Experience management software firm Qualtrics International Inc. posted fourth-quarter financial results today that beat analysts’ expectations and offered strong guidance for the coming quarter, sending its stock higher in after-hours trading.

The company reported a net loss of $256.4 million. Earnings, before certain costs such as stock compensation, came to three cents per share, improving from a loss of seven cents per share one year earlier and just beating Wall Street’s forecast of a profit of two cents per share. Revenue for the period increased 23% to $389.1 million, well ahead of the $381 million consensus estimate. Subscription revenue, which is the company’s bread-and-butter business, rose 26%, to $327.6 million.

Qualtrics also posted its fiscal 2022 results, saying it ended the year with $1.458 billion in revenue, up 36% from the prior year. Subscription revenue rose 41%, to $1.223 million. Overall, it generated a $1.04 billion net loss.

The company is a subsidiary of the German enterprise software giant SAP SE that sells a cloud-based experience management platform used by companies to collect feedback from customers and employees, usually through surveys. Its software is popular with human resources departments, which use it to obtain feedback on topics such as the effectiveness of training programs, onboarding processes and so on. Product teams also like it because it allows them to assess customer satisfaction.

Chief Executive Zig Serafin (pictured) said the company capped off a “very strong year of growth” and delivered significant operating margin expansion in 2022. “Qualtrics continues to be critical to helping companies build deeper relationships with their employees and customers to increase revenue and operate more efficiently in a challenging market,” he insisted.

In an interview with Barron’s, Serafin admitted that no tech company is immune to the current economic climate, and said virtually all customers are considering their software purchasing decisions more carefully. However, he said Qualtrics is also in a position to benefit, because its software plays a key role in helping companies to understand their customers and their employee’s sentiments. It can also help firms to understand what remaining opportunities they have to drive growth, he said.

“The nature of our platform helps companies engage more efficiently and effectively with their customers,” the CEO said.

Holger Mueller of Constellation Research Inc. said Qualtrics did extremely well to grow its revenue by more than 25% compared to the previous year, and that this shows the attractiveness of its offering, helping enterprises to understand what their customers and employees are thinking.

“The worry is that Qualtrics spent over $200 million more in the last full year, keeping its net loss constant year-over-year,” Mueller explained. “The question is how long investors will be willing to keep bankrolling a company that’s losing $1.40 for every $1 it takes in.”

Looking to the first quarter of fiscal 2023, Qualtrics said it’s expecting revenue of $392 million to $394 million, ahead of Wall Street’s consensus estimate of $391 million. On the other hand, its full-year guidance came up short of expectations. The company is looking at total sales of $1.66 billion to $1.67 billion, versus Wall Street’s forecast of $1.69 billion.

The company offered revenue guidance of between $392 million and $394 million for the first quarter, topping the average analyst estimate of $391 million, according to FactSet. Executives’ annual guidance was slightly under analysts’ expectations, however — $1.66 billion to $1.67 billion — while analysts were expecting $1.69 billion on average, according to FactSet.

Qualtrics’ stock gained more than 3% in extended trading on the back of the report, erasing a 1% decline from earlier in the day.

Photo: SiliconANGLE