Qualtrics, Utah-Based Software Company, Plans $14 Billion IPO

Carpenter Wellington PLLC
4 min readJan 21, 2021

Image credit: Suhail Haque

The record IPO surge in the second half of 2020 looks set to extend well into 2021. The IPO euphoria, particularly with respect to tech companies, has defied expectations. Utah-based Qualtrics is a customer-relationship management software company. It has entered the arena with its announcement of an IPO it plans for early 2021. Valued at an estimated $14 billion, it would be the largest IPO in Utah history.

Formation of Qualtrics

German software giant SAP acquired Qualtrics in 2018 for $8 billion. Just two years later, SAP is spinning off Qualtrics. The estimated IPO valuation of around $14 billion is nearly twice the price SAP paid for Qualtrics a mere two years ago. Christian Klein, SAP’s Chief Executive Officer, believes the move will allow Qualtrics to pursue more diverse business opportunities. SAP is well-positioned to reap significant profits from the public debut of Qualtrics. SAP will remain the majority shareholder after the software platform goes public, holding all of the company’s Class B stock. The dual-class share structure entitles Class B shareholders to 10 votes per share, while the Class A stock held by the rest of the shareholders only provides one vote per share.

Qualtrics reported revenue growth of over 30% for the first three quarters of 2020. During this same nine-month period, its sales jumped to $550 million while its net losses were notably lower than for the same period in 2019.

The company filed an S-1 registration statement with the Securities and Exchange Commission (SEC) in late December. Companies planning to go public use an S-1 registration statement to register their securities for listing on a national stock exchange. Qualtrics will trade on NASDAQ with the ticker symbol “XM.” The IPO price estimate is in the range of $20-$24 per share. Morgan Stanley and JPMorgan will serve as lead underwriters of the public offering.

Brothers and Father Founders

Ryan Smith co-founded the company with his brother and father in 2002. Together the family retains a significant stake in the company. In October 2020, Smith purchased the Utah Jazz NBA team for over $1 billion. Smith remains chairman of Qualtrics while Zig Serafin, a former Microsoft executive, serves as CEO.

Qualtrics produces software that helps employees conduct survey research, evaluations, and other data collection tasks. Headquartered in Provo, Utah, today the company has approximately 3,300 employees. The company has grown to serving more than 12,000 customers across over 25 countries.

Silver Lake, a prominent private equity firm focused on technology investments, signed up to purchase $550 million of its stock, or around 4% of the stock. This includes purchasing 15 million shares at a price of $21.64 per share and the remaining amount at the IPO price. Silver Lake’s Co-CEO Egon Durban and Zoom CFO Kelly Steckelberg will be joining the Qualtrics board of directors.

Qualtrics Utah

Qualtrics Part of Utah Startup Hub

The company’s upcoming IPO is symbolic of the rise of Utah’s growing startup scene. Tech workers from San Francisco have recently been moving to secondary tech hubs with lower costs of living, since as Austin, Seattle, Denver, and Salt Lake City. The region spanning from Salt Lake City to Provo, a city less than an hour away from Salt Lake City, has colloquially been termed the “Silicon Slopes”. Besides Qualtrics, other tech companies with a presence in Utah include Overstock.com, Pluralsight, Vivint Solar, Adobe, and Ancestry. The rapid rise of real estate prices in the Salt Lake City and Provo areas is a reflection of the influx of tech talent.

Companies raised $167.2 billion through a total of 454 IPOs on U.S. stock exchanges in 2020. Putting this into perspective, the previous full-year record was set in 1999 at the height of the dot-com boom. In 1999, a total of $107.9 billion was raised by companies through U.S. public offerings.

The COVID-19 pandemic has undoubtedly been a key driving force behind the momentum, with $67.3 billion raised in the fourth quarter of 2020. That amount is nearly six times the total amount for the first three months of 2020, before U.S. lockdowns intensified. The stock market gains have partly stemmed from increasing interest among individual investors, using accessible fintech platforms such as Robinhood Financial.

2020 Tech Deals Heavy on Tech Names

The list of the largest IPO deals of 2020 was full of familiar tech names. The most notable IPOs included Airbnb, DoorDash, Palantir, Snowflake, and Unity Software. Approximately half of the IPOs in 2020 were special purpose acquisition company (SPAC) IPOs. SPACs, also known as blank-check companies, are shell companies that raise money on the public markets and then subsequently look for a business to acquire within two years of the IPO date. The SPAC craze is likely to continue well into 2021 alongside the overall IPO frenzy.

Qualtrics hopes to benefit from some of the excitement surrounding cloud computing and tech company IPOs. Snowflake, the cloud-based data warehousing provider that went public in September, has seen its share price climb over 153% since the IPO. It waits to been seen whether Qualtrics can replicate the success of its tech peers, but the Qualtrics IPO looks well-positioned to be a public offering worth watching.

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Carpenter Wellington PLLC

Ryan Carpenter serves as Attorney and Managing Director of Carpenter Wellington. Ryan advises clients across a broad set of corporate and commercial matters.