XM - Earnings call transcript Q4 2020 | Qualtrics International Inc

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Qualtrics Fourth Quarter and Fiscal Year 2020 Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Steven Wu, Head of FP&A and Investor Relations. Please go ahead.

Steven Wu

Welcome to Qualtrics' Fourth Quarter Fiscal 2020 Earnings Conference Call.

will line we questions. to remarks, prepared open up the answer Following

Relations results, and found can Investor filings release, on replay Qualtrics Our SEC call a press of today's the website. be

considered make as update statements today's beliefs any future should We of variety of to statements federal expectations. our that today disclaim that any statements results events reflect These from we under be During date. be as forward-looking laws. that of actual and concerning considered call, representative may securities our differ expectations to represent our uncertainties a statements views any forward-looking are and of subsequent will These and could to views not outlook. cause materially or obligation subject only risks

material report further with and for Form could refer discussion factors that results, the annual our filings the to year our December a our important or of affect including XX, other financial XXXX. please ended XX-K fiscal SEC, risks the For

addition, performance. for In useful the of as to substitute we measures not financial isolation non-GAAP in should supplemental as believe discuss Qualtrics' which and will we GAAP non-GAAP considered measures results. in are measures a be addition today's of or These during call,

our be year. Relations disclosures Investor with stated, turn now Zig You on website. results our the comparable this our GAAP will the would Serafin, our The call earnings measures, over replay can results link. available fiscal find like regarding for our Unless the including on And webcast additional to this otherwise in of presentation period call company be Investor financial all I to discussed investor press comparisons non-GAAP Relations CEO. that, these reconciliations comparable to will XXXX call on with website release under of and

Zig Serafin

call. our quarterly our Thank you, Bachman. our us CFO, Beckstead; President, Chris and you here earnings and all thank with joining I'm Rob And first for for Steven, today

you of healthy and all well. hope I off, first and are your look, So families

pre-IPO capping in very XM release, in year highlighting growth up QX, and you grew quarter, of line category. our increase a which year-over-year; off the numbers, is revenue subscription our outstanding million momentum and an In is As strong to which earnings our of flash of rose continued our Qualtrics XX% in XX% $XXX saw $XXX numbers revenue to with million, the QX was total an year-over-year. for

XXXX. obligations year. have We XX ended performance increasingly outstanding and XX% with more $XXX achieved current in to also months, is than we're in over year We're for fiscal pleased results, to million next last Qualtrics next period The begun. the QX same in in which normal on has up already the remaining the year mission-critical business. both is as momentum becoming continuing Coming build every into this XXXX,

markets fastest-growing data or becoming in with experience and system, is total critical HR market. success management we addressable software is Experience business switch takes management, With experience experience And don't design providers of the improve to employee service digital, simply competitive. can and that acceleration is most the CRM as an any a Organizations pioneer, who $XX to to it of that's is jobs the category or their actively all product, as few the data be a why customer valuable organization. everyday continue not one billion becoming will continuously clicks. within

experience is secure, take that data, then a and platform we've this got We also decreased customer, YKK and reducing single, We it to ahead. customers significant result than They of tip a operating customer with design experience want and enables organizations together experiences chose are our expanded system our analyze the management. We And lifetime XX-year opportunity want system we of like using the operating these head Qualtrics employees market, customers start cloud-native their wins And easily XM and iceberg. listening to a customers global the have feedback. continually all our formed all that have on to to to QX, experiences built for And and are of engagement bring acting on products, customers next. And important GEICO experiences value increased the designing to is increasing improving Group services talent, and that product retain HSBC, experiences and customer working their improve brand. deliver. employees And most products are design business improve relationships churn, serve. Japan. Health, now on they're employee Adobe, productivity. new act In action ways And able XX,XXX the and the who with using they're they Cardinal their and feedback cost services customers and attract by new and shape next. and workflows and more Qualtrics to to recent and best in Insurance the help the that the in their and just employee,

going have dramatically Qualtrics that from as the more We expand potential as that XM benefit solutions customers we're to providing platform new existing well to many customers. are our the that opportunities

navigate solutions products and Qualtrics how to pandemic. XXX checking company. state of in are in and the their We're tracing, faster innovation QX, entire customers, Just the of governments And our new for look the we releasing any assessment. team these extremely innovation State local like of launched in platform portfolio. help center the resident governments, time of in COVID Vaccine at patient using at responding contact than proud the solutions of across now through our symptom Missouri, innovative history to as experience to our More Navigator pace process. I'm put well leveraged quickly our so to help of customers and needs our deliver as the the we've vaccination both our changing this than

which than if them productivity, where We introduced and are action employees experience companies IT, XM products where their launched -- technology reduce look example, experiencing we gaps. understand suite that gaps their master a for how our they're customers to help systems new working. those we've you IT And Employee their helps at closing them line, For customer pinpoint in help then experiencing to well of we are enable take product and our faster on QX, deliver unlock before. to value to our and we're advantage are and innovate than remote with And customers our digital competitive ever faster our code for platform a of foundation more. them experiences, customers. including able more of products we're and on our management XM many to customer Because our the this enables single XM gives care, a base, to able competition account Customer digital, value all built

world's partners innovation a deeply hundreds and I exciting fragmented one turning quarter. is respected to I customers, of the with and business running surpassed also of we're the with to deals all brands. experiences. tell strategy vast world's more from a using end XXX to By and world's organizations manage the The one customers, product platform. experience employee, journey customer And from largest like partnership accelerating And that of of management. Our This continues to how Together ecosystem, closed building we're our of Qualtrics SAP most largest hear for of very you we go-to-market are Look, quarter. And customer, the easily the QX, to we parts can around partners get enabling is of our practices every Qualtrics. on XXXX, point our and motion our variety companies. every entire EXIM expect Qualtrics seeing first on with and we joint of solutions are in lot technology resonating well. of the product build brand a ecosystem in moving quickly solutions their in products end-to-end We're our system future. to X-figure most see partners one cloud perform expansion the away this large

