Qlik – No Threat To Tableau

While big data leaders Tableau and Splunk trade more than 35% off their respective 52-week highs, competitor Qlik Technologies has held up quite nicely

down just 6% from its high. That’s somewhat surprising, as investors seem to be buying the notion that Qlik’s somewhat new product, Qlik Sense, is a legitimate threat to Tableau and a disruptor in the data visualization space. However, this assumption is wrong.

For those of you who don’t know, Tableau and Qlik are both big data service providers, and the former has been the leader in data visualization. What these companies do is sell platforms to mostly enterprise customers who wish to access data related to their business, industry, or even their targeted consumer to make better business decisions. This applies to essentially all business types, whether it’s a biotechnology company trying to figure what combination of compounds might cure breast cancer, a grocery store trying to determine what products are most likely to be stolen, or an energy company seeking ways to become more efficient. The uses for such data is broad, and this particular type of big data that Tableau and now Qlik provide is the fastest growing and most promising.

 

While big data leaders Tableau (NYSE:DATA) and Splunk (NASDAQ:SPLK) trade more than 35% off their respective 52-week highs, competitor Qlik Technologies (NASDAQ:QLIK) has held up quite nicely, down just 6% from its high. That’s somewhat surprising, as investors seem to be buying the notion that Qlik’s somewhat new product, Qlik Sense, is a legitimate threat to Tableau and a disruptor in the data visualization space. However, this assumption is wrong.

For those of you who don’t know, Tableau and Qlik are both big data service providers, and the former has been the leader in data visualization. What these companies do is sell platforms to mostly enterprise customers who wish to access data related to their business, industry, or even their targeted consumer to make better business decisions. This applies to essentially all business types, whether it’s a biotechnology company trying to figure what combination of compounds might cure breast cancer, a grocery store trying to determine what products are most likely to be stolen, or an energy company seeking ways to become more efficient. The uses for such data is broad, and this particular type of big data that Tableau and now Qlik provide is the fastest growing and most promising.

Tableau has been a disruptor in the big data space. Not only is its platform easy to use but also affordable with the company offering services at multiple price points. During its last quarter Tableau grew revenue 65% year-over-year and now has $527 million in revenue over the last four quarter. Looking ahead, Tableau is guiding for revenue of $630 million for the full-year, growth of 53% versus last year. Meanwhile, Qlik is about the same size as Tableau, but growing much slower. During its last quarter, Qlik saw sales rise 10.8%, which includes license revenue growth of 14%. This was a big increase over the 2% license growth it had seen in the previous quarter, thereby exciting shareholders and fueling the notion that Qlik Sense is a disruptor, and will cause havoc for Tableau. This is simply not the case.

First and foremost, Qlik Technology is not growing that fast, and Qlik Sense is not some new, transcendent product. Qlik Sense has been around since 2012 in trial stage, taking the company about two years to commercialize the product. Not even one year after its official launch, the company is already offering many services on desktop for free, something it should not have to do so soon post-launch, especially if demand is really high. While Qlik has maintained a double digit growth rate, its growth has not been nearly as explosive as Tableau. Not to mention, Qlik has paid for that growth, with its operating margin declining in each of the last five years whereas Tableau has consistently increased its margin.

At the end of 2012, Qlik Technology was three times larger than Tableau by revenue. However, if Tableau is successful in reaching expectations for revenue of $860 million next year, it will then have $135 million more annual revenue than Qlik will in 2016. Thus, Qlik Sense may accelerate the company’s overall revenue by some degree, but it is not exactly causing turmoil for Tableau.

On top of that, no one really knows for sure how fast Qlik Sense is growing. While Qlik CEO Lars Bjork has been busy pumping the promise of Qlik Sense, even saying that Qlik’s initiatives will somewhat disrupt Tableau, the CEO still won’t report actual figures for Sense. For example, Qlik investors tried to put two and two together and conclude that Qlik Sense was responsible for the company’s accelerated growth in the second quarter. However, the company won’t report figures for Sense, or any data for that matter. If the data were real good, I’d have to believe Bjork would advertise its performance.

Seeing as how Sense just launched late last year, chances are it is not creating too much recurring revenue for the company. Instead, it is contributing mostly to the company’s licensing revenue. During the second quarter, license revenue was $76.3 million, up from $66.9 million in the year prior. That’s a difference of just over $9 million, which isn’t exactly a disruption to Tableau’s business, which had $96.7 million in license revenue during its second quarter, an increase of 60% year-over-year.

So clearly, these two companies are on different levels, and the notion of Tableau having to worry about Qlik Sense is just ridiculous. The same thing was said by TIBCO CEO Vivek Ranadive last year, when he called Tableau a toy and predicted that its growth would stall when it reached $350 million in annual revenue. But instead, Tableau kept growing while Tibco’s competing platform, Spotfire, struggled to find any new business. Long-term, I expect the same outcome for Qlik Sense, and for Tableau’s stock to regain its old form sooner rather than later.

SUMMARY:

  • QLIK has held up nicely while other big data stocks have tumbled in recent months.
  • There is a belief that QLIK’s new Sense platform will be a legitimate growth driver, causing havoc for Tableau.
  • However, that’s not going to happen, as its implied growth is suspect at best and DATA continues to push forward without missing a beat.

Source: seekingalpha.com