Qualtrics continues to crush it and lead the same category they created – experience management. A software class now valued at $60 billion, according to company execs. They posted 36% year-over-year growth with revenue of $238.6 million and continue to hover around break-even profitability and Bain’s Rule of 40 for software companies.
Key Q1 Highlights
Let’s break down results from their Q1 earnings call. We can infer close approximations (or exact in some cases) of what the following sales metrics and goals look like for the company:
- Net Dollar Retention is 120%. NDR is the metric that tells you how fast the company bank account is growing (Tomasz Tunguz’s presentation for SaaStr is a must-watch). Any company with a <100% NDR effectively earns a negative interest rate.
- For Qualtrics, this means their $677 million in revenue under contract, or “remaining performance obligations,” will turn into $812 million in the next 12 months. The beauty of product-led growth. A customer signs on for the employee experience product but ends the year with one or two add-ons.
- Expand to total “remaining performance obligations” at $1.2 billion, and we see their average deal term is about two years. Multi-year purchasing decisions replacing annual terms are now the norm.
- Future guidance pegs company revenue at $984 million in 2021. Given the expected NDR, that places the goal for net new business revenue somewhere in the ballpark of $170 million.
- With the above assumption, net new business revenue is 17.5% of the total revenue projected.
- Qualtrics is up to a staggering 14,500 customers.
- Average Contract Value = $46,690.
- Rough estimate net new customer goal = 3,500.
- The international segment was responsible for 33% of new bookings growing at a slightly faster YOY clip than domestic.
- Q1 resulted in 119 new and existing customers crossing the $100k ACV threshold. This group now totals 1,457 but still just 10% of total customer install.
- Execs alluded to seven-figure customers without specifying the number – something they promised to do in future earnings calls.
Other Sales Machine Ingredients
Based on these inferences – and using data from LinkedIn – we can make additional educated guesses below the 95% confidence interval 😬:
- LinkedIn data shows roughly 380 SMB/commercial account executives and 120 enterprise account executives.
- A blind-folded stab at Account Executive quotas: $300,000 for SMB/commercial reps, $700,000 for enterprise reps.
- Combined quotas = $198 million.
- Quota attainment buffer = 16.4% (individual contributor goals should always equal 10-20% more than the actual company revenue target).
- Close to 100 Sales Development Reps.
- The other 50% of the nearly 1,200 person sales machine comprises sales support (engineers, ops, enablement, etc.), frontline managers, 2nd line managers, and sales leaders.
Moving Forward
After SAP purchased Qualtrics for $8 billion two years ago, Ryan Smith took the company public in January (his original intent before SAP’s last-minute offer in late 2019). Smart move. With a market cap of around $17 billion, the Qualtrics sales machine continues to be a value creator and critical lever of growth. With a healthy net dollar retention of 120% and their product innovation – now up to five distinct experiences for the customer, brand, employee, product, and design – the future is a product-led growth sales model. And the future is bright. As of this writing, the company’s careers page shows 188 openings in sales.
