Qualtrics turned in an unexpected loss yesterday despite revenues jumping 43% year-on-year and subscription revenues up 47% to $300.6 million. But the Experience Management firm’s share price dipped sharply on Wall Street on news of a net loss of $279.2 million for the second quarter.
Keep calm and carry on was the underlying message coming from CEO Zig Serafin:
Despite the uncertainty of macro-economic environment, we continue to see strong forward indicators, while we continue to manage for long term durable growth. We’re still in the early innings of an incredibly important category. And we're focused on building a great business. It's not only a leader today, or a year from now, but 5, 10 plus years too.
That said, that macro-economic environment is having an impact, he said:
This market shift, it's a little different. You have companies that are feeling concerned about a combination of pressures, they're feeling some of those pressures, depending upon the industry that they're in...It’s a combo of soaring inflation and interest rate hikes. They're calibrating on demand site uncertainty. In some areas they are grappling with supply chain challenges, talent retention, rapidly changing consumer business preferences.
Qualtrics is able to ride out any turbulence, he added:
In our two decades as a company, we've seen that in uncertain times companies focus their investments on what will help them win in their markets. And I've been on the road with customers in the US and across Europe, and the themes are all very consistent.
Companies want to quickly understand where the greatest friction points are in their businesses. They want to retain and engage their top talent. They want to know that they have the right products and services in the market. And they want to deliver them in a way that's efficient and convenient for their customers, especially now as consumer and business priorities are rapidly shifting.
Qualtrics gives them the ultimate advantage. We help them understand what matters most. So they can uncover unmet needs and deliver the products, services and experiences that keep customers and employees coming back instead of going to a competitor. And we help them do that with empathy, speed and scale.
Other stats of note from the earnings call:
- A 126% net customer retention rate.
- 2146 customers spending more than $100,000 annually, up 37% year-on-year.
- In the first half of 2022, customers executed more than 800 million automated actions on the XM platform.
- Also in the first half, XM Discover analyzed more than a billion feedback records.
Qualtrics has earned its seat at the board table, Serafin argued:
We get the visibility across different departments, whether it's marketing leaders, HR departments, sales, customer success leaders, IT leaders. It’s customer segments, employee segments in their companies, running their companies in different geographies. And we get to know what they're worried about. We're involved with as they think through critical decisions, strategies in the way that they're running their companies.
Serafin pointed to a number of customer exemplars:
One of the world's largest hotel chains selected Qualtrics to improve its customers digital and support experiences. Qualtrics advanced AI capabilities will help them improve service call resolution and make it easier for their customers to purchase reservations online, driving more digital revenue, while reducing services costs.
We're also increasingly seeing customers embrace multiple products, bringing more of their experience of data and applications onto Qualtrics. A great example is PNC Bank, one of the largest financial institutions in the US. PNC has been working with Qualtrics to develop a deeper understanding of their customers and deliver more unique and personal banking experiences across every touch point.
In the quarter, they added EmployeeXM to better understand the drivers of employee engagement to increase productivity and retain their top talent. Like many of our customers, PNC understands that engaged employees deliver better customer experiences, and only Qualtrics can manage the full lifecycle of customer and employee experiences on a single platform.
Our view is, ‘Hey, let's just take on a healthy level of caution here.’
That’s a sensible attitude to take. Qualtrics remains in a sweet spot in the market and there’s a long way to go yet. Keep calm and carry on.