Tableau Software Inc. DATA is slated to release fourth-quarter 2017 results on Feb 1. The company has beaten the Zacks Consensus Estimate in three of the trailing four quarters, resulting in an average positive surprise of 111.15%.

Last quarter, the company delivered a negative earnings surprise of 11.11%.  Revenues increased 4.4% year over year to $215 million but missed the Zacks Consensus Estimate of $220 million.

For fourth-quarter 2017, the company expects revenues to be in the range of $235–$245 million. The company projects non-GAAP operating loss of $4 million to non-GAAP operating income of $3 million for the fourth quarter. The company anticipates the bottom line to be in the range of a loss of 1 cent to earnings of 5 cents per share on a non-GAAP basis.

We note that the company’s shares have increased 61% in the past year, outperforming the industry’s gain of 34.2%.

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

Tableau Software benefits from increasing demand for business analytics tools, as reflected in the addition of 4,100 customer accounts in the last reported quarter.

Tableau’s transition to a subscription-based model is also paying off. The company’s commercial and international businesses are witnessing an uptake in subscription. In the September quarter, subscription annual recurring revenues increased a whopping 204% year over year to $139.2 million.

Tableau has undertaken a number of initiatives to boost sales productivity and align marketing efforts to drive growth. The company’s recent partnership with the likes of GE Aviation shows growing adoption of Tableau’s advanced analytics offerings.

Demand for Tableau’s products was further evident from the Tableau Conference held in October 2017, which recorded enormous success with 14,000 registered customers and partners worldwide and more than 28,000 viewers online.

However, the model transition will remain an overhang on the company’s billings and license bookings. For the fourth quarter, the Zacks Consensus Estimate for license revenues is $119 million, down 21.7% from the figure reported in the year-ago quarter.

Saturation in the company’s domestic market (United States and Canada), which accounts for the majority of its revenues is also a concern.  In the last reported quarter, it increased only 2% year over year.

Also, intensifying competition from Microsoft’s MSFT Power BI and other new as well as established players is a major concern for the company.

Tableau Software, Inc. Price and EPS Surprise

Tableau Software, Inc. Price and EPS Surprise | Tableau Software, Inc. Quote

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or #5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Tableau has a Zacks Rank #3 and its Earnings ESP is -28.89%. Therefore, our proven model does not conclusively show that the company is likely to deliver a positive surprise this quarter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Some Stocks With a Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Facebook Inc. FB has an Earnings ESP of +0.68% and a Zacks Rank #2.

Apple Inc. AAPL has an Earnings ESP of +1.56% and a Zacks Rank #3.

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