Our code. into of CRM systems, system such connected it's action. their as insights platform record, can when or is turn an their action a with systems anyone of HR clicks, not organization with And

XXX with engine. have companies SAP, of now Zendesk automation more than as ServiceNow, we So action like part integrations our flow experience Salesforce,

experience so a the that partners like day; Accenture, quickly with customers. make systems then amazing to Bain, are partners us And strategic be Ferry, Deloitte, our E&Y, and delivery key customers are to collect every and our to on in using it able vision using along they're management act this helping experience reality data Korn our for

success CIOs great organizations. we partnership and saw So adoption help expand management of to Deloitte their own expanded experience working we for example, together in with in QX, our the

innovation now up build a late to lead And expanded and an has who've like Salesforce, leadership in us and companies build our from new to world. Our to public team of and was team to scale IPO include partners journey. the are some Twilio grow our phenomenal deliver incredible we'll and be Adobe. Microsoft customers, best -- IPO, our with people tech. continue leaders in best and company milestone to talent brand helped our technology company. on foundation welcomed more organic the These of expand we In an incredible people some the inorganic in and the helped as with Qualtrics. ecosystem the retaining this positions, and greater we Attracting able They our Microsoft, resources January recognition, for

are nearly Bachman, our all all and CFO, around on we're guidance going the They close, it our XM that world going over to Rob, detail. X,XXX the made in the share is to So now possible to the who more you. thank vision. employees outstanding results for to Rob

Robert Bachman

good and Thanks, afternoon. everyone. to Zig, Hello

recap then going QX companies, quarter initiatives. it market noted, governments provide by was driven many XXXX backdrop Zig execution briefly initial an for open I'm questions. an up guidance QX their for results, As fiscal and fourth our transformation continued to digital as and year against and XXXX quarter outstanding fiscal and improved organizations our strong

out financial discussing Before like GAAP be I'd discussing in results, to our certain to addition point results. that I'll non-GAAP results, detailed

be release up Our our and fourth investor XX% quarter presentation revenue the the GAAP results, website. year-over-year. found with our between earnings financial non-GAAP reconciliation $XXX.X and in can Subscription for Relations GAAP Investor million, was on along results,

the year-over-year, XX% million revenue growth the million $XXX.X X% quarter For subscription for up the full XX% year-over-year. year, full for growth in of and year, representing million up $XXX.X representing year-over-year. million revenue quarter, fourth $XXX.X for was the full $XXX.X and XX% fourth year-over-year XX% million, was services Total respectively. year, the and revenue was $XX.X Professional

of this particularly was are million, Experience renewals. year remaining up or a contracts, net of is than year-over-year. Platform. all expected existing contract, the usage XX% $XXX.X revenue performance business. more clearly performance been This spending at in seeing of both for XXX%, includes we're to QX, catch-up driven future billings year, under QX, which more customers digital-first our retention this in X,XXX software year-over-year. existing us. remaining spending booking in renewals. represents that that performance our their XXX retention and new growth pleased XX in On addition representing is the relevant $XXX,XXX up months, were overall base. XX% add-on approximately customer with still next than we Qualtrics only services a customers with net Management renewal annually million in and rate, has In for originally the were along more customers. revenue $XXX,XXX $X renewal strong average spending future scheduled revenue be particularly also year-over-year and billion, professional lengthening both We're XXX Customer our growing total revenue in that in contract new with a strategic all recognized which our never $X.X Current excess Our metric obligations, from full contract ended of strong both earlier obligations, our added benefited duration customers $XXX,XXX new customers. growing and more annually world. basis, shows under our XX% year net net a This In for as from the business, renewals XXXX was than to the the showing due customers by and Total customers number new notable in year. RPO of actively of subscription pandemic-challenged a across onetime new our QX to of was

partnership $XXX.X at XXXX revenue. of with year spending annually, United respectively, customers $X XXXX. and SAP. compares Total or This with ongoing fiscal ended XX% the which our key international markets and to focus was XX% XX% in from our revenue XXXX, million XX up year than of outside XX customers more also year-over-year our highlights XX% million the in in end the total States and XXXX We

to markets. key will reach our investments in have international continue We and make broaden to

For example, our be region. And for Singapore, help in our a which in customer growing continues in we to data continue Asia opportunity will Japan region big serve Pacific to center base the announced us. newest and QX, us the

to Turning margins.

gross margin our subscription than roughly with and increased our revenue. as higher Subscription from to to XX.X% points best our total we usage customers. quarter is in XXX service software XXXX of on basis fourth quarter of year increasing XX% an mix partner mainly driving non-GAAP platform total approximately has of as QX. in our Our ago was in our XX.X% QX, expand due percentage to fourth and revenue the ecosystem XX% focus XXXX of This in a on the a line

resulting operating negative the loss operating million, in non-GAAP Our X%. non-GAAP $X.X quarter of was margin fourth for

the total increased of to of to related million $XXX the ago and spend compared year Free million expenses, XXXX. an million improvement quarter expenditures was to efficiencies negative QX XXXX XXX flow basis in of was $XXX.X compared and negative or Operating including approximately due onetime operating in the loss negative $XX.X the marketing non-GAAP by by for with capital cash X% to period. COVID-related expansion continued in million higher flow for spend, $XXX.X Sydney, to was negative was million revenue, travel $XXX.X of office. due the points other IPO to million and co-headquarters operating settlement For year $XX.X sales period. payment related QX in Seattle scale from points negative Australia $XX.X our cash in million year, was outflows cash margin QX cash build-outs stock-based of moderation liabilities events. to XXX expenses. of decreased of and ago completion QX compared in and basis sequentially driven negative This along reduced

