Smiles all around I imagine as the latest wave of earnings releases, this time from Qlik, NetSuite and Marketo, all posted top line numbers better than anticipated by Wall Street analysts. I will leave the analysis of NetSuite’s results to Stuart Lauchlan and instead summarize Qlik and Marketo.
- Second quarter total revenue of $145.8 million increases 11% year-over-year; 26% in constant currency
- Second quarter license revenue of $76.3 million increases 14% year-over-year; 29% in constant currency
While net loss widened from $7 million in 2014 to $9.9 million this quarter on a GAAP basis, the company has improved its cash position by $49.6 million since December 2014 to $306.4 million.
The result is much better than was expected especially since Qlik is feeling the pressure of currency headwinds that impact revenue growth by around 11%. Even so and in line with relatively cautious forecasts fro mother vendors, the company is predicting total revenue for 2015 up 10-11% in reported numbers and in the range $610-612 million, ahead of consensus at $608 million.
As an indication of momentum, Qlik:
Completed 129 deals with license and first year maintenance over $100,000 in the second quarter of 2015, including 35 deals over $250,000 and seven deals over $1 million, compared to 109 deals over $100,000, including 25 deals over $250,000 and three deals over $1 million in the prior year period.
Ahead of the fine detail, it looks to me like Qlik is getting traction on its recently released Sense solution, but more importantly, is doing a good job of maintaining prices in more deals than this time last year. That should not surprise given the fact that business intelligence is currently a very strong segment of the enterprise software market with daily announcements hitting my inbox from numerous vendors vying for attention.
Phil Fernandez, CEO Marketo was right to be ‘very pleased’ with the company’s Q2 result. Again from the blurbs:
- Revenue increased 41 percent year over year to $50.7 million
- Deferred revenue increased 52 percent year over year to $80.6 million
- Calculated billings increased 48 percent year over year to $64.4 million
- Generated cash flow from operations of $10.0 million
Net loss widened from $13.1 million to $17.9 million but I also noticed that gross market fell 140 basis points to 38.6% with subscription and support costs rising 42%. Unlike others, Marketo only has a modest international presence, amounting to 15% of total revenue. That translates into minimal currency headwinds.
On the analyst call, the company said the SMB market continues to be robust but is seeing the enterprise market to tick up. The company is trying to drive a sustainable business model at an elite growth rate. In recent times, Marketo has been feeling the pinch somewhat from Salesforce aggressive marketing of its own marketing cloud. Whether those times are behind it remains to be seen but this is one of the company’s best performances in a long time.
Talking to the general market for marketing automation, Fernandez said:
We are not seeing the competitors move from a technology perspective…and I think that’s opening doors I claimed we would open. In B2B, this market is almost wholly greenfield. Relative to past [products], this is barely five percent penetrated…LinkedIn seems like a magic place to be right now…Consumer marketers see Facebook as a huge trend…We need to brightline inbound marketing with adtech.
Good news is that Marketo is starting to see a shift to more annualized billing, largely as a result of improvement in closing out enterprise deals. Interestingly, Fernandez mentioned its SAP partnership but remains cautious about SAP’s ability to sell into the front office.
Disclosure: Marketo and SAP are partners at time of writing.