- Q3 2021 total revenue of $271.6M, up 41% year over
year
- Q3 2021 subscription revenue of $220.3M, up 49% year over
year
- Total remaining performance obligations1 of $1,362.1M, up
67% year over year
- Next 12 months remaining performance obligations of $781.5M,
up 58% year over year
Qualtrics (NASDAQ: XM), the leader and creator of the Experience
Management (XM) category, today announced financial results for the
third quarter ended Sept. 30, 2021.
"Q3 was another outstanding quarter for Qualtrics, and our
leadership position has never been stronger as we continue to
innovate and define the category we created," said Qualtrics CEO
Zig Serafin. "Companies in every industry are accelerating their
experience transformations, and they're increasingly choosing
Qualtrics to build critical relationships with their customers and
employees."
Third Quarter 2021 Financial Highlights:
- Revenue: Total revenue for the third quarter was $271.6
million, up from $192.8 million one year ago, an increase of 41%
year-over-year. Subscription revenue for the third quarter was
$220.3 million, up from $148.3 million one year ago, an increase of
49% year over year.
- Operating Income (Loss) and Margin: Third quarter
operating loss was $(277.5) million, compared to $(82.0) million
one year ago. Non-GAAP operating income (see discussion of non-GAAP
operating income (loss) and margin measures below) was $13.3
million, compared to non-GAAP operating income of $2.5 million one
year ago. For the third quarter, GAAP operating margin was (102)%
and non-GAAP operating margin was 5%.
- Net Income (Loss) and Net Income (Loss) Per Share: Third
quarter net loss was $(286.0) million, or $(0.56) per share,
compared to $(85.7) million, or $(0.20) per share in the third
quarter of fiscal year 2020. Non-GAAP net income (see discussion of
the non-GAAP net income (loss) measure below) for the third quarter
was $5.9 million, or $0.01 per share, compared to non-GAAP net loss
of $(0.4) million, or $0.00 per share in the third quarter of
fiscal year 2020.
- Cash and Cash Equivalents: Total cash and cash
equivalents as of Sept. 30, 2021 was $589.9 million.
Financial Outlook:
Qualtrics is providing guidance for its fourth quarter ending
Dec. 31, 2021 as follows:
- Total revenue between $296 and $298 million.
- Subscription revenue between $242 and $244 million.
- Non-GAAP operating margin between (1%) and 0%.
- Non-GAAP net loss per share between $(0.04) and $(0.02)
assuming 550 million weighted shares outstanding.
Qualtrics is updating its guidance for its full year ending Dec.
31, 2021 as follows:
- Total revenue between $1,056 and $1,058 million.
- Subscription revenue between $854 and $856 million.
- Non-GAAP operating margin between 2.5% and 3.5%.
- Non-GAAP net profit per share between $0.02 and $0.04 assuming
515 million weighted shares outstanding.
The guidance provided above are forward-looking statements and
actual results may differ materially. Refer to the “Forward-Looking
Statements” safe harbor section below for information on the
factors that could cause our actual results to differ materially
from these forward-looking statements.
Non-GAAP operating income (loss), non-GAAP operating margin,
non-GAAP net income (loss), and non-GAAP net income (loss) per
share are non-GAAP financial measures. Additional information on
Qualtrics' reported results, including a reconciliation of the
non-GAAP financial measures to their most comparable GAAP measures,
is included in the financial tables below. A reconciliation of
non-GAAP guidance measures to corresponding GAAP measures is not
available on a forward-looking basis without unreasonable effort
due to the uncertainty of expenses that may be incurred in the
future, although it is important to note that these factors could
be material to Qualtrics’ results computed in accordance with
GAAP.
A supplemental financial presentation and other information can
be accessed through Qualtrics’ investor relations website at
https://www.qualtrics.com/investors/.
