XM - Earnings call transcript Q2 2022 | Qualtrics International Inc

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Operator

Thank you for standing by. And welcome to Qualtrics Second Quarter Fiscal Year 2022 Conference Call. At this time all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the call over to Steven Wu, head of FP&A and Investor Relations. ahead. go Please

Steven Wu

second Qualtrics year earnings XXXX Welcome quarter call. conference to fiscal

Serafin, we Beckstead, call the CEO, have CFO. On Bachman, Zig Chris Rob President and

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

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

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

important financial XXXX filings With to For and XX-Q hand risks be further could I'll other on XX, report quarter SEC, to for with the our filed over that will that, of the refer form the our Zig. ending the discussion with call our quarterly please June factors that affect including the SEC. material results,

Zig Serafin

thank for you Well, thanks, Steven. And joining us all today.

year-over-year current in the see $XXX macro solid revenue million. growth environment. $XXX quarter XX% million. was for the and to can year-over-year you of was another up Revenue As quarter the in And even across QX numbers, outstanding XX% grew light to quarter subscription the revenue the board,

$X.XXX uncertainty. are 'XX further for environment, to range midpoint we in while demand slightly revenue billion the our macroeconomic of the we continue reflect the so lowering And at to FY Qualtrics guidance to strong current see

XX% of extremely customer of spending our is is customers in strong, more number the XXX% net Our an in $XXX,XXX increase than retention year-over-year. which rate. And annually, remain highlighted relationships which

their consumer consistent. are right friction the the want US in greatest services Qualtrics especially market. focused, and the of very them shifting. And companies will understand X%, In our top company, times second to want that markets. investments know help long ability business to as this deliver talent. bottom all in what durable retain engage non-GAAP them matters And QX two and in focus Europe, that's them points gives are on their QX. growth uncertain long we've way as they across and we XX from the businesses. and and and in points Companies deliver We're quarter have a the want want on decades operating now rapidly themes for customers, they them sequential convenient and is improvement, in Our a up operating continue our their our basis we're And our margin margin guidance. confident that They seen term win the understand ultimate are in in where the quickly what toward priorities in the efficient and increased to to both to with They to as been We most. products help I've road their their customers advantage. line. term top

that customers And unmet and that and as And services and experiences the with uncover we PGA Roche, we York to and across formed instead and speed needs customer competitor. we're adoption a organizations City many including of seeing can Department TOUR, relationships deliver Education, QX, help scale. Repsol, more. lines. our the new result, with a empathy, they So coming products, keep of going New the or leading Toyota, In strong product expanded employees do back them

bringing lifecycle multiple engagement call employee employee understands PNC while resolution full banking embrace with capabilities driving top PNC One Bank, engaged customer’s improve digital customers EmployeeXM Qualtrics to AI point. of revenue, and the their Like costs. support it and many largest every improve and online, seeing a can develop financial for US. one make talent. they its will advanced to selected increase in Qualtrics added more of and more the drivers experiences. service easier increasingly has of data of onto reservations customer largest is world's manage working only retain the deliver employees Qualtrics to been that touch our services digital to a help customers, understand institutions hotel also their customers We're chains on purchase Qualtrics more reducing experience of better and the A example deeper experiences applications of Qualtrics. experiences, products, great and and their productivity the PNC platform. of unique In deliver understanding the to their quarter, and customers across customer of single personal better experiences them

our built our of lines. are because able product products innovate are all value the unlock platform, continue customers deliver across functionality faster. foundation on We And our our and to to of XM new

manager introduced a hiring, Journey by value the customers quarter, growth understand technology new for an employee a unlocks moments Experience Experience how have That's capability We interactions have company Employee more year-over-year. our system. time. This than Experience ID over is powered XX% quickly key with we helping them our of each and Experience single, everything things in helps rate ultimately shared scale. X.X impact at now billion And this In differentiators experience a new deep, in employee's by is game journey unified of customers relationships customers individual IDs a experiences. ID, like view ID. One trusted our a onboarding, of changer. and Analytics, innovation build employees other,

released take And So solution timely insights, that new contextually helps agent retention, call risks. they employee drive from while and the satisfaction in every quality and performance reducing and analyzing compliance and can voice interaction. chat improve operational boost effectiveness capturing with organizations and and the helps relevant in by actions customer we agent This these center to customer experience, retention. management feedback

[ph] the service analyze routing, achieve time. teams to receive and millions also listening service companies and new that email, and Social customer they a customer automations, We won digital respond enables self service media. intelligent to social Connect resolve helps cases through social satisfaction less higher Social With and of that and Connect, customer solution chat, capture, requests in more

platform, platform, product partners Our records. to XXX incredible more Qualtrics. with more platform are with actions months value more the billion data customers XM the scale. also six than co-innovating a executed our get customers actions an XXXX, on feedback to at million entrusting and analyzed more just XM is the they operating The our the first XM In Discover than advanced In of organizations agent AI are We're and automated machine conversations customer XM service we'll analyze to Qualtrics chat, success. we view and learning XXX notes which their structured reviews. Cloud, drive give QX Together, all purchases, Service advance and SAP and support and of degree data for and and a customer's experiences announced unstructured coming feedback. their the cloud, from Discover to interactions, into uses

timely improves customer faster, So actions which help cases resolve them more that costs satisfaction. and they can take