operating million million, decline respectively, in of flow Starting and to cash XXXX elected employee QX majority awards their year was $XXX.X in liabilities. million a $XXX.X as free cash-settled our stock-based flow cash fiscal these large of Our which negative settlement cash payment the base related Qualtrics the settlement to cash negative $XXX.X of XXXX, and awards. we of has see will stock-settled to SAP liabilities payment exchange stock-based of was

of to outflows press and legal For position and the flow operations a of stock-based the to short-term Investor cash approximately liability and in release flow, please presentation investor classified cash our bridge to earnings related equivalents from website. cash awards Relations cash, acquisition, investments. refer to cash our with SAP million free advisory settlement the on related We quarter ended including a and cash in strong costs $XXX

of to pleased Our the and over Overall, of we than most of execution fourth increase company-wide XXX total X,XXX quarter. an in more important hiring the at up year begun our the year-over-year, have strong consists workforce end ramp and very are seasonally employees employees, we XXXX. with

business our to on Moving outlook.

million the expect anticipate total revenue XXXX, of quarter to subscription fiscal to million we revenue and the rate range $XXX of a year-over-year be growth at we Within of to $XXX $XXX the at range a million. in $XXX XX% revenue the the rate this, first implies of for midpoint. revenue of For growth This year-over-year to be subscription midpoint total million. in XX%

per share of negative the range of loss and net $X.XX, shares non-GAAP assuming expect We XXX in to margin of to negative outstanding X% operating weighted X% non-GAAP $X.XX million.

$XXX subscription total these year-over-year of At revenue For of to million growth to growth we this represents midpoint revenue subscription of rate XX% total and $XXX the XXXX, XX% $XXX $XXX million million. year-over-year, rate the range the ranges, and revenue a respectively. a range year in of fiscal the in expect of million

X%. range expect margin We of the negative X% to operating non-GAAP in negative

In We and for expect a market remains assuming share non-GAAP opportunity our $X.XX, $X.XX large net XXX loss million very outstanding. per between of shares growth runway weighted and closing, exciting.

to continue will investments. through strategic scale We our business

towards to back this it With send you growth. in joining put happy and extend We we'll call. Operator, questions. long-term and take Chris to drive market your I that, today's Zig, our -- leadership and durable profitable you. for will Thank are

Operator

Instructions]. [Operator

Our first Keith question Morgan comes with Stanley. Weiss from

Keith Weiss

to A there seeing is is how think really up guys XX%. for Maybe sort one Rob. But We nice part if did up of we bookings for growth year, question, it tremendous two you about guys your the QX. the full somewhat related. more RPO-based current you A Excellent. year really end the that calculate and I in are in first RPO year current year-over-year. 'XX, is calendar XX% think

are the of, at like growth with you You aware flip half And there terms in line year bookings QX the should that, us that the in factors mechanical factors slowdown year for weigh fundamentally that And of QX, should expecting could revenue be results like, this back year the or maybe we Are subscription -- your to the that go-to-market terms full growth. help you're XX% macro year. keep in Zig, accelerated environment? go-to-market into in in with like, it XX% follow-on Can good full XX%. strategy then SAP we about in the to subscription just mind? growth anything the growth the for for for that that revenue? like, really be the potentially guys sounds there of you XX% in of, how is changes conservatism Or impacting might spin-out the ahead of question, in on is post

Robert Bachman

the achieve. for of as, and things established point happy script. couple we're the looking QX focused through forward, long-term went we that look to we're pleased question, the results and obviously, on this here. really really And we out we to durable for as growth Overall, thanks Keith, baseline a our have Yes, with

we know are at expansion, international on. some mentioned: look the and focused to I existing that provided, our customers out the customer of those the drive guidance deliver key and we're across set levers against that bringing with we're continuing we pleased year and base with that. And as up that's new on to this So that those growth

the look other we customers year, see the net would as that and the point $XXX,XXX-plus is, customers. of you well year new strengthening the I million-plus at the growth over X,XXX the added one you'll alongside in of as that So of half $X addition the during make back the and

Zig Serafin

on the the Look, system an the been base. run this underlying experience we comment have starting to company And we beginning. is single That's I'll since advantage, We've picture. the code And Zig broader, software bigger building long for for here. built that this out. operating play management,

You're seeing that growth. in the

customers, You're that in the at true that be is and major reshape we've And end that advantage to are And platform. world how at as shape the you more betting employees. single are have to data company. a and on. a their for How fundamentals do to experiences element customers become You understand running watched becoming vital scale? do a better have every is in level, to companies. their becoming connected macro that how looking a are need seeing competitive able And data engage to you industries experience especially that

a fundamental that's so And piece.

a the to Now to to company, it's an allow ecosystem. be able of by allowing independent leverage to just us becoming continue larger part customers

and And now lines. same us we what we continues At do they're CRM major we the They're XM of and see the is, the of each they've other that and of frankly, across with HR lot of opportunity, -- the partner. as day, and to as close other can systems, a building also systems systems creating about at some the end doing We how the effectively that to doing XM. coming But a partner momentum companies You that's complementary business have. believe to customers, to a in forth. we're lot you're our SAP," run out. down innovation really we so comes see right of our the SAP I've that's started. accelerating, just talked with with it the the ecosystem additional results made just that be are and getting People looking saying, way, we're business investments in important "Hey, too. work

for question, your thanks So Keith.

