Tableau's Plunge Is a Cautionary Tale for Growth-Chasing Tech Investors

Less than 18 months ago, Tableau Software (DATA)  was seen as a company that could do no wrong, a fast-growing juggernaut that was at the forefront of a software wave that promised to make advanced analytics tools far more accessible and widely used in the corporate world.

Today, Tableau's story doesn't look so unblemished, and the way that it has changed should serve as a cautionary tale for investing in richly-valued, enterprise tech names in hot markets that larger peers have begun to take notice of.

Tableau, a provider of business intelligence (BI) tools that allow workers to quickly analyze and visualize data, tumbled roughly 12% Wednesday after posting mixed third-quarter results and issuing soft fourth-quarter guidance. While Q3 EPS of $0.16 beat a consensus analyst estimate of $0.07 (controlled spending helped), revenue of $206.1 million (up 21% annually) missed a $213.8 million consensus. 

On its earnings call, the company guided for Q4 revenue of $225 million to $235 million and EPS of $0.09 to $0.16, below consensus estimates of $250.1 million and $0.20. It also set preliminary 2017 revenue growth guidance of just 0% to 10%, below a consensus for 22.4% growth. Tableau cautions the guidance assumes its mix of "ratable" license bookings, for which license revenue isn't fully recognized up-front, will double in 2017.

Shares are now down 66% from a July 2015 peak of $131.34.

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