Qualtrics Earnings Call
Qualtrics plans to host a conference call today to review its
fiscal third quarter 2021 financial results and to discuss its
financial outlook. The call is scheduled to begin at 3:00 p.m.
MT/5:00 p.m. ET. Investors are invited to join the webcast by
visiting: https://qualtrics.com/investors/events. The webcast will
be available live, and a replay will be available following
completion of the live broadcast for approximately 90 days.
About Qualtrics
Qualtrics, the leader and creator of the Experience Management
(XM) category, is changing the way organizations manage and improve
the four core experiences of business—customer, employee, product
and brand. Over 13,500 organizations around the world use Qualtrics
to listen, understand and take action on experience data
(X-data™)—the beliefs, emotions and intentions that tell you why
things are happening, and what to do about it. The Qualtrics XM
Platform™ is a system of action that helps businesses attract
customers who stay longer and buy more, engage employees who build
a positive culture, develop breakthrough products people love and
build a brand people are passionate about.
Forward-Looking Statements
This press release contains express and implied “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, including statements regarding our financial
outlook for the fourth quarter of 2021 and full year 2021,
Qualtrics’ growth strategy and business aspirations, its market
position, and the continued impact of COVID-19 on its business and
operations. In some cases, you can identify forward-looking
statements by terms such as “anticipate,” “believe,” “estimate,”
“expect,” “intend,” “may,” “might,” “plan,” “project,” “will,”
“would,” “should,” “could,” “can,” “predict,” “potential,”
“target,” “explore,” “continue,” or the negative of these terms,
and similar expressions intended to identify forward-looking
statements. By their nature, these statements are subject to
numerous uncertainties and risks, including factors beyond our
control, that could cause actual results, performance, or
achievement to differ materially and adversely from those
anticipated or implied in the statements, including: our future
financial performance, including our revenue, cost of revenue,
gross profit, operating expenses, ability to generate positive cash
flow, and ability to be profitable; our ability to grow at or near
historical growth rates; anticipated technology trends, such as the
use of and demand for experience management software; our ability
to attract and retain customers to use our products; our ability to
respond to and overcome challenges brought by the COVID-19
pandemic; our ability to attract enterprises and international
organizations as customers for our products; our ability to expand
our network with content consulting partners, delivery partners,
and technology partners; the evolution of technology affecting our
products and markets; our ability to introduce new products and
enhance existing products and to compete effectively with
competitors; our ability to successfully enter into new markets and
manage our international expansion; the attraction and retention of
qualified employees and key personnel; our ability to effectively
manage our growth and future expenses and maintain our corporate
culture; our anticipated investments in sales and marketing and
research and development; our ability to maintain, protect, and
enhance our intellectual property rights; our ability to
successfully defend litigation brought against us; our ability to
maintain data privacy and data security; the sufficiency of our
cash and cash equivalents to meet our liquidity needs; our ability
to comply with modified or new laws and regulations applying to our
business; and our reduced ability to leverage resources at SAP as
an independent company from SAP. Additional risks and uncertainties
that could cause actual outcomes and results to differ materially
from those contemplated by the forward-looking statements are
and/or will be included under the caption “Risk Factors” and
elsewhere in Qualtrics’ Annual Report on Form 10-K and most recent
Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission and any subsequent public filings.
Forward-looking statements speak only as of the date the statements
are made and are based on information available to Qualtrics at the
time those statements are made and/or management's good faith
belief as of that time with respect to future events. Qualtrics
assumes no obligation to update forward-looking statements to
reflect events or circumstances after the date they were made,
except as required by law.
Non-GAAP Financial Measures
To supplement our financial results, which are prepared and
presented in accordance with GAAP, we use certain non-GAAP
financial measures, as described below, to understand and evaluate
our core operating performance. These non-GAAP financial measures,
which may be different than similarly-titled measures used by other
companies, are presented to enhance investors’ overall
understanding of our financial performance and should not be
considered a substitute for, or superior to, the financial
information prepared and presented in accordance with GAAP.