Operator

Our Murphy JPMorgan. next question comes with from Mark

Mark Murphy

nondigital probably $XXX,XXX that. some my in leap to million you Are any the add research the Zig saw what's so congrats. Chris. the in threshold of pipeline. if and guess, market The old-fashioned displace above for above get threshold is or that of finding data? wondering on, see kind The is it, easier I'll at in budgets analog $X these spent traditional that QX of any I the you companies impressive, and it I'd I'm behind question might that if and customers of Just call wondering you

Chris Beckstead

one. Sure, Chris take I'll Beckstead. this that is

So great question.

platform I standardization One coming customers which a are we're the on underlying that a and thinking our by to are as few think when you strong. looking we're customers that we're choice, are that standardize, and we to clear that's the trends determined it's driving large single mentioned, the they're as about across a think seeing consolidation the is, finding about that platform. that categories onboard, due

with receiving Another versus of much they recently underlying platform reduced think thinking they're to and away it's I in those to or doing using how of that our thinking platform, of they how of platform. a having he the result terms that's do real sales. customers in grow positive that it and And we pipeline as that finding the seeing. of to retention, with about they're increased we're value of was in category driving driver spend as that result the churn from then I the value to deriving they're customers the really trends, trend, data that it seeing more some it of they're from fourth and of finding creation terms need out of quarter, continues they're we're That's versus large their cost a as added increased about it's one a employee that continue that think moving more are increase that usage to getting, about with of the as the the to from the in and And value finding putting ways mature. whether business I they're spoke trend. customers the and category whether away use Qualtrics expand shifting opportunities value those and talking And customers

Mark Murphy

Okay. And that a there total can That's jumping Rob, situation. I just and there spread agree revenue great. just backlog current as and was portions, growth, that, think the I very follow-up, is feels just us way the off above what there I to the on the comfortable above? they're glide about, the think FX should quick both anything Keith, -- help forecast, it's a contribution any or drove And page, the like RPO just path impact But think RPO? we is you what far far else with way quantify above whether understand our so from duration so any it's that

Robert Bachman

we question drive Appreciate and that. Look, growth it growth here, the us really to and I and that question. we set throughout go see consistently. and opportunities spoke \ to to the as the is And that are Yes. drive this to up increased year understand see for continue but move we strengthen, to perform about deliver

with the place to And have for that, is focus so a again, the where we long-term the today commitment fits sit durable business. and long-term we growth

Operator

with Materne Kirk Evercore. Our comes question from next

Stewart Materne

conversations versus, or saw you at color over add Zig, color, quarter, on congrats. a guess, are looking And cases of bit use back the and after some terms can you you kind got with fourth of are hopefully of if the the say, any again they're also last are is color some I us if give slowed in industries on they coming the you maybe changing down, reopening, on X the guess, industries on the of now. customer I maybe pandemic? either quarter X the momentum more maybe of sort little that that customers in to ago? echo to curious months customer perhaps sort could based coming how I was the now I'll maybe if all the floor experience that just the

Zig Serafin

question. the thanks Kirk, for good Yes.

product enable your what to make operate a is pandemic they you next, way or customer. seen facilitate where take understand the to look, and how no evolve, we've that that COVID you're and proved in just proved And about the what in, all their problem, matter do create lot that's So of that dialed experience experience business uncertainty. you're what of business figure getting what see connect we've And problem, in industry moments been okay? the with time size affecting every all time, know pandemic are has right? in when accelerating in, organization can importance the of you're living momentum out especially matters, trying there's the the an their in is is the this actually to you how decision And uncertainty people of And especially to right, that results what of customers, business.

next. you're teams coming specific how use start of and we there. expand trying those to how an to data." It's customer relationship they operating. is do correlated of part we we're the say, solve you're other organization that this data understand, They're to work core sets that way where And as and what platform doing finding And collaborate the see they're the perceived." could feedback You then other input problem at that's and And area. all between and once data got need can which into to of an are about my over of time "Look, that in time, they knowing of "Hey, in my solving people's this essence business is perceptions, part is in is product into that most set. what giving right And the problem, to be tightly "Look, companies to kind And companies departments it's some next: on people's blossoming And reaching important areas. inside have." that in I people's management they proving one data It's what that the you on companies correlated take and essential seeing like, companies, get experience brand of to is increasingly they the my are of experience be where go flowing the is emotions, I'm is hands seeing businesses my saying, where out. the to tightly so

businesses well, aligned we you which, is we've substantially seeing advantage given built the years. this during -- that at pandemic, this lot know business. as believe we themselves. so And the the it's behind as course out we've exercise. well XX-year that's not creating We've we've of what software demand reshaping a the fundamentally the of And way to an platform. and built seen the been play a platform we're this that in many underlying way And And especially the built got for overnight core are

question. So the thanks for

Stewart Materne

thinking whatever should And terms just Great. Rob, over that or context for one I And maybe not right give I is the things guidance that think for ballpark But reason? in any of know ratios. we about color then going the guess, kind next of going on all? a to quick you're Rob. retention net to for forward impact XXX% the you about be any, year might

Robert Bachman

question. the appreciate I Yes.

this key notes, very Our with continue as a to go-to-market our then customer guidance I'm the We and and had mentioned on And expansion be continues to land-and-expand stabilize motion, consistent that to revenue, us, with ability I around with for we and be pleased that in overall that. along we see opportunity base, in motion we've the within provided results see my to rate. and subscription the QX. do, in

go-to-market the we the customer with pleased very motion so expansion. have and ongoing here And

