Thomas Edward Walker - Chief Financial Officer

Hi, Karl. This is Tom. So, yeah. With respect to operating margin, I think it's more about our investment strategy. I think it correlates 100% with the way we look at the opportunity and the market opportunity. We think it's enormous. We think product innovation is extremely important, and we want to continue to go after the market opportunity. We've seen a lot of competitors get attracted to the overall market space. And so it's very, very important for us to recognize how – we've been saying what a rich opportunity it is and how much beyond BI it is.

And so we want to continue to go and be the leader there, and we think the best way to do that is through investing. And so there will be a time when we don't think the opportunity is as rich, and I believe that that's when we return towards more operating leverage in the model. But right now, we actually are bullish on the overall opportunity and the long-term opportunity. We're focused on reaching $1 billion over the next few years in top line revenue, and we're going to continue to doing it.

Karl E. Keirstead - Deutsche Bank Securities, Inc.

Okay, great. Thank you both.

Joni Davis - Director-Investor Relations

Thanks, Karl. Operator, can we have our next question, please?

Operator

Your next question comes from Keith Weiss of Morgan Stanley. Your line is open.

Melissa A. Gorham - Morgan Stanley & Co. LLC

Great. Thank you. This is Melissa Gorham calling in for Keith Weiss. I just have a question on the guidance. For Q1, it looks like you're saying that it's going to be sub-seasonal. And at the midpoint, it's about 25% growth for Q1. And then for the full year, I think I believe you said it was 30% growth. So that does imply that it's going to accelerate throughout the year. Wondering if you can just help us reconcile that and what would cause that acceleration?

Thomas Edward Walker - Chief Financial Officer

Yeah. Hi, Melissa. This is Tom. So overall, when we put forth our guidance, obviously, Q1 is the one we have to better focus on right now, the most information that we have. And so we put it in there. And that's where we're comfortable with the range that I gave.

With respect to the year, we again, getting back to what Karl Keirstead just asked is, it's a large opportunity. We have expanded the sales and marketing team dramatically in 2015 and we expect productivity gains to kick in albeit at a measured approach in 2016. So, I think that's the reconciliation that I would give you there is, we're looking – we're being cautious as we enter the year and as we historically have done every 90 days, we will update you as new information comes. But overall, we're bullish on it and we'll continue going forward.

Melissa A. Gorham - Morgan Stanley & Co. LLC

Okay. Thanks. And then just a question on cash flow for next year. So we have your operating margin guidance and we have your CapEx. So first thing on that, can you just maybe describe what that $100 million in CapEx is going towards? And then, how should we think about free cash flow? It sort of implies that free cash flow could be negative next year, is that sort of the right assumption to make?

Thomas Edward Walker - Chief Financial Officer

Yeah. And so I think cash flow maybe the first half of the year would be negative. I think if you think of some of the announcements we made last year, mid-part of last year, about some office expansion, a lot of those expenses are coming due in 2016. So, a majority of those expenses that we're talking about and the $100 million that I mentioned is around facilities and office expansion. Not only here in U.S. but also internationally. And then there's other infrastructure plays.

For the overall year, positive free cash flow is what we're shooting for. As I said, I think some of those expenses are going to push negative cash flow in the first part of the year, but we'll come out of it. From the operating margin standpoint or I'm sorry cash flow from operations standpoint, I think it'd be consistent with – at the end of the year, it'd be consistent with what we've experienced in the last few years. And then you just net out the capital expenditures that we're talking about.

Melissa A. Gorham - Morgan Stanley & Co. LLC

Okay. All right. Thank you.

Joni Davis - Director-Investor Relations

All right. Thank you. Operator, can we have our next question, please?

Operator

Your next question comes from Steve Koenig of Wedbush Securities. Your line is open.

Steve R. Koenig - Wedbush Securities, Inc.

Thanks for taking my question. Just wondering if you all – as you've parsed the sales data from Q4, did you see differences by vertical or by the existing size of the Tableau footprint or by use case? Any granularity besides that it hit all expansions, and any particular areas that were stronger or weaker?

Thomas Edward Walker - Chief Financial Officer

Yeah. Hi, Steve, this is Tom. So I can – I'll dive in on that one. So overall from the vertical perspective, no. I wouldn't say we saw that. As you know, you know pretty well about our technology. It's pretty agnostic to vertical, right? Data is data. We choose all equally. And so that's not necessarily where we are seeing pockets.

The one thing that I did mention was that the overall from the existing bases, somebody else asked that question about the existing customer cohorts. That's where we did see some softness, particularly in North America. But overall, our customers continue to expand, and we expect them to continue to expand more going into the 2016.

