PR Newswire | Mar 9, 2021 04:10PM EST

03/09 15:10 CST

Qualtrics Reports Fourth Quarter and Full Year 2020 Financial Results- Full Year 2020 Total Revenues of $763.5M, up 29% Year-over-year- Q4 Total Revenues of $213.6M, up 24% Year-over-year- Full Year 2020 Subscription Revenues of $575.4M, up 34% Year-over-year- Q4 Subscription Revenues of $160.4M, up 33% Year-over-year- Total Remaining Performance Obligations[1] of $1,144.4M, up 78% Year-over-year- Next 12 Months Remaining Performance Obligations of $645.4M, up 49% Year-over-year SALT LAKE CITY and SEATTLE, March 9, 2021

SALT LAKE CITY and SEATTLE, March 9, 2021 /PRNewswire/ -- Qualtrics (NASDAQ: XM), the leader in customer and employee experience and creator of the experience management category, today announced financial results for the fourth quarter and fiscal year ended December 31, 2020.

"With virtually everything moving to digital, Qualtrics' mission to help companies design and continuously improve the experiences they deliver has never been more relevant, and that is reflected in our outstanding Q4 and 2020 results," said Zig Serafin, CEO, Qualtrics. "We're innovating faster than ever before to make our more than 13,500 customers successful, and we're well positioned for continued strong growth in 2021."

Fourth Quarter 2020 Financial Highlights:

* Revenue: Total revenues for the fourth quarter were $213.6 million, up 24% year-over-year. Subscription revenues for the fourth quarter were $160.4 million, up from $120.5 million one year ago, an increase of 33% year-over-year. * Operating Loss and Margin: Fourth quarter operating loss was $11.0 million, compared to $145.0 million one year ago. Non-GAAP operating loss (see discussion of non-GAAP operating loss and margin measures below) was $4.7 million, compared to $18.5 million one year ago. For the fourth quarter, GAAP operating margin was (5)% and non-GAAP operating margin was (2)%. * Net Loss and Net Loss Per Share: Fourth quarter net loss was $14.5 million, or $(0.03) per share, compared to $147.3 million, or $(0.35) per share in the fourth quarter of fiscal year 2019. Non-GAAP net loss (see discussion of non-GAAP net loss measure below) for the fourth quarter was $8.1 million, or $(0.02) per share, compared to $20.3 million, or $(0.05) per share in the fourth quarter of fiscal year 2019. * Cash and Cash Equivalents: Total cash and cash equivalents as of December 31, 2020 was $203.9 million

Full Year 2020 Financial Highlights:

* Revenue: Total revenues for the fiscal year ended December 31, 2020 were $763.5 million, up from $591.2 million one year ago, an increase of 29% year-over-year. Subscription revenues were $575.4 million, up from $430.0 million one year ago, an increase of 34% year-over-year. * Operating Loss and Margin: Operating loss for the year was $255.1 million, compared to operating loss of $994.1 million in 2019. Non-GAAP operating loss for the year was $29.6 million, compared to $49.5 million in fiscal 2019. For the fiscal year 2020, Operating margin was (33)% and non-GAAP operating margin was (4)%. * Net Loss and Net Loss Per Share: Fiscal year 2020 net loss was $272.5 million, or $(0.64) per share, compared to $1,007.6 million in fiscal year 2019, or $(1.76) per share from January 23, 2019 through December 31, 2019. Non-GAAP net loss for the year was $46.0 million, or $(0.11) per share, compared to $59.3 million in fiscal year 2019, or $(0.12) per share from January 23, 2019 through December 31, 2019.

[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.

Financial Outlook:

Qualtrics is providing guidance for its first quarter ending March 31, 2021 as follows:

* Subscription revenues between $176 and $178 million. * Total revenues between $226 and $228 million. * Non-GAAP operating margin between (1%) and (2%). * Non-GAAP net loss per share between $(0.02) and $(0.04) assuming 487 million weighted shares outstanding.

