Tibco Software Inc.'s Second-Quarter Warning All But Confirms Limited Solutions for Tableau

Tibco Software CEO Vivek Ranadive might be in denial regarding the impact that Tableau Software  is having on his business. Tibco, along with Qlik Technologies , are struggling in contrast to the rise of Tableau, but does this mean there are no solutions that can spark growth and regain lost market share?

The bad news gets worse
Tibco is a market leader in the sale and utilization of big data. Its most popular platform, Spotfire, allows customers to process large amounts of data in real time, and the platform mostly serves enterprise clients. In recent years, Tibco flourished behind the success of Spotfire, but 2014 has been a different story.

In the first quarter of this year, Tibco's revenue grew 6.4% year over year, which stemmed from sales of both service and maintenance and licensing, with the latter accounting for roughly one-third of total revenue. However, licensing sales of Spotfire -- roughly 40% of the segment's revenue -- came into question during the first quarter, declining 7%. Looking at peer Qlik Technologies, it, too, has struggled mightily to gain traction in long-term licensing sales, which increased only 2% in its last quarter versus 15% total growth.

With that said, Tibco issued a second-quarter warning after the market closed on Tuesday, now expecting revenue of $251 million, which is far below the $267.5 million consensus. While the company did not host a conference call, its short press release did say that the disappointing results were mostly due to lower-than-expected sales of Spotfire. Thus, one can only assume that its licensing segment is once more under pressure, perhaps even to a greater degree.

What's wrong with Tibco?
Given Tibco's 20% stock losses so far this year, and its fundamental performance, investors should find this Motley Fool exclusive interview with Tibco CEO Vivek Ranadive very interesting, which took place only two weeks ago. In the interview, Ranadive openly discussed the rise of competitor Tableau, calling its software "a toy," and his belief that Spotfire is far superior.

Ranadive separated Tibco from others in the space such as Qlik Technologies, and especially Tableau, by defining the difference between fast and slow data. He said, "What makes TIBCO unique is that we're the only company that can utilize fast data, which helps our customers make an offer to their consumers before they leave the store, rather than six months afterward."

Furthermore, Ranadive insisted that Tibco can tighten the reins on Tableau's growth at any time by making its software more accessible. Ranadive believes that Tableau's growth is only possible due to its explosive spending. Yet, Tibco and Qlik continue to barely grow their licensing, while Tableau has posted year-over-year growth of 93% and 83% in its last two quarters, respectively. Plus, Tibco and Qlik are spending quite aggressively.


First-Quarter Revenue

First-Quarter Operating Expenses

Cost Per Dollar of Revenue


$252.9 million

$227.7 million



$111.1 million

$134.6 million



$74.5 million

$76.4 million


As you can see, Tableau is spending more on operations than Tibco to create each dollar of revenue, but not by an obscene margin that would justify the disconnect in growth. Instead, the rather large gap in growth between Tableau and everyone else, coupled with continuous disappointments serve as proof that Tibco and also Qlik have a real problem, perhaps long-lasting, and that's Tableau.

Final thoughts
In the second-quarter update, Ranadive said "several changes are under way." In retrospect, he was likely referring to a version of Softfire that can be purchased via credit card, one that may not be fast-data. Conveniently, Ranadive also mentioned simpler purchasing solutions during our interview, further implying this to be the company's plan to combat Tableau.

However, based on what we've seen, including poor first-quarter reports from Tibco and Qlik, a disappointing outlook for Tibco's second quarter, and Tableau's incredible growth, coupled with acceptable spending practices, investors are skeptical that pricing will cure Tibco's problems. Moreover, Tibco's second-quarter fundamentals imply that Tableau is a bigger problem for it, and Qlik, than Ranadive wants to admit.

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The article Tibco Software Inc.'s Second-Quarter Warning All But Confirms Limited Solutions for Tableau originally appeared on Fool.com.

Brian Nichols has no position in any stocks mentioned. The Motley Fool recommends Qlik Technologies and Tibco Software. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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