Steve R. Koenig - Wedbush Securities, Inc.

Okay. And then for one follow-up, can you all give any color on anything new on the competitive environment, and how are the pricing dynamics in the low end?

Christian Chabot - Chairman & Chief Executive Officer

Over the years, the competitive dynamic has become more crowded and difficult. Tableau and a few other companies have pioneered this new way of visual analytics that I described it earlier and a lot of people have got noticed. And so there are more and more companies with offerings in the arena. And so it has gotten thicker and thicker over the years, so to speak, but not so much that one jumps out, as Tom mentioned earlier, for the opportunities we're engaged with and have data for when rates are actually stable and in some cases even higher. But we're very confident in the situation there.

And with regard to the low end offerings that have come on as part of that mix, they will certainly grab some of the market and have some level of success. As it turns out, the products don't really do very much and are focused on a very low end use case. And so, we don't anticipate that fundamentally inhibiting Tableau's success over the long run.

Steve R. Koenig - Wedbush Securities, Inc.

Got it. Thank you very much.

Joni Davis - Director-Investor Relations

Great. Thank you so much. Operator, can we have our next question, please?

Operator

Your next question is from Matt Hedberg of RBC Capital Markets. Your line is open.

Matthew George Hedberg - RBC Capital Markets LLC

Thanks, guys. Tom, I'm curious on your guide, it sounds like you're still assuming North America will stay soft mainly from the first part of 2016. Are you assuming any sort of slowdown in international growth or is this still largely a U.S. phenomenon you're seeing?

Thomas Edward Walker - Chief Financial Officer

Yeah. Hey, Matt. So overall, I would expect the numbers in aggregate to get larger. So we're forecasting growth. It's just the percentage that's what I think you're talking about because international, the growth rates have come down over the last few years. So I would expect the percentages to come down, but in aggregate, we are seeing a huge opportunity to continue to expand. So, I wouldn't change that and even in the U.S. and North America, we're expecting growth. We see it as a huge opportunity. We don't think we're saturated in the market, and we're excited about bringing the next step of Tableau 10 to our customers.

Matthew George Hedberg - RBC Capital Markets LLC

Maybe then just as sort of a follow-up to that. And so the softness in North America, which it doesn't sound like international. Correct me if I'm wrong, but it doesn't sound like you saw that softness internationally. Is that fair and are there any changes to sort of that assumption up or down for 2016?

Thomas Edward Walker - Chief Financial Officer

Yeah. I mean, overall, I would say there was caution in a lot of our customer spending. So, domestic or North America makes up 75% of the overall revenue mix. That's not to say that there's no uncertainty, and even though we're dollar-denominated, internationally, there is definitely currency things that caused people to pause or uncertainty. But overall, I wouldn't think that that was the larger impact. North America is where we just saw that caution, and I think we don't – I think we're well positioned to get through that because of the nature, as I mentioned on one of the earlier calls or earlier questions, was about the expansion part.

So even when people are expanding, you think about customers that might have been eyeing a larger deployment in Q4, right? But if the fallback position is they continue to expand, they just expand in a small footprint. Long term, that's really good for Tableau. That's not really (56:20) that's what we're focused on.

Matthew George Hedberg - RBC Capital Markets LLC

Got it. Thanks, Tom.

Joni Davis - Director-Investor Relations

Thank you so much. Operator, can we have our next question, please?

Operator

Your next question comes from the line of Tom Roderick of Stifel. Your line is open.

Tom Roderick - Stifel, Nicolaus & Co., Inc.

Hey, guys. Good afternoon. Thanks for taking my question. I'm curious for your thoughts on how you make a determination in-house, whether you think the softness out there in the end market is more a reflection of the macro. Are you seeing it in any particular verticals that might encourage you to think about how you staff the business and where you staff the business?

And what are the metrics that you look at that would tell you, hey, this is maybe a broader macroeconomic issue, not so much a competitive dynamic win rates, close rate type of issue. I'd love to hear what metrics you're tracking and how those inform the way that you staff the business particularly the sales force going into 2016.

Thomas Edward Walker - Chief Financial Officer

Yeah. So, hi, Tom. This is Tom. So, overall, I mean, I think there's not a company in the world that could say that they're immune to the macro. I think it's very hard to point to that and say anything about it. What we saw – we can talk about our customer base is, we saw softness in the spending there, right? But again, I think Christian commented based on our internal data, the competitive win rates are unchanged, right? We see ourselves getting good traction and good expansion albeit not at the same level that we have historically. So, we're feeling really, really confident that we can continue to expand the Tableau footprint.