Qualtrics is providing guidance for its full year ending December 31, 2021 as follows:

* Subscription revenues between $738 and $742 million. * Total revenues between $950 and $954 million. * Non-GAAP operating margin between (4%) and (5%). * Non-GAAP net loss per share between $(0.16) and $(0.18) assuming 513 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 loss, non-GAAP operating margin, non-GAAP net loss and non-GAAP net 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 CallQualtrics plans to host a conference call today to review its fiscal fourth quarter and full year 2020 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 QualtricsQualtrics, the leader in customer experience 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 are using Qualtrics to listen, understand, and take action on experience data (X-data(tm))--the beliefs, emotions, and intentions that tell you why things are happening, and what to do about it. The Qualtrics XM Platform(tm) 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. To learn more, please visit qualtrics.com.

Forward-Looking StatementsThis 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 first 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 will be included under the caption "Risk Factors" and elsewhere in Qualtrics' Annual Report on Form 10-K that will be 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 MeasuresTo 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 loss, non-GAAP operating margin, non-GAAP net loss, non-GAAP net 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, advisory and legal costs related to the SAP Acquisition, and the tax impact of the non-GAAP adjustments. 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.

Investor Relations:Steven WuHead of FP&A and Investor Relationsinvestors@qualtrics.com

Public Relations:Gina SheibleyChief Communications Officerpress@qualtrics.com

Qualtrics International Inc.

Consolidated Balance Sheets

(Unaudited, in thousands, except share and par value)



As of December 31,

2020 2019



Assets

Current assets:

Cash and cash equivalents $203,891 $42,467

Accounts receivable, net of allowance 296,148 193,692

Deferred contract acquisition costs, net 43,429 22,168

Prepaid expenses and other current assets 48,130 37,090

Total current assets 591,598 295,417

Non-current assets:

Property and equipment, net 116,120 51,067

Right-of-use assets from operating leases 195,372 184,838

Goodwill 6,709 6,709

Other intangible assets, net 3,959 5,414

Deferred contract acquisition costs, net of 115,837 54,832 current portion

Deferred tax assets 92 3,313

Other assets 9,368 1,694

Total assets $1,039,055$603,284



Liabilities, redeemable convertible preferred stock, and deficit

Current liabilities:

Lease liabilities $7,125 $7,893

Accounts payable 30,452 31,707

Accrued liabilities 225,046 80,029

Liability-classified, stock-based awards 209,286 286,991

Deferred revenue 495,638 382,602

Total current liabilities 967,547 789,222

Non-current liabilities:

Lease liabilities, net of current portion 235,620 182,274

Liability-classified, stock-based awards, net of 76,627 161,237 current portion

Deferred revenue, net of current portion 5,477 4,182

Deferred tax liabilities 5,970 -

Other liabilities 16,716 6,889

Total liabilities $1,307,957$1,143,804

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 1 - outstanding 6,000,000 and no shares as of December 31, 2020 and 2019

Class B common stock, par value $0.0001 per share; authorized 1,000,000,000 shares; issued and 42 42 outstanding 423,170,610 and 423,170,610 as of December 31, 2020 and 2019

Additional paid in capital 1,126,631 586,631

Accumulated other comprehensive income (loss) 3,191 (928)

Accumulated deficit (1,398,767)(1,126,265)

Total deficit (268,902) (540,520)

Total liabilities, redeemable convertible $1,039,055$603,284 preferred stock, and deficit

Qualtrics International Inc.

