Office Pub Adds To Qualtrics Experience
How can a company that booked a loss of $1.1bn in each of the last two years be valued at $11bn? Because its annual recurring subscription revenue has been growing at a fast clip. That’s the case with Qualtrics, which pioneered a new category of software, experience management, also known as XM.
The pitch is that Qualtrics software enables organisations
“to find and fix broken experiences and drive operational improvements to improve customer loyalty, increase employee retention, and become a brand that people love”.
How this works in practice is that Qualtrics uses surveys to collect post-transaction feedback to monitor trends in satisfaction scores, bring together all of the experience data, analyse it with “native advanced AIpowered analytics”, and then enable “real-time action to continually improve the experiences customers deliver to their customers and employees”.
There is a workplace angle too, as Qualtrics helps employers “understand exactly where and why employees are frustrated so they can quickly intervene to keep their employees productive and reduce unwanted attrition”.
As of December 2022, the Qualtrics XM platform had attracted 18,750 customers, including 90% of America’s largest corporates. The company’s
annual report for 2022 boasts that c.250,000 people list ‘Qualtrics’ as a skill on LinkedIn, and 5.6 million LinkedIn members list ‘experience management’ as a skill. According to the firm, this demonstrates Qualtrics’ “transformative influence on the world of work”.
Subscription revenue grew 40% in 2022 to $1.2bn following 50% growth the previous year. Fast growth American software firms achieve this level expansion due to massive spending on sales and marketing — $890m in 2022, or 60% of annual turnover.
At the end of last year, Qualtrics had racked up losses of $3.5bn since inception, and investors were in for $5.4bn. However, with private equity investor Silver Lake and a Canadian pension fund acquiring Qualtrics at a $11bn valuation in June, shareholders have come out ahead.
The takeover coincided with Qualtrics opening its new EMEA headquarters in Dublin. The company first located in Dublin a decade ago, and the new office will house a planned R&D Innovation Centre — subject to Silver Lake not tightening the purse strings, as sometimes happens when PE firms take control of loss-making ventures.
The new HQ has an ‘employee enablement hub’, gym, wellness studio and pub for use by almost 400 staff. Some of them did well from the Silver Lake deal too. Filings for Qualtrics Ireland Ltd, which accounted for 22 of the staff complement in 2021, disclose average share awards of €100,000, on top of average annual pay of c.€90,000.