And the other thing I'd fall back to is in tight spending times, there's also need to make very good decisions and very fast decisions. So that is one of the value props of Tableau is, being able to not just get a quick dashboard up but putting insight into data fast so companies can make decisions and so I think it's a very, very important way that companies, if there is a soft spending environment, are bringing value to the organizations.

Tom Roderick - Stifel, Nicolaus & Co., Inc.

And, Christian, maybe a quick follow-up for you just on that topic as you think flexibly about perhaps how to shorten some sales cycles, a lot of discussion in the marketplace around pricing particularly with some lower cost competitors like Power BI out there in the marketplace. How do you think about the dynamic of pricing, your willingness to discount the enterprise, your willingness to be more flexible up and down the entire customer stack just strictly on the notion of prices as sales cycles may be stretched out here a little bit?

Christian Chabot - Chairman & Chief Executive Officer

Yeah. As we get into larger deals, we discount. And we have taken those discount rates up a bit over the years as we've been involved in large negotiations. Generally speaking, there had been a wave of very inexpensive or sometimes free products that have entered the market. It's actually not new; it goes back six years or seven years, they kind of come in one wave after the other. And inevitably, we'll get some portion of the market and have some level of success. As you double-click on them, however, what you quickly realize is if those customers were not charging bargain – if those companies were not charging bargain basement prices for their offerings, they wouldn't be selling any of them. And the reason is the product just don't do very much.

They contain virtually no visual analytics advancement. They're weak even on the analytics basics. They have very little depth, you very quickly hit walls. Tom was talking about sort of simple dashboards as opposed to analytics system. They are often tied to one particular platform or claim to support other databases, but aren't performance-optimized for them. Some of them only run in the cloud. Some of them only run in one platform-specific version of the cloud and so on down the line (60:18) I can kind of keep going here (60:20). I don't want to keep going too long.

But as customers double-click on what is actually available to them for a very, very low price, they will increasingly discover that those products are unable to meet most of their needs. And so as a result, Tableau is sticking with the affordable model we have today. People can get sort of with Tableau for a very small investment as they scale it up. They can do it on a very low cost per user basis, and I think we'll have the best solution on the market and one price right for customers for many years to come.

Tom Roderick - Stifel, Nicolaus & Co., Inc.

Great. That's helpful. Thank you, guys.

Joni Davis - Director-Investor Relations

Thank you. I think we have time for one more question. Operator, can we have our last question, please?

Operator

Thank you. Your final question is from Bhavan Suri of William Blair. Your line is open.

Bhavan S. Suri - William Blair & Co. LLC

Hey, guys. Thanks for taking my question. Just two quick ones. Given that the expansion happening customers that obviously probably have a larger number of potential users assume the smaller customers are somewhat saturated and everything else, and the larger guys have some legacy products and the legacy guys are innovating slower, and it's not a great product and it's not self-service, anything else, but it's not a competitive win or displacement because those guys already have the existing product, is there any sense if that might have been one of the reasons why the expansions are slower?

And I guess the second question would be, obviously, as you get into these larger accounts, verticalizing the product, because Tableau today has been, as you said, very horizontal, but verticalizing the product and providing specific things or, say, market after analysis for grocers or turnaround for telco, things like that, does that make sense in an effort to start capturing more mind share within these large accounts?

Christian Chabot - Chairman & Chief Executive Officer

Yeah. The first part of the question, I think the large number of competitive alternatives that are available for customers to check out versus a few years ago probably had some role in expansion ratios. It's very hard to measure that from our perch. One thing that gives us comfort that it's probably not overwhelmed by that are the closed one, closed loss ratios that Tom mentioned before. We're actually performing very well there again for opportunities we're engaged with.

So, I guess we'll – I'll leave you with the hypothesis that the number of things customers are checking out has increased probably play some role, but it doesn't feel to us that it's the overwhelming factor. With regards to verticalization to better penetrate a customer, yeah, we're increasingly interested in that. We don't have immediate plans. And as a matter of strategy, largely we've been leaving that to our partner network. You can probably see what's happened to our partner network in terms of revenue contribution and customer contribution over the last, say, four years or five years. A lot of that is in the area of verticalization. Actually, just a few weeks ago, I was at the Tableau Partner Summit and met with a customer who builds amazing Tableau visualizations and dashboards and KPIs for people in the commercial construction industry really specific stuff that we'll never be experts in as ourselves. And at the moment, we're more fond of the partner ecosystem angle on that. But we'll certainly evaluate it every year.

Joni Davis - Director-Investor Relations

Great. Thanks, Bhavan. And thank you to everyone who joined us today and have a good evening.

Operator

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

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