they of joint a employee customer with data. and ServiceNow. also The We view agents and understand how and [ph] solution a embedded about IT single desk. employee not their when side quickly only a also service customer how their but will are app announced by data engaging That better Qualtrics solving service help issues, operational side feel service insights desk and gives they customer experience agents managers with experiences with

opportunities. our all and to we attractive are their On to and is extend quarter, Qualtrics market time AirAsia, chose a leaders ABN invest Tata this paying continue employees. to AMRO, in critical Belleron in as [ph] the customers Lloyds Merck investments last category with those international And said and already to Bank, off, front, leadership Germany, like discipline serve

with more to give growth super me Tata, on digital you in Tata for for services than users. economic Let power the demand more the a XXX serves which million India, Tata expanded insights bit with the all new detail Qualtrics app, customer driving

strong keep Qualtrics great agility innovation, driving Rob and customers, not a It's on or business. from employees well leader with I'll success growth. that, top now, long only and manage results challenging the in focus. uncertainty them we're more to years And of continue the innings So year customer building organizations category. over early as despite to forward as of thank customers hand as And XX while environment, and we detailed results. continue X, strong it too. to their retain to I'd to to QX, close, times. turn help talent delivered find to durable in important and And a with more plus our in for see partners, a still today, to are focused indicators, discuss incredibly who macroeconomic delivering term We're an we but we these like our our

Rob Bachman

Thanks, everyone. Zig afternoon, and good

Zig revenue quarter, XX% was second quarter growth quarter, year-over-year. XX% for second revenue year-over-year. representing Professional As up was $XX.X services the total XX% million, said, revenue up year-over-year. second million other the and $XXX.X Subscription was in in million $XXX.X the

which ended was obligations obligations, along XX% expected revenue to in is $X.XXX performance our both future year-over-year. software quarter up remaining revenue new Our at contracts, representing renewal professional all the billion, XX% contract This with and under includes $X.XXX performance is next revenue up XX remaining recognized Current billion, business. contract be months future that services the as all year-over-year. under metric

these uncertain times. for mission-critical is platform XM in Our customers

more spending year-over-year $XXX,XXX our As annual retention XX% than grew X,XXX recurring of customer in XXX%, to demonstrated net customers. revenue by rate

our consistent Turning the with prior was to quarter. XX.X% non-GAAP margin margins, QX gross

for second operating to of operating QX Free non-GAAP travel million, operating X% quarter to in contributed of resulting million QX was prior basis quarter a ago was the compared negative flow XXXX. $X.X current cash year in compared $XX.X $XX.X of Our margin. cash Similar to margin increases profit for million during million X.X% reduction QX the $XX.X Operating approximately $X.X QX point year in to quarter an million, period. compared flow XXX to was in quarter XXXX. compared results, in to non-GAAP the in the in the

fluctuate believe longer free collections, cash to term. flow timing reminder, of our As the cash it's to best we a may over quarterly on basis assess a due a flow performance cash and

on relating and awards. vesting QX, cover with position to settlement of taxes approximately paid in or will related use share million to equivalents. taxes We of $XX sell cash depending cash equity amount cash This quarter to the for quarter-to-quarter, $XXX.X of During cash we a the strong if net we the fluctuate to in ended cover awards. million equity cash

outlook. QX year to now and Moving business our XXXX fiscal

demand see While strong, remained in cycle lengthening the continue deal QX. we to of some

the into Our experienced account of half further reflects and we've economic in uncertainty. macro XXXX first what also guidance takes

million $XXX the at this, the to $XXX $XXX subscription year-over-year representing representing growth be year-over-year in We the revenue the quarter range third million to of revenue at midpoint. expect midpoint. XX% for expect total to million, $XXX Within to we million, growth XX% be

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

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

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

non-GAAP expect and $X.XX shares XXX outstanding. share a net between million $X.XX, loss We per weighted assuming

over and second nimble back working the flow in turn and take to of invest to half continue be it With are toward we Zig, the we to of our I your on embarked while and financial Chris margin we free how will XX% cash XXXX, questions happy that, margin. long we'll XX% growth, disciplined operator. targets over term for operating and As

Operator

from line comes Evercore of Materne Kirk [Operator question Instructions] the Our ISI. of first

Kirk Materne

on you come got prior to when discussing Hi, positioning are. is and of with question sort you quarter. much, Rob. of And, and how I'm the budgets thanks investors I've one and I maybe all all very for Thanks much. today prioritization very discretionary you and Zig, your cycles. up one Zig, versus Zig, know, congrats you know, for a think good continues

backwards terms a some financial us or comments give I And looking your the if that, kind back I of, how in know, on of was that. with some for spent think non-discretionary more thanks is great even Rob, days clients And you you having just people this would you guide. view time the take maybe still maybe just much wondering time answer how know, Qualtrics versus crisis? on in you then these color

time a you for I think of thread to it's everybody in this I macro front trying uncertainty. needle. all to tough the appreciate of trying some get But

in mean a of by maybe on to for on show continue you us what year more give to back that, just half and nimble you margins? the you some know, things being spend on little you to could color - Thanks. Just the bit have progress discretion the

