Loss-making data-viz biz to investors: You know what our problem is? We did too well Data visualisation business Tableau has told investors its losses have more than doubled because it did too well in Q2. The Seattle-based company, which made its initial public offering on the New York Stock Exchange in 2013, reported a 260 per cent increase in operating losses, from $17.9m to $46.9m, while total revenue grew …
Not necessarily, and not in start-up land. Many companies run loss-leading sales campaigns where the costs of initial acquisition are higher than annual revenue. The business model hopes that in time both scale and renewals will more than offset the initial costs.
Tableau has certainly managed to position itself as the premier visualisation toy. Only time will tell if the product provides real benefits to customers.
To add to Charles' comments, if they are selling a subscription, rather than a licence, then losses might be expected. The cost of the sale is the same, but you don't get the whole sale value up front to offset against this cost. Instead, you get a drip feed of money over time, but in accounting terms, you can't include future revenue, so you get a loss.
Sounds like they've been booking large multi-year enterprise deals, and paying commission on booking rather than when the revenue comes in. Add in the costs of starting up that kind of complex account and the overall costs of the business are horribly front-loaded, with profits coming in later years.
Of course that same explanation can also be used in a self-serving way to disguise declining margins, so you end up having to make a judgement on the integrity of any company that deploys it.
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