- Q1 2022 total revenue of $335.6M, up 41% year over
year
- Q1 2022 subscription revenue of $280.8M, up 50% year over
year
- Total remaining performance obligations1 of $1,766.6M, up
48% year over year
- Next 12 months remaining performance obligations of
$1,031.9M, up 52% year over year
Qualtrics (NASDAQ: XM), the leader and creator of the Experience
Management (XM) category, today announced financial results for the
first quarter ended March 31, 2022.
“Q1 was an outstanding quarter for Qualtrics – in fact, it was
the biggest Q1 in our history,” said Qualtrics CEO Zig Serafin.
“These results highlight the demand for experience management as
companies of every size and in every industry navigate an uncertain
environment. I’m particularly pleased to deliver another quarter of
positive non-GAAP operating margin while continuing to invest in
long-term, durable growth.”
First Quarter 2022 Financial Highlights:
- Revenue: Total revenue for the first quarter was $335.6
million, up from $238.6 million one year ago, an increase of 41%
year over year. Subscription revenue for the first quarter was
$280.8 million, up from $186.9 million one year ago, an increase of
50% year over year.
- Operating Income (Loss) and Margin: First quarter
operating loss was $(290.5) million, compared to $(196.6) million
one year ago. Non-GAAP operating income (see discussion of non-GAAP
operating income and margin measures below) was $4.1 million,
compared to non-GAAP operating income of $6.8 million one year ago.
For the first quarter, GAAP operating margin was (87)% and non-GAAP
operating margin was 1%, compared to GAAP operating margin of (82)%
and non-GAAP operating margin of 3% one year ago.
- Net Income (Loss) and Net Income (Loss) Per Share: First
quarter net loss was $(292.3) million, or $(0.51) per share,
compared to $(199.9) million, or $(0.41) per share in the first
quarter of fiscal year 2021. Non-GAAP net income (see discussion of
the non-GAAP net income measure below) for the first quarter was
$3.4 million, or $0.01 per share, compared to non-GAAP net income
of $5.3 million, or $0.01 per share in the first quarter of fiscal
year 2021.
- Cash and Cash Equivalents: Total cash and cash
equivalents as of March 31, 2022 was $836.4 million.
Financial Outlook:
Qualtrics is providing guidance for its second quarter ending
June 30, 2022 as follows:
- Total revenue between $344 and $346 million.
- Subscription revenue between $291 and $293 million.
- Non-GAAP operating margin between 1.5% and 2.5%.
- Non-GAAP net income (loss) per share between $(0.01) and $0.01
assuming 585 million weighted shares outstanding.
Qualtrics is updating its guidance for its full year ending
December 31, 2022 as follows:
- Total revenue between $1,428 and $1,432 million.
- Subscription revenue between $1,202 and $1,206 million.
- Non-GAAP operating margin between 1% and 3%.
- Non-GAAP net income per share between $0.00 and $0.02 assuming
595 million weighted shares outstanding.
The guidance provided above constitutes 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.
_____________________
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.
Non-GAAP operating income, non-GAAP operating margin, non-GAAP
net income, and non-GAAP net income 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 first quarter 2022 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 16,750 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 second quarter of 2022 and full year 2022. 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 Quarterly Reports 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, non-GAAP operating margin, non-GAAP net income,
non-GAAP net income 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, including employer payroll tax
on employee stock transactions, amortization of acquired intangible
assets, acquisition related costs, changes in the fair value of our
distribution liability for our tax sharing agreement with SAP, and
the tax impact of the non-GAAP adjustments, as applicable.
We revised our non-GAAP definitions during the current quarter
to exclude employer payroll taxes on employee stock transactions.
The amount of employer payroll tax on employee stock transactions
is dependent on our stock price and other factors that are beyond
our control and do not correlate with the core operation of our
business. Going forward, we expect these expenses to increase
relative to prior periods as a result of the vesting of restricted
stock units (RSUs), and we believe it is useful to exclude these
expenses in order to help investors better understand the long-term
performance of our core business. The revisions to these
definitions had no material impact on our reported non-GAAP
financial measures for periods prior to the three months ended
March 31, 2022.
When evaluating the performance of our business and making
operating plans, we do not consider the items excluded from our
non-GAAP definitions (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 items
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.
Qualtrics International
Inc.