Zig Serafin

leaders. It's or companies segments, it's one their a We its diversity employee across upon customer whether to elaborate the I've supply another, across they're America. site take color dimensions and we think areas in running this at huge consumer critical down find looking to I geographies. of a decisions, liberty quarter, industries. Most that In like last the chain segments North not. the rate pressures, rapidly have it's on that in Qualtrics Kirk, way little more the they're they're is great demand lot we of going departments, combination involved a CEOs, questions. Europe, in a in They're bit know different what those uncertainty. – to the success worried changing table. of unique the give marketing to departments, running say And as are about shift, companies. I'm first They're And your through challenges, particularly a using market And visibility sat a side, hikes. concerned that off here. they're at and that And with important companies are about. preferences. pressures, you company have little Look, companies inflation HR We're way seat of different customer look, get it's feeling calibrating leaders, IT retention, with strategies they leaders, feeling get different. And a this more their of very companies, some sales, mean, I'd throughout soaring in the grappling interest with their combo talent depending some business of industry they're

our what know, their with CEOs are of issue I'm most consumers research [ph] doing Where, we're of of issues the is supplement pressures teams we're course, right. know, as deliver focused providing on best two the know, And are it. important of needs. seeing. them right demand just business so types how Qualtrics are described. different companies focusing deal also strong are given do as there is, the win consistent sort strong in They are that report from and increase you are multiple thing result, to into they're you for people them, know, looking optimistic creating other that it's, what's I what terms company, remarks, facing end extending, in And actioning next and retention said, talent address what have of on guidance, and that way the attract a some have into board to employees of on they but know you just I signal. rates how issues to points which across through with going year. like, some to spending to we're the expectations approvals, approval they tuning built just processes for demand to the the our But spend. going are dimensions you is, They trying on see you focus And they're also my look, Many add think rates the on companies, markets. that deals. are challenges their a that bit And, they're where tech And with and know, are want and marketplace, on decades is their longer, of this a you that, well. there's only to are same I businesses which just to dimensions are XXXk a in different And is where that are they're the time, also revenue or to not very maintain here well why, time you perspective, larger this net products, of some their the leadership increase you cycles know, in signal companies. energy of is means want you them continuing I to expect going cycling do what businesses next the adjustments more we've help up seen with look, year. But positioned C the quickly at while and spend level saying, putting that through growth. win to us, how of that. as that on the little the continue platform which their everyone saying And context planning do saw see time And in do are money that you customers their especially how also leaders in would see and retain things done. see at times which that have spend, been to levels for themes strong, also help industries also we're going into and energy in in the to right all friction some that they're in and has I we've our understand we different will high greatest how a strength And think plus some we particularly case that our taking growth. more these you That's I about is on where the

to right. see continuing I strong good news just the we're win said, Now, is rates,

these we're managing dynamics. the just the state play, of in that given see we of So all things

today a a good a We years way other of now, building We're on I we're now, of any focused wise XX and want also like category model But quarters. here. don't take turn business and leader right right. from a being model to it's you plus to a in before category You're having this attractive, Rob, we're time. next also as great a X, but year business also operate at And reiterate I the that on seeing couple in business in mean way a the have healthy think us this just particular caution. doesn't and this highly or to level just over from building leader leading that's great business

you Rob, to that? So to add want

Rob Bachman

Absolutely. Kirk. XX% margin in see QX margin, XX% Thanks free for in remarks, in can why my again business. the question, to long significant over prepared see operating over margin, in that's flow, from to QX to margin regards that sequential improvement term of targets already In cash And we QX. reiterated - our again, the this you

sure Now, and gives that we margin raised have rigor spend, year. our the improvement And in see optimize the see we we our the that of have slowed And full ongoing that's added what you end we for more the making business. that we have we as the of spend that to the our And low also opportunity. even us that drive hiring. in confidence to areas investments, guidance greatest margin

Zig Serafin

we're think job to by we're just being here through the saying that and moving the and is business - the manage business a changes I'll but category, quite as strong comment operators. committed the also I'll off And in building to along marketplace. leader And be our look, not only in great like, cap we

Kirk Materne

the color. guys. Appreciate Thanks,

Operator

Thank you.

Our Morgan go Stanley. next Weiss from Please comes of ahead. Keith question

Keith Weiss

hear Excellent. Can right? guys you me

Zig Serafin

you. got I Yeah,

Keith Weiss

time, cut just commentary operator about for what the for little indicators much Zig, like and rates million juxtapose conference bullish with Because this million. to question. guys look call, there grow sequentially, to RPO, Net gray been down like we a of the like sort up versus [ph] you've when little I the cycles. try a the it is elongating of bit. X taking slowed deal Thank quarter, about very is of off the quarter. want you a in And second. XX leading the at kind year up some current bit didn't the The last Okay. at like very in talking retention

impacts subscription [ph] out revenues that on more is guess question a how much guys see you business, hard could some the a your side of I so beat forecast the like of little quantitative slow to of two, out cycles, us you on how equation? the it's some a maybe off are see sheet, which bit have the exactly give sort strength? of And you I So started is elongating is the applied go pushing of a you that to was sort very those conservative answer amortizes conservatism of Because then sort in us one, into deal [ph] hoping that forward with moving balance being. Can help basis? you

Zig Serafin

actually Yeah. used. to part that from know, we context. we've really first that's worked I'd off, Well, the signals you factored I And, important And rates be our the strong. a always that say win And well, that we we've into demand. strong continue see think

