Qlik Q2 Earnings: Company Experiences Solid All-Round Growth, Currency Headwinds Play Minor Spoilsport

Qlik Technologies (NASDAQ:QLIK) put out a strong set of numbers in its quarterly earnings report which was released recently. ^[1] The company’s subscriber base and revenues both registered an uptick during the quarter. However, unfavorable currency movements also had a detrimental effect on the company’s revenues for the quarter. As Qlik earns more than 60% of its revenue from outside of the Americas, we expect currency fluctuations to play a minor spoilsport in the near term. The company’s customer base has grown immensely with the increase in demand for data discovery based Business Intelligence (BI) software, and we believe that the company is well on track to acquire 57,000 customers by 2021. Qlik’s “Land and Expand” strategy has been very successful thus far, and will continue to help the company grow its revenues in the years to come. Consequently, we believe that Qlik’s revenues will increase from 557 million in 2014 to $1.23 billion by the end of our forecast period.

See our complete analysis for Qlik

Robust Growth In Revenues And Customer Base, Currency Fluctuations Play Minor Spoilsport

Qlik’s total revenues amounted to $145.8 million for Q2 2015, an increase of 11% over the prior year period. ^[1] However, revenue growth was hampered by unfavorable currency movements. Ignoring the effect of currency headwinds, the company’s overall revenues actually registered a 26% uptick for the quarter. Similarly, Qlik’s license revenues grew 14% in actual terms but 29% in constant currency terms. The effect of currency fluctuations has been amplified as Qlik earns nearly 63% of its revenue from outside of the Americas. Qlik expects the strong dollar to continue to take its toll on the company’s revenues in the coming quarters. The company expects overall revenue for the year 2015 to be in the $610-620 million range, which would represent a 10% to 11% increase over last year’s revenues and a 21% to 23% increase on a constant currency basis. ^[2]

The company experienced robust growth in its customer base and added around 1,000 new customers for the quarter. ^[3] Qlik’s subscriber tally currently stands at 36,000 and we believe that the company will continue to add new customers in the coming years. The business analytics software industry is in the midst of a secular trend of growth and Qlik has been one of the beneficiaries. Qlik has featured as a leader in Gartner’s Magic Quadrant for Business Intelligence and Analytics Platforms for the last three years and its business discovery platform has been a pioneer in the data discovery segment. ^[4] Consequently, we believe that Qlik’s subscriber base will be north of 57,000 by the end of our forecast period.

Looking Ahead To Potential Growth Areas For Qlik

Emphasis on ease of use and visualization in business intelligence software has fueled growth for Qlik. However, that does not mean that enterprise requirements can be ignored. According to Gartner, the Business Intelligence and Analytics industry is expected to grow at a compounded annual growth rate of 8.7% through 2018. ^[4] Gartner introduced the concept of governed data discovery that refers to platforms that can address enterprise-level IT requirements as well as assist business users (non-IT) in data discovery. No vendor has addressed both these aspects so far, but there is an indication that this convergence will happen. Governed data discovery strives to find the right balance between allowing creativity so that end users can experiment with the data and maintaining just enough centralized control so that enterprise tasks can run smoothly.

In keeping with the concept of data discovery, Qlik is introducing more enterprise related features related to reusing data, data governance and control, and scalability with its new product Qlik Sense Enterprise 2.0. ^[5] Qlik Sense Enterprise 2.0 will inculcate a modern, platform-based approach and will span multiple use cases throughout the client’s organization, including self-service data visualization, reporting and dashboards, guided analytics, embedded analytics etc. Based on the patented QIX Associative Indexing Engine, the software will have the most advanced enterprise-grade capabilities Qlik has ever offered. (Related – Qlik’s Strategy Of Improving Enterprise-Grade Capabilities Is Starting To Pay Off) Qlik’s in-memory computing (IMC) technology is complementary to data discovery. It reduces the number of data transactions required while analyzing data by storing the entire database in random access memory (RAM) which is nearer to the processor. The IMC engine calculates aggregations rapidly and maintains associations in the data, which makes analysis faster and more real-time. Qlik also has a cloud based platform which reduces the complexities of infrastructure and storage space requirement. Including new features that enable the product to handle a vast range of functions will allow Qlik to increase its pricing. Qlik closed 129 contracts exceeding $100,000 in fees during Q2 2015, compared to 109 contracts in the previous year period. ^[3] Consequently, we forecast that Qlik’s average revenue per customer will increase from current levels of $9,250 and will eventually grow to just shy of $10,000 by 2021.

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1. Qlik Announces Strong Second Quarter 2015 Financial Results, July 23, 2015, Qlik Press Release [↩] [↩]
2. Qlik Technologies’ (QLIK) CEO Lars Bjork on Q2 2015 Results – Earnings Call Transcript, July 23, 2015, Seeking Alpha [↩]
3. Qlik’s SEC Filings [↩] [↩]
4. Magic Quadrant for Business Intelligence and Analytics Platforms, 23 February 2015, Gartner [↩] [↩]
5. Qlik Introduces Qlik Sense Enterprise 2.0, April 27, 2015, Qlik Press Release [↩]