Consolidated Balance
Sheets
(Unaudited, in thousands,
except share and par value)
As of March 31, 2022
As of December 31,
2021
Assets
Current assets:
Cash and cash equivalents
$
836,448
$
1,014,511
Accounts receivable, net of allowances
366,314
461,830
Deferred contract acquisition costs,
net
64,876
60,455
Prepaid expenses and other current
assets
76,082
68,887
Total current assets
1,343,720
1,605,683
Non-current assets:
Property and equipment, net
199,392
192,327
Right-of-use assets from operating
leases
236,344
227,320
Goodwill
1,119,548
1,118,768
Other intangible assets, net
250,303
264,500
Deferred contract acquisition costs, net
of current portion
151,956
145,952
Deferred tax assets
1,301
96
Other assets
28,414
27,577
Total assets
$
3,330,978
$
3,582,223
Liabilities and equity (deficit)
Current liabilities:
Lease liabilities
$
20,870
$
18,898
Accounts payable
70,865
84,053
Accrued liabilities
127,417
167,402
Liability-classified, stock-based
awards
2,249
4,519
Deferred revenue
746,328
748,145
Total current liabilities
967,729
1,023,017
Non-current liabilities:
Lease liabilities, net of current
portion
274,131
263,307
Liability-classified, stock-based awards,
net of current portion
—
52
Deferred revenue, net of current
portion
9,978
6,698
Deferred tax liabilities
24,539
23,653
Other liabilities
78,511
78,796
Total liabilities
$
1,354,888
$
1,395,523
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
158,862,119 and 147,309,254 shares as of March 31, 2022 and
December 31, 2021
16
15
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 March 31, 2022 and December 31,
2021
42
42
Additional paid in capital
4,727,962
4,645,800
Accumulated other comprehensive loss
(1,692
)
(1,244
)
Accumulated deficit
(2,750,238
)
(2,457,913
)
Total equity (deficit)
1,976,090
2,186,700
Total liabilities and equity (deficit)
$
3,330,978
$
3,582,223
Qualtrics International
Inc.
Consolidated Statements of
Operations
(Unaudited, in thousands,
except share and per share data)
Three Months Ended March
31,
2022
2021
Revenue:
Subscription
$
280,808
$
186,896
Professional services and other
54,839
51,747
Total revenue
335,647
238,643
Cost of revenue:
Subscription
44,774
20,370
Professional services and other
54,493
41,411
Total cost of revenue
99,267
61,781
Gross profit
236,380
176,862
Operating expenses:
Research and development
105,999
62,806
Sales and marketing
218,330
136,181
General and administrative
202,589
174,449
Total operating expenses
526,918
373,436
Operating loss
(290,538
)
(196,574
)
Other non-operating income (expense),
net
674
(1,740
)
Loss before income taxes
(289,864
)
(198,314
)
Provision for income taxes
2,461
1,540
Net loss
$
(292,325
)
$
(199,854
)
Net loss per share attributable to common
stockholder, basic and diluted
$
(0.51
)
$
(0.41
)
Weighted-average Class A and Class B
shares used in computing net loss per share attributable to common
stockholders, basic and diluted
575,700,568
482,260,465
Cost of revenue and operating expenses includes:
Stock-based compensation expense as follows:
Three Months Ended March
31,
in thousands
2022
2021
Cost of subscription revenue
$ 4,544
$ 2,624
Cost of professional services and other
revenue
8,066
4,430
Research and development
41,275
21,332
Sales and marketing
49,053
22,777
General and administrative
165,323
151,836
Total stock-based compensation expense,
including cash settled(a)
$ 268,261
$ 202,999
________________
(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 months ended March 31, 2022 and
2021 consisted of $268.3 million and $203.0 million, respectively,
of liability-classified and equity-classified awards. During the
three months ended March 31, 2022 and 2021, awards of $2.7 million
and $72.0 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 March
31,
in thousands
2022
2021
Cost of revenue
$ 7,572
$ 266
Sales and marketing
5,527
51
General and administrative
318
47
Total amortization of acquired intangible
assets
$ 13,417
$ 364
Qualtrics International
Inc.
Consolidated Statements of
Cash Flows
(Unaudited, in
thousands)
Three Months Ended March
31,
2022
2021
Cash flows from operating
activities
Net loss
$
(292,325
)
$
(199,854
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities
Depreciation and amortization
23,355
7,572
(Gain) loss on disposal of property and
equipment
(17
)
129
Change in fair value of distribution
liability for tax sharing agreement
(1,500
)
—
Reduction of right-of-use assets from
operating leases
7,501
5,704
Stock-based compensation expense,
including cash settled
268,261
202,999
Amortization of deferred contract
acquisition costs
15,812
11,213
Deferred income taxes
(227
)
(554
)
Changes in assets and liabilities:
Accounts receivable, net
95,414
37,072
Prepaid expenses and other current
assets
(7,259
)
(1,138
)
Deferred contract acquisitions costs
(26,809
)
(13,519
)
Other assets
(1,033
)
(7,415
)
Lease liabilities
(3,723
)
(743
)
Accounts payable
(13,472
)
(10,855
)
Accrued liabilities
(40,146
)
(25,731
)
Deferred revenue
1,969
(4,208
)
Other liabilities
(16
)
1,240
Settlement of stock-based payments
liabilities
(2,682
)
(71,997
)
Net cash flows provided by (used in)
operating activities
23,103
(70,085
)
Cash flows from investing
activities
Purchases of property and equipment
(13,173
)
(11,149
)
Net cash flows used in investing
activities
(13,173
)
(11,149
)
Cash flows from financing
activities
Proceeds from capital contributions from
SAP
—
115,000
Proceeds from issuance of class A common
stock, net of underwriting discounts and commissions
—
2,244,322
Payment of costs related to issuance of
class A common stock
—
(2,557
)
Repayment of promissory note
—
(1,892,280
)
Payments for taxes related to net share
settlement of equity awards
(208,920
)
—
Issuance of class A common stock through
Employee Stock Purchase Plan
20,380
—
Proceeds from exercise of stock
options
614
—
Net cash flows provided by (used in)
financing activities
(187,926
)
464,485
Effect of changes in exchange rates on
cash and cash equivalents
(67
)
(606
)
Net increase (decrease) in cash and cash
equivalents
(178,063
)
382,645
Cash and cash equivalents at the beginning
of the period
1,014,511
203,891
Cash and cash equivalents at the end of
the period
$
836,448
$
586,536
Qualtrics International
Inc.