Consolidated Statements of Operations

(Unaudited, in thousands, except share data)



Three Months Ended December 31, Year Ended December 31,

2020 2019 2020 2019

Revenue:

Subscription $160,397 $120,476 $575,397 $430,038

Professional services and other53,169 52,331 188,125 161,117

Total revenue 213,566 172,807 763,522 591,155

Cost of revenue:

Subscription 15,697 16,419 62,671 67,982

Professional services and other35,756 36,817 135,816 117,509

Total cost of revenue 51,453 53,236 198,487 185,491

Gross profit 162,113 119,571 565,035 405,664

Operating expenses:

Research and development 43,810 58,658 212,795 242,124

Sales and marketing 109,019 112,871 431,794 440,325

General and administrative 20,274 93,021 175,499 717,363

Total operating expenses 173,103 264,550 820,088 1,399,812

Operating loss (10,990) (144,979) (255,053) (994,148)

Other non-operating income (489) 180 (972) (486) (expense), net

Loss before income taxes (11,479) (144,799) (256,025) (994,634)

Provision for income taxes 2,996 2,471 16,477 12,999

Net loss $(14,475) $(147,270) $(272,502) $(1,007,633)



Three Months Three Months Year Ended January 23, 2019 Ended D Ended December 31, 2020through ecember 31, 2020December 31, 2019 December 31, 2019



Net loss per share attributable$(0.03) $(0.35) $(0.64) $(1.76) to common stockholder, basic

Weighted-average Class A and Class B shares used in computing net loss per share 423,829,951 423,170,610 423,334,994 423,170,610 attributable to common stockholder, basic

Qualtrics International Inc.

Consolidated Statements of Cash Flows

(Unaudited, in thousands)



Three Months Ended December 31,Year Ended December 31,

2020 2019 2020 2019

Cash flows from operating activities

Net loss $(14,475) $(147,270) $(272,502)$(1,007,633)

Adjustments to reconcile net loss to net cash used in operating activities

Depreciation and amortization 7,887 5,661 26,457 19,715

Reduction of right-of-use assets from4,773 4,088 17,202 9,031 operating leases

Stock-based compensation expense, 5,964 126,105 224,013 876,226 including cash settled

Amortization of deferred contract 9,715 5,642 32,098 19,513 acquisition costs

Deferred income taxes 10,528 (1,921) 13,200 (5,321)

Changes in assets and liabilities:

Accounts receivable, net (135,469) (68,787) (103,692) (54,320)

Prepaid expenses and other current (3,195) (13,084) (10,773) (17,533) assets

Deferred contract acquisitions costs (48,393) (13,011) (111,686) (47,734)

Other assets (1,214) (190) (7,592) 1,801

Lease liabilities 24,528 (2,307) 24,741 (6,375)

Accounts payable (1,487) 6,537 (282) 7,219

Accrued liabilities 24,388 20,262 22,546 44,662

Deferred revenue 119,902 55,131 114,331 102,562

Other liabilities 2,701 (2,203) 9,826 55

Settlement of stock-based payments (104,646) (99,602) (388,609) (312,772) liabilities

Net cash flows used in operating (98,493) (124,949) (410,722) (370,904) activities



Cash flows from investing activities

Purchases of property and equipment (46,464) (6,712) (89,518) (33,181)

Net cash flows used in investing (46,464) (6,712) (89,518) (33,181) activities



Cash flows from financing activities

Proceeds from capital contributions 140,000 115,000 540,000 869,500 from SAP

Proceeds from issuance of class A 120,000 - 120,000 - common stock

Settlement of equity-based awards - - - (539,707)

Net cash flows provided by financing 260,000 115,000 660,000 329,793 activities

Effect of changes in exchange rates 1,348 152 1,664 1,316 on cash and cash equivalents

Net increase (decrease) in cash and 116,391 (16,509) 161,424 (72,976) cash equivalents

Cash and cash equivalents at the 87,500 58,976 42,467 115,443 beginning of the period

Cash and cash equivalents at the end $203,891 $42,467 $203,891 $42,467 of the period

Qualtrics International Inc.

