Qlik Sense’s Success and Domestic Market Drove Qlik’s Revenue Expansion in Q4

Business intelligence software vendor Qlik (NYSE:QLIK) reported its fiscal 2015 fourth quarter earnings on February 11th. ^[1] The company’s 12% year on year revenue growth rate was primarily driven by strong adoption of Qlik Sense, which now comprises a quarter of Qlik’s total license revenues. ^[2] Currency headwinds and continued softness in the Asia-Pacific market negatively impacted the top-line growth. Indeed, on a constant currency basis, revenues for the quarter grew 22%.  These trends, including good growth in Qlik Sense, currency headwinds and weakness in the Asia-Pacific market, are expected to continue in fiscal 2016. Consequently, revenue growth is likely to slow down slightly in the near to medium term.

Qlik fiscal 2015 full year earnings snapshot:

• Revenue grew by 10% year on year to $612.7 million. In constant currency terms the growth was 23%.
• Non-GAAP operating margin expanded by 20 basis points year on year to 6.1%
• Non-GAAP diluted EPS was negative $0.40, compared to negative $0.27 in fiscal 2014

We are currently in the process of updating our price estimate for Qlik to reflect the latest results.

See our complete analysis for Qlik here

Steady Revenue Expansion Led by Domestic Growth

In the fourth quarter, Qlik’s revenue grew by 12% year on year in as-reported terms, higher than the full year revenue growth rate of 10%. This suggests that its revenue is not at the verge of slowing down, unlike in the case of its competitor, Tableau (NYSE:DATA). Further, the company has guided fiscal 2016 revenue to expand by 13% to 15%, which indicates that revenue growth may pick up slightly next year despite increasing competition.

Notably, Qlik achieved the double-digit revenue growth despite a contraction of 5% year on year in Rest of the World (markets other than the Americas and Europe) revenues. The slump in revenues from these markets is primarily due to elongated sales cycles, fueled by uncertainty in spending. For instance, Qlik stated that it was unable to close deals in the fourth quarter that are essentially won, which resulted in a loss of revenues in the fourth quarter. This trend is expected to continue in the near term as corporate spending  is likely to remain weak in several international markets. ^[2]

On the other hand, domestic growth remained strong as Qlik achieved 18% year on year growth in the Americas in fiscal 2015. This was driven by an aggressive marketing program as the company’s sales and marketing expenditure jumped by 12% year on year in fiscal 2015. The increase in marketing spend was especially notable in the fourth quarter, with a 20% year on year increase in dollar terms. The trend is expected to continue in 2016 as Qlik is likely to keep up its marketing drive to bolster Qlik Sense sales.

Qlik is also stepping up its product release cadence, which has historically lagged behind that of rival business intelligence software vendor, Tableau. Qlik’s flagship product, Qlik Sense now accounts for a quarter of its revenues and is expected to take over as the company’s leading revenue maker by the end of 2016. Qlik Sense 2.2 and Qlik Enterprise 3.0 are scheduled to be launched fiscal 2016. In addition, the company has decided on an annual release schedule for updated versions of the new QlikView, which was released in December 2015. ^[2] These new products are likely to help the company ward off rising competition from new, smaller players as well as entrenched rivals such as Tableau and Microsoft (NYSE:MSFT).

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1. Qlik Investor Relations [↩]
2. Qlik Fiscal 2015 Fourth Quarter Earnings Call Transcript, Seeking Alpha, February 11, 2016 [↩] [↩] [↩]