In the past, one of the only ways to gather large-scale data was to undertake a census. A census is a large-scale survey of a population that seeks to achieve a 100% response rate. The goal is to collect data on the population.
This data can then be used to help make better decisions and achieve better outcomes for that population. For example, if a census showed that a particular area had a higher number of young children and families than expected, a new school could be planned for that area.
But conducting a census is a hugely expensive process in terms of time and money. For the data collected to be useful, it has to be accurate, representative and analyzed correctly. As a result, large scale surveys like this were once limited to governments, but that is not the case any more.
The internet has had many unintended consequences, and the rise of big data has been one of them. This trend has been the reason for the outperformance of companies like Tableau Software Inc (DATA) in recent times. Now the question for options trading advisory services to consider is, can the share price gains continue upward from their most recent high of $100.
Understanding the Business
If you have read any business or financial journals in the past 18 months, then chances are you have heard the phrase “big data”. Big data was one of the most popular developments in finance and analytics in the last decade, with managers, colleges and organizations all scrambling to understand it and harness it.
In basic terms, big data refers to the vast quantities of data that is produced every second of every day by our modern lives. Our credit cards, spending habits, transport choices and website browsing all create data points. When collected and collated with thousands of other data points from other people, this data can reveal important insights.
For example, a supermarket chain recently discovered that when fathers went to buy baby products for their young children, they were also likely to buy beer. By using this data, the supermarket altered the layout of their displays to place the beer on the way to the baby products, which resulted in an increase in beer sales!
Tableau Software (DATA) provides clients with the tools to find out information like this about their own customers. Tableau Desktop is a self-service tool that allows employees of clients to access data specific to their business. More importantly, it allows them to measure, quantify and act on that data to make important business decisions. Tableau Server and Tableau Public are cloud-hosted services that allow ease of access and help users to visualize their data sets by creating tables and informational graphics that they can use for their own purposes including websites, and promotional materials.
Metrics and Measures
This wide range of products and applications led Tableau Software (DATA) to report record results recently. Their quarterly earnings were highlighted by revenue of $142.9 million, which was up 75% on the previous corresponding quarter.
International revenue was an even stronger earner, with an 86% earnings jump when compared to the same period in the previous year. One of the most pleasing aspects of the quarter was the migration up the value chain of existing clients of the company. The amount of transactions that were worth more than $100,000 grew to 304, from below 200 the previous quarter.
With over 9,100 new customer accounts for the year, this increased value per transaction showed that both new and existing customers were being converted to higher value products and services that had been developed by Tableau.
The Investment Case
The investment case for Tableau Software (DATA) is highly promising. Some academics and researchers predict that the rise of big data has only just begun, and that as we move more of our lives online, the amount of data we create will multiply exponentially. This will drive more businesses and governments to seek out ways to harness this data for their own benefit.
The other major factor in favor of Tableau Software is broad appeal of their products. Their clients include governments, telecommunications providers, energy generators, financial services firms, healthcare providers, educational institutions and the manufacturing industry. This means that they can capture clients in a broad range of industries, rather than having to fixate on one segment.
This diversity of clients means that earnings are also protected from external shocks. For example, companies that serve the oil and gas industry were badly affected by the recent oil price crash, as they only had one industry sector as clients. However, a company like Tableau has a broader client base, so will not be as exposed to sudden downturns in any one sector.
Tableau Software’s clients are also largely repeat customers. This is because once clients get comfortable with a service like this one, they are unlikely to want to go through the time and hassle of finding a new provider and learning how to use the new software unless there is a compelling reason to do so.
For options trading advisory services like Financial Markets Wizard, Tableau Software (DATA) is a stock that has a lot of positives in its favor. It is part of an area that is currently underserviced and growing, meaning demand for their services is high. In addition, they have a broad range of products, meaning their earnings base and their client list is also diverse. Finally, they are profitable and have grown both their revenue and their client list over the past year. To benefit from the share price movements of a stock like Tableau, a high quality options advisory newsletter like the one provided by Financial Markets Wizard can help you achieve market beating returns.