We believe that these non-GAAP financial measures provide useful
information about our financial performance, enhance the overall
understanding of our past performance and future prospects, and
allow for greater transparency with respect to important metrics
used by our management for financial and operational
decision-making. We are presenting these non-GAAP measures to
assist investors in seeing our financial performance using a
management view, and because we believe that these measures provide
an additional tool for investors to use in comparing our core
financial performance over multiple periods with other companies in
our industry. You should consider non-GAAP results alongside other
financial performance measures and results presented in accordance
with GAAP. In addition, in evaluating non-GAAP results, you should
be aware that in the future we will incur expenses such as those
that are the subject of adjustments in deriving non-GAAP results
and you should not infer from our non-GAAP results that our future
results will not be affected by these expenses or any unusual or
non-recurring items.
Non-GAAP gross profit, non-GAAP gross margin, non-GAAP
operating income (loss), non-GAAP operating margin, non-GAAP net
income (loss), non-GAAP net income (loss) per share, free cash
flow, free cash flow margin: We define these non-GAAP financial
measures as the respective GAAP measures, excluding equity and cash
settled stock-based compensation expenses, amortization of acquired
intangible assets, acquisition related costs, and the tax impact of
the non-GAAP adjustments, as applicable. When evaluating the
performance of our business and making operating plans, we do not
consider these items (for example, when considering the impact of
equity award grants, we place a greater emphasis on overall
stockholder dilution rather than the accounting charges associated
with such grants). We believe it is useful to exclude these
expenses in order to better understand the long-term performance of
our core business and to facilitate comparison of our results to
those of peer companies and over multiple periods.
________________
1
Remaining performance obligations represent all contracted future
revenue that has not yet been recognized, including both deferred
revenue and non-cancelable contracted amounts that will be invoiced
and recognized as revenue in future periods.
Qualtrics International
Inc.
Consolidated Balance
Sheets
(Unaudited, in thousands,
except share and par value)
As of September 30,
2021
As of December 31,
2020
Assets
Current assets:
Cash and cash equivalents
$
589,946
$
203,891
Accounts receivable, net of allowance
258,809
296,148
Deferred contract acquisition costs,
net
51,270
43,429
Prepaid expenses and other current
assets
50,711
48,130
Total current assets
950,736
591,598
Non-current assets:
Property and equipment, net
122,152
116,120
Right-of-use assets from operating
leases
183,841
195,372
Goodwill
27,092
6,709
Other intangible assets, net
7,749
3,959
Deferred contract acquisition costs, net
of current portion
124,785
115,837
Deferred tax assets
3,961
92
Other assets
22,246
9,368
Total assets
$
1,442,562
$
1,039,055
Liabilities and equity (deficit)
Current liabilities:
Lease liabilities
$
15,710
$
7,125
Accounts payable
46,823
30,452
Accrued liabilities
94,849
225,046
Liability-classified, stock-based
awards
4,464
209,286
Deferred revenue
514,337
495,638
Total current liabilities
676,183
967,547
Non-current liabilities:
Lease liabilities, net of current
portion
221,590
235,620
Liability-classified, stock-based awards,
net of current portion
330
76,627
Deferred revenue, net of current
portion
5,891
5,477
Note payable
504,564
—
Deferred tax liabilities
3,966
5,970
Other liabilities
11,110
16,716
Total liabilities
$
1,423,634
$
1,307,957
Commitments and contingencies
Equity (deficit)
Preferred stock, par value $0.0001 per
share; authorized 100,000,000 shares; no shares outstanding
—
—
Class A common stock, par value $0.0001
per share; authorized 2,000,000,000 shares; issued and outstanding
92,680,590 and 6,000,000 shares as of September 30, 2021 and
December 31, 2020
9
1
Class B common stock, par value $0.0001
per share; authorized 1,000,000,000 shares; issued and outstanding
423,170,610 and 423,170,610 as of September 30, 2021 and December
31, 2020
42
42
Additional paid in capital
2,167,649
1,126,631
Accumulated other comprehensive income
(loss)
(631
)
3,191
Accumulated deficit
(2,148,141
)
(1,398,767
)
Total equity (deficit)
18,928
(268,902
)
Total liabilities and equity (deficit)
$
1,442,562
$
1,039,055
Qualtrics International
Inc.
