Why Qualtrics Stock Was Socked by the Market Today

Analysts are becoming more downbeat on the company despite its estimates-beating quarter.

Analysts are becoming more downbeat on the company despite its estimates-beating quarter.

What happened

After market hours on Thursday, Qualtrics International ( XM -10.52% ) posted quarterly earnings that it described as “outstanding.” While the experience management software specialist indeed posted some encouraging figures, it clearly left investors wanting more — the following day, they traded the stock down by nearly 11%.

So what

In unveiling its first-quarter numbers, Qualtrics revealed that it earned almost $336 million in revenue for the period, a sturdy 41% year-over-year increase. That was on the back of a 50% climb in the company’s critical subscription revenue; this advanced by 50% to just under $281 million.

Woman at a desk using a smartphone, tablet, and laptop simultaneously.

Image source: Getty Images.

Zooming down to the bottom line, Qualtrics posted non-GAAP (adjusted) net income of $3.4 million ($0.01 per share). This was down, although not substantially, from the year-ago net income of $5.3 million.

“These results highlight the demand for experience management as companies of every size and in every industry navigate an uncertain environment,” Qualtrics quoted CEO Zig Serafin as saying. “I’m particularly pleased to deliver another quarter of positive non-GAAP operating margin while continuing to invest in long-term, durable growth.”

On average, analysts were expecting revenue of just under $326 million, and a per-share net loss of $0.01.

Now what

Qualtrics also proffered guidance that was above prognosticator forecasts. The company believes its full-year 2022 revenue will come in at around $1.43 billion, while earnings should be flat to $0.02 in the black. Both compare favorably to the average analyst projections of $1.41 billion on the top line, and a per-share net loss of $0.01.

Yet despite the trailing and guidance beats, analysts were bearish on Qualtrics stock in the wake of the earnings report. Several cut their price targets on the stock, including Morgan Stanley‘s Keith Weiss. He’s chopped his level to $43 per share from the previous $54. 

Although Weiss is maintaining his overweight (i.e., buy) recommendation on the shares, he pointed out that demand could soften in an “uncertain” macroeconomic environment.


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