Operator

Tillman Terry next from question Truist. comes with Our

Terrell Tillman

but I got first this also That's definitely you I you a expansion terms striking IPO follow-up. I a I'm with of kind I congratulations of of the guess brought on the top of question, on had And deal other if could talent this Congratulations you curious size. said renewal? double-click then a an some unless X-figure large in. wrong, kind areas? in into think

Chris Beckstead

is that this seeing is on is customer. an of was terms an the indication back example down a existing evolving an about of expansion who's standardizing This what so Qualtrics into the a value earlier in expand and of high platform, time on Chris. could opportunity grow and Yes. seeing the of large to is an that with It customer future. what road Coming and we're of that the kind the type of this customers company question customers, the what be in category end X-figure to over and of

road million to we're as As increase in get hold that continue and the customer of mature. we over what category seeing that million, fun down it's see to over and this a $X $XX customers precursor have the innovate future could hump a

Terrell Tillman

that? Are actually is saving money vendor some you for That's vendor a about of As point, lot have you follow-up what until half Zig, broad my the year, got what but we'll milestone. product of good. seeing this we at R&D, portfolio, maybe the just reined in, to could of also about is -- you've Maybe just, maybe from you consolidation? consolidation? -- figure, a or continue a a into question, standardizing idea that back more But then, but like, the move innovate,

Zig Serafin

consolidate, previously is growing. certainly the the taking on of budgets a one efficient the overcharging problem, the saying comments a be efficient they're out to of platform their Terry, is input within to they or based actually company to save kind just they've able is is in business well. they money, "Look, at me enterprise way doing?" a on that specific expanding of can experience lead time customers, been share they hit as mean, inside they're hit And and, the what how saying, time, consolidation they of that what this well. what is Look, they're so is as but truly as up earlier midsized diminishing great part large helping designed that spent breakthroughs And then we solution, what actually become doing. that they run Thanks them are mix. to point legacy our inputs on saying is come especially return for many how of point market. a modern kind I've be had. looking people they And expanding tactically question. And vendor, what their would very maybe ROI pace vendors to happens the of fair market customers, -- end do. much cloud-native a look, of are we've customers continuing more like, get market certainly than higher same this able we're faster at XYZ to But they're when that not promised that help all are as much And clearly, at of do I measure and

that certain it's So trend do a see. we

Operator

comes question next Raimo from Lenschow with Barclays. Our

Raimo Lenschow

quick from me well. Two as Congrats questions.

like, force structure First, kind cetera? incentive that what's the with of year, sales that then of et out middle independent, this since Like, like, the independent you're now going to situation the not kind the one independent, you terms and I is like, we're new follow-up. how there? have there, expect in obviously, for you kickoff in of, for play do -- of, like, And what year but momentum SAP

Chris Beckstead

Chris. that, Yes, this is I'll take Raimo.

we're continue bring will including with the them successfully and in in their customer that partnership excited to had have going we've and opportunities same And that They've partner rewarded excellent we about acquisition. been post the the us forward, continued years having the we're last base. with as us for sellers So existing SAP's of SAP. the that an model past we to sell rewarded into with couple excited motivated

year of can to we, We're This to our their about And SAP customers. great to SAP equally our to really we're the base to really to with we're and start broaden a customer unlocks that And existing us expand this how talk quarter, SAP's well part alongside excited. for perspective account SAP SAP. and management off tell well. started start story planning the FCOM, the we to and partnership with year whole a colleagues with start and together, beyond this value that as continue kickoff off bring we're excited the for great experience the opportunities got about

And about that that of in publicly continue that the the are continue we had we so we we're same selling that and company, so years. refine to as them. able we And to early were now excited even though models place strengthen continue of well have over before worked proposition a to couple the signs alongside those last we everything continuing joint traded

Raimo Lenschow

Yes.

going obviously, Makes potential think like, for Perfect. the And Okay. And sense. longer-term you then feedback, brand a feedback, do so follow-up, expanding the expand more them? maybe this a want have don't product. but about a product like, even kind I Do employee -- broaden customer How that kind just of there's there's feedback, there's forward? you further strategic, do -- are to opportunities is of further? Or of done kind to that -- of front segments? see product, you funding deeper into with like, we go those like,

Zig Serafin

the mean, this product, helping run important, product, you on a being by about your way and those are their Yes, think and interrelated. Raimo, is stitch marketplace. your customer make absolutely And good is growth that you for that combination management the any well the right, scale X things employee, things, organization, things how And into experiences platform, off, question. have got way how of it's how product are what this experience. often affected perceived. core are is is all businesses, and or the and efficiency think really all on your software you across validating employees to that These the when growing right? together cannot you you brand deeply And way decision business engaged your deliver people first single fact that they're if So brand about those X is a experience if able core our platform, right? we I and to it's this affects business, a

impact like, stuff And they of this an really the also out you're scale There's efficiency value. together. important cannot what set that their go seeing we And and, which important that's rate last published. customers we and unlocking around for efficiency angle in results there's over up You end how piecemeal business. just

data to looking The that one you well, a that, the can No, is, you we're at and thing we company, XX about market. X.X your are addressable years just billion was and across us substantial, were would team $XX their addressable today. around way second the source massively they're how we're the just ago, this have were in every years are operating all this a looking we're underestimated vibrant, building years like, this company. ago, they're at rewire as meeting right, to at ago, making opportunity. we people started. businesses. X $XX way management And that And tell seeing companies of leaders here category important because this getting that's was looking And if big done? it and We're durable long-term point only the billion I the market, our growth decisions that ask

up being around investments new Absolutely. we're is and the gives run thoughtful of a end lot we inorganic over strategic that product have? yet. the things optionality that both Do organic we road haven't innovation So on map? the announced also we making. there on opportunity we us ones company public and long a fact independent Absolutely, And and and in play that have beyond what

wanted sure make is lot know, to a It's something I Raimo, question. context in everyone's So that mind. you to than probably great it's keeping wanted more a but that

Raimo Lenschow

No, I comprehensive the like again. Congrats answer.