Consolidated Statements of
Operations
(Unaudited, in thousands,
except share and per share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Revenue:
Subscription
$
220,314
$
148,259
$
611,748
$
415,000
Professional services and other
51,320
44,590
147,874
134,956
Total revenue
271,634
192,849
759,622
549,956
Cost of revenue:
Subscription
23,802
16,362
65,865
46,974
Professional services and other
43,041
32,674
127,522
100,060
Total cost of revenue
66,843
49,036
193,387
147,034
Gross profit
204,791
143,813
566,235
402,922
Operating expenses:
Research and development
83,875
62,065
226,552
168,985
Sales and marketing
161,570
103,008
449,446
322,775
General and administrative
236,810
60,731
637,944
155,225
Total operating expenses
482,255
225,804
1,313,942
646,985
Operating loss
(277,464
)
(81,991
)
(747,707
)
(244,063
)
Other non-operating expense, net
(3,160
)
(556
)
(6,091
)
(483
)
Loss before income taxes
(280,624
)
(82,547
)
(753,798
)
(244,546
)
Provision (benefit) for income taxes
5,409
3,141
(4,424
)
13,481
Net loss
$
(286,033
)
$
(85,688
)
$
(749,374
)
$
(258,027
)
Net loss per share attributable to common
stockholders, basic
$
(0.56
)
$
(0.20
)
$
(1.49
)
$
(0.61
)
Weighted-average Class A and Class B
shares used in computing net loss per share attributable to common
stockholders, basic
515,212,996
423,170,610
503,781,082
423,170,610
Cost of revenue and operating expenses includes:
Stock-based compensation expense as follows:
Three Months Ended September
30,
Nine Months Ended September
30,
in thousands
2021
2020
2021
2020
Cost of subscription revenue
$
2,516
$
725
$
8,522
$
3,809
Cost of professional services and other
revenue
6,977
2,582
18,161
6,193
Research and development
33,697
23,919
89,410
63,165
Sales and marketing
36,651
12,086
94,917
34,933
General and administrative
196,979
44,810
553,582
109,949
Total stock-based compensation expense,
including cash settled(a)
$
276,820
$
84,122
$
764,592
$
218,049
________________
(a)
As a result of the SAP Acquisition, our
stock-based compensation expense reflects the recognition of both
equity-classified awards and liability-classified awards.
Liability-classified awards are settled in cash in accordance with
SAP’s employee equity compensation programs. Our stock-based
compensation expense for the three and nine months ended September
30, 2021 consisted of $276.8 million and $764.6 million,
respectively, of liability-classified and equity-classified awards.
During the three and nine months ended September 30, 2021 awards of
$2.9 million and $76.9 million, respectively, were settled in cash.
Our stock-based compensation expense for the three and nine months
ended September 30, 2020 consisted of $84.1 million and $218.0
million, respectively, of liability-classified awards. During the
three and nine months ended September 30, 2020 awards of $96.9
million and $284.0 million, respectively, were settled in cash.
Liability-classified awards are recorded according to
mark-to-market accounting.
Amortization of acquired intangible assets as follows:
Three Months Ended September
30,
Nine Months Ended September
30,
in thousands
2021
2020
2021
2020
Cost of subscription revenue
$
442
$
265
$
973
$
797
Sales and marketing
74
51
176
153
General and administrative
47
47
141
141
Total amortization of acquired intangible
assets
$
563
$
363
$
1,290
$
1,091
Qualtrics International
Inc.
