By Scott Denne
Qualtrics is looking to become 2018’s second public offering from a survey software vendor as it unveils its prospectus, moving one step closer to an IPO. In doing so, Qualtrics draws a contrast to SurveyMonkey, outpacing its rival on most metrics that matter to Wall Street. That contrast wasn’t missed by investors, who trimmed $250m from SurveyMonkey’s market cap following the Qualtrics filing.
Qualtrics’ revenue jumped 52% to finish 2017 at $290m and, despite spending almost half that amount on sales and marketing, it managed to eke out a $3m profit (the company claims to have generated positive free cash flow in every year since its 2002 founding). SurveyMonkey, by comparison, expanded just 14% to $218m with a $20m loss during the same period. When Qualtrics does list, its combination of size, growth and profit are likely to be rewarded.
In a sale of its shares to existing investors, the company commanded a valuation a bit above $2.5bn. With $343m in trailing revenue, Qualtrics should be able to increase that previous valuation when it hits the Nasdaq. SurveyMonkey, for its part, was valued just a bit shy of 10x trailing revenue on its first day, although that’s come down by 30% since, including a 14% drop since the Qualtrics prospectus became public.
The general outlook for unicorns like Qualtrics is increasingly bullish. In the October edition of 451 Research and Morrison & Foerster’s M&A Leaders’ Survey, 62% of respondents expect the average unicorn IPO to finish its first day of trading above its last post-money valuation, compared with just 48% that predicted increasing valuations when we asked the same question six months earlier.
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