Zig Serafin

Thank you, Raimo.

Operator

with Our Sandler. next Bracelin Piper question comes from Brent

Brent Bracelin

if Zig Zig, and one last on engagement is. hand, month thoughts could. wanted on and entering employee One for Obviously, get Microsoft. I big your experience how the Chris, validates for the one I to size market

talking I guys think as market big you is. bigger than how that they're as much far figures are

that a have hand, the you competitor. new suggest it does On do other

this then mean market. Microsoft get a company Microsoft? in So on I'd love does the What how versus for to And differentiate your do you Qualtrics? views like

Zig Serafin

fundamentals And a many Yes. of got like Microsoft. look, several try mean, businesses people of amongst see several think of to going us Microsoft. respect of the I continuing I and lot us contribute to how I've some innovate operate. you're came I from to -- for continued mean companies of to them,

what you XX-year that, experience enabling way they We've up so managing probably operationalize better, right? XX which employee predictive in customers, order be a about your intranet you not something that And the and overnight. connect, people's able that head it's more workflow the the part global a equation, this. systems, to platforms, and on the to handle perceptions, happening designed purpose-built see companies, up got scalability highly the about systems, from needs, focused to corporate engines. platform part so absolutely, focused be the particular The of broader years companies able complex yes, if to right? right? can to their we're people HR the in think be the with announced to call about that focused intranet emotions, collaborate. that what to We've that's not collaboration Microsoft that it ability What information, words, that's content in at that technology other ease they at the way experiences, do on equation they've on you behind end we of use, the company, doing that's that's in Veeva management is end collaboration flexibility, we go the way of the as get way the employees, your And helps is platform, you for been on in human this for cases that's they start do factor product order people's way moved But do, everything in And the we of understanding. be more scale that and are use ecosystem you complementary a in accommodating the predictive corporate

result, as so allows important Does platform end a that that that investments of And operational other as platform betting is as some up for they're more customers making. us on play to ecosystem. a And Qualtrics the that the use independent as sense? much the unlocks being a how of opportunities make larger

Brent Bracelin

for in think in guide the about just color as Super just helpful. Absolutely particular, then, guess, you, Chris, you lot business. here, very a in helpful momentum the I QX you of And Could there. for the business. and tailwinds. of and us think sustainable sustainable? tailwinds are durable, help the in some Just these going momentum post-COVID those of business compare about maybe post-COVID Are how contrast the pre-COVID,

Chris Beckstead

Sure. Happy take that. to

of be competitive really going customers went be if you're for for on then And they to employees, of be of when is got mission-critical ready have and able As kind to to at data see another of whole for to going was with underway, really intervene they that interesting and about, next we've as reaction absolutely it that don't close where be on, in as talked that XXXX, of that realized to work through the is to customers of experience that was interesting marketplace. kind how what's to the going environment the towards encouraging employees was went be of to pausing as -- well disadvantage normal are way different. we to our to trends the COVID you to needing product during time are mission-critical, experiences sell, management of of the world, then about that are you see, staying your they act the home stay to time your not of where movement ending. And of of with others the going that as those were customers, experiences a working honestly, the designing close the result is even those changing We that operate about to thing the your understand they trends employees able in and but, work importance to from employees both that as to as employees. that pandemic the rapidly your be of way able beyond think initial importance already the as digital, to a going going aspect sentiment the going the a to it view design recognize your acceleration away were for understand an and go some

XXXX. momentum we can encouraged and trends as continued the the last over go continue by we that encouraged course we're of we so into be see to saw year And

Zig Serafin

is Microsoft at question to that on a Another what platforms. trend, of to Companies Chris ecosystem. connecting just their build saying, was too ours. is great and earlier are partner looking

Adobe. like companies got You

at designed have employee advantage think any and systems, and we've to are action they're it systems now given our record, infrastructure out. to companies our workflow this mean in order "How that platform, I to trend is of continue going that with And able do tie -- got other So HR in business?" Qualtrics that's our providers, they're looking be systems, leaders. plays saying, how way to platform. we You've that the another to to I'm I my the architecture of are people use operating looking that CRM workflow that play

Operator

question next Canaccord. DJ comes Hynes with from Our

David Hynes

a one for for Zig. follow-up Maybe then and Chris quick

the see. really obviously too, So is net heard enterprise The that strong, to we of which in has half of the velocity X,XXX back almost new been Chris, the customers strength, on it great I seeing a sales begs about hit the the guess, during hardest corporate from inside comments probably think was the Any team? year. what group, which question I you're pandemic. that right,

Chris Beckstead

love overall motion land we corporate and what just enterprise, customer well Yes, make sure the that a large growth saw that a you were of combination but also of the great we the we saw that overall is customers strength with that adding have the thrilled but new back expansion of we alive the continuing opportunity strengthening and That year, international which significant of sales you of a as highlighted, base. company. that both equally a the to of to question. that motion growth customers was Honestly, highlighted the in half combination I and of

right And so that they time continuing we receive that between then we make the to saw base encouraging sure have on, platform. value to because, on expand as equally can that goes as balance that an need we grow trend we was the customer

so are teams continue play the to vital role their remaining we team, about we in excited we XXXX inside And planet, company's sales And they're is that that's they have that future. sales motivated on the into motivation. best the believe, and going the

David Hynes

And one Zig, hear. to then, Good for Yes. you.

