Qualtrics Stock: Seeking Growth Amid Great Resignation (NASDAAQ: XM)

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A Quick Take On Qualtrics International

Qualtrics International (XM) went public in January 2021, raising approximately $ 1.55 billion in gross proceeds in an IPO that was priced at $ 30.00 per share.

The firm provides customer and employee experience management software and services to enterprises worldwide.

Given the firm’s high operating losses and the negative market environment for such loss-making firms, I’m on Hold for XM until it can make a meaningful turn toward operating breakeven.

Company & Technology

Provo, Utah and Seattle, Washington-based Qualtrics was founded in 2002 to provide software as a service that empowers organizations with the data they need to keep their customers satisfied through various stages of the customer journey.

Management is headed by Chief Executive Officer, Zig Serafin, who has been with the company since 2016 when he was appointed to the Chief Operating Officer position from Microsoft.

Qualtrics has developed its Experience Management, or XM, platform which it says enables organizations to:

  • Gather and analyze a new class of data it calls experience data, or X-data, that is richer, more immediate, and potentially noteworthy to understanding the quality of experience than traditional operational data.

  • Ensure a quality experience holistically, unifying information and insights from customers, employees, and partners and recognizing the operational linkages between these stakeholders.

  • Become more predictive and proactive, closing feedback loops, and turning insight into real-time action to prevent and close experience insufficiencies where necessary.

  • Decentralize the analysis and decision-making process across the organization by delivering capabilities in a simple, easy-to-use solution.

Below is a brief overview video of Qualtrics:


Qualtrics’ solutions include:

  • Customer Experience

  • Employee Experience

  • Brand Experience

  • Product Experience

  • Design

  • XM Services

The firm’s focus industries, throughout which the company’s solutions are utilized include, but are not limited to, B2B, automotive, government, travel & hospitality, financial services, media, airlines, and retail industries.

XM has invested in its Qualtrics Partner Network, which has more than 200 companies partnering with the firm to extend the platform for individual customization.

XM has over 13,000 organizations as customers located in more than 25 countries, and management believes its market opportunity remains largely underpenetrated.

The firm plans to invest further in its direct sales, indirect sales, and marketing processes with a focus on enterprise customer growth.

The company has developed more outbound sales capability to drive a ‘land and expand’ sales approach since its system can be used by individual teams.

Management also plans to expand its international presence via its hub-and-spoke model of centralized inside sales teams combined with regional direct sales groups.

Qualtrics’ Market & Competition

According to a 2018 market research report by Research and Markets, the global customer experience management market is projected to grow to $ 21.3 billion by 2024, representing a very strong CAGR of 22% during the period between 2018 and 2024.

The main factor driving market growth is the increasing need for personalized customer experience.

Major competitors that provide or are developing customer experience management services include:

  • Medallia

  • Aon Hewitt

  • Towers Watson

  • SurveyMonkey

XM’s Recent Financial Performance

5-Quarter Total Revenue

5-Quarter Total Revenue (Seeking Alpha and The Author)

5-Quarter Gross Profit

5-Quarter Gross Profit (Seeking Alpha and The Author)

5-Quarter Operating Income

5-Quarter Operating Income (Seeking Alpha and The Author)

5-Quarter Earnings Per Share

5-Quarter Earnings Per Share (Seeking Alpha and The Author)

(Source data for above GAAP financial charts)

In the past 12 months, XM’s stock price has dropped 36 percent vs. the US S&P 500 Index’s rise of 8.9 percent, as the chart below indicates:

52-Week Stock Price

52-Week Stock Price (Seeking Alpha)


Valuation Metrics For Qualtrics

Below is a table of relevant capitalization and valuation figures for the company:



Market Capitalization

$ 15,870,000,000

Enterprise Value

$ 15,130,000,000

Price / Sales


Enterprise Value / Sales


Enterprise Value / EBITDA


Free Cash Flow (TTM)

$ 230,950,000

Revenue Growth Rate (TTM)


Earnings Per Share

– $ 2.04


As a reference, a relevant partial public comparable would be Adobe (ADBE); shown below is a comparison of their primary valuation metrics:


Adobe (ADBE)

Qualtrics Int’l (XM)


Price / Sales




Enterprise Value / Sales




Enterprise Value / EBITDA




Free Cash Flow (TTM)

$ 5,780,000,000

$ 230,950,000


Revenue Growth Rate





Commentary On Qualtrics

In its last earnings call, covering FQ4 2021’s results, management highlighted the company’s impressive 128% dollar-based net retention rate, which is an important measure of how efficiently the company is growing its revenue from its existing customer cohorts.

CEO Serafin also touched on the acquisition of Clarabridge, which will add omnichannel conversational analytics to help customers analyze what their customers and employees are communicating online.

Additionally, XM is seeing stronger growth from its Employee Experience segment, as customers work harder to attract and retain employees in a challenging labor market.

As to its financial results, FQ4 subscription revenue grew by 64% year-over-year while non-GAAP gross margin was in line with the previous year.

However, the firm is producing enormous GAAP operating losses and net losses, and free cash flow for the quarter was negative ($ 60 million).

Looking ahead, management expects FQ1 2022 revenue growth to be 31% at the midpoint of the range.

Regarding valuation, Qualtrics is currently being valued by the market at similar revenue multiples as Adobe while growing revenue at a higher rate but producing high GAAP losses.

The primary risk to the stock’s outlook is its continuing high losses, which are being heavily penalized in the current market environment.

Additionally, the US Federal Reserve continues to signal that it will raise interest rates in March, increasing the cost of capital assumptions and putting more downward pressure on technology company valuations.

Given the firm’s high continuing losses and the market environment, I’m on Hold for XM.

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