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Takeaway: Hosting an IPO preview call on Qualtrics (XM) Tuesday 11/13 @10AM.

Call Details:

Date & Time: Tuesday 11/13 @ 10AM ET

Dial-In & Webcast Information: To be provided prior to Call

Add Call Details to Outlook Calendar:  CLICK HERE


Is it time to be buying expensive software stocks that have some iffy messaging?

It takes a bit of moxie to price an IPO at 12x (pro forma) trailing EV/S in the midst of the most volatile public equity market in the last four or five years. On a forward basis the IPO price is asking us to pay ~9-10x 2019 EV/S, with FCF still too small to soften the math. Pricing at perfection is fine with us if what you are offering is perfect. Most investors will hear 40% LTM growth + FCF positive + Sequoia & Accel = ‘Nuff Said. Unfortunately, I get paid to think and read for a living, which means I am not just ‘ok’ with stuff being marketed to me as gold when it is really closer to base metal. The pricing demands are hoping you all look the other way…we recommend never sleeping at the investment wheel.

The Qualtrics IPO needs to be navigated:

  • Is it really an experience management platform or is it just good survey software? 
  • Is it sticky? We were surprised by some of what we found
  • Has the company under-expressed the true competitive landscape? We share our view of the landscape
  • Growth driven by monetizing the existing customer base
  • Customer unit adoption curve still happening but at a much slower pace
  • Weak employee “experience” issues which point to the lack of validity in the platform claim
  • Incremental OCF margins aren't all that special
  • ...among many other considerations…some of which we previewed in our Initial XM Note from 10/26 HERE

Qualtrics has fine-tuned the capital raising pitch to maximize distraction with flair. The same basic product that was once called a 'survey tool' was changed to 'enterprise survey software' to 'market research disruptor' and now to 'experience management platform.' Is the pitch full of truth? Or just a way to manage message the investor’s experience? Come find out Tuesday November 13 at 10AM.

[P.S. We can’t do any earlier; blame MCHP, AVLR, ADT, and ALRM for all choosing the same night for EPS, and DBX for choosing the following night].

Please call or e-mail with any questions.

Ami Joseph

Managing Director




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