On July 29, 2021, Qualtrics International Inc. (the “Company”)
and Rhodium Merger Sub, Inc. (the “Merger Sub”), a wholly-owned subsidiary of the Company, entered into an Agreement and Plan
of Reorganization and Merger (the “Merger Agreement”) to acquire Clarabridge, Inc. (“Clarabridge”), a customer
experience management software company headquartered in Reston, Virginia. The Merger Agreement provides that, among other things and subject
to the terms and conditions set forth therein, the Company will purchase all of the issued and outstanding shares of capital stock of
Clarabridge for aggregate consideration of $1.125 billion, subject to certain adjustments, in the form of shares of Class A common stock
(“Company Stock”) of the Company (the “Stock Consideration”); provided, that shares of Clarabridge capital stock
held by unaccredited stockholders will receive cash in lieu of the Stock Consideration. The number of shares to be issued in connection
with the Stock Consideration will be calculated based on a fixed value of $37.33 per share, which is the average of the daily volume-weighted
average sales price per share of Company Stock on the Nasdaq Select Market during the ten consecutive trading days ending three trading
days immediately preceding the date of the Merger Agreement. The Merger Agreement also provides for equity incentive awards to be granted
to certain continuing employees of Clarabridge and its subsidiaries under the Company’s 2021 Employee Omnibus Equity Plan at the
Company’s sole discretion, subject to the terms and conditions set forth in the Merger Agreement. The Company expects the transaction
to close during the Company’s fourth quarter of fiscal year ending December 31, 2021, subject to the satisfaction of customary closing
conditions, including the receipt of required regulatory and stockholder approvals.
The Company and Clarabridge
issued a joint press release on July 29, 2021, announcing the acquisition and such press release is filed herewith as Exhibit 99.1 and
incorporated by reference herein.
An investor presentation
containing additional information relating to the acquisition is furnished as Exhibit 99.2 to this Current Report.
Forward-Looking Statements
This Current Report on Form 8-K
contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including
statements concerning the anticipated benefits and timing of the proposed transaction between the Company and Clarabridge and the product
and markets of each company. In some cases, you can identify forward-looking statements by terms such as “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,”
“project,” “will,” “would,” “should,” “could,” “can,” “predict,”
“potential,” “target,” “explore,” “continue,” or the negative of these terms, and similar
expressions intended to identify forward-looking statements. Forward-looking statements are predictions, projections and other statements
about future events that are based on current expectations and assumptions and, as a result, are subject to numerous uncertainties and
risks, including factors beyond our control, that could cause actual results, performance or outcomes to differ materially from those
anticipated or implied in the statements, including: the risk that the proposed transaction may not be completed in a timely manner
or at all, which may adversely affect the Company’s business and the price of the Company’s common stock; the failure to satisfy
the conditions to the consummation of the proposed transaction, including the receipt of governmental and regulatory approvals; the occurrence
of any event, change or other circumstance that could give rise to the termination of the Merger Agreement; the effect of the announcement
or pendency of the proposed transaction on the companies’ respective business relationships, operating results and business generally;
risks that the proposed transaction disrupts the current plans and operations of the companies; potential difficulties with respect to
employee retention for each of the companies as a result of the transaction; risks relating to diverting the Company management’s
attention from ongoing business operations; the outcome of any legal proceedings that may be instituted against the Company or Clarabridge
relating to the Merger Agreement or the proposed transaction; the ability of the Company to successfully integrate Clarabridge’s
operations, product lines, technology and other assets; the ability of the Company to implement its plans, forecasts and other expectations
with respect to Clarabridge’s business following the completion of the proposed transaction and realize additional opportunities
for growth and innovation; and unexpected variations in market growth and demand for the Company’s and Clarabridge’s products
and technologies. Additional risks and uncertainties that could cause actual results, performance or outcomes to differ materially
from those contemplated by the forward-looking statements are and/or will be included under the caption “Risk Factors” and
elsewhere in the Company’s Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q filed with the Securities
and Exchange Commission and any subsequent public filings. Forward-looking statements speak only as of the date the statements are
made. Readers are cautioned not to put undue reliance on forward-looking statements, and the Company assumes no obligation to update
forward-looking statements, whether to reflect new information, events or circumstances after the date they were made or otherwise, except
as required by law.
Non-GAAP Financial Measures
To supplement our financial results,
which are prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), we use certain
non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures,
which may be different than similarly-titled measures used by other companies, are presented to enhance investors’ overall understanding
of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented
in accordance with GAAP. We believe that these non-GAAP financial measures provide useful information about our financial performance,
enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to important
metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP measures to assist investors
in seeing our financial performance using a management view, and because we believe that these measures provide an additional tool for
investors to use in comparing our core financial performance over multiple periods with other companies in our industry. You should consider
non-GAAP results alongside other financial performance measures and results presented in accordance with GAAP. In addition, in evaluating
non-GAAP results, you should be aware that in the future we will incur expenses such as those that are the subject of adjustments in deriving
non-GAAP results and you should not infer from our non-GAAP results that our future results will not be affected by these expenses or
any unusual or non-recurring items. Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP operating
margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, free cash flow, free cash flow margin: We define these non-GAAP
financial measures as the respective GAAP measures. When evaluating the performance of our business and making operating plans, we do
not consider these items (for example, when considering the impact of equity award grants, we place a greater emphasis on overall stockholder
dilution rather than the accounting charges associated with such grants). We believe it is useful to exclude these expenses in order to
better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies
and over multiple periods