Consolidated Statements of
Cash Flows
(Unaudited, in
thousands)
Nine Months Ended September
30,
2021
2020
Cash flows from operating
activities
Net loss
$
(749,374
)
$
(258,027
)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization
24,011
18,570
Loss on disposal of property and
equipment
1,525
—
Reduction of right-of-use assets from
operating leases
16,571
12,429
Stock-based compensation expense,
including cash settled
764,592
218,049
Amortization of deferred contract
acquisition costs
35,977
22,383
Deferred income taxes
(5,544
)
2,672
Changes in assets and liabilities,
excluding the effect of business combinations:
Accounts receivable, net
37,261
31,777
Prepaid expenses and other current
assets
(5,043
)
(7,578
)
Deferred contract acquisitions costs
(54,986
)
(63,293
)
Other assets
(13,104
)
(6,378
)
Lease liabilities
(10,369
)
213
Accounts payable
14,875
1,205
Accrued liabilities
(8,232
)
(1,842
)
Deferred revenue
18,837
(5,571
)
Other liabilities
(985
)
7,125
Settlement of stock-based payments
liabilities
(76,875
)
(283,963
)
Net cash flows used in operating
activities
(10,863
)
(312,229
)
Cash flows from investing
activities
Purchases of property and equipment
(29,711
)
(43,054
)
Cash paid for business combination, net of
cash acquired
(25,000
)
—
Net cash flows used in investing
activities
(54,711
)
(43,054
)
Cash flows from financing
activities
Proceeds from capital contributions from
SAP
115,000
400,000
Proceeds from issuance of class A common
stock, net of underwriting discounts and commissions
2,244,322
—
Payment of costs related to initial public
offering
(3,081
)
—
Repayment of promissory note
(1,892,280
)
—
Payments for taxes related to net share
settlement of equity awards
(27,800
)
—
Issuance of class A common stock through
Employee Stock Purchase Plan
16,586
—
Net cash flows provided by financing
activities
452,747
400,000
Effect of changes in exchange rates on
cash and cash equivalents
(1,118
)
316
Net increase in cash and cash
equivalents
386,055
45,033
Cash and cash equivalents at the beginning
of the period
203,891
42,467
Cash and cash equivalents at the end of
the period
$
589,946
$
87,500
Qualtrics International Inc. Reconciliation
of GAAP to Non-GAAP Measures (Unaudited, in thousands)
Non-GAAP Gross Profit and Margin
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
(In thousands)
GAAP gross profit
$
204,791
$
143,813
$
566,235
$
402,922
Add: Stock-based compensation expense,
including cash settled(1)
9,493
3,307
26,683
10,002
Add: Amortization of acquired intangible
assets
442
265
973
797
Non-GAAP gross profit
$
214,726
$
147,385
$
593,891
$
413,721
Non-GAAP gross margin
79
%
76
%
78
%
75
%
We calculate non-GAAP gross profit, as GAAP gross profit
excluding equity and cash settled stock-based compensation expense
allocated to cost of revenue and amortization of acquired
intangible assets allocated to cost of revenue. Non-GAAP gross
margin is calculated as non-GAAP gross profit divided by total
revenue.
Non-GAAP Operating Income (Loss) and Margin
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
(In thousands)
GAAP operating loss
$
(277,464
)
$
(81,991
)
$
(747,707
)
$
(244,063
)
Add: Stock-based compensation expense,
including cash settled(1)
276,820
84,122
764,592
218,049
Add: Amortization of acquired intangible
assets
563
363
1,290
1,091
Add: Acquisition related costs
$
13,430
$
—
$
13,430
$
—
Non-GAAP operating income (loss)
$
13,349
$
2,494
$
31,605
$
(24,923
)
Non-GAAP operating margin
5
%
1
%
4
%
(5
)%
We calculate non-GAAP operating income (loss), as GAAP operating
loss excluding equity and cash settled stock-based compensation
expense, amortization of acquired intangible assets and acquisition
related costs. Non-GAAP operating margin is calculated as non-GAAP
operating income (loss) divided by total revenue.
