WEBVTT - Bloomberg's Singh on Qlik: More Consolidation to Come (Audio)

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<v Speaker 1>Global business news twenty four hours a day at Bloomberg

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<v Speaker 1>This is a Bloomberg Business Flash from Bloomberg World Handquarters.

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<v Speaker 1>I'm Charlie Pallett. Stocks have rebounded from a morning sell off.

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<v Speaker 1>They are fluctuating near US six week high. Treasuries advancing

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<v Speaker 1>as investors await tomorrow's jobs data for clues about the

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<v Speaker 1>timing of the federal reserves next policy move. Oil trading

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<v Speaker 1>their forty nine dollars a barrel. We've got the tenure

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<v Speaker 1>up eight thirty seconds. Heal there one point eight percent,

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<v Speaker 1>gold down to doll rated the ounce to twelve twelve,

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<v Speaker 1>a drop there of two tenths of one percent. Stocks

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<v Speaker 1>now higher across the board, SMP five index at one one.

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<v Speaker 1>It is up two points, a gain of point one percent.

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<v Speaker 1>Down industrials up twenty points, also a gain of point

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<v Speaker 1>one percent, and as stack up seven points, a gain

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<v Speaker 1>of point one percent. I'm Charlie Pellett, and that's a

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<v Speaker 1>Bloomberg Business Flash. Is taking stock with Kathleen Hayes and

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<v Speaker 1>Prim Fox on Bloomberg Radio. Two days. Two significant deals

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<v Speaker 1>in the enterprise software space. Yesterday it was salesforce and

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<v Speaker 1>demand wear. Today it's click technologies and Toma Bravo. A

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<v Speaker 1>lot of money being thrown around, and it seems like

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<v Speaker 1>the paces quickening. Let's find out why and why investors

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<v Speaker 1>should be focused on this. I'm joined now here in

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<v Speaker 1>our New York studio by man Deep Singh, software analysts

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<v Speaker 1>for Bloomberg Intelligence. Bloomberg Intelligence, of course, gives you unique

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<v Speaker 1>real time research and context on all kinds of industries

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<v Speaker 1>and all the market and government factors that impact business.

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<v Speaker 1>And if you're a terminal customer access Bloomberg Intelligence it

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<v Speaker 1>b ico. So, Mandy, let's start here. Software industry continues

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<v Speaker 1>to go through all kinds of disruption and now cloud.

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<v Speaker 1>We've been hearing this more and more and more, a

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<v Speaker 1>big technological shift that's changed in the way company use software.

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<v Speaker 1>Why is that so significant and and what why is

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<v Speaker 1>it now leading to a bunch of deals? Sure, so,

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<v Speaker 1>like you said, Kathleen, this is a big technological shift

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<v Speaker 1>that takes place once in ten years. And what happens

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<v Speaker 1>typically in cycles like this is companies do change the

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<v Speaker 1>way they use software, but it happens over a period

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<v Speaker 1>of time. So that's why the disruption happens early on

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<v Speaker 1>the small companies. They tend to disrupt the market kind

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<v Speaker 1>of take market share from the small from the larger players,

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<v Speaker 1>but do it in a way where they will grow

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<v Speaker 1>very quickly in the first couple of years, and after

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<v Speaker 1>a while their growth starts to taper. So once that happens,

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<v Speaker 1>investors focus on the profitability given we see the profitability

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<v Speaker 1>aspect showing up more now, I think it's timing is

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<v Speaker 1>right for companies who sell themselves or do something. Okay,

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<v Speaker 1>So the cloud, we know that Microsoft is pushed into

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<v Speaker 1>the cloud. Amazon has pushed in the cloud, and in

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<v Speaker 1>a company could never really actually technically say it was

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<v Speaker 1>making money. That's helping them move in that direction. So Click,

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<v Speaker 1>for example, tell me about Click what they do and

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<v Speaker 1>what they do in the cloud that so many people

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<v Speaker 1>are clamoring for. Great question. So Click is an analytics company.

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<v Speaker 1>If you look at their functionality, all they do is

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<v Speaker 1>help visualize your data. Now that makes a lot of

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<v Speaker 1>excuse me, visualize my data? In other words, that got

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<v Speaker 1>my all my cluster data. By visualize it, do you

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<v Speaker 1>mean sort of map it out, ands organized it just

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<v Speaker 1>kind of it's it's a better way to picture your

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<v Speaker 1>data draw than just looking at an Excel chart. And

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<v Speaker 1>it can use that data from any type of source,

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<v Speaker 1>so it doesn't have to be a spreadsheet. It could

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<v Speaker 1>be uh like an unstructured data source. So you calve

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<v Speaker 1>an example of a kind of company or what kind

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<v Speaker 1>of data click would be so visualizing. A good example

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<v Speaker 1>is you have all these cloud applications now Salesforce, dot

