Qualtrics International (XM), which bills itself as the leader and creator of the experience management (XM) category, is slated to report its fourth-quarter and full-year 2021 results after the market close on Wednesday, Jan. 26. An analyst conference call is scheduled to follow at 5 p.m. ET.
Qualtrics has comfortably beat Wall Street's earnings estimates in all four quarters that it has reported since it held its initial public offering (IPO) in January 2021. Indeed, last quarter, it even posted a surprise adjusted profit along with speeding by analysts' revenue expectation. (The company's IPO was a partial spinoff from German software giant SAP, which kept a controlling stake.)
Given this track record, investors are probably optimistic about Qualtrics turning in another quarterly report that exceeds the Street's consensus estimates. However, even better-than-expected results and guidance don't necessarily mean the stock will rise following the release. Tech stocks have recently been under pressure because of the expectation that the Federal Reserve will raise interest rates several times this year.
As for the stock, it closed at $26.38 on Tuesday, Jan. 18. That's just slightly down from its IPO price of $30, but off significantly -- 37% -- from its opening price of $41.85 on its first day of trading.
Here's what to watch in Qualtrics' upcoming fourth-quarter report.
Image source: Getty Images.
Qualtrics' key quarterly numbers
| Metric | Q4 2020 Result | Qualtrics' Q4 2021 Guidance | Wall Street's Q4 2021 Consensus Estimate | Wall Street's Projected Change |
|---|---|---|---|---|
|
Revenue |
$213.6 million |
$296 million to $298 million |
$297.6 million |
39% |
|
Adjusted earnings (loss) per share |
($0.02) |
($0.04) to ($0.02) |
($0.02) | N/A |
Data sources: Qualtrics International and Yahoo! Finance.
Qualtrics' revenue will get a boost in the fourth quarter from its $1.1 billion acquisition of Clarabridge, which closed on Oct. 1, 2021. Clarabridge is reportedly a leader in omnichannel conversational analytics.
For context, in the third quarter, Qualtrics' total sales grew 41% year over year to $271.6 million, driven by a 49% surge in subscription revenue to $220.3 million.
For the third quarter, the net loss according to generally accepted accounting principles (GAAP) was $286 million, or $0.56 per share, compared with a net loss of $85.7 million, or $0.20 per share, in the year-ago period. Adjusted for one-time items, net income was $5.9 million, or $0.01 per share, up from a net loss of $0.4 million, or $0.00 (breakeven) per share, in the year-ago quarter.
Wall Street was looking for an adjusted loss of $0.02 per share on revenue of $258.2 million. So, Qualtrics' third-quarter results easily beat both expectations. It also raced by its own guidance, which was for revenue between $257 million and $259 million, and an adjusted loss per share between $0.03 and $0.01.
Key metrics
Along with the usual or headline numbers, investors should also focus on key customer metrics. Management has been discussing these metrics on the earnings call.
Last quarter, the number of customers spending more than $100,000 in annual recurring revenue grew 38% year over year to 1,668 customers. And Qualtrics' dollar-based net retention rate was 125%. This means that existing customers increased their spending on the company's offerings by an average of 25% over the year-ago period.
Guidance
The market's reaction to Qualtrics' earnings release will probably hinge more on guidance than on fourth-quarter results.
Wall Street is currently modeling for first-quarter revenue to increase 32% year over year to $314.7 million. Adjusted for one-time items, analysts expect a loss of $0.01, compared to a profit of $0.01 in the year-ago period.