Non-GAAP Net Income (Loss) and Net Income (Loss) Per
Share
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
(In thousands, except share
and per share data)
GAAP net loss
$
(286,033
)
$
(85,688
)
$
(749,374
)
$
(258,027
)
Add: Stock-based compensation expense,
including cash settled(1)
276,820
84,122
764,592
218,049
Add: Amortization of acquired intangible
assets
563
363
1,290
1,091
Add: Acquisition related costs
13,430
—
13,430
—
Add: Tax impact of the non-GAAP
adjustments
1,094
821
3,481
1,046
Non-GAAP net income (loss)
$
5,874
$
(382
)
$
33,419
$
(37,841
)
Weighted-average Class A and Class B
shares used in computing non-GAAP net income (loss) per share
attributable to common stockholders, basic and diluted
515,212,996
423,170,610
503,781,082
423,170,610
Non-GAAP net income (loss) per share
attributable to common stockholders, basic and diluted
$
0.01
$
0.00
$
0.07
$
(0.09
)
We calculate non-GAAP net income (loss) as GAAP net loss
excluding equity and cash settled stock-based compensation expense,
amortization of acquired intangible assets, acquisition related
costs, and the tax impact of the non-GAAP adjustments. Non-GAAP net
income (loss) per share is calculated as non-GAAP net income (loss)
divided by the weighted-average Class A and Class B shares
attributable to common stockholders.
Free Cash Flow and Margin
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
(In thousands)
(In thousands)
Net cash provided by (used in) operating
activities
$
410
$
(90,007
)
$
(10,863
)
$
(312,229
)
Less: Capital expenditures
(13,464
)
(17,217
)
(29,711
)
(43,054
)
Free cash flow
(13,054
)
(107,224
)
(40,574
)
(355,283
)
Free cash flow margin
(5
)%
(56
)%
(5
)%
(65
)%
We calculate free cash flow as net cash provided by operating
activities less capital expenditures. Free cash flow margin is
calculated as free cash flow divided by total revenue. We incurred
significant cash outflows in connection with the settlement of
liability-classified, stock-based awards in accordance with SAP’s
employee equity compensation programs. Our free cash flow for the
three months ended September 30, 2021 and 2020 includes $2.9
million and $96.9 million, respectively, in cash outflows related
to the settlement of liability-classified, stock-based awards. Our
free cash flow for the nine months ended September 30, 2021 and
2020 includes $76.9 million and $284.0 million, respectively, in
cash outflows related to the settlement of liability-classified,
stock-based awards.
________________
(1)
Our stock-based compensation expense
reflects the recognition of both equity-classified awards and
liability-classified awards. Liability-classified awards are
settled in cash in accordance with SAP’s employee equity
compensation programs. Liability-classified awards are recorded
according to mark-to-market accounting. On January 28, 2021, the
Company completed a voluntary exchange offer pursuant to which 5.4
million cash-settled legacy restricted stock awards, restricted
stock unit (RSU) awards, and options (together, Qualtrics Rights)
and 1.3 million cash-settled SAP RSU awards were exchanged into
12.8 million equity-settled Qualtrics RSU awards, representing 93%
of the outstanding Qualtrics Rights and SAP RSU awards. On
September 13, 2021, the Company completed an additional voluntary
exchange offer for certain employees in Australian that were not
eligible for the January 28, 2021 exchange, pursuant to which less
that 0.1 million cash-settled Qualtrics Rights and SAP RSU awards
were exchanged and modified into equity-settled Qualtrics RSU
awards.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211020006013/en/
Investor Relations: Steven Wu Head of FP&A and
Investor Relations investors@qualtrics.com
Public Relations: Gina Sheibley Chief Communications
Officer press@qualtrics.com
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