Tableau's (DATA) rocky 2016 has resulted in a managerial change, as the company announced on Monday that founder and CEO Christian Chabot will relinquish control over day-to-day operations to former Amazon Web Services Vice President of Sales Adam Selipsky, though Chabot will maintain his role as Chairman of Tableau’s Board of Directors. Further, cofounder Chris Stolte will transition to a technical advisory role (he previously served as Chief Development Officer), while his prior responsibilities will be given to Andrew Beers, a key cog in product development. While the stock has reacted positively to this news, a change at the top does not address Tableau’s most daunting challenge: a product that faces competition from much larger firms that can offer a broader set of software and services, effectively eliminating Tableau’s ability to generate much pricing power in the long run. We are maintaining our no-moat and $54 fair value estimate, and we believe shares look fairly valued.

While Tableau faces competitive headwinds from both peers such as Qlik and entrenched business intelligence vendors IBM, Microsoft, Oracle, SAP, and others, we are also concerned the firm is essentially simultaneously undergoing a business model transition, as more and more customers are opting for cloud-based delivery of Tableau’s software, which will increasingly drag on revenue and margins in the near term. Though we believe the economics of these deals are still beneficial in general, we fear that Tableau’s cloud products remain underdeveloped relative to its on-premises versions, a gap that Selipsky will likely make a top priority in the coming months. However, we have a hard time placing too much faith in Tableau’s ability to manage so many challenges at once, particularly as top-line growth continues to crater in the face of competitive, less expensive offerings such as Microsoft’s Power BI that can be packaged with other products.

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