ecosystem build You happen? materially In out of Qualtrics working in to an as now at you which do more other with pace words, independent thoughts that ecosystem spinout Brent's the of interested ask, may entity? just I Any hit the helpful. question. on answering importance kind changes wanted are would think in partners be the

Zig Serafin

have Yes. makes it the ecosystem way unambiguously themselves. And that design And It's is big platform built, make as them it been an but that's given yes. to making what for take the Thank helping they've people for answer Qualtrics other yes, great the the is the capital of also a with of for a system the a you. well question. advantage very asking but that to also desire on it's system customers And infrastructure is asset. just to SAP clear in investments lot able easier that points simple to -- made be innovate the conjunction

Operator

next question comes of Our Montreal. with Bank from Keith Bachman

Keith Bachman

I partner two questions. related want Zig, on start comment. side the have I with the to to And you previous

really next with data out reason look you how was, wondering much you those integrate or to made part the a you you over the strategic side Now your prioritize those that of acquisition as integration strategic say and as of I how partners? kind said, the to who are XX SAP you partners independent, mean of And partners are do most systems partners? the why XX the would months XM helps record. priority you of the handful

in just I'm your wondering And a follow-up I please. important speak, terms prioritization? of you is to how so as cash flow have question, prioritize data So layer, partner, the

Zig Serafin

they if look the at if are system I the HR add or that ticketing to larger CRM of vendor, vendor, systems of if you at viewing and first that a their way landscape, many at the large mean, experience record management look enhance engagement vendor, if at look look vendors value to a you key you a list look systems of Yes. at vendor, off, help the increasingly you tech have, long. if as might an workflow they you can underlying is

of way And are data built so with or actioning of mean solutions that that the doesn't data, to we've require platform our platforms be of platform, of again, incremental designed got couple work it being our that top customers and with lot idea in. made on into now can programs record that the we've partner on our easily investments automate the because on cutting-edge I ability then the a that have pull system. systems other built systems platform connect can we --

Ferry. currently mentioned for got examples. continue up they to build have growth in have they well And obviously of and record, addition And Korn engagement. that of have EY, to They've new going innovation together base they of installed customers want bring to to they delivering that, that and conjunction with want avenues are we on for unlock strategy to. able systems Deloitte, to their in different themselves to I unlock And the earlier, advantages. to be partnerships be with systems we're then them So new services as the that. for bring value all as in end able that These Accenture, that

strategic here with asset. ecosystem about way, is that we to of to us to an we're the partnerships you're going that how work that point see XMOS continue And the that's way our invest as in So customers is hard as some reemphasize that in big picture. going well think build. And key again, the to

Keith Bachman

the maybe And Rob, Great. cash Okay. question. flow to

to cash more for impact negative guided And numbers the b, to about the you that is calendar negative X% as want puts to the year? there us takes and or, in cash 'XX? margins either should flow first be thinking we settlement You relates it for to half any of X%. the QX any importantly, give operating A,

Robert Bachman

Yes.

Keith SAP the think big settlement flow you've cash SAP, our sure, cash still XXXX, been history I of that. a of be one company QX, off those a item to very which history. subsidiary of hit then of factor meaningful meaningful driving and in particularly on as we will flow it this that But off. for that is, there So awards proud trail and it cash has that were wholly-owned though, a on while Look, will less trails a has factor long free beyond and in noted,

to of forward you positioned cash overall free drive As our to we're positive mid and then well flow. long at term the margin subscription look strength in margins, the

Keith Bachman

the Okay. quarter, Congratulations on gentlemen.

Zig Serafin

you. Thank

Operator

with Your comes from Sachs. Goldman Merwin next question Chris

Christopher Merwin

the really dissect bit where stronger customer wanted to I strong seeing. out components Obviously, the outside expansion, is of of seeing that that called your of modules you're maybe us upsell of to you expansion strength than attach? how more broadly particular much much areas But ask that, a that So can you you're cross-sell renewal. about for you any and experience versus maybe some of other the

Chris Beckstead

I'll Thanks, Chris. that. This is take Beckstead. Chris

just specific additional us, for pleased above growth and of It's good both that's balance it's And use also spoke additional really internationally we earlier a spending new customers, $X Really retention that into really As net are had net we where that's we land-and-expand of QX between use overall is engine go spiking path the the cases to of the we continued healthy this look balance. customers in to came from, summary of good balance terms and to mix there's in resulted the a we customer in that the indicates it that multi results growth of no well case both with the terms base within And and we that XXX% but also -- in year, as or really cross-selling $XXX,XXX both growth. one multifaceted we're others. pleased about added sustaining just a growing XXXX, see U.S. in overall million-plus good customers last because, but with by a in terms that that and the balance customers there's good sustainability rate. product.

Christopher Merwin

a follow-up. quick Maybe just Great. Okay.

way out, next was, like, normalized you that As it can that think billings acceleration, top a were I the renewals. number If to back there know billings about to line as growth the catch-up year? about a mentioned just a is for we relates we there potential we in think

Robert Bachman

rate. Yes. It to more of so represents growth about a get billings overall that X% that to help you in normalized QX, X% and would

Operator

comes question next with from Citigroup. Drew Our Foster

Drew Foster

market to X years. your for is X view the over next of evolve I'm Zig. one Zig, this First curious how will

guess, cases the see platform ends adoption thinking of you're the I And adopted do think you think market use of do what specific the the Qualtrics you're of are technology time? system question the how As base is you back you key much who is, over actually to my into and up customers for as encourage type continue usage? of then using addressable to where fashion a technology that operationalized, that evolved usage to barriers your more the action in installed to facing about of going

