QlikTech Soars in IPO
Published: July 19, 2010
by Alex Woodie
The calendar said 2010, but it felt more like 1999 for a few hours last Friday, when business intelligence software developer QlikTech had a very successful initial public offering (IPO) of stock on the NASDAQ Global Market. QLIK rocketed upward by more than 30 percent after the opening bell, before settling down for a 28 percent gain, marking one of the most successful tech IPOs of the year and bolstering the notion that people are demanding BI software that's inexpensive and easy to use.
On a day when the NASDAQ index tanked by more than 3 percent, QLIK impressed many with its debut. Moments after QlikTech CEO Lars Bjork rang the opening bell at the NASDAQ MarketSite location at Times Square in New York City, the company's stock price shot up from the offering price of $10 to more than $13, after which it settled down to close at $12.80 at the end of the day.
QlikTech, which has 13,000 customers using its in-memory associative database technology, originally planned to sell 11.2 million shares of common stock at a price between $8.50 and $9.50. Instead, the company's IPO, which was being managed by Morgan Stanley, Citigroup, and J.P. Morgan, who functioned as joint book-runners, listed its stock at a starting price of $10. The move put an extra few million dollars into QlikTech's coffers.
According to the form S1, or Security Registration Statement, that QlikTech filed with the SEC, after paying off old debt, QlikTech plans to spend the remainder of its IPO proceeds on a range of items, including: expanding sales and marketing in the United States and abroad; bolstering its technology infrastructure to boost transaction volumes; enhancing the QlikView product and developing new software; increasing awareness of the company's products; and developing new marketing, sales, and promotional programs. The company is also considering making some acquisitions.
Some industry watchers predicted the QlikTech IPO would be hot, owing to the relatively small number of shares being offered relative to demand, as well as QlikTech's recent success selling BI software to mid-sized companies. QlikTech, which is based in Radnor, Pennsylvania, says it expanded its customer base from 1,500 customers in 2005 to more than 13,000 in 2009. Revenues have similarly been growing at a near exponential rate, going from about $43 million in 2006 to $157 million in 2009, according to the S1. However, the rate of revenue growth has slowed in recent years, some of which is attributable to the Great Recession.
Thanks to the S1, we know a little more about the company's operations. For example, we know that most of the company's expenses go to sales and marketing, which accounts for 73 percent of all expenses. This is an interesting piece of data, considering that 50 percent of the company's revenues came from the channel, and not from its direct sales force. The company is especially proud of the fact that it turns many free downloads of QlikView into sales after the 30-day trial period is up.
Also interesting is the fact that research and development accounts for just 7 percent of the company's expenses, which is quite low by most measures for an IT company. R&D still takes place in Sweden, where the company was founded in 1994.
While QlikTech has enjoyed tremendous success among mid-size companies who were turned off by more expensive and difficult-to-use BI solutions from Cognos, BusinessObjects, and others--including a good percentage of IBM System i, iSeries, and AS/400 customers--analysts say QlikTech would do well to use some of the IPO proceeds to flesh out its product set a little bit, either through in-house development or by acquiring existing products.
Areas where QlikTech might consider an R&D project or acquisition include data integration, data quality, and predictive analytics, according to some analysts. QlikTech's own plans for product development include "adjacent areas where data-driven decisions are critical," it says in its S1. This includes Web site navigation, content search and information management, external data communication, product configuration, and e-commerce applications.
It seems clear that QlikTech will not try to take on the big BI vendors directly, but instead keep nipping at their heels, pilfering dissatisfied customers who want to quickly set up dashboards and get different views of their data than what Excel can offer, without waiting months for IT to set the software up for them. Time will tell if this strategy continues to pay off for QlikTech.
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