Qlik’s Growth Slowed in Q3, But Near Term Outlook Remains Strong
Leading data visualization and analytics company Qlik (NYSE:QLIK) reported its third quarter results on October 22nd. [1] As expected, the company achieved moderate revenue growth but the pace slowed compared to the previous quarter. Revenue expansion was also dragged down by long deal cycles in Asia-Pacific, due to the ongoing economic uncertainty in the region. [2] Still, Qlik’s renewed focus on margin expansion was apparent in the third quarter results as non-GAAP operating margin improved by 110 basis points year on year.
We believe that Qlik’s robust product pipeline and the upcoming expansion of its cloud services puts it in a strong position. The company’s multi-product portfolio and depth of services distinguish it from new entrants to the market like Amazon (NYSE:AMZN) AWS’ Quicksight. (Read: Just How Big a Threat is Amazon’s Quicksight to Tableau and Qlik?) Thus, Qlik’s prospects remain strong and it is likely to maintain the current revenue growth rate in the near-term.
Snapshot of Qlik’s third quarter performance:
- Revenue grew by 8% year on year to $141 million (20% growth on constant currency basis)
- Non-GAAP operating margin improved by 110 basis points to 3.1%
- Non-GAAP diluted EPS was $0.02, compared to $0.01 in the prior year period
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Our price estimate of $40 for Qlik is about 30% higher than its current market price.
See our complete analysis for Qlik here
Uncertainty in Asia-Pacific Dragged Down Revenues, But Long Term Outlook Strong
Qlik closed eight deals larger than $1 million in the third quarter, compared to seven deals in the prior year period. While it is an improvement, this number could have been higher if not for uncertainty in the Asia-Pacific markets. The ongoing economic uncertainty in the region resulted in longer deal cycles, and the trend is expected to continue in the fourth quarter. [2] However, deal activity is likely to pick up in fiscal 2016 with a number of new products in the pipeline.
Qlik has now paired its longstanding ‘land and grab’ strategy with an “agile product release cadence”. [2] The regular release of new products and upgrades is designed to deliver increasing value to the customers and thus encourage customer stickiness. The strategy also speaks volumes about Qlik’s focus on constant innovation and pushing the envelope in terms of features and depth of analysis offered. The company plans to release upgrades to Qlik Sense as well as Qlik View in the forthcoming months.
Additionally, Qlik is planning to expand its presence in the cloud analytics segment next year. Currently the company offers the Qlik Cloud free of cost to Qlik Sense customers, but in the form of an extended trial run with limited usage. A paid version of Qlik Cloud is scheduled for release next year, which will offer the full extent of features as the legacy version, along with additional features like unlimited storage and premium data from MarketData. [2] Qlik Cloud will pit Qlik head-on against the analytics services offered by cloud behemoths like Salesforce.com (NYSE:CRM) and Amazon. Nevertheless, Qlik could very well hold its own against them as the relatively nascent products offered by its competitors may not hold up against the depth of features offered by Qlik.
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- Qlik Investor Relations [↩]
- Qlik Fiscal 2015 Third Quarter Earnings Call Transcript, Seeking Alpha, October 22, 2015 [↩] [↩] [↩] [↩]