Qlik IPO filing culminates a 5-year transformation

With plans now under way for an IPO, Qlik is nearing the end of a journey that has taken more than five years.

The vendor, founded in 1993 and based in King of Prussia, Penn., revealed on Jan. 6 that it had confidentially submitted a draft registration statement for an IPO with the U.S. Securities and Exchange Commission.

In August 2016, Qlik, which had been publicly traded beginning in 2010, was acquired by private equity firm Thoma Bravo for $3 billion and taken private.

Qlik knew it needed to transform at the time, according to Mike Capone, who was appointed CEO in 2018.

Mike Capone

Along with Tableau, the vendor had been one of the innovators leading business intelligence away from static reports to data visualizations. By 2016, however, it was clear that the future of analytics was in the cloud, and Qlik, whose platform was geared toward an on-premises customer base, needed to transform to remain competitive.

Rather than go through that transformation in the public eye, it went private. And through the combination of nine acquisitions and internal research and development, Qlik is now cloud-first with a platform built around the premise of active intelligence and ready to reemerge with an IPO.

Recently, Capone discussed the vendor's transformation over more than five years, beginning with where Qlik was at the time of its acquisition by Thoma Bravo and where it stands now as it readies for an IPO.

In addition, he spoke about the most critical moves Qlik made to drive its transformation, and while not specific to Qlik, what steps need to be taken between the time a company reveals plans for an IPO and it ultimately goes public.

What was happening in 2016 that led Qlik to sell to Thoma Bravo and go private?

Mike Capone: Qlik is a terrific brand with a terrific product and lots of loyal customers. It was a pioneer in visual analytics. There was consolidation back in [2007] with Cognos and Business Objects getting acquired, and that created an opening for Qlik and then Tableau and Power BI. Qlik did really well and went public, but in 2016 the issue was whether companies could make the turn to cloud and subscriptions. It was the same dilemma every software company had. The opportunity was there, but it was very difficult to do in the public markets. It turned out to be a great moment to take the company private and let us focus on [change].

I joined in 2018, and I think my experience in cloud businesses and recurring revenue business was helpful to Qlik at the time to get people to understand why they're important. At that point, we were a visual analytics company. We were a good one, but that's what we were, along with Tableau and Power BI.

Why wasn't that enough?

Capone: When I got to Qlik, talking to customers and prospects, as a former CIO I knew what they were up against. The problem wasn't visual analytics -- they needed that. But they also needed end-to-end analytics capabilities. All this data was locked up in operational systems and was hard to get to, data was getting bigger and bigger, and it was in the cloud. The problem was getting that data out of those systems and into an analytics-ready platform. At the same time, we were starting to hear about Snowflake and Microsoft Azure and modern cloud data lakes. And then a second problem was that once people analyzed data, they didn't know what to do with it -- could they actually get their organization to do something based on that data?

So what we set out to build through our organic R&D efforts -- investing in the product and getting it to the cloud -- and then nine acquisitions since 2016 was to build an end-to-end platform. What we have now is a platform built around active intelligence that extracts data from operational systems, from disparate data sources at high velocity into modern cloud data lake platforms, analyzes it at high speed and then actions it by alerting someone or pushing it into a robotic process automation platform.

At the time Qlik was taken private in order to transform, was an eventual IPO always part of the plan?

Capone: I don't think the plan was specifically to go public again. I think the plan was to create a company that was profitable, growing nicely, had recurring revenue and great operating metrics all around, and had spectacular customer retention north of 90%. Usually, the rest just takes care of itself. Private equity firms don't hold companies forever, and it just turns out that going public is one avenue to explore.

What needed to happen between August 2016 and January 2022 to transform Qlik and ready it for a potential IPO?

Capone: The cloud was one, and then implementing subscriptions and getting to a recurring revenue model so that we don't have to sell our way every quarter. It's a painful process when sales equals revenue, so having a very predictable revenue model where new sales are incremental to our revenue and not the revenue was very important, and the vast majority of our revenue now is recurring. That was really important.

Rather than get into a conversation about who has the better charts and graphs, we wanted to get into the conversation about who can best solve problems. That's the end-to-end, active intelligence story. We had to develop real-time analytics, actionable analytics.

Additionally, we couldn't be just an analytics company anymore. We needed to separate ourselves from the competition. Rather than get into a conversation about who has the better charts and graphs, we wanted to get into the conversation about who can best solve problems. That's the end-to-end, active intelligence story. We had to develop real-time analytics, actionable analytics. We had to, fundamentally, be different.

