QlikTech: Still Posting Unprofitable Growth

I have written about QlikTech (NASDAQ:QLIK) several times over the past year, including a follow-up piece regarding their Q4-11 and FY2011 results. With the recent release (26 April 2012) of the Q1-12 results, I am compelled to submit an article that demonstrates their continued negative trajectory.

The principal issues that I highlighted:

--Missed Q4-11 projections - only a small miss by non-GAAP, but enormous via GAAP. (11 cents vs. projected 30 cents)

--Expenditures Growing Faster than Revenues.

--Projected losses of 6-8 cents for Q1-12 and 2012 non-GAAP profit of 40-44 cents.

--Exclusion of stock-based compensation expenses -12.6M in 2011 (317% increase y/y)

--Stock Unconnected to Reality - 47.6% decline in EPS + 40% insider selloff = 25% increase in stock price.

Updates on Trajectory as of Q1-12 Report:

Once again, QLIK has missed their own projections with a loss of 9 cents vs. projections of 6-8 cent loss. The stock seems unphased by this miss, as investors seem to be eating up the headlining facts:

  1. Total revenue of $79.2 million increases 26% compared to first quarter of 2011
  2. License revenue of $46.3 million increases 22% compared to first quarter of 2011

Although the above facts look respectable, shareholders and analysts choose to ignore the 21.9% increase in marketing costs, the 32.4% increase in R&D expenditures, and 52.5% increase in general & administrative expenses.

It is acceptable for a new growth company to operate at a loss. With minimal sales, marketing and R&D often far outweigh revenues; however, QLIK is not a new growth company. QLIK has been operating in this sector for several years and since their IPO, the results are only getting worse.

QLIK is performing so inefficiently that they could spend $0 on future R&D and still operate at a loss.

Losses would be acceptable if revenues

This article was written by

J Mintzmyer profile picture
The ultimate shipping and logistics platform.
BS in Economics, MA in Public Policy (International Economics), pursuing Doctoral in Public Policy (Intl Relations). J is an established independent research provider and hedge fund consultant in the maritime shipping sector.

Mintzmyer founded Value Investor's Edge, a top-ranked deep value research service in May 2015, with the goal of establishing a top-tier community of deep value investors and activists. Value Investor's Edge subscribers leverage exclusive in-depth analytic reports and community investment experience to discover disconnects in global shipping and a variety of other beaten down sectors.

As part of directing Value Investor's Edge, Mintzmyer works with a team of five analysts and data technicians to deliver quality research and analytics to over 500 members. He has interviewed numerous management teams at public maritime firms, and has worked with a multitude of investors. Mintzmyer's exclusive analysis has received frequent 'Top Idea,' 'Must Read,' and 'Small Cap Insight' awards at Seeking Alpha and he is commonly cited in industry news such as TradeWinds and Splash 24/7.

Pursuing a Doctorate in Public Policy (Intl Relations) from Harvard University. M.A. in Public Policy, with focus on International Security & Economic Policy from the University of Maryland. Distinguished Graduate of the United States Air Force Academy with a B.S. in Economics. Extensive background in financial analysis, equity research, accounting, portfolio management, and customized asset allocation through nearly a decade of formalized education, personal studies, and practical experience. Avid reader of business/investments and biographies.

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