A post-IPO shopping list for QlikTech

Contact: Brenon Daly, Krishna Roy

Bucking the trend of trimmed prices and broken issues for tech IPOs, QlikTech debuted on the market Friday with a strong offering. The analytics vendor sold 11.2 million shares at $10 each, above the $8.50-9.50 range the company had set. In their Nasdaq debut, shares of QlikTech continued higher, changing hands at around $12.50 in early-afternoon trading. With 75 million shares outstanding, that gives the company an initial market capitalization of some $940m. (That’s basically spot-on to where we expected the company to begin its life on Wall Street when the paperwork first came in.)

As the proceeds from the IPO make their way to QlikTech, we’ve put together a handy-dandy shopping list for the company. Not that we necessarily expect QlikTech to immediately step into the M&A market. After all, it’s got a pretty solid business running right now. In recession-wracked 2009, QlikTech managed an impressive 33% increase in revenue. Even more impressive, the company doubled that rate in the first quarter of this year. Perhaps mindful of not messing with a good thing, QlikTech hasn’t done any deals up to now.

Nonetheless, my colleague Krishna Roy recently noted that QlikTech is essentially a one-product company that competes against the enterprise software giants that sell analytics as part of a larger product suite. (IBM, Oracle and SAP combined to snap up all three primary BI vendors in a string of deals that, collectively, set them back $15bn.) Further, one of QlikTech’s key technological advantages that the company helped pioneer (in-memory analytics) has become much more commonplace. Both of those facts turn up the competition on QlikTech, which might benefit from looking out-of-house for some additional technology.

If so, one area where we could imagine QlikTech going shopping is in the predictive analytics market. The company already offers some predictive analytics with the inclusion of advanced aggregation features in the latest QlikView 9. But additional technology could make for an easy knock-on sale to existing customers. (That’s a key for QlikTech, which gets roughly 60% of its revenue from existing customers.) Two small startups that might fit the bill for QlikTech are Revolution Analytics and Rapid-I.

Is QlikTech a billion-dollar baby?

Contact: Brenon Daly

IPOs are not what they used to be. The companies looking to go public recently have had to scale back their expectations, cutting both the amount of money they hope to raise and what they expect to be worth as they start life as a public company. The implications of these slimmed-down debuts extend far beyond the IPO candidates themselves. Smaller offerings trim the fees available for underwriters, which rely on these hotly contested mandates to offset the cost of supporting research and trading for public companies. And perhaps more alarmingly, the lower IPO valuations make it difficult for venture capitalists and other investors to realize decent returns in what was once a fairly sure path to outsized performance.

At least that’s the situation for most IPO candidates. (For instance, we’re not knocking either Meru Networks, which went public last week, or Nexsan, which is slated to come out this week, but both are valued by the market at less than $300m.) However, there are exceptions. Just as a few companies were able to make it public in 2009, while most would-be debutants just had to ride out the recession as private businesses, there will be rich valuations doled out to IPO candidates, even during this time of discounts.

From our perspective, the next player that’s likely to enjoy a warm welcome on Wall Street is QlikTech. (At $100m, the offering itself is one of the largest enterprise software IPOs in some time.) In fact, if we pencil out the initial valuation for this fast-growing, profitable analytics provider, we come up with a number that’s in the neighborhood of $1bn. QlikTech may not hit that magical mark on its debut, but we suspect that it won’t fall too far below it. Look for our full report on the company and the offering, including our projected financials and valuation for QlikTech, in tonight’s Daily 451 sendout.