Qualtrics Is Getting Ready for an IPO With a $14 Billion Valuation

By Bruce Harpham Saturday, January 9, 2021

Qualtrics, currently owned by SAP, is about to become a public company again. The move comes less than three years after SAP bought the business software company for $8 billion in 2018. Paperwork filed with the Securities and Exchange Commission (SEC) suggests a possible valuation of $14 billion. SAP plans to retain a small stake in the company, which should boost SAP's stock price.

Inside Qualtrics’s Company Numbers

Qualtrics has maintained a significant growth rate despite being owned by one of the technology industry's largest firms. SAP has over 100,000 employees, while Qualtrics has only three thousand. Qualtrics also has a significant number of employees in Utah, and it has been successful in attracting talent from higher-cost areas such as California.

  • Revenue Growth: In the first three quarters of 2020, the company earned $549 million in revenue, up from $418 million in the same period of 2019. Despite the revenue growth, the company is still operating at a loss. The business had a loss of $258 million in the first nine months of 2020.
  • Annual Contracts: The majority of Qualtrics's revenue is based on contracts lasting one year or longer.
  • Significant Non-Software Revenue: The company earned about 25% of its 2020 revenue from professional services and other activities. The business places much emphasis on services and is likely to continue to do so as it helps large companies implement its software.
  • Customers: Qualtrics has more than 12,000 customers, and 1,200 of them pay more than $100,000 in annual recurring revenue. Furthermore, the company has over sixty customers who pay more than $1 million per year. Their business has gradually grown its number of high-paying customers over the past few years. Additionally, Qualtrics’s customer list includes major brands in clothing (e.g., Under Armour and L.L. Bean), automotive (e.g., BMV), and telecom (e.g., Telefonica). The reputation of their business speaks for itself as the company has a majority of Fortune 100 companies as customers.

Keeping Ties With SAP

Despite the planned initial public offering (IPO), Qualtrics will retain business ties to SAP in the form of product integrations. The company also has a partner network of more than two hundred companies. These relationships will help the firm maintain its growth.

Spending Heavily for Business Growth

Qualtrics is continuing to allocate a significant amount of resources into their business to secure growth. The company spent over $300 million on sales and marketing in the first nine months of 2020. In contrast, research and development spending in 2020 was down compared to 2019.

SAP Acquisition Costs Slow Qualtrics Growth

Many startup founders dream of being acquired by a larger technology firm, but they may not realize the costs such deals involve. However, such acquisitions can be quite costly. In Qualtrics’s case, acquisition-related costs include legal fees and the cost of equity incentive programs for employees. These costs are likely to fall as the company leaves SAP behind.

About the Author


Headshot for author Bruce Harpham

Bruce Harpham is an author and marketing consultant based in Canada. His first book "Project Managers At Work" shared real-world success lessons from NASA, Google, and other organizations. His articles have been published in CIO.com, InfoWorld, Canadian Business, and other organizations. Visit BruceHarpham.com for articles, interviews with tech leaders, and updates on future books.

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