What happened
Shares of Qualtrics (XM) had a nice 6% rally today after the company reported knockout earnings for the fourth quarter of 2021. Though the stock is trading close to all-time lows since its IPO early last year, the leader in experience management software is still very much in high-growth mode. Shares are currently 57% off of all-time highs.
Image source: Getty Images.
So what
As for the Q4 2021 numbers, Qualtrics' revenue surged 48% higher year over year to $316 million. Adjusted net loss was $39.4 million, higher than the $8.1 million loss the same period last year due to elevated research and development, sales and marketing, and admin expense. General admin expenses were particularly high this year due to the IPO from former parent SAP, and stock-based compensation is still being awarded at a high rate in relation to the spinoff last January.
Nevertheless, it was a banner year for Qualtrics as its 41% full-year 2021 growth propelled it beyond the $1 billion in annual sales milestone. With digital experiences only growing in prevalence -- both within the workplace and for customer-facing applications and services -- Qualtrics thinks it has lots of growth runway left ahead of it.
Now what
What was once a sky-high valuation is starting to look far more reasonable. Qualtrics stock currently trades for just over nine times expected 2022 revenue-to-enterprise value. Management's guidance for 2022 is calling for about a 30% rise in revenue, and adjusted earnings are expected to come in at breakeven. There are no profits, at least not yet, which reflects continual aggressive spending on sales and marketing.
Nevertheless, with over $1 billion in cash and equivalents and no debt, and still growing at a rapid pace, now looks like the time to give this software company a closer look after the steep sell-off it's endured in the last couple months.
