SAP Sap SE

By Matt Grossman 

Shares of Qualtrics International Inc., a spinoff from SAP SE, rose roughly 38% in its public-markets debut amid a surge of investor interest in the enterprise-software sector.

Qualtrics, which makes software for businesses to track customer interactions, brands and employees, opened at $41.85 Thursday afternoon, compared with its initial public offering price of $30 a share. The opening price values the company at approximately $24.5 billion. Qualtrics is trading on the Nasdaq under ticker symbol "XM."

The company arrives on the public market during a pandemic that has amplified a digital transition many businesses are undertaking as they adopt tools to boost interaction with customers online and to better run internal processes. That focus on digital operations has heightened the importance of Qualtrics's products, the company's chief executive, Zig Serafin, told The Wall Street Journal.

Investors have rewarded companies that support digital commerce. Shares of companies such as Salesforce.com Inc., whose software helps businesses manage customer relationships, and Square Inc., a digital-payments company, have surged over the last 12 months. Others such as Snowflake Inc., a data-warehousing company, have preceded Qualtrics in launching successful pandemic-era IPOs.

SAP, based in Germany, maintains a controlling stake in Qualtrics following Thursday's offering, owning 84% of the company's common stock and 98% of its voting rights. SAP acquired Provo, Utah-based Qualtrics for roughly $8 billion in early 2019. Qualtrics had been on the verge of going public by itself at the time.

The two years under SAP's ownership lifted Qualtrics's international reach, Mr. Serafin said. The company's sales coming from international markets amounted to 28% in the first nine months of 2020, compared with 23% in all of 2018.

The IPO will help Qualtrics better pursue business opportunities outside of SAP, Christian Klein, SAP's chief executive, has said.

Qualtrics's revenue through the first nine months of 2020 was $550 million, with an adjusted loss of $24.9 million. Qualtrics's revenue in 2019 was $591.2 million, and it posted an adjusted operating loss of $49.5 million that year.

The company said its software platform was used by more than 12,000 customers, including 85% of Fortune 100 companies, as of the end of September. The number of large customers has grown in recent years: As of September, Qualtrics had about 1,200 customers that were responsible for at least $100,000 each in annual recurring revenue, compared with 720 such customers at the end of 2018. Sixty-four customers' spending accounted for at least $1 million each in annual revenue as of September.

Ryan Smith, the company's founder and executive chairman, said that growth reflected customers integrating Qualtrics's platform more deeply with their operations.

Other tech companies have come to public markets in recent months while posting losses. Palantir Technologies Inc. went public through a direct listing in September after posting a net loss of $164 million in the first half of 2020. Snowflake was unprofitable at the time of its IPO in September and remained so in the latest quarter.

Still, shares of Snowflake traded around $279 Thursday, up from an IPO price of $120. Palantir traded near $36 a share Thursday, up by about 53% year to date. Salesforce shares have gained roughly 25% over the last 12 months.

Beyond software for businesses, the tech IPO market in general has soared in recent months as investors prove eager to pile into shares of newly listed companies.

Poshmark Inc., a consumer marketplace that uses a social-media-like platform, more than doubled on its first day of trading earlier this month, and now trades around $73, up from an IPO price of $42. Affirm Holdings Inc., a financial-technology company, saw its shares close their first day of trading two weeks ago at $97.24, up from an initial offering price of $49.

Mr. Smith said that external market considerations didn't play a major role in the timing of the company's IPO.

"Our job is to go out and help the world compete in every market," Mr. Smith said. "We just want to go ring the bell, go public and go back to work."

Write to Matt Grossman at matt.grossman@wsj.com

(END) Dow Jones Newswires

January 28, 2021 15:14 ET (20:14 GMT)

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