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Qlik Announces Third Quarter 2015 Financial Results

Third quarter total revenue of $141.2 million increases 8% year-over-year; 20% in constant currency

October 22, 2015

Qlik (NASDAQ: QLIK), a leader in visual analytics delivering intuitive solutions for self-service data visualization and guided analytics, today announced financial results for the third quarter ended September 30, 2015.

Lars Björk, Chief Executive Officer of Qlik, stated, "Our comprehensive platform approach to analytics is resonating well with customers and partners, and we are seeing strong adoption of Qlik Sense. We are confident in our differentiated position within our large market opportunity, and we expect to achieve our full year goals of reaccelerating revenue growth and driving margin expansion."

Financial Highlights for the Third Quarter Ended September 30, 2015

  • Total revenue for the third quarter of 2015 was $141.2 million, an increase of 8% from $131.3 million for the third quarter of 2014. On a constant currency basis, total revenue increased 20% compared to the third quarter of 2014. License revenue for the third quarter of 2015 was $69.8 million, an increase of 3% from $67.5 million for the third quarter of 2014. On a constant currency basis, license revenue increased 15% compared to the third quarter of 2014.
  • GAAP loss from operations for the third quarter of 2015 was ($8.1) million, compared to a GAAP loss from operations of ($8.6) million for the third quarter of 2014. Non-GAAP income from operations was $4.3 million for the third quarter of 2015, compared to non-GAAP income from operations of $2.6 million for the third quarter of 2014.
  • GAAP net loss was ($16.0) million for the third quarter of 2015, or ($0.17) per diluted common share, compared to a GAAP net loss of ($14.4) million, or ($0.16) per diluted common share, for the third quarter of 2014. Non-GAAP net income was $1.4 million for the third quarter of 2015, or $0.02 per diluted common share, compared to non-GAAP net income of $0.7 million, or $0.01 per diluted common share, for the third quarter of 2014. GAAP and non-GAAP net income (loss) for the third quarter of 2015 include a $2.3 million foreign exchange loss compared to a $1.7 million foreign exchange loss in the third quarter of 2014.
  • Cash and cash equivalents as of September 30, 2015 were $321.2 million compared to $244.0 million at December 31, 2014. Net cash provided by operating activities was $56.1 million for the nine months ended September 30, 2015, compared to $17.3 million for the nine months ended September 30, 2014.

Operating Highlights

  • For the third quarter of 2015, on a constant currency basis, total revenue in the Americas increased 19% over the prior year period, total revenue from Europe increased 18% over the prior year period, and total revenue from Rest of World increased 27% over the prior year period.
  • Added new customers during the quarter including Abu Dhabi Police Department, ESCHA Bauelemente GmbH, Four Seasons Health Care Limited, Georg Fischer B.V. & Co. KG, The Helsinki Region Environmental Services HSY, Ingram Micro Distribution GmbH, Lantmäteriet Gävleborgs län, Léon Grosse, Novo Nordisk Service Center India Pvt. Ltd., Oman Airports Management Company, Prime Minister's Office UAE, Profinch Solutions, Rochester Regional Health System, Royal BAM Group NV, Schibstad Classified Media Spain, Sl., Servion Global Solutions, Talentum Oyj, Thomas Jefferson University (TJU), Tucson Medical Center, and UN Women.
  • Expanded numerous customer engagements globally through our land and expand strategy including Aalborg Universitet, Akershus Universitetssykehus HF, Allianz Dublin, Crystal Run Healthcare, Deutsche Bank, Epsilon, Ford Motor Company, Hapag-Lloyd Aktiengesellschaft, Helsana Versicherungen AG, Hologic, Intuit, Lapland Hospital District, Lekolar AB, Mærsk Olie og Gas A/S, MedAssets, NCR Corporation, Nemours Foundation, New Hanover Regional Medical Center, Novo Nordisk A/S, The Pennine Acute Hospitals NHS Trust, REXEL France SAS, Siemens AG, Södra Skogsägarna ekonomisk förening, Sopra Steria AS, Sparekassen Sjælland, Solvay SA - Information Services, Tamedia AG, The U.S. Department of Justice (DOJ), The National Security Agency (NSA), TLT Solicitors, USIC, and VWR International.
  • Completed 130 deals with license and first year maintenance over $100,000 in the third quarter of 2015, including 34 deals over $250,000 and eight deals over $1 million, compared to 108 deals over $100,000, including 23 deals over $250,000 and seven deals over $1 million in the prior year period.
  • Generated 65% of license and first year maintenance billings from existing customers in the third quarter of 2015, compared to 64% in the prior year period.
  • Generated 55% of license and first year maintenance billings from our indirect partner channel and 45% from our direct channel in the third quarter of 2015, compared to 52% from our indirect partner channel and 48% from our direct channel in the prior year period.

