Qlik’s Revenue Likely Expanded in Q3, But Repeat of Q2’s Blockbuster Performance Doubtful
Data visualization and analytics software vendor Qlik (NASDAQ:QLIK) is scheduled to report its third quarter results on October 22nd. [1] After robust revenue expansion in the second quarter, Qlik’s revenue growth is expected to taper in the second half of the year. This is in part because of the tough prior period comparator in the third quarter, and partly because of the seasonal slowdown in the second half of the year. Nevertheless, the company released major upgrades to its product portfolio earlier this year, including the Sense 2.0 and DataMarket, which may add to revenue growth in the third quarter. Non-GAAP operating profit is expected to be down sequentially due to the increase in headcount and step up in investments sales and marketing. However, the increase in investments may be partially funded through Qlik’s operational efficiency program ‘Fit for Growth’. [2] Currency headwinds are expected to continue to exert a significant drag on revenues as well as margins in the third quarter due to the sustained strength of the US dollar vis-à-vis most major currencies.
Our price estimate of $40 for Qlik is about 15% higher than its current market price.
See our complete analysis for Qlik here
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Expansion of Customer Base Likely to Continue
Qlik has expanded its customer base with impressive consistency over the last few years. Its number of customers has increased from a mere 19,500 in 2009 to 36,000 at last count. The company has not taken its foot off the innovation pedal and has been regularly introducing new products and upgrades. In fiscal 2015 alone, it introduced the Qlik Sense 2.0, DataMarket, and the beta release of Qlik Sense Cloud. The QlikView 12 Beta was released in August, while the Qlik Sense 2.1 was made available in September this year. [2]
The constant stream of additions to Qlik’s product portfolio is an effective means of expanding its customer base through its ‘Land and Grab’ strategy. The company is rapidly racking up million-dollar deals and even closed a multi-million dollar agreement in the second quarter. We expect this trend to continue going forward, albeit at a slower pace in the second half of the year. Over the long term, we estimate that Qlik’s number of customers could cross 60,000 by 2022.
New Focus on Margin Expansion
Qlik is currently a long way off from achieving its long term goal of 20% non-GAAP operating margin. However, its non-GAAP operating margin reached positive territory during the current fiscal year and the company has guided a full-year non-GAAP operating margin of 7% to 7.5%. It is undoubtedly a tall order, given that the non-GAAP operating margin was just 1% in the first half of the year. Qlik is counting upon its ‘Fit for Growth’ operational excellence program to eradicate inefficiencies and squeeze out cost savings. It is also worth noting that Qlik’s operating margin so far may have been dragged down by a strong hiring program in the first half of 2015. Hiring is expected to taper in the second half, which may provide additional avenues for improving the operating margin.
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- Qlik Investor Relations [↩]
- Qlik Fiscal 2015 Second Quarter Earnings Call Transcript, Seeking Alpha, July 23, 2015 [↩] [↩]