- Qualtrics shares soared 52% in its long-awaited IPO, valuing the company at well over $21 billion.
- That’s more than double the $8 billion SAP paid in 2018 when it interrupted its first IPO attempt.
- Qualtrics founder and CEO say that the company can own the “experience management” market.
- Visit Business Insider’s homepage for more stories.
Qualtrics went public on Thursday in a blockbuster IPO that cemented its status as Utah’s biggest tech success story to date — and that capped off an unusual path to getting there.
Founded in 2002 by Ryan Smith and his father Jared Smith, Qualtrics took no venture capital money for its first decade of existence, before ultimately raising $400 million (and fending off at least one major acquisition offer) between 2012 and 2018. It prepared to hit the public markets in 2018 but, just days before that long-awaited IPO, SAP snapped it up for $8 billion.
Today, two years after that acquisition, Qualtrics finally hit the markets, with its stock popping 52% above its opening price of $30 in its first day of trading to close at $45.50 — propelling its implied market value to well over double what SAP paid for the company years ago.
It’s not exactly the typical path from startup to IPO. But in the view of Ryan Smith, now the executive chairman of Qualtrics alongside CEO Zig Serafin, it feels “totally on-brand” for a company that’s always taken a non-traditional path.
By the same token, however, Smith tells Insider that he believes media outlets (including Insider) sometimes place undue emphasis on his story as the founder of Qualtrics — and the recent buyer of the Utah Jazz basketball team — and not on the strengths of the company itself.
“You can’t run for 20 years if you don’t have an incredible tech platform,” Smith said. “As good as I think I am, like, our technology is bonkers. It is unreal what companies can do with Qualtrics.”
The company bills itself as the creator and leader of a category it calls “experience management,” leading it to the stock ticker XM. It helps clients like BMW or Microsoft survey their own customers and employees to identify and manage the gaps between the experience they hope for and the one they’re currently getting. It competes with the likes of SurveyMonkey, a $3.7 billion company that saw its shares close up 5% on same day Qualtrics went public.
Qualtrics, which raised about $1.5 billion in the IPO and will remain majority-owned by SAP, generated $550 million in revenue in the first three months of 2020, according to its IPO filings, up 32% from the same period of 2019.
Smith says that Qualtrics’ target demographic is “every organization that has customers, brands, products, or employees,” and its pitch is only getting more appealing as companies in segments like financial services, retail, and hospitality gather feedback in making their plans to return to some kind of normalcy as the pandemic begins to recede.
The firm says that experience management is now a $60 billion category, with the potential to get even bigger — with Qualtrics growing alongside it.
“That’s why we’re able to do this, or else we would have just been a $3 or $4 billion company, like [others in tech],” Smith said. “I mean, we see ourselves being as big as the biggest companies in the world.”
Indeed, Smith describes himself not as an “executive,” but a “growth executive.” It would have been easy for him to pocket what he made from the SAP acquisition and walk away from the company a contented billionaire, but instead he said he “worked harder in the last two years than I think I worked prior to that,” because of the opportunity to continue building.
That hard work is already paying off: Smith bought himself a $120 million stake in Qualtrics at a discounted $20 per share in the IPO, which is now valued at some $273 million after the first day of trading, CNBC calculates.
Serafin, who joined Qualtrics from Microsoft in 2016 as chief operating officer before stepping up as CEO over the summer, says that the retention of Smith and other key talent is actually a reflection of what sets the company apart in the crowded tech market.
“What was interesting is when we went into that moment of being acquired, the obvious conventional thing that you would have seen was in two years, people would have been gone,” Serafin said. “But that was a true test of, ‘Okay, how much all-in are you guys on this mission that you’re working on?'”
Serafin says that “velocity” — in iterating on the product, in working with customers — is key to Qualtrics’ culture, and that pace didn’t slow down under the auspices of SAP.
“SAP allowed us to basically keep that culture intact and operate as an independent unit in the company, which helped,” Serafin said. “There wasn’t like a get acquired, sort stuff out, and then restart the engine, which is typically what happens. No, we just kept rolling.”
Not long before the IPO, Qualtrics hired on a slew of new executives from Salesforce, Adobe, Twilio, and Microsoft — including long-time Microsoft corporate VP Brad Anderson. Serafin says that the firm’s success in recruiting that talent is reflective of a shared belief that “the best of Qualtrics is still way ahead of us. We have so much that we can go do.”
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