Qlik Technologies (NASDAQ: QLIK ) is prepared to take on Tableau Software (NYSE: DATA ) in an attempt to benefit from the company's successful model of simplicity and data utilization. Tableau Software's business model has taken the big data market by storm, causing headwinds for leader Tibco Software (NASDAQ: TIBX ) , so do Qlik's new initiatives change the investment outlook for these three companies?
On Monday, Barclays upgraded shares of Qlik Technologies to overweight, ahead of a second-quarter report that might as well be irrelevant. The reason: Investors are more concerned with new products from Qlik, specifically QlikView.Next and its impact on the future.
Sometime in the next few months, Qlik will launch a business intelligence software platform called QlikView.Next at multiple price points, aimed at giving clients a wide selection of services and applications.
The company is hoping that by presenting this technology on a platform with applications that serve specific purposes, and by focusing on simplicity with navigational features like The Hub, it can accelerate revenue growth beyond the 16% that is expected over the next two years.
What's Tableau's biggest edge?
In addition, QlikView.Next has all the makings of a platform to compete against Tableau, whose focus on simplicity has not only made it attractive to consumers and small businesses, but also large enterprise clients. For years, Tibco reigned in the enterprise space, being the only company to offer "fast data," which is instantaneous versus "slow data," or a compilation of data during a specific time frame.
Tibco has more than $1 billion of 12-month revenue as the largest pure big data company, but has seen its growth fall from a cliff in recent quarters. Specifically, Tibco has found new license sales difficult to achieve, which then carry into maintenance and subscriptions. During its last quarter, Tibco's license revenue fell 7% year over year, while Tableau saw growth of 83% year over year in the same category. Qlik Technologies also saw weakness in license revenue, which grew just 2% year over year during its first quarter.
Tibco CEO Vivek Ranadive insists that pricing is the key difference in why Tableau has achieved such success, but that finding a price point to please lower-end clients, while not sacrificing higher-end clients, remains a challenge. Furthermore, this process includes finding price points for specific services so that Tibco and Qlik can become competitive against a company that has seemingly found the answer to this problem.
For example, R.W. Baird believes the tool most replaced by Tableau is Excel, which has a total of 325 million corporate users, indicating great fundamental upside. Therefore, not only knowing this fact, but also creating a superior product with a better pricing point, will be key for Qlik's new platform to drive growth.
A step in the right direction
With that said, Qlik will try to achieve this feat with an application-focused system. While Barclays is obviously encouraged, other firms like BMO have expressed concerns that various pricing and product models may not be very effective for Qlik, supporting Ranadive's comments that finding the perfect balance is a challenge.
Nonetheless, QlikView.Next is a step in the right direction, while Tibco has yet to find a solution for its licensing problem. Qlik Technologies will report earnings on Thursday, but given the anticipation for QlikView.Next, it's possible that investors will give poor licensing revenue a mulligan if it occurs.
As for Tableau, it remains the most disruptive company in the industry, one that's pricey at 15.2 times sales, but whose enormous market opportunity makes it worth the valuation. The company has just 17,000 total customer accounts, adding 1,800 in the first quarter, with 120 being valued at more than $100,000. This shows that Tableau is making a big dent in the enterprise space.
Tableau Software has an appealing service for a wide array of clients in the business intelligence space, an industry valued at $12 billion. Hence, the company's outlook remains intact as competitors focus their energies on playing catch-up.
At this point, it's impossible to know whether Qlik or Tibco will be successful, once the latter launches a new platform. This fact alone gives a big edge to Tableau, as it continues to gain momentum and grow quickly in a large industry that's transforming daily.
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