Reconciliation of GAAP to Non-GAAP Measures

(Unaudited, in thousands)



Non-GAAP Gross Profit and Margin



Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

(In thousands)

GAAP gross profit $162,113 $119,571 $565,035 $405,664

Add: Stock-based compensation expense, including cash settled^(1)1,367 6,420 11,369 41,304

Add: Amortization of acquired intangible assets 265 282 1,062 1,160

Non-GAAP gross profit $163,745 $126,273 $577,466 $448,128

Non-GAAP gross margin 77 %73 %76 %76 %

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 Loss and Margin



Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

(In thousands)

GAAP operating loss $(10,990) $(144,979) $(255,053) $(994,148)

Add: Stock-based compensation expense, including cash settled^(1)5,964 126,105 224,013 876,226

Add: Amortization of acquired intangible assets 363 360 1,454 1,478

Add: Advisory and legal costs related to the SAP Acquisition - - - 66,992

Non-GAAP operating loss $(4,663) $(18,514) $(29,586) $(49,452)

Non-GAAP operating margin (2) %(11) %(4) %(8) %

We calculate non-GAAP operating loss as: GAAP operating loss excluding equity and cash settled stock-based compensation expense, amortization of acquired intangible assets, and advisory and legal costs related to the SAP Acquisition. Non-GAAP operating margin is calculated as non-GAAP operating loss divided by total revenue.

Non-GAAP Net Loss and Net Loss Per Share



Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

(In thousands)

GAAP net loss $(14,475) $ (147,270) $ (272,502) $(1,007,633)

Add: Stock-based compensation expense, including cash settled^(1)5,964 126,105 224,013 876,226

Add: Amortization of acquired intangible assets 363 360 1,454 1,478

Add: Advisory and legal costs related to the SAP Acquisition - - - 66,992

Add: Tax impact of the non-GAAP adjustments 29 530 1,075 3,684

Non-GAAP net loss $(8,119) $ (20,275) $ (45,960) $(59,253)



Three Months Three Months Year Ended January 23, 2019 Ended Ended December 31, 2020through December 31, 2020December 31, 2019 December 31, 2019

Weighted-average Class A and Class B shares used in computing non-GAAP net loss per share attributable to common stockholder, 423,829,951 423,170,610 423,334,994 423,170,610 basic

Non-GAAP net loss per share attributable to common stockholder, $(0.02) $ (0.05) $ (0.11) $(0.12) basic

We calculate non-GAAP net loss as: GAAP net loss excluding equity and cash settled stock-based compensation expense, amortization of acquired intangible assets, advisory and legal costs related to the SAP Acquisition, and the tax impact of the non-GAAP adjustments. Non-GAAP net loss per share is calculated as non-GAAP net loss divided by the weighted-average Class A and Class B shares attributable to common stockholders. Due to the impact of the SAP acquisition of Qualtrics, the Company's capital structure for the years ended December 31, 2020 and 2019 are not comparable. As a result, the presentation of net loss per share for the period prior to the SAP acquisition is not meaningful and only net loss per share for periods subsequent to the SAP acquisition of Qualtrics are presented.

Free Cash Flow and Margin



Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

(In thousands)

Net cash used in operating activities$(98,493) $(124,949) $(410,722) $(370,904)

Less: Capital expenditures (46,464) (6,712) (89,518) (33,181)

Free cash flow (144,957) (131,661) (500,240) (404,085)

Free cash flow margin (68) %(76) %(66) %(68) %

As a result of the SAP Acquisition, 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. We calculate free cash flow as net cash provided by operating activities less capital expenditures. Our free cash flow for the three months ended December 31, 2020 and 2019 and for the year ended December 31, 2020 and 2019 includes $104.6 million, $99.6 million, $388.6 million and $379.8 million, respectively, in cash outflows related to the settlement of liability-classified, stock-based awards and advisory and legal costs related to the SAP Acquisition. Free cash flow margin is calculated as free cash flow divided by total revenue.

________________

(1)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. Liability-classified awards are recorded according to mark-to-market accounting.

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SOURCE Qualtrics