What happened
Shares of Qualtrics International (XM) jumped on Thursday morning after the enterprise software company reported full-year financial results for 2022. The numbers were better than what many analysts had projected, and that's why the stock was up 28% as of 10:40 a.m. ET.
So what
Businesses use Qualtrics to hear from stakeholders like customers and employees, organize their input, and make changes to improve their experience. The company's full-year 2022 revenue was almost $1.5 billion, up an encouraging 36% from 2021.
Investors are also encouraged by Qualtrics' shrinking net loss. In the fourth quarter of 2022, the company's net loss was $256 million, which is enormous in absolute terms considering Q4 revenue was only $389 million. However, this was a sharp improvement from its net loss of $310 million in the prior-year quarter.
Qualtrics CEO Zig Serafin is optimistic about the company's future, saying that its services help businesses "operate more efficiently in a challenging market."
I believe efficiency is an enterprise software trend worth watching in 2023. As Microsoft CEO Satya Nadella similarly said recently, "Just as we saw customers accelerate their digital spend during the pandemic, we are now seeing them optimize that spend." That's what companies are looking for right now, and Qualtrics believes that's what it offers.
Now what
Revenue growth is resilient for Qualtrics, but the growth rate for this tech stock is undeniably slowing down. Q4 revenue was only up 23% year over year. And at the midpoint of 2023 guidance, management only expects 14% top-line growth.
However, an extremely encouraging sign is found in Qualtrics' remaining performance obligations (RPO) -- revenue under contract that's yet to be recognized. While the company's total RPO only increased 25% year over year to almost $2.2 billion, $972 million of this is expected more than one year from now. That's up 35% year over year, meaning the longer-term outlook is growing faster than the nearer-term's, which should be encouraging for Qualtrics shareholders from here.