We also as and in a bit view people across hey, their cycles sorts and places, deal our so, all on just hone longer, And, take on of is, you spend right. a companies, scrutinize that's right all, and know, in degree the let's you taking uncertainty. some people the of dynamics the some of of given level a lot know, think We of greater fact a caution operating to in do, thing cycles, see, here. are not that, healthy deal

to in will rates keep again, you a longer. approvals some point know, bit cancellations, is, cycling And Rob? bit take take I a mind. make, seeing And so for we're that's, not just places, some is, longer. I other seeing in new [ph] win the as we're think But color around

Rob Bachman

provide. the but assessment that - that economic macro that, and have further have appropriate, that exists. us is had our that's the the back here that to we us - I relative we the into we into guidance guidance in to as would in is half And And account guidance. you, just what taking we're very we and we conservative important do building We're past year. tell and uncertainty in And we comfort same how how operate level that's of reiterate deliver for of the the that, Yeah.

Zig Serafin

it's being, level sort attention be to also processes a take that to more fact of with you operating caution. So about but healthy of bit got a paying approval know, the longer, you

Keith Weiss

Got it. like just a expense to fair that so it have And down Rob, bit hiring, is of the be uncertainty, clear, you for a in growth that expectations the sounds face macro slowing little down, taken commentary?

Rob Bachman

Absolutely, right. Yeah.

Keith Weiss

Excellent. Thank you, guys…

Rob Bachman

Where it makes and on sense opportunities have to actually effective also see. capitalizing we that

think the the part of responsibility of I business. that's

Keith Weiss

Makes sense. Thank you.

Operator

Thank you.

the Our Brian of comes your next from line James. Raymond is question of line Peterson Brian Peterson, open.

Brian Peterson

was question. mute button my for again. guys, guys, But Zig, Sorry, confused taking thanks I by that

So a is what on this consolidation? here. specifically, a in experience, terms seen know, Zig, I'm vendor you're of your you've actually and market category of, you've stance curious, had you know, some cycles. lot know you culture I creating

you have spend So more of in spend But of new. be of far if happened beneficiary just this vendors a that's coming net of in so XXXX? I'm may this a been other space? lot off curious

Zig Serafin

a think lot we that single approach creates company, built the that platform the do and technology Simple different works a to platform, people of to answer truth. in has And I of source yes. of validating our our is with nature departments trends way across just single a

know, you about both what demand I in talked seen far a and with shown is customers, I've also really and examples trends the growth And, indicator this Experience represented in seeing mentioned. is I've but signal. so we're the in think IDs we've with also important the that

Brian Peterson

mentioned Thanks, And quarter guide maybe that Understood. real impact you on this, apologize. call or guys. the you I the would on Rob, quick, out? Any FX

Rob Bachman

material FX. move for any to on to material continues you Yeah, that nothing some of it call constant as know, call It there would sort not currency. to but point out impact, that certainly have, or I out would you the we

Brian Peterson

Rob. Thanks, Understood.

Rob Bachman

Yeah.

Operator

Thank you.

of Our Borges of the next line is your question Borges, line Gabriela comes Goldman Gabriela Sachs. from open.

Gabriela Borges

additional not [indiscernible] I'd the some hear bit Thanks noticed or deals that vertical, and slowing? but to of afternoon. that good taking versus larger the businesses types lengthening. Zig commonalities of on deals types I Rob, that the you question. mentioned on are you color are between deals So all of color through momentum it's types for deals, region, know go continue deals? of Hi, ones to any a good the on love little the

Zig Serafin

speak one. I'm like going to Chris, to this

Chris Beckstead

I the question. Gabriela, appreciate Yeah. Hey,

ability win they them earlier, great You one and rates set talked of us diverse an close what allow and continue cetera. at what's have gives of really about of historically, know, geographies, our taken in urgent learnings, across different to a we're overall, we've customers, we've win. which And which important a about across depending terms product of to a And board is portfolio, consistency for to rates we and encouraging. the product look win into, a is and we of us great diverse high really that have solutions, experienced industries seeing Qualtrics, the that things et deal most the is sell upon specific priorities the as

Gabriela Borges

slowing the Recognizing the company, is, the down think we has a high like. XQ XXXX? us looks should range? on term when And assumptions? from path maybe into about teens teens normalized normal you normal a that do growth XQ of what do XXXX, of about color through have medium is high the environment? what think planning bit company in the little follow math Give how implied my by And the guidance the isn't Understood. How to growth the profile we this up that

Rob Bachman

Gabriela. Sure, appreciate question, the

we particularly results year the you important that know is we As and we've XXXX of drive done guidance QX when provide the in and incredibly this others, And past, QX, I our the will the back know we earnings. release there. our to half us,

year. the the Now, may a take guidance reiterate XQ here, at that I is appropriate for called how we the the out we market. been to think that - level uncertainty which what is you guidance what And you for need the conservative we've account that implied in impact see and the is rest believe set and we that in that would of as into about have

think things the all of execute half back our I to know that forward-looking. you and we're of XXXX on the provide those So updates And the the completion we'll in at year. out factor against year

Gabriela Borges

for color. Thanks the

Rob Bachman

Yeah.

Zig Serafin

Thanks, Gabriela.