Zig Serafin

myself, I've along called for with thanks the Drew, we was a for time. been Microsoft, building team, you're that Microsoft now became I is Okay, to categories. Teams. book Look, When time of I good you're built when product There's new that new the from at mean no question. capabilities at over What you're is categories part a attention customers. paying building long reading the Lync

market?" is you. be years on are saying, to You're a see building great long-term of How large customers wallet? my deploy increase are research a here durable How a you're the people my a I fundamentally do the the paying "Look, market? increase I And of looking that X, there's attention How in, even I to the We're do shooting can that now. provide long from my what brand do that on. focused right on going people it is a you're things How one in in be way. product something my a to you what spend market do right in I customers? really end up your the share you're first set. do mean in decrease the a way, represented for that, do order runs. software principles, been to we I we're X helps though you which a the it And make if very to that for betting hey, is we way not the the way thinking do I in is up on telling And isn't it lot ends operationalizing And the something we're do loyalty also about set with business and platform, what churn market, do. that's things capture that in in statistically which And in especially help growth How And the able us how playing any to, be with be you I are relationship game. ultimately, job data order those and in data you one how that'll significant, And your business of not better important, old core built focus of interesting then marketplace to customers? solve then to things that money the got well quarter-to-quarter, is predictive capital? never that's there's have technology very able make of participate data been to really, spend working between improve us. system similar, pulling, by my

how but of system, be saying customers, back what's who Chris create to getting while, are think Highly touch help get that The actually gets you and used? of with dimensions to differentiating the solving the Where our combination really who able in for is people departmental, end This a problems system for end so But a they operating it's once unique portfolio actually some record, do ability is automation be XM. at this with about enabled of how And dive listen customer able workflow XM, that started HR people and the a managers of and are an up that company. are, their that creating help and is touch across value was be being Employee right Most of they serving the understand connect something time job platform across departments of -- solving start able to to has advantage of observe over Beckstead kinds to the earlier, XM, beginning. the people is many the with Brand it, and it Yes, we're it able right? able type the we're if the things are just that the to of to ends Customer think focus what used? up then XM, system. inside because be underlying companies. better being and travels we taking customer system kinds Where is balance systems aspect actioning. unlock the to of focused, interesting the departmentally of we seeing okay? HR combination an up CRM -- different And Product entire

I that to continue think to this is going expand. market So

going last it's the continue because years. about. their put weighted going what human which are in they're focused grow We ways XM of over human is more be beings, expand TAM problems solving which couple human think the factor -- to to on actions, seen factor the on people should is the focused to You've the of all data,

that's about So category. I this as think how a

out is this we that's run. we're thinking able doing today of continue that optimizing out our what to short and we're long-run the any But on play through customers, of with that our partners if And You be you'll Everything for do can't to every of our shareholders. to decisions we quarter-by-quarter hope live a the see years basis. that something made now, the from up you're doing advantage here. to couple

Drew Foster

you -- on changed over strength I large had and the perspective you need XX do in consistently the just far months also And anything hired your do to go-to-market just base? from deals $X evangelizing think expansion as that invested much installed as the back you deliver into sort metrics time an drivers deal this Can quarter. playbook more market some those talent, as a of as million go you follow-up organization, in highlight one of you over how last top to on into cetera? you've et

Chris Beckstead

partnering with than to internationally and as playbook wouldn't we've especially with Yes. consolidation SAP, I continued we're the how other that better get at. and substantial anything continued highlight we are progress running evolve

a sure job really would I our selling leadership and The we're in in. executive other be of doing and add that would really continued piece team making good just evolution executive pulling

platform And us and evolves overall. to for drive grows so category continue just selling continued I as say the to would the of value

Operator

question with comes from Peterson Raymond last Brian our James. And

Brian Peterson

on keeping strong you're seems quarter, there. It Congrats jazz a like pace very with guys. the

mentioned how the or you I'm think Chris, look about curious, want that's the today, to the you an of or consolidation whether versus Is greenfield however is just to or much that's opportunity? clearly So kind this research actually one any as question playbook a of it, segment me. way software to TAM you there for being that at approach working. truly pipeline that?

Chris Beckstead

question. great Yes,

from a the where value the I and answer, to thing where are balance we with we started our good customers. customers situations is earlier achieve the think see provides time coming two flexibility have And our love that back use to individual there between for one about see that we platform cases. to the platform value healthy quick it

late they into becomes more natural of And But as to they to figure the can so they it it, returns. to evolution value seeing even recognizing game to that bit little are maybe value the a operate, that them mature also how more that experience as as category platform, use out better to have more more in that becomes we and on, sign we're them get experience companies and apparent mission-critical and to how and translates companies playbook. consolidation it need for continue the that they in evolve, continues get and platform. is get management the an marketplace up And to a management

on the and whether And their more in own so or employee healthy stage strong or in it's maturing program, good side evolution a of it's at after customer is product the significant its brand mix. will the of establishing their Every company they're program. a in get-go some the right or pretty side come side, on whether how

and and we where grow they're so early and really we them marketplace. differentiate solution consolidate and grow to today, help where whether they're at custom stage whether meet meet our they're that the And and customers ready them it's love in or to can evolve at

Operator

remarks. now to the over any like turn back call would I Zig Serafin to for closing

Zig Serafin

last thanks it. question, great questions set of thanks, so insights that Yes. And for everyone, a and much Brian, for well, as and very appreciate

look about was look, to we outstanding and very talking soon. results here QX So QX forward an quarter,

to evening. look we'll you. forward great a So all reconnecting with Have of

Operator

today's concludes call. and you Ladies this you. gentlemen, for participating. Thank Thank conference

disconnect. may now You

Qualtrics International (XM) 10 Mar 212020 Q4 Earnings call transcript