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Qualtrics (XM) Shares Fall on Soft Guidance, Analyst 'Disappointed' in Results

July 21, 2022 6:30 AM EDT
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Price: $10.58 +3.93%

Rating Summary:
    16 Buy, 4 Hold, 0 Sell

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    Up: 6 | Down: 13 | New: 11
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Shares of Qualtrics International (NASDAQ: XM) are down 4.5% in premarket Thursday after the software company cut its revenue forecast for the full year.

Qualtrics reported an adjusted loss per share of Q2 EPS of ($0.04), worse than the analyst estimate of $0.00. Revenue came in at $356.4 million to beat the $345.1 million consensus.

For this quarter, the company is calling for revenues of $358 million to $360 million, somewhere in line with the guidance of $359.5 million. However, XM slashed its full-year revenue guidance to now expect to generate between $1.42 billion and $1.43 billion, slightly lower than the prior guidance of $1.43 billion.

Qualtrics CEO Zig Serafin, said: “We continue to see robust demand for our experience management platform as companies look to Qualtrics to help them navigate the uncertain macro-environment and win in their markets.”

BMO analyst Keith Bachman cut the price target to $14 from the prior $16 after witnessing “disappointing” results. Just two days ago, Bachman slashed the price target by 50% to reflect macro challenges.

“We retain our Outperform rating, though XM remains in our Tier 3 (lowest level) of Outperform stocks. We believe that XM comments will be similar to most of our coverage universe, and we believe it will take multiple quarters for estimates within our coverage universe to find a comfortable bottom,” the analyst said in a client note.

Raymond James analyst Brian Peterson also cut the price target as he went to $17 from $35. The analyst said the results showed that XM is not immune to macro headwinds, but the company remains a category leader.

“2Q22 results that still showed robust growth rates, although reflected some macro softness and a deceleration in key growth metrics. Note that management referenced some slowdown in sales cycles during 2Q22, with the revised full year outlook assuming incremental softness in the back half of the year. While overall growth still looks healthy, we have taken a much more conservative stance on 2023 growth, with our new assumption at +18% (vs. +22% previously) reflecting a deteriorating macro and a much more conservative stance on both upsell and net new logos,” Peterson wrote in a note.

The analyst also noted an “attractive” valuation bearing in mind the company’s “product leadership and growth rate at this scale.”

By Senad Karaahmetovic



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