BARC Comment on the Announced Acquisition of Talend by Qlik

What happened?

Qlik has announced its intention to acquire Talend: qlik.com/us/company/press-room/press-releases/qlik-intends-to-acquire-talend

Why is it important?

Two major players in the data and analytics space merge: Qlik, a heavyweight in BI and analytics, and Talend, a major data integration vendor with about $350 million in revenues (very roughly half the size of Qlik) and more than 7,000 customers worldwide.

What is interesting about it?

• Both Qlik and Talend have the same owner: Private equity company Thoma Bravo acquired Qlik for approximately $3 billion in 2016 and Talend for $2.4 billion in 2021. This interesting move could be considered as a merger rather than an acquisition. An interesting detail is that the first quote in the press release announcing the acquisition came from a Thoma Bravo executive, not from Qlik as the acquirer. Qlik has announced its IPO plans in January 2022 but with the tech stock market on the decline since then, it is not certain whether this will come anytime soon.
• Attunity (2019) – also a data integration vendor – remains the only larger software vendor that Qlik has acquired until now. Qlik has shown very lively M&A activity with the takeover of five additional companies since then (Knarr, RoxAI, Blendr.io, Nodegraph and Big Squid). Its M&A strategy has been very clearly focused on small (often start-up) technology vendors that can add capabilities to the Qlik portfolio but do not bring in complex additional organizations or customer counts. Integrating Talend will prove more complex.

Background and technological fit

• With increasing commoditization in the BI and analytics software segment driven mainly by Microsoft Power BI, Qlik continues to widen its offering and strengthen its data management capabilities, a more diversified and potentially more profitable market segment.
• Qlik has already started to address data management as its second pillar, mainly with the acquisition of Podium Data in 2018 and Attunity in 2019. Since then, it has proven to be a strong area of Qlik’s business with good growth rates and good adoption by the traditionally strong and loyal Qlik partner network.
• Talend’s products do overlap with Qlik in that they both offer change data capture (CDC), data integration and cataloging capabilities. But their strengths are different. Talend excels at data governance (including data quality) and transformation, while Qlik Data Integration (Attunity) is strong on real-time data integration from legacy sources (mainframe, SAP, iSeries) into cloud analytics targets.
• That is why we believe that the acquisition makes sense and strengthens Qlik’s market position, which has emerged from a BI front-end player to a full-stack data and analytics vendor with strong data management capabilities. The data quality and data governance capabilities of Talend in particular fill a big gap in the Qlik data and analytics stack.

Potential negative effects for customers

• Product overlap of Qlik DI and Talend leads to insecurity about the product roadmap and continuation of features/products.
• Qlik might suspend the open-source community edition of Talend, which includes many of its capabilities. Qlik has no tradition in the open-source market space. It will be interesting to see what announcements will be made about that part of the business in the coming months.
• Post-merger integration issues might slow down both organizations, although Qlik has a good track record of integrating multiple companies in recent years. Nevertheless, with an estimated revenue of around $350 million, a large customer base and its presence in the open-source market, the challenges of integrating Talend exceed the complexity of the previous acquisitions by far.

Potential positive effects for customers

• Qlik’s expansion in the fast-growing market segment of data integration strengthens its market position overall.
• The combination of Qlik’s and Talend’s capabilities enables the joint company to build a strong data and analytics platform with data management and BI and analytics capabilities, allowing customers to do more in one platform which should be integrated in terms of functionality and UI quite quickly.
• Qlik Data Integration has shown good skills in UI and usability, as the BARC Data Management Survey shows. This is an area where Talend’s solutions have potential for improvement

Strategic outlook

Thoma Bravo also acquired Anaplan for $10.7 billion in 2022. As Anaplan is a major planning and corporate performance management vendor, a segment which is not covered by Qlik natively today, the investor might be considering a brave strategic move to bring them all together. The three joint companies would form a major force in the data and analytics space, covering BI and analytics, data management and corporate performance management all with significant existing customer bases.

The concerns about the complexity of such a merger or the resulting large organization with different roots might be too prohibitive to consider such a move. We believe the investors will have a good look at the integration process of Qlik and Talend before they get closer to this idea.

Co-author: Kevin Petrie (Eckerson Group)