What happened

Shares of Tableau Software (NYSE:DATA) climbed 16.8% in November, according to data from S&P Global Market Intelligence, after the business-intelligence platform company announced solid third-quarter 2018 results and strong forward guidance. 

Essentially, all of Tableau's rise last month came on Nov. 7, 2018 -- the first trading day after the company told investors its quarterly revenue arrived at $290.6 million, which translated to adjusted net income of $41.3 million, or $0.47 per share. Still, investors should note those figures were reported under new ASC 606 accounting standards adopted at the start of this year, which changed the way the company recognizes revenue.

Under the old ASC 605 standard, Tableau's revenue would have climbed 11% year over year, to $239.6 million -- within the company's previously provided guidance range of $236 million to $246 million -- which translated to an adjusted net loss per share of $0.07, well above Tableau's outlook for a loss of $0.09 to $0.15 per share.

Tableau software running on an Apple monitor with a hand pointing to the screen.


So what

Perhaps most encouraging, Tableau saw annual recurring revenue (on an ASC 606 basis) soar 45% year over year this quarter, to $762.6 million. Within that, subscription annual recurring revenue skyrocketed 160%, to $362.4 million.

"It was extraordinary seeing our Tableau Community come together in New Orleans this year for our largest customer conference ever," stated Talbeau CEO Adam Selipsky. "Customers responded enthusiastically to our new product announcements, including natural language to bring analytics to even more people, and broadening the Tableau platform with enterprise-ready data preparation capabilities."

The company hosted more than 17,000 customers and partners at its 11th annual customer conference in New Orleans this quarter. Tableau also expanded its reach through new partnerships with AWS, Informatica, and Unifi this quarter, as well as plans to expand its global partner program with new certifications, training, and support.

Now what

During the subsequent conference call, management told investors to expect fourth-quarter ASC 605 revenue of between $266 million and $276 million, good for year-over-year growth of 9% at the midpoint and roughly in line with consensus estimates. Finally, for the full fiscal-year 2019, Tableau is targeting revenue of between $1.33 billion and $1.40 billion, again in line with Wall Street's models.

In the end, the market was more than willing to reward Tableau last month for the combination of its bottom-line outperformance this quarter with solid growth in both its top line and recurring revenue streams.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.