Qualtrics International Inc.

Thank you for standing by and welcome to the Qualtrics third quarter fiscal year 2021 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. As a reminder, today's program may be recorded. I would now like to introduce your host for today's program, Stephen Wu, head of FP&A and investor relations. Please go ahead, sir.

Thank you, and welcome to Qualtrics' third quarter fiscal year 2021 earnings conference call. On the call, we have Zig Serafin, CEO, Chris Beckstead, President, and Rob Bachman, CFO. Following prepared remarks, we will open the lineup to answer questions. Our results, press release, and a replay of today's call can be found on the Qualtrics Investor Relations website. During today's call, we will make statements that represent our expectations and beliefs concerning future events that may be considered forward-looking under federal securities law. These statements reflect our views only as of today and should not be relied upon as representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For further discussion of the material risks and other important factors that could affect our financial results, please refer to our filings with the SEC, including our annual report on Form 10-K for the fiscal year ended December 31, 2020, and our quarterly report on Form 10-Q for the quarter ended September 30, 2021. That will be filed with the SEC. With that, I'll turn it over to Zix.

Well, thank you, Steven, and also thank you, everyone, who's joining us here today. Q3 was an outstanding quarter, and our strong momentum continued as revenue in the quarter rose to $272 million, which is up 41% year-over-year. Subscription revenue rose to $220 million, up 49% year-over-year. And we ended the year with more than 782 million in current remaining performance obligations, which is a 58% increase year over year. And we're in the midst of a massive shift in how companies engage with and build relationships with their customers and their employees. And this shift is fueling the $60 billion plus TAM for experience management. Our leadership position has never been stronger. As we continue to innovate and define the category that we created, and as companies accelerate their adoption of Qualtrics across industries. Let me give you just one example, which is from this quarter. Peloton, they're a phenomenal company. They're transforming the fitness world by delivering an incredible member experience. Peloton is a longtime customer, and in Q3, they standardized on Qualtrics as their experience management platform. One of their core values is to obsess over every touchpoint of the member experience. I love this. They're using Qualtrics to listen to their community across these touch points and then to share feedback across the entire company. This drives their strategic priorities and then allows them to be able to improve member journeys at every turn. Qualtrics is about forging deep relationships between the organization and the people who matter most, which are the employees and their customers. And we have a single cloud native platform that allows companies to bring together all of their experience data and their operational data across the four core experiences of any business, customer, employee, product, and brand. And the services that we provide are helping to transform retail, travel, and entertainment, to reimagine student experiences in K-12 and higher ed, and to manage critical vaccination and health services around the world. In Q3, Market leaders like CrowdStrike, DoorDash, LL Bean, NASCAR, BMBA, ServiceNow, and many, many more also chose Qualtrics to help them drive their experience transformations. And for these customers, experience management has never been more important. People are sharing their feedback about companies everywhere, both directly and indirectly. And that's happening in support conversations, chat, social media posts, product reviews, and dozens of other places. With our acquisition of Clarabridge, the leader in omni-channel conversation analytics, we can help our customers discover what's being said about them across all of these unstructured sources. This feedback exists at such a scale that without Clarabridge, companies might never find the meaningful, actionable insights that drive business outcomes. So this acquisition... along with our acquisition of Journey Orchestration Leader UserMind, puts us even in a stronger position to listen and act on experience data. We're already integrating these strengths into our newest platform innovation, Experience ID. Experience ID delivers a single, unified view of all the feedback customers and employees want a company to know about them over time. It enables companies to zoom in on the detailed preferences of individual customers to personalize their experiences. And then they can zoom out to get powerful views by segments such as teams or geographies to identify new market opportunities while also giving companies the ability to build deep, trusted relationships at scale. So for example, in Q3, we expanded our relationship with Dish Network to build an industry-leading customer experience program across the company's pay TV and consumer wireless brands DISH has been rated number one in customer satisfaction by J.D. Power and their own customers for the last four years. And they're building on that momentum to design the same trusted experience for their wireless brands. And now they're adding EmployeeXM to better connect employees to their customer-centered culture and to help DISH to attract and retain talent in an increasingly competitive market. It's clear that our product strategy is working. And as we continue to innovate across our platform to keep all of our customers a step ahead, for example, even before the White House proposed vaccination mandates for large U.S. employers, we released our Employee Experience Vaccination and Testing product to help organizations navigate this new phase of the pandemic. This product allows customers to securely confirm vaccination status, collect test results, and then screen for COVID-19 symptoms all on our XM platforms. And customer demand has been unparalleled. Also, on the employee side, the great resignation has made retaining talent many CEOs' top priority. So in Q3, we launched EX25, which gives organizations a real-time, predictive view of the 25 most impactful engagement and retention drivers like trust, safety, respect, and work-life balance. And on the brand experience side, we launched Brand Impact Simulator to help companies identify the right mix of brand attitudes and strategies to improve key outcomes like customer acquisition, website traffic, and subscriptions. Our ecosystem continues to grow. In Q3, EY wants the dedicated competency to drive end-to-end experience management solutions from strategy to design and enablement to implementation, all combining EY's professional services, and Qualtrics technology. We also partnered with DXC to create a first-of-its-kind product in managed workplace services to drive employee engagement and productivity with real-time insights. And a new partnership with global HR consulting firm Mercer is helping top brands better understand their employees so they can develop impactful benefits programs during a crucial time for employee retention and hiring. We continue to see strong international growth as the demand for experience management grows around the world. In the quarter, customers including Kyoto University, MercadoLibre, NL Post, Repsol, Sky, and YMCA New South Wales all chose Qualtrics to empower their experience transformations. And we're investing locally to support our growing customer base in EMEA. In Q3, we announced plans to more than double our EMEA workforce by 2024 and open an expanded headquarters and R&D center in Dublin early next year. We're also expanding in APJ and announced plans to grow our local employee base in APJ by more than 5X in 2024. We also just opened up our new regional headquarters in Sydney and a new data center in Singapore to serve our customers across the region. In closing, We had another quarter of exciting employee growth in Q3. We added 485 new employees, and we have hundreds of open positions around the world. At Qualtrics, one of our core values is operating as one team in everything that we do, and that was on display in Q3. From our leadership team to our new Q3 hires, I am incredibly grateful for the talented employees that we have.