Unleashing the Power of Experience Management (XM) November 11, 2018
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Together, Powering the Experience Economy Pioneering the new category of Fusing intelligence across the deepest Experience Management (XM) to and broadest suite of business transform brands, customers, applications seamlessly integrated on employees and products the most data rich architecture 3
Transaction Overview • Purchase price of $8 billion Transaction • Includes unvested employee incentive compensation Consideration • SAP will assume Qualtrics’ cash • SAP has obtained a €7 billion credit facility to cover purchase price and acquisition - related costs Financing • SAP expects to refinance parts of the credit facility via the issuance of debt securities • Ryan Smith will continue to lead Qualtrics, reporting to Robert Enslin, President, SAP Cloud Business Group Management & • Qualtrics to operate as an entity within SAP’s Cloud Business Group and will be reported Governance as part of SAP’s Customer Experience segment • Qualtrics to continue to be based in Provo, Utah and Seattle, Washington • Expected to close in 1H 2019 Expected Closing • Subject to receipt of regulatory approval 4
Why Qualtrics Clear Leader and Accelerate the disruptive and fast growing category of experience management (XM) Pioneer Accelerates Enhances SAP’s Intelligent Enterprise suite as the essential foundation of end -to-end Intelligent Enterprise experience management across all lines of business Turbocharge Leverage SAP’s unparalleled global network and go -to-market (GTM) channel to rapidly Qualtrics’ GTM scale Qualtrics Accelerates SAP’s cloud momentum and predictable revenue model, adds experience Accelerate SAP intelligence (customers, employees, products, brand) across SAP’s portfolio Evolution to Cloud Attractive Financials Rapidly growing and profitable with high visibility revenue model and strong cash flows 5
Qualtrics at a Glance Experience Management Leading presence in academia… $44B+ TAM (XM) …the experience users of the future in Fast growing Early adoption enterprises Market leader Scale Cloud Model Profitable Expanding margins 40 % + growth today… $372 M Free cash flow positive …and into the future revenue LTM 9/2018 since inception in 2002 Highly predictable SaaS model 9,000+ 600+ customers with Only 22 % of revenue from Total customers over $100K non-US customers 75 % + subscription ACV of Fortune 100 Companies All data as of September 30, 2018. 6
Qualtrics is the Leader in Experience Management Executives must own all dimensions of Experience, identify Experience gaps, and act on them Experience evolves from all aspects of a business. Gaps around customer complaints, employee turnover, and product dissatisfaction must be addressed Qualtrics captures experience data across key dimensions – brand, customer, employee, product – and combines it with operational data to provide a comprehensive view of a brand’s operations and perception, and triggers action Experience Data Operational Data The Why The What Any Engagement Method Systems of Record ((Web, Chat, In-app, Emails, SMS, Social Media, etc.) (ERP, HCM, CRM, customer service, etc.) Captures Sentiment Transactional Facts The “Why” The “What” In the Moment In the Moment Live Real Time Experience Data Real Time Operational Data Action 7 7
Fusing X and O to Power and Transform the Experience 1.8 B experience Economy touchpoints run on Qualtrics Cloud Platform | Data Management | AI 77 % of the world’s transactions across 25 industries touch SAP systems 8
Powerful Combination €25 B + $372 M FY2018E Revenue 1 LTM 9/18 Revenue High 30s 42 % y/y cloud growth 2 y/y revenue growth Powering the 413,000+ 9,000+ Intelligent customers customers ~15,000 Enterprise ~450 sales reps sales reps $350B $44 B TAM TAM 68% 22 % Non-US Revenue Non-US Revenue 1. Based on FY 2018 Total revenue outlook at constant currencies 2. Based on FY 2018 Cloud subscription and support outlook at constant currencies 9