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<v Speaker 1>Com Demand, where these are standalone applications. Obviously the is

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<v Speaker 1>our transactional systems, so they capture a lot of data

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<v Speaker 1>over a period of time. But if you're a company

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<v Speaker 1>using these applications, you have to find a way to

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<v Speaker 1>analyze this data because this is critical. That's how you're

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<v Speaker 1>going to be making your decisions, and and to build

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<v Speaker 1>a tool which can basically pull in data from different

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<v Speaker 1>transactional systems and aggregated. So what a retailer uses with

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<v Speaker 1>a hospital absolutely absolutely, all different verticals, retailers, hospitals, manufacturing, companies, logistics,

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<v Speaker 1>any system that captures data or a period of time,

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<v Speaker 1>they need to aggregate it and you need to visualize

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<v Speaker 1>that data so that your management can make decisions. And

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<v Speaker 1>I think this is a good tool to really combine

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<v Speaker 1>all your data from different systems and help visualize it,

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<v Speaker 1>and that includes cloud systems. Now, the problem here is

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<v Speaker 1>they grew very rapidly. Now it's off of like six

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<v Speaker 1>million will run rate, They're still not profitable. They spend

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<v Speaker 1>more their fifty of their revenue on sales and marketing,

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<v Speaker 1>and once your growth slow So they were growing in

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<v Speaker 1>excess of every quarter. Now it's slowing to like teens

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<v Speaker 1>eighteen seventeen eighteen percent, and expectations are it's going to

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<v Speaker 1>slow down further because competition is rising, because the numbers

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<v Speaker 1>are getting bigger. At scale, you just can't keep growing

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<v Speaker 1>twenty plus. You can do that when you're a two

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<v Speaker 1>hundred million dollar company, but it gets tougher when you're

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<v Speaker 1>a six hundred million dollar company. And investors they give

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<v Speaker 1>you all the benefits of growth as long as you

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<v Speaker 1>keep delivering on the numbers. Once the growth slows, they

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<v Speaker 1>start questioning your profitability. And I think that's what is

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<v Speaker 1>happening with Are there investment opportunities in this space? Yes, absolutely.

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<v Speaker 1>I think as a large company you would want to

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<v Speaker 1>wait for a time like this when valuations have come down.

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<v Speaker 1>So they were at their peak last year, now they

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<v Speaker 1>have come down this year. After the February decline we had.

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<v Speaker 1>And if I'm a Microsoft or and IBM, I'm always

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<v Speaker 1>looking to kind of fill the gaps in my portfolio.

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<v Speaker 1>And there are a lot of smaller companies that are

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<v Speaker 1>out there that are trading cheaper than where they were

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<v Speaker 1>last year, and it's a good time to buy. Of course,

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<v Speaker 1>tom a Bravo, Uh privactly snapped up Click. But then

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<v Speaker 1>who knows, maybe they'll be ready to sell it to

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<v Speaker 1>somebody for more money. But what about this story about

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<v Speaker 1>the Microsoft board pushing Saty Develo for a faster move

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<v Speaker 1>into the cloud. They're not going fast enough. I mean Microsoft,

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<v Speaker 1>It's really a tale of three different segments. One of

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<v Speaker 1>them has accelerated, it's moved to the cloud doing very well.

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<v Speaker 1>The other couple the Windows piece, the operating system piece

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<v Speaker 1>which we are used to on our desktop. Once that

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<v Speaker 1>moves to the cloud, that will really hurt them big time.

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<v Speaker 1>And I think what the board is drawing its attention

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<v Speaker 1>is what is the game plan to move the Windows

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<v Speaker 1>piece to the PLoud? How do we make offset the

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<v Speaker 1>revenue that Windows is generating now when pinks all moved

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<v Speaker 1>to the cloud. And I don't think, uh, the board

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<v Speaker 1>is satisfied with the way company has outlined its strategy.

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<v Speaker 1>It has, like I said, it's done very well in

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<v Speaker 1>the other two segments, the office suite and the infrastructure side.

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<v Speaker 1>It's really the Windows that is the concern, and I

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<v Speaker 1>think rightfully so well active, a lot of activity in

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<v Speaker 1>this space. And Youth Thank you so much. She's software

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<v Speaker 1>almost for Bloomberg Intelligence, kind of bringing us noncloud people

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<v Speaker 1>into the cloud business with him. Thank you so much.

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<v Speaker 1>As Click a very important company is purchased by Toma

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<v Speaker 1>Bravo today. I'm Kathleen Hayes. This is taking Stock on

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<v Speaker 1>Bloomberg Radio. Coming up next oil Opec. They met, but

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<v Speaker 1>they couldn't agree on a production quota. So it's the

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<v Speaker 1>bottom of oil prices really in we'll find out now

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<v Speaker 1>on Bloomberg Radio.