Business Outlook

Based on information available as of October 22, 2015, Qlik anticipates total revenue growth of 10% to 11% on a reported basis and 21% to 22% on a constant currency basis for the full year 2015. Qlik is issuing guidance for the fourth quarter and full year 2015 as follows:

1 To determine projected revenue growth rates on a constant currency basis for fourth quarter and full year 2015, expected revenue from entities reporting in foreign currencies was translated into U.S. dollars using the comparable prior year period's monthly average foreign currency exchange rates.
2 Expectations of non-GAAP income from operations and non-GAAP income per diluted common share exclude stock-based compensation expense, employer payroll taxes on stock transactions, contingent consideration adjustments and amortization of intangible assets.
3 Assumes an estimated long-term effective tax rate of 30% and diluted weighted average shares outstanding of approximately 96 million.
4 Assumes an estimated long-term effective tax rate of 30% and diluted weighted average shares outstanding of approximately 95 million.

Qlik's expectations of total revenue, non-GAAP income from operations and non-GAAP income per diluted common share for the fourth quarter and full year 2015 assume that foreign currency exchange rates for the fourth quarter 2015 will approximate current exchange rates. This Business Outlook is directional guidance only as foreign currency exchange rate fluctuations and changes in the mix of domestic and international revenue and expenses can impact our results.

Qlik currently intends to publish, in each quarterly earnings release, certain expectations with respect to future financial performance. Those statements, including the guidance provided above, are forward looking, and actual results may differ materially.

Conference Call and Webcast Information

Qlik will host a conference call on Thursday, October 22, 2015 at 5:00 p.m. Eastern Time (ET) to discuss the company's third quarter financial results and its business outlook. To access this call, dial (877) 312-5507 (domestic) or (253) 237-1134 (international). The conference ID is 43108244. The presentation will be webcast live and available under the "Events & Presentations" section on Qlik's investor relations website at http://investor.qlik.com/. Following the conference call, a replay will be available until October 25, 2015 at (855) 859-2056 (domestic) or (404) 537-3406 (international). The replay pass code is 43108244. An archived webcast of this conference call will also be available under the "Events & Presentations" section on Qlik's investor relations website at http://investor.qlik.com/.

Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with generally accepted accounting principles in the United States, or GAAP, Qlik uses measures of non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP net income (loss) per basic and diluted common share, non-GAAP revenue and constant currency. A reconciliation of these non-GAAP financial measures to the closest GAAP financial measure is presented in the financial tables below under the headings "Reconciliation of Non-GAAP Measures to GAAP", "Reconciliation of Non-GAAP Revenue to GAAP Revenue" and "Reconciliation of Year-Over-Year Projected Revenue Growth Rate to Year-Over-Year Projected Revenue Growth Rate on a Constant Currency Basis." Qlik believes that the non-GAAP financial information provided in this release can assist investors in understanding and assessing Qlik's on-going core operations and prospects for the future and provides an additional tool for investors to use in comparing Qlik's financial results with other companies in Qlik's industry, many of which present similar non-GAAP financial measures to investors. In addition, Qlik believes that these non-GAAP financial measures are useful to investors because they allow for greater transparency into the indicators used by management as a basis for its internal budgeting and operational decision making.

For the three and nine months ended September 30, 2015 and 2014, non-GAAP income (loss) from operations is determined by taking GAAP loss from operations and adding back stock-based compensation expense, employer payroll taxes on stock transactions, amortization of intangible assets and contingent consideration adjustments. Non-GAAP net income (loss) is determined by taking GAAP loss before income taxes and adding back stock-based compensation expense, employer payroll taxes on stock transactions, amortization of intangible assets and contingent consideration adjustments and the result is tax affected at an estimated long-term effective tax rate of 30%. Qlik believes that the effective tax rate used in the non-GAAP net income (loss) and related income (loss) per diluted common share calculations are reasonable estimates of the long-term normalized effective tax rate under its global structure. Qlik believes these adjustments provide useful information to both management and investors due to the following factors:

  • Stock-based compensation. Although stock-based compensation is an important aspect of the compensation of Qlik's employees and executives, determining the fair value of the stock-based instruments involves a high degree of judgment and estimation and the expense recorded may bear little resemblance to the actual value realized upon the future exercise or termination of the related stock-based awards. Furthermore, unlike cash compensation, the value of stock-based compensation is determined using a complex formula that incorporates factors, such as market volatility, that are beyond Qlik's control. Management believes it is useful to exclude stock-based compensation in order to better understand the long-term performance of Qlik's core business and to facilitate comparison of its results to those of peer companies.
  • Employer payroll taxes on stock transactions. The amount of employer payroll taxes on stock transactions is dependent on Qlik's stock price and other factors that are beyond Qlik's control and do not correlate to the operation of its business.
  • Amortization of intangible assets. A portion of the purchase price of Qlik's acquisitions is generally allocated to intangible assets, such as intellectual property, and is subject to amortization. However, Qlik does not acquire businesses on a predictable cycle. Additionally, the amount of an acquisition's purchase price allocated to intangible assets and the term of its related amortization can vary significantly and are unique to each acquisition. Therefore, management believes that the presentation of non-GAAP financial measures that adjust for the amortization of intangible assets provides investors and others with a consistent basis for comparison across accounting periods.
  • Contingent consideration adjustment. Qlik periodically enters into business combinations which may contain contingent consideration arrangements. At each reporting date, management remeasures these contingent consideration liabilities at fair value until the contingencies are resolved. During the three and nine months ended September 30, 2015, a charge of $0.2 million and $0.4 million, respectively, was recorded related to changes in the fair value of contingent consideration liabilities and is included in Qlik's consolidated statement of operations. Management believes that these costs are generally non-recurring and do not correlate to the ongoing operation of its business.