Operator

right. All

of next our Mark your line is comes Mark question open. of line the Murphy Murphy, Now JPMorgan. from

Mark Murphy

ask of much. into of March Thank relative the topic for the Europe? you the on some cycles. the had you US? help lower I actually prior kind wondering clarify then you perhaps number. QX compared us lengthening underlying that Has contained looking revenue Can the dynamic why at And of wanted higher Or moved broadened then the on have has instance, deal you very and growth, Zig, years, there? out, directions? CRPO would Rob, what saw you Or this the that in understand was if what growth, to could backlog results, broadened sequential out you to of in sequential composition to Was of opposite the that the quarter? to

Zig Serafin

demand geographies, one speaking, as continuing side, for some - know, products the deal Rob that. I'll cycles Okay, lengthening. I we're see to word cycle on first I robust take Look, emphasize deals so a quite and you broadly variety of then well. would the answer in the Because,

cases of there's days other upon is situation. up the quarter, be end I'll might the but just scrutiny, it's also upon do again, metrics I we've varies size, the that especially weeks, a the in depending we larger thing the of core deals. might industry, But the may mix, it strength And be be a in more some that, nature on the might deal of that in vary so several And reiterate watching. and company, seen depending bit sort a

So signal, pipeline generation. includes the like things like things pipeline, demand which

factors be win I our As said continue organization, be to like solid. rates at We look of strong. that continues earlier, sales to retention

And so consideration on these the in guidance take degree with are what earlier, a into combination that feed are conservatism. Rob we're we the context of what had and providing things the factors reflects that of into commented

Rob Bachman

and in and at then Yeah, you on look to the quarter-over-quarter. historical and regards and Mark, sequentially, the that revenue then CRPO, a then

about, over in when lagging a the on, time, strong that as seeing revenues, so sequential as you're very revenue the know, QX indicators think, of revenue comes I comes the driving as is strength that QX that we results quarter well and to results that it's exactly delivered cycles the of - the then this quarter. of CRPO and then talking some of what the impact at in we of we're the QX. end lengthening current deal overall point And

are so those And the point to. main factors I you would two that

Mark Murphy

Okay.

clarify, deal that of lengthening cycles that's statement? the to contained to a Is just is - fair Europe. So

Zig Serafin

bit depending as it's a the market. a said, I, I No, actually upon of mix,

that of this that I will know, is, Europe go you more, now. also face right are don't know, geography instances processes there's but actually level seeing the through. it call where you're And, scrutiny and regardless approval there it's many an parts not issue. other companies some you everyone have parts is it. have issue. ones a so, of in, the to of actually And not And But that had I there's of there And that of that mean, think are anybody have that don't reality

And and of so and dynamic - managing. think the that's context we context that we're color the sort

Mark Murphy

for Thank the Yeah, makes clarity. that sense. you

Operator

you. Thank

from Shah question open. line Bhavin your Deutsche Bank. is comes of of line Bhavin next Our the Shah,

Bhavin Shah

for you line guess in what on just thanks I seeing of about following of terms cycle questioning, up real time question. deal know, lengthening? last you're that and terms talked impact if expansion. have on impact not Great, at there'll on know, expansions taking of in new be my I logos focused that an But you seen being far, all? rates, really, churn any thus and mostly quarter,

Zig Serafin

Chris? Right,

Chris Beckstead

to. happy Yeah,

think is seen band, competence, delivering value us we're finish in this line. I are of as with get to expect environment history they've the expand know, deals macro signatures it across I additional towards just There's the it's more the really sometimes know, Zig cautious. where more mentioned, it we've on bit a you I terms bit slanted because and mean, reflective people of just you as new easy got logos, a you'd think existing customers, I it think industries, in platform. little happening, - to But required is across

out our all done. the that's it's we're to ensure get the deals continue in that just so actual position, the monitoring direction. time the And and have And - to leadership so win this signaling answered, we being questions right lengthening why to rates closely,

of business signals just we're happy real it's our is the taking, with So longer. underlying just taking

Zig Serafin

thing what's broad make few the sure comes is that's have up. And want not won't that not factoring with all we're fact And same that companies it, that's probably see to important. very a painted brush, in. what happening. I in it we uncertainty, cases, which that that's there's the There's

is way a across operate that responsibility. And earlier, helps in which diverse One set diverse different product in we we that and of this have have, Chris dynamics, the part portfolio. we the we the set diverse our at mentioned a managing of benefits geographies, that's look case, a us as in of of that industries,

Bhavin Shah

most. Yeah, the you guidance. be But only the a But assumptions logos? I being I are maybe it rates instructions you're follow are anything Again, guys with ones. Rob, or on know expansion the the that? [ph] or you quick any terms like And also worsening. rates on a imagine Is little macro close for further changing your clarity won't of the it. on where seeing just churn I new mostly more Or up on appreciate in concerned

Rob Bachman

that you broad portfolio. asked how guidance the the of the same going level makes set just to account in set which of the I look, I going a the we questions to would have sense, looking Previously, of take is past. that, to we mentioned on again, on, guidance we're to it guidance comfort just which lot level where this, into is similar the Yeah, impacts a commentary base add the where the guidance.

when the that the it's times get to conservatism there's build into to of more same natural uncertainty, level you in in guidance comfort. Now, more

that to So point I here. want take you away connection

the about that adds of As discussed. way caution that we've and in of I level comfort it talked level consistency When our that we factor in you guidance. uncertainty, set

Bhavin Shah

my Thanks thanks for question. for color. And taking again that

Zig Serafin

Thank you.

