The $1.55 billion IPO made the Provo company lots more money and gave Silicon Slopes more bragging points.
Qualtrics International turned Thursday into something huge for Utah, its economy, a growing tech sector and for investors.
It also made history. And lots of money.
Many say the IPO has left a new landscape for Qualtrics, Smith, northern Utah’s Silicon Slopes tech sector and the state at large. But what will the deal really mean?
In its IPO filings, the company says it has “pioneered” an entire field of software for experience management, and that its XM platform lets subscribers “turn their customers into fanatics, employees into ambassadors, products into obsessions, and brands into religions.”
The firm of 3,300 employees also disclosed it currently had more than 12,000 customer-subscribers “of all sizes” in over 100 countries as of September, “including 85% of the Fortune 100.”
But let’s be clear: Owning shares in Qualtrics won’t give you sway as a shareholder on where the company heads from here. SAP — the immense German software multinational that swooped in to buy Qualtrics ahead of public investors in 2018 — still holds 98.1% of share-based voting power in Qualtrics.
The Utah firm says that, for the foreseeable future, shareholders “will not have a meaningful voice in our corporate affairs and that the control of our company will be concentrated with SAP.”
According to filings, a portion of IPO cash will go toward covering $1.76 billion in debts to a SAP subsidiary. The rest, it says, will provide working capital “to finance our growth, develop new businesses, products, services or technologies, and fund capital expenditures.”
“We will lead where governments lack. We will be vocal when others are quiet,” he said at XM’s celebratory Nasdaq launch, with swelling music in the background. “We are determined to create positive experiences in absolutely everything that we do because we embrace our responsibility, this responsibility to use business as a source of good.”
For Ryan Smith and family
“Ryan did a great job of bootstrapping the business and growing it in significant ways before he took any outside funding,” said Jeff Burningham, founding partner and chairman of Peak Capital Partners, an investment firm based in Provo.
“If you know me at all,” Smith said last week, “you know how passionate I am about Utah.”
Many are predicting a public Qualtrics will also lift investment prospects for the rest of Utah’s more than 6,500 technology firms. The enclave of Silicon Slopes tech firms clustered around the Interstate 15 corridor linking Salt Lake and Utah counties is not only a rising force in the economy but also has gained in world reputation, partly due to Qualtrics’ heightened visibility.
“The impact Qualtrics has had and will continue to have on the startup and tech ecosystem in Utah is immeasurable,” said Clint Betts, executive director of the Silicon Slopes trade group and a member of the nonprofit Salt Lake Tribune’s board of directors.
Utah’s tech sector is notably driven by entrepreneurs, Betts said, and Qualtrics’ leaders “have shown they’re more than willing to mentor and support the next wave of successful companies.”
Smith, as a key backer of the Silicon Slopes brand, had a big hand in that direction, Betts said. “His leadership and voice are critical within our organization and, in my opinion, the state at large.”
Demand for companies offering cloud-based computing services was strong and building before COVID-19 and has only intensified as more businesses invest heavily in new tools for remote working and customer care.
Utah has a pipeline of firms with strengths in similar services now emerging along with Qualtrics, including Domo, Pluralsight, Divvy, Podium, Weave, Lucid, MX, Pattern and myriad others, Betts said, reflecting nearly two decades of increasing influence in the state’s economy.
“Software is eating the world and software as a service is a hot space and something that Utah excels in,” Burningham said. “This won’t be the last IPO out of Utah.”