Qualtrics IPO Raises $1.55 Billion, Topping Expectations By Wide Margin


Qualtrics International (XM) raised $1.55 billion with an initial public offering that exceeded elevated expectations and priced above the high end of its estimated range. The Qualtrics IPO is set to begin trading Thursday.


Early Thursday, prior to the offering, Qualtrics amended its filing on concerns its parent may have violated Securities and Exchange Commission regulations by touting Qualtrics stock.

Qualtrics priced 51.7 million shares, increased from earlier plans to offer 50.4 million shares, at $30. That was above its estimated price range of $27 to $29. It initially planned to offer the shares in the range of $20 to $24 each.

The Qualtrics IPO is a spinoff of parent company SAP (SAP), which acquired the company in 2019 for $8 billion.

In the amended filing, Qualtrics said SAP Chief Executive Christian Klein, as part of a series of media appearances that included a live on-air interview on CNBC Squawk Box Europe, made statements that could have the appearance of promoting Qualtrics stock. Such a move is a violation of SEC rules.

Moreover, Klein is on the board of directors at Qualtrics. His comments came as Qualtrics was in its “quiet period,” which is an SEC-mandated embargo on promotional publicity. This prohibits management teams or their marketing agents from making forecasts or expressing any opinions about the value of their company. In the CNBC interview, Klein said the Qualtrics IPO was “massively oversubscribed,” suggesting a high request for shares by institutional investors.

It sought to clarify a statement by Klein, who said, “I mean we doubled the revenue since the acquisition.”

“Mr. Klein’s reference to doubling the revenue of (Qualtrics) since SAP acquired (Qualtrics) on January 23, 2019, was based on the revenue attributed to (Qualtrics) as a reporting segment of SAP. Mr. Klein was, in these interviews, speaking to SAP shareholders and, as such, was relying on financial information in SAP’s public financial statement,” it said.

Qualtrics IPO Still Expected to Launch

Matt Kennedy, an analyst at Renaissance Capital, said he still expects the Qualtrics IPO to begin trading sometime Thursday, despite the late amendment. Renaissance is an IPO research and investment firm.

The company believes it has pioneered a new category of software, which it calls experience management. The Qualtrics IPO will list on the Nasdaq under the ticker XM. The lead underwriters are Morgan Stanley and JPMorgan.

“Our XM Platform helps organizations both design and improve the experiences that turn their customers into fanatics, employees into ambassadors, products into obsessions, and brands into religions,” the Qualtrics IPO filing said. Also, the XM software platform has about 12,000 customers.

“Experience management is the business discipline of finding and fixing experience gaps,” Qualtrics said. “Left unresolved, experience gaps result in failed product launches, customer churn, employee attrition, and eventually, brand irrelevance.”

Qualtrics IPO Market Valuation

At the IPO price, Qualtrics will have a market valuation near $15 billion. In November 2018, Qualtrics raised about $400 million with an IPO that valued the company at $4.3 billion. Days later, SAP acquired Qualtrics for $8 billion.

For the nine-month period ended Sept. 30, the company reported revenue of $550 million, up 32% from the year-earlier period. It showed a net loss of $258 million, vs. $860.4 million from the year-ago period, according to the Qualtrics IPO filing.

Also, solar equipment supplier Shoals Technologies Group (SHLS) late Tuesday raised $1.9 billion with an initial public offering that’s drawing heightened attention in a hot market.

Recent IPO stocks are where you often find some of the market’s best stocks. New IPOs are typically in their early stages of growth, and big earnings growth generally fuels a stock’s price performance. The IPO Leaders list has special screening criteria to find up-and-coming stocks with strong fundamental and technical traits

Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.


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