Operator

Thank you.

of line comes your Raimo is open. from question Lenschow Raimo of Lenschow, Barclays. next the Our line

Raimo Lenschow

about rethink process Is hiring. it pretty do on caused of the like this of more far. talk Maybe like, accounts? Obviously, it already getting manage the you're of big focus terms you doing managing kind a what year. into questions. more existing a macro is there the that anything stringency That changes How think you expansion it is to quick new have what well And terms in the of that Rob, reprioritize? Two or was there Europe? priority more you. like that bit sounds managing about Thank so And sales of is. kind signatures. mentioned kind little And, you you're know, you for in of hires on

Just kind in going anything idea of is think how Clarabridge And point a that a macro you. But apologize in the to since ask I not this of Thank selling branding, an then environment? give it far? I you now reprioritize other under to on of us little and how so bit terms February, is your question. own

Zig Serafin

Hey, Thanks the Sure. Raimo. for questions.

different I off, we've look, different mean, first been through cycles, So modes. we've operated in

One of know, at company look opportunity, is, as to both and part into are culture scrappy learning that of are bottom you the the of that hone able areas making the right. that adjusting. that we line. you fast we well run know, top at business, way is the as actually part factored And, elements of is in of a And the line is you and be sure this of all on same for time to we, that company in

the companies [ph] our increase their up possible customers, and that of wasn't into to save it helps that customers. existing some with end unstructured areas of about the product how sure Clarabridge, of run to year, a of opportunity, part sources business. to when that, incredibly in that, portfolios it's about asked the XM of redeploying a part did just the feedback coupling earlier for it's integrated for you was so to We we we conversations, friction, do things an you on we in how called Clarabridge. create and question. of can where the the we're media entirely, or know, is support us our form posts, XM thing greatest of part our layer and the example, beautiful more powerful of unstructured that expectations consistent have Discover. result, an At platform. helps and companies the Clarabridge sales opportunities. relationship or them significant time-intensive it's chat, a tune performing operations, to hiring, efficiency, money new slowed it's beginning refer a great data. are We're the our don't Rob and And teams mentioned that as here you places, other dialing into of materializing what optimizing that to the But It's standalone that that of social manual of other see we know, with a investments the And also addition, off business. in You we're in It's The places, that beautifully of areas and want the of making hiring as company, company. as all hone more people into. that resources SKUs automate before any operate engineering, now taking as the that's dynamics - And of to expanding

with again, - so had performing And comments this and opportunities. the earlier about on is expectations, I our consistent sure right making that the focused we're

Raimo Lenschow

thank Okay, you.

Operator

you. Thank

question Arjun line line is your Our next Arjun from of of William Blair. comes the open. Bhatia Bhatia,

Arjun Bhatia

to for one Zig, guys you I want you. Thank question. for taking the start maybe with

all into little you more this spending mentioned, get product of you're motion that points there with Is at employee lot change new right market customers. between XM prioritizing, you know, you deals You that cautious the Do any portfolio customers, back the of maybe you curious, as and at XXXX. experience? landing expansion new to diverse gives see for the all? maybe go you're into the messaging half that customer and and making I'm lead or that products bit change which a environment have you you year a Discover to expansion with

Zig Serafin

rates. deployed win you say, as where attention to and you putting are strong for important great, care their then pointed Are out demand people getting that's XM, things as our to great, platform, zooming important portfolio, digital And they customer strong. first you to going employee in Thank customers would and I they're and And Design get a and what off, closer signal things the point using to budgets. offering of on around and that experience that like well. great product much with in And example, as be and things that's to be where want coupled said signal, Arjun, out you of just people like agility different for mean, points value money consideration, can great, is question. time demand point, zoom to like I as our you. side, capabilities into as I'll experience because our the that their well time really about relevant? back

use off and cases, and new another leverage turn to and you might long have don't used have whole you have access up the system our the motion go where go tools, that And for we of instance, can you advantage. in then example. having pick across company's fact set different through you different capabilities of modules a people people department, cycles, the that part deployment to that to So level actually fact in been works get on new that portfolio, fact for capabilities this that up know, can data to for and and the quickly left retrain term that actually

us. factored is the we're into and So engaging that to that operating that you the dialing of the well are way that as - all customers in, go with it is market, know, way as

Arjun Bhatia

the but partnerships customer far and in marketing Discover, is live your still how you that's area actually it the noticed changed with the that up How center you customers has Have in? How ServiceNow. presence a know, is sales? just And SAP follow that. That's, in thus you XM of seems maybe with your is service And much departments customers? in that existing of with terms very shifted versus on big also like, much helpful. a existing your focus, context