Offering Outside-in Data to Customers • jetBlue selected Qualtrics because it was the best customer • Qualtrics provides Volkswagen with the ability to collect experience platform that offered total control over all phases and distribute insights in real-time, and with customizable of customer experience program management. dashboards and access. Volkswagen Group Australia could finally deliver actionable insights to dealers. • With the ability to combine relational, front-office data (brand • They can collect customer and employee feedback on the purchase drivers) with transactional, back-office data (experience and satisfaction) into a centralized hub, jetBlue same platform. gained the ability to easily pinpoint their biggest impact areas • In the future, Volkswagen Group Australia will use and make immediate, impactful changes. Qualtrics to predict and deliver what customers expect • Using Qualtrics, jetBlue found that: from the customer experience at every touchpoint — buying, driving, and owning. • 82% of their passengers preferred cheaper ticket prices over free bags. • Dissatisfaction amongst Philadelphia customers was due to the lack of shops and amenities open early in the morning. • The security interview process required at Lima, Peru’s airport was leading to negative remarks about the company. 10
Driving Step-Change Growth for Qualtrics Partner Leverage SAP’s base of Ecosystem 413,000+ Industry Amplify customers expansion Domain through partner Expertise network Access SAP’s Cross-sell / unmatched Up-sell industry expertise Massive cross-selling Every LOB opportunity enhanced by Plugged into ~15,000 person every line-of- Global Reach sales reps business Increase Qualtrics’ global presence 11
Impressive Financial Profile 1 $ millions, LTM FY2016 FY2017 unless otherwise stated 09/18 40%+ organic growth today… 191M 290M 372M Revenue growth and into the future +52% +42% 80% 88% 88% Subscription gross margin 74% Overall gross margin 68% 73% • Best-in-class gross margins • Strong operating cash-flow (5%) 4% 2% Operating margin • Expanding OCF and FCF margins • FCF positive since inception 9% 14% 15% Operating cash flow margin 2 Free cash flow margin 2 2% 7% 9% 1. All figures based on Non-GAAP and Qualtrics accounting policies and definitions 2. Defined as cash flow in percent of total revenue 12
Successful Acquisition Strategy and Strategic Organic Innovation Be the most innovative cloud company powered by HANA Intelligent Enterprise Doubled Addressable Market Raised 2020 Target: €8.2 - €8.7bn in Cloud Public Cloud C/4HANA Analytics Cloud Suite on HANA HEC Launched Data Hub New 2020 Target: • Integrated Intelligent New Co-CEOs €8bn in Cloud Suite • Revolutionizing € 5.2B SAP Acquires Sybase Customer Experience to expand to DB & € 3.8B with C/4HANA Mobile • Innovation with € 3.0B Intelligent Systems € 2.3B (Leonardo) € 1.1B € 0.3B Cloud € 0.8B € 0.01B €0.02 B Revenue 2010 2011 2013 2012 2014 2015 2018 1 2016 2017 Market Cap € 40B € 47B € 50B € 75B € 77B € 72B € 90B € 102B € 114B 1. Based on FY 2018 Cloud subscription and support outlook at constant currencies 13
Appendix 14
Qualtrics Non-GAAP Reconciliation 1 9 Months 9 Months ($ in thousands, Fiscal Year Ending December 31) FY 2016 FY 2017 Ended 9/17 Ended 9/18 LTM 2 Revenue $190,603 $289,903 $207,079 $289,566 $372,389 133,931 185,145 161,742 228,199 228,199 Add: Total Deferred Revenue, End of Period (133,391) (185,145) (161,742) Less: Total Deferred Revenue, Beginning of Period (89,930) (133,391) Calculated Billings $238,604 $341,657 $235,430 $332,620 $438,846 43.2% 41.3% 39.6% Period over Period Growth Subscription $142,525 $213,274 $151,699 $215,533 $277,109 Research on Demand $38,147 $51,812 $37,524 $51,489 $65,776 $9,931 $24,817 $17,856 $22,544 $29,504 Services $190,603 $289,903 $207,079 $289,566 $372,389 Total Revenue 52.1% 39.8% 42.3% Period over Period Growth 1. All figures based on Qualtrics accounting policies and definitions 2. LTM reports FQ4 ‘17 through FQ3 ’18c 15
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