Were there some major milestones over the past five years -- acquisitions or innovations -- that were critical to getting Qlik ready for an eventual IPO?

Capone: Far and away, the most critical acquisition was a company called Attunity. That's a data integration company that we bought, a wonderful company based in Israel that had a strong presence in the United States. That capability, which is being able extract data out of operational systems like ERPs and mainframes without putting any kind of load or tax on the source system, was spectacular. There's no company now that's not trying to get their analytics data into modern cloud data lake platforms -- just look at the success of Snowflake, and same with Azure, AWS and Google Cloud -- so it was a case of right place at the right time for us, and I'd like to think a little bit of knowing the right strategy as well. That business was the cornerstone of expanding us from just an analytics company to a full data platform company with active intelligence.

Attunity also had something really cool, which was a cloud data modeling capability. It was the ability to build a data model as you're bringing in data. That was the gift that keeps on giving. That was a really good acquisition.

Beyond acquiring Attunity, is there anything else that stands out?

Capone: There are a bunch of capabilities out there that, for a little while, it looked like people were going to make a cottage industry out of, things that I consider should be a feature of BI and not a whole separate product. A couple of examples are search and natural language processing. In today's world, modern workers don't want to write code. They want to type in questions. We acquired a company called CrunchBot which gave us NLP capabilities, and that was really important. That also gave us some search capabilities.

Another thing we did was buy an alerting platform. People want to receive analytics where they want to consume analytics. They're not going to rely just on their PC or open their laptop. It's got to be on the phone with a message that says, 'Here's the answer.' There were a few others that were important -- we added iPaaS capabilities, a low-code/no-code platform that does what [data integration vendor] Fivetran does, so we now have capabilities in that space. We really filled out the platform.

Is there a timeline for Qlik's IPO, and what are the steps that need to be taken before ultimately going public?

Capone: As you can imagine, I'm not allowed to talk about Qlik's IPO. But if you think about a normal IPO, a company would file a confidential S-1 with the SEC, the SEC would come back with comments, and then at some point down the road the company would drop some numbers into the S-1. At that point the S-1 would go public and the company would do road shows and then set a price and go.

There's no real timeline I can talk about. One you file initial paperwork with the SEC and put out a press release, you're essentially a public company at that point and you can't reveal non-public information.

Whenever Qlik does go public, will Thoma Bravo still hold a controlling stake or will Qlik be independent at that point?

Capone: I'll speak hypothetically and not about Qlik specifically, but when there's a private equity parent company taking a company public, there would usually be a sub-holding period when they don't sell down everything right away. They'd be a stakeholder for a while and then they'd probably sell down. But again, that's just a typical scenario. I can't speak to our specific situation.

A past example of a company that has gone public after being owned by a private equity firm is [software intelligence vendor] Dynatrace. They were taken public [by Thoma Bravo] and are going through that process now. That's not to say it would be the same for us. Our offering is still subject to lots of different stock market conditions, but [Dynatrace's example] is how it typically works.

What is the advantage of going public?

Capone: Raising capital, paying down a little debt, and you have the proceeds to go do stuff.

And is there a drawback?

Capone: You have to do earnings calls [laughs].

We've been talking about a potential IPO, but from a platform standpoint, what can Qlik users expect to see in a few months when you host your annual user conference?

Capone: You're going to see the culmination of all this. We've spent the last bunch of years integrating all this together in a seamless fashion, so when I talk about an end-to-end active intelligence platform, we're going to show off examples of data streaming into our platform in real time, seamlessly being analyzed and then being actioned.

What are some examples of active intelligence in action?

Capone: One of the examples is Aramark, the company that does all the food concessions for stadiums, hospitals, corporations. They extract data from their point-of-sale systems in real time, use Qlik to analyze it, and in real time they update the information. It could be that salads aren't selling at a particular location. Well, salad isn't going to be any good the next day, so they might as well drop the price and sell as much as possible before it goes bad. That's active analytics, and that's what we're going to show off at QlikWorld.

We were founded in Sweden and the company has a long history of deep social responsibility, and we've carried that forward, so another example is when we underpinned the 2021 United Nations Climate Change Conference in Scotland. One of Qlik's employees followed the U.N. Secretary General around with a tablet, and all the pledges the countries made were displayed in real time on the 'Wall of Shame' so people could see who was giving more than them. Human trafficking is another issue we work on with the U.N. I always like to go back to social responsibility because that's a big part of our heritage.

Editor's note: This Q&A has been edited for clarity and conciseness.