Zig Serafin

good that's too. a question, Yeah,

still And in a have is number back off, and had, So I because beachheads ago, look, it to, look first the experience the that call getting based to you decision just market. that a connect uses they've connected that system of or channels connections two, expanding. with if across their years employees, idea been three we using that customers, departments to much more making, company creating getting to different closer closer the around works

the years you you a ago, easily. a today, If have number you then apps take, different for five of look at with instance about touch two, if very points, increased And think many how - touch may company. customer points three had has

lot means so you And be flowing company, hyper more into a can disconnected. have data that your but it

market all And that bring new. to so we

If you touch number today, increased ago, points, every a X, have look if touch take, at And points the years you customer then easily. Xx how for instance, about has think five with company. many of you different may had a

data flowing And disconnected. more so lot a can you hyper your have company, into be but means that it

bring have and so they we And all form example. decision like buyer be SAP actually like to in through that where them. a available access relationship And point to because that's that with help together. makers, supply SAP for instance, And your doing, things Ariba type to in chain with helped of so to an we position as

chain. example. That's to the decisions that make them manage supply So they can they that expedient from help you platform use, know, more our one capabilities the way their in just

for certain increasing number in we're driving, of in as an do get really, us to care, exposing customer well. part end, as cycles and some of that's you And that, that, companies, Naturally, is you you the bigger decision budget departments that's core too, either offer you as other then even what with you pool. when to out cycles if makers with in we footprint deals again, pointed you to in access bigger really paint cases, got like approval right, deeper we know greater see departments the the what, this paintbrush aperture the core expanding So have thing But a not significantly. that's types in because nutshell, embedded also straightforward, and involved getting to of question, cases. of of this get value is that's right. go the terms can't use important, of in the But of single expanding the your is well, are other that that we deals. manage And more a look of different at cases is the some

Arjun Bhatia

That's very helpful. Thank you, Zig.

Zig Serafin

welcome. You're

Operator

Thank you.

Bergere question America. Our your Bank Adam of please. comes next from Adam question of Bergere,

Adam Bergere

Hey, great, you. thank

But don't customer anything there? see from numbers, year correct, are QX. know, of I QX maybe, my lapping, you that actually a know, if business you, ago, that call major in decline that. manage example, So project for looking revenue You is at thing? out non-subscription Is know, the a may obviously, you revenue implied math a year-over-year you sort the to to

Zig Serafin

that otherwise, out. Yeah, I there's no or call would major projects

I the think would lot is in drive of to a past growing we've that our reiterate, again, highlighted and we that our to something business professional continue services ecosystem.

you should so the expect grow at slower go And than much subscription revenue the basis. forward services a revenue to a on pace

Adam Bergere

it? anything versus there you. how unfortunate you Got And differences further each? call any differences side good success into you're use thinking do two Are in of And the more out, to Thank is terms the in slip we customer a out the type in in cases? spending looking resilience on scenario, hear. key That's to then employee the demand know, categories the about recession. and there of

Zig Serafin

place seeing my They're in market, act CEOs earlier business in on to especially friction know back how points number about point other point one, in your the understand I'll where, to and greatest them. executives. hearing and we're what a from the and

the everything serving to way, service right into you're way or with Some the the of do or the customers your your some delivering - enabling you're market, these how things right of not your them with very talent across actually your serving product them, do how are not highest a or what these them intersection of different important employees working do. able different are to keeping are with not things engaged, having most to in other of are industries. actually at retaining And and way many

changing their engage lot the their on you is and data are trends quarter-to-quarter, you engaged people working scale. they consumer and be way know, inside and people budget decision money to cases, of And a then them allows larger of in to significant six This that why action behaviors so a system to workforce, it's that to on they're where right. and that retain decisions they requires just especially better actually operating get the months months, company. customer every on signals extremely these we're hiring, making they truth the business why built between And a relationship know, ground how market for at them and six factors, information is that and how able spent Qualtrics a make that relevant, using the

context the that's think it's on that would So reiterate question. I good a I because

Adam Bergere

very you thank Okay, much.

Zig Serafin

Thank you.

Operator

you. Thank

of Patrick open. question Our line JMP Walravens line comes next from Patrick your Securities. of the is Walravens,

Patrick Walravens

$XX money and is to the that? raised you this this buyback? Oh, How And appreciate you so detail. Isn't We you. do a consider time Thank stock go for great. know, guys, much about currently Look, a thank through around to you it. continuing you so in $XX? think good

Zig Serafin

we in the sheet Well, that Pat the continue relative to have to invest that to our market make we significant appropriate cap, that I our is mean business. part sure capital opportunity business, and is also of to balance this to see relative on for wise operation our

situation you a as a where stock would considered characterize not have do what we buyback. we So

it our stock you have for determined use market. vesting than tax the rather Now, portion, in shares the additional this do point the point see employees, sell into to that settle up commentary is that makes is to we sense to the to that as cash

impact the our that when vesting. and haven't we we the our not And buyback so there some because to see a that investment achieve we business stock is have considered to employee to and, But the that in date, market. also we're capital we of overall opportunities want cash dilute using natural further as position

Patrick Walravens

at your like is QX mean, it that and growth apply then to rate one. I And - take Rob, it year? Okay. this is to you now, reasonable for least next for But us not might

Rob Bachman

is that comment we XXXX. – guidance do conservatism clear. certain the the amount QX be And Right through we I given go I'll on this folks for earnings. release we'll of again, to I going this set have when our not to wanted we in provide XXXX guidance I'm because So to uncertainty highlight now, that see. this the want a

how forward need the you about you guided the how go how think of the take with to the in and we've in as that past guidance. the that guiding consideration, certainly, cautiousness we're I approaching different so current we're that see than quarter, But And into you numbers. think also overall terms is

So you factor those now for a all top I mind things of this of is think lot in. folks. And

Patrick Walravens

Okay, thank you.

Operator

you. Thank

next question Our - sorry.

question the line Loop next comes Kim of Our open. is Yun of from your Kim, Yun Capital line Markets.