To determine the revenue growth rates on a constant currency basis for the three and nine months ended September 30, 2015, revenue from entities reporting in foreign currencies was translated into U.S. dollars using the comparable prior year period's monthly average foreign currency exchange rates. Qlik reports results in U.S. dollars but does business on a global basis in multiple currencies. Exchange rate fluctuations affect the U.S. dollar value of foreign currency revenue and expenses and may have a significant effect on reported results. The discussion of Qlik's financial results in this release includes comparisons with the prior year period in constant currency terms. Management believes this information facilitates comparison of underlying results over time.

This press release includes forward-looking non-GAAP financial measures under the heading "Business Outlook". These non-GAAP financial measures were determined by excluding stock-based compensation expense, employer payroll taxes on stock transactions, amortization of intangible assets and contingent consideration adjustments and assuming an estimated long-term effective tax rate of 30%. We are unable to reconcile this non-GAAP guidance to GAAP because it is difficult to predict the future impact of these adjustments. In addition, these forward-looking non-GAAP financial measures assume that foreign currency exchange rates for the fourth quarter 2015 will approximate current foreign currency exchange rates. In addition, Qlik's expectations of year-over-year projected revenue growth rates on a constant currency basis for the fourth quarter and full year 2015 assume that expected revenue from entities reporting in foreign currencies are translated into U.S. dollars using the comparable prior year period's monthly average foreign currency exchange rates.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant elements that are required by GAAP to be recorded in Qlik's consolidated financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management in determining these non-GAAP financial measures. In order to compensate for these limitations, management of Qlik presents its non-GAAP financial measures in connection with its GAAP results. Investors are encouraged to review the reconciliation of our non-GAAP financial measures to their most directly comparable GAAP financial measure. As previously mentioned, a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided below.

About Qlik

Qlik (NASDAQ: QLIK) is a leader in visual analytics. Its portfolio of products meets customers' growing needs from reporting and self-service visual analysis to guided, embedded and custom analytics. Approximately 37,000 customers rely on Qlik solutions to gain meaning out of information from varied sources, exploring the hidden relationships within data that lead to insights that ignite good ideas. Headquartered in Radnor, Pennsylvania, Qlik has offices around the world with more than 1,700 partners covering more than 100 countries.

Safe Harbor for Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, the guidance provided under the heading "Business Outlook" above, statements regarding the value and effectiveness of Qlik's products, the introduction of product enhancements or additional products and Qlik's growth, expansion and market leadership, that involve risks, uncertainties, assumptions and other factors which, if they do not materialize or prove correct, could cause Qlik's results to differ materially from those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements containing the words "predicts," "plan," "expects," "focus," "anticipates," "believes," "goal," "target," "estimate," "potential," "may," "will," "might," "momentum," "can," "could," "see," "seek," "forecast," and similar words. Qlik intends all such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected in such statements due to various factors, including but not limited to: risks and uncertainties inherent in Qlik's business; Qlik's ability to attract new customers and retain existing customers; Qlik's ability to effectively sell, service and support its products; Qlik's ability to adapt to changing licensing and go to market business models; Qlik's ability to manage its international operations; Qlik's ability to compete effectively; Qlik's ability to develop and introduce new products and add-ons or enhancements to existing products; Qlik's ability to continue to promote and maintain its brand in a cost-effective manner; Qlik's ability to manage growth; Qlik's ability to attract and retain key personnel; currency fluctuations that affect Qlik's revenues and costs; Qlik's ability to successfully integrate acquisitions into its business; the scope and validity of intellectual property rights applicable to Qlik's products; adverse economic conditions in general and adverse economic conditions specifically affecting the markets in which Qlik operates; and other risks more fully described in Qlik's publicly available filings with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Qlik's views as of the date of this press release. Any statements regarding Qlik's products are intended to outline its general product direction and should not be relied on in making a purchase decision, as the development, release, and timing of any features and functionality remains at Qlik's sole discretion. Qlik anticipates that subsequent events and developments will cause its views to change. Qlik undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Qlik's views as of any date subsequent to the date of this press release.

© 2015 QlikTech International AB. All rights reserved. Qlik®, Qlik® Sense, QlikView®, QlikTech®, Qlik® Cloud, Qlik® DataMarket, Qlik® Analytics Platform and the QlikTech logos are trademarks of QlikTech International AB which have been registered in multiple countries. Other marks and logos mentioned herein are trademarks or registered trademarks of their respective owners.

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