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Jan. 27, 2021, 6:16 p.m. EST

5 things to know as Qualtrics prepares for its IPO this week

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By Jon Swartz

When enterprise-software company Qualtrics International Inc. makes its eagerly awaited public debut Thursday, it will bring with it an eclectic history that includes being part of one of the world’s largest software companies and a direct link to an NBA franchise.

The SAP acquisition and spinoff

On the cusp of going public, Qualtrics was acquired by SAP /zigman2/quotes/207905606/composite SAP +2.65% for $8 billion in 2018, becoming a wholly owned unit of the German software giant. This week’s initial public offering amounts to a spinoff, with SAP cashing in.

Read more: SAP files for Qualtrics IPO expected to value the software company at more than the acquisition price

Qualtrics last week raised the expected price range for its IPO to between $22 and $26 a share, up from a previous range of $20 to $24. Under the offering, Qualtrics will sell 49.2 million Class A shares, and SAP will hold on to all 423.2 million of the company’s supervoting Class B shares. In total, there will be about 510 million shares outstanding, which would suggest a valuation of up to $13 billion.

Qualtrics is scheduled to trade on the Nasdaq market under the ticker /zigman2/quotes/224172508/composite XM +11.02% , which refers to experience management, a category of software Qualtrics takes credit for popularizing.

Morgan Stanley /zigman2/quotes/209104354/composite MS +2.93% and JP Morgan /zigman2/quotes/205971034/composite JPM +1.55% are leading the offering.

Management team stays the same

Qualtrics CEO Zig Serafin, a 17-year veteran of Microsoft Corp. /zigman2/quotes/207732364/composite MSFT +2.11% , has been with Qualtrics since 2016. He leads a management team that has remained in place, even after the SAP acquisition.

The C-suite stability is part of a plan to preserve the company’s culture, Serafin told MarketWatch in a December interview.

At the same time, new blood is joining. Egon Durban, co-CEO of private-equity firm Silver Lake, and Zoom Video Communications Inc. /zigman2/quotes/211319643/composite ZM +6.11% Chief Financial Officer Kelly Steckelberg are joining the board of Qualtrics.

Financial outlook is bright

Qualtrics racked up sales of $723 million, up 36% from a year ago, for the 12-month period ended Sept. 30, according to a filing. For the nine months leading up to that same date, revenue improved 31% to $550 million.

The Provo, Utah-based company recorded an operating loss of $244.1 million for the first nine months of 2020, but $218 million of that was because of stock-based compensation. As of Sept. 30, Qualtrics’ XM Platform was used by more than 12,000 customers, including 85% of the Fortune 100, the filing said.

When SAP completed its acquisition of Qualtrics in early 2019, it was the largest private enterprise-software acquisition in tech history. Today, Qualtrics is a major mover in a $60 billion annual addressable market.

A red-hot enterprise-software IPO market

Qualtrics joins an impressive roster of newly public software companies such as Snowflake Inc. /zigman2/quotes/220991541/composite SNOW +11.55% , Palantir Technologies Inc. /zigman2/quotes/221054928/composite PLTR +9.31% , and C3.ai Inc. /zigman2/quotes/222990672/composite AI +6.24% .

Additionally, Qualtrics joins lending company Affirm Holdings Inc.  /zigman2/quotes/223715966/composite AFRM +11.64% in an already strong 2021 IPO class that will soon include gaming company Roblox Inc.  /zigman2/quotes/223883423/composite RBLX +1.82% . Airbnb Inc.  /zigman2/quotes/222990650/composite ABNB +4.01%   and DoorDash Inc.  /zigman2/quotes/222973991/composite DASH +22.15%  both went public in December.

The 2020 tech IPO class was the best in terms of deal count and capital raises since the 1990s, according to data compiled by PricewaterhouseCoopers: 183 traditional IPOs and 242 SPAC deals raised slightly more than $150 billion.

NBA connection

You could safely call Qualtrics co-founder Ryan Smith a basketball junkie. He has a court in his Provo basement and a half-court inside the front door of the company’s headquarters. In October, he took it a huge step further, and bought a majority stake of the NBA’s Utah Jazz for $1.66 billion.

Read more: Qualtrics founder Ryan Smith to buy the Utah Jazz for $1.6 billion

“I dreamed of playing for the Jazz, and that didn’t work out,” Smith, 42, joked at the press conference announcing the deal. The deal includes the Vivint Smart Home Arena in Salt Lake City, where the Jazz play, and Utah’s G League team.

Qualtrics has been a team partner since 2017, when the NBA introduced its “patch” program, which gives companies a chance to market themselves on a two-and-a-half-inch square piece of real estate on player jerseys.

Smith founded the company in 2002 with his brother, Jared, and father, Scott.

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P/E Ratio
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/zigman2/quotes/221054928/composite
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Market Cap
$5.24 billion
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P/E Ratio
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Market Cap
$13.32 billion
Rev. per Employee
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/zigman2/quotes/223883423/composite
US : U.S.: NYSE
$ 70.95
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/zigman2/quotes/222990650/composite
US : U.S.: Nasdaq
$ 141.20
+5.45 +4.01%
Volume: 20.33M
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P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$85.91 billion
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$603,573
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/zigman2/quotes/222973991/composite
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$ 141.07
+25.58 +22.15%
Volume: 15.26M
May 14, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$45.97 billion
Rev. per Employee
$742,666
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