Yun Kim

thank you. right, All

a is partners deal. change customer mix product closing how of the there. terms So the role bit a change importantly, you new obviously, generating environment? you the deal a land there's sizable current in size, dynamics, deals the regarding those of changing more in new Can are know, us lot any question And in just your the land and of these in really you on leads customers, initial the in details initial more uncertainty seeing give little customer

Rob Bachman

that of you, over have of - seeing with Yeah, of in strong another of of it terms set another relates one anything what in you nothing the dynamics customer really customers signals around we spending to Really with to and level of and call differently the our see are the number just are as overall, number can it landing out in portfolio. overly customers, XXXk. customer that, spend sheer I at enterprise and that spending major metrics I'd terms product versus some think pleased terms product of not size

seen is, we've and continuation nothing the there. as say in out past, I'd So really

Zig Serafin

partner that comment you want asked Chris? the on you to question, on side And that, about that's –

Chris Beckstead

as make think for I'd continue. about continued, look overall. for for investing focus to to that's our it's operating say, we for been the Yeah, And scale to area in is ecosystem. medium continue several drive building major and long of partner term business business to it efficient an years we the the a to focus us, leverage to us, continue as We've

terms so long drive of I the grow. that and our for to And will customers. days our that you there excited really and think about early business what see in opportunity continue for We're can term,

[ph] term to our And so growth. that that continues mean what major and long for going be for to a that's about imperial focus us excited

Yun Kim

that… for thanks Okay,

Zig Serafin

on SaaS a connecting then, further to sense ServiceNow makes many side, operational deepens Qualtrics that and have as be experience like, that, then go are partners complement our management base a customers one system sorry, if the in of these of platform know, that to with management just And example, our division the you. that use some have practices, other of of context connect that platform that to you on using installed footprint core And lot corresponding partners, partners say, operational they'll start is they exists you examples. I might apart, of experience operational But system. to in for am that the that will in the alongside off department, the for know, they ServiceNow, to

Yun Kim

have quick for be Thanks we aware should that question for both existing contract shorter our a change And length? Any of. in new asking In and current for contract Rob. that. length I the are environment, they customers,

Rob Bachman

seeing No, we're not way. any trend that

past. our shared consistent what contract with the in is length overall we've So continued

Yun Kim

Thank so Okay, much. great. you

Operator

you. Thank

line the from of Terry Terry Tillman comes question Tillman, is Truist. open. next Our line of your

Terry Tillman

to are CRPO year. are you cue Yeah, question thanks typically I I to to Rob end anything a might share make is KPIs know, [ph] all your And of this from this did relates I I think as because the just I'll it I guide things say in. those more But year, of I we're of Clarabridge. to watching. fitting don't of thoughts of be how going would their really me the nature easier. all year, a you at think take there just that about loaded be going don't previously, that. really, you billings can and have lot the half here. mean, know unanswerable. - there But second the know half into one second be back for in it important

things with given color us, all more any just share can talking the we're you. you So Thank about macro?

Rob Bachman

QX, even us as enterprise, for Well, seasonality quarter an yes, expect that given be again, on larger now move bringing do our Clarabridge, a ongoing the to relative equation. basis, into the XM we Discover will into well as

or then you'll although first billings And is don't you'll the on so you account, quarters, well should calculated even we've take guidance into provide that that And guide similar to see you had that where for historically. provided as I guidance have we carry in three think we've QX, would calculated than the fairly That's, that actually enlarge in forward relative the larger the see be do how what billings here as and know, we otherwise. models size. on

Terry Tillman

you. thank Okay,

Zig Serafin

Yeah.

Rob Bachman

Thank you, Terry.

Operator

you. Thank

your next Our the open. from question comes DJ, line of is Canaccord line Genuity. Hynes of DJ

Zig Serafin

hear can't you. DJ, we

Operator

your Again, line DJ, is me. open. Pardon

DJ Hynes

Can you hear me? guys

Zig Serafin

Yeah.

got it. we Now

DJ Hynes

And can right? We're I to I it. a better incredible to easy, Think of the not mandate. on what's How But you don't if right past and get period? prospects? a for taking in lot has top you for curious. getting and insight think because, are the granular a I payback get am how return customers we've asked it? terms do spend it's know it's But that navigating know, down like helping of, We for the spoken for All I'm quantifying much business. in question. thanks about or, I today challenging Chris. some. you or Zig the is thing curious, how it's been know, just focus you know right. or Hey, of ROI you Got we

Zig Serafin

the customer proposition. have customer And approach heart Well, to frankly, been experience, correlation what's no taking know, pilot our telling what, revenue approach core in will our me what our of like But important and instance. look, churn like, to value customer old a at you platform of marketplace, the hey, on experience tomorrow. school actually about going data like, give between the the to sense in many understand a to things you experience the action the happening segments, for capabilities I to satisfaction what's most that what rate and have it point and - look management, approach drives score, give and people then they'll just and not to yesterday, solutions And point, of things on reduction, that it. is you in my do on helping but drive or our to you

mentioned, like, as important, actually so, platform. differentiating a of dimension extremely And I it's our it's an

actually drives demand signal up, see we the it's brought in So you the I'm part of that glad what question the but marketplace.

DJ Hynes

you. Thank it. Got

Operator

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

disconnect. You may now

Qualtrics International (XM) 21 Jul 222022 Q2 Earnings call transcript