Reconciliation of GAAP to
Non-GAAP Measures
(Unaudited, in
thousands)
Non-GAAP Gross Profit and
Margin
Three Months Ended March
31,
2022
2021
(In thousands)
GAAP gross profit
$ 236,380
$ 176,862
Add: Stock-based compensation expense,
including cash settled and employer payroll tax on employee stock
transactions(1)(2)
13,357
7,054
Add: Amortization of acquired intangible
assets
7,572
266
Non-GAAP gross profit
$ 257,309
$ 184,182
Non-GAAP gross margin
77
%
77
%
We calculate non-GAAP gross profit as GAAP gross profit
excluding equity and cash settled stock-based compensation expense
allocated to cost of revenue, including employer payroll tax on
employee stock transactions 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 and
Margin
Three Months Ended March
31,
2022
2021
(In thousands)
GAAP operating loss
$ (290,538
)
$ (196,574
)
Add: Stock-based compensation expense,
including cash settled and employer payroll tax on employee stock
transactions(1)(2)
280,333
202,999
Add: Amortization of acquired intangible
assets
13,417
364
Add: Acquisition related costs
839
—
Non-GAAP operating income
$ 4,051
$ 6,789
Non-GAAP operating margin
1
%
3
%
We calculate non-GAAP operating income as GAAP operating loss
excluding equity and cash settled stock-based compensation expense,
including employer payroll tax on employee stock transactions,
amortization of acquired intangible assets, and acquisition related
costs. Non-GAAP operating margin is calculated as non-GAAP
operating loss divided by total revenue.
Non-GAAP Net Income and Net Income Per Share
Three Months Ended March
31,
2022
2021
(In thousands, except share
and per share data)
GAAP net loss
$ (292,325
)
$ (199,854
)
Add: Stock-based compensation expense,
including cash settled and employer payroll tax on employee stock
transactions(1)(2)
280,333
202,999
Add: Amortization of acquired intangible
assets
13,417
364
Add: Acquisition related costs
839
—
Add: Change in fair value of distribution
liability for tax sharing agreement
(1,500
)
—
Add: Tax impact of the non-GAAP
adjustments
2,685
1,763
Non-GAAP net income
$ 3,449
$ 5,272
Weighted-average Class A and Class B
shares used in computing non-GAAP net income per share attributable
to common stockholder, basic
575,700,568
482,260,465
Non-GAAP net income per share attributable
to common stockholder, basic
$ 0.01
$ 0.01
Weighted-average Class A and Class B
shares used in computing non-GAAP net income per share attributable
to common stockholder, diluted
576,606,156
482,260,465
Non-GAAP net income per share attributable
to common stockholder, diluted
$ 0.01
$ 0.01
We calculate non-GAAP net income as GAAP net loss excluding
equity and cash settled stock-based compensation expense, including
employer payroll tax on employee stock transactions, amortization
of acquired intangible assets, acquisition related costs, changes
in the fair value of our distribution liability for our tax sharing
agreement with SAP, and the tax impact of the non-GAAP adjustments,
as applicable. Non-GAAP net income per share is calculated as
non-GAAP net income divided by the weighted-average Class A and
Class B shares attributable to common stockholders.
Free Cash Flow and Margin
Three Months Ended March
31,
2022
2021
(In thousands)
Net cash provided by (used in) operating
activities
$
23,103
$
(70,085
)
Less: Capital expenditures
(13,173
)
(11,149
)
Free cash flow
9,930
(81,234
)
Free cash flow margin
3
%
(34
)%
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 March 31, 2022 and 2021 includes $2.7 million
and $72.0 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
than 0.1 million cash-settled Qualtrics Rights and SAP RSU awards
were exchanged and modified into equity-settled Qualtrics RSU
awards.
(2) During the three months ended March 31, 2022, employer
payroll tax on employee stock transactions reported in cost of
revenue was $0.7 million and employer payroll tax reported in
operating expenses was $11.3 million. Employer payroll tax on
employee stock transactions was not material during the three
months ended March 31, 2021. The amount of employer payroll
tax-related items on employee stock transactions is dependent on
our stock price and other factors that are beyond our control and
do not correlate with the operation of the business. 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220421006004/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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