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An IPO to Watch & Why: Survey Monkey vs Qualtrics

SurveyMonkey raised $180 million for their IPO on the 26th September. They’re listed under the ticker symbol SVMK and their stock price soared 44% from their initial price and while they’ve already had their IPO, one of their rivals is about to IPO leaving Survey Monkey’s with declining stock price.

Who are they?

SurveyMonkey is an online, cloud based, software as a service (SaaS) company that lets you develop your own surveys. They have a free (freemium) & paid (premium) version.

Who are their rival Qualtrics?

Qualtrics calls themselves an experience management company. They offer a subscription software for collecting and analysing data for market research, customer satisfaction and loyalty, product and concept testing, employee evaluations and website feedback.

Why watch Survey Monkey?

From founding the company in 1999 they now have 16 million active users and so far only 3.8% of those are paid users. In 2017, they reported revenue of $218.8 million, almost 5.5% higher than their 2016 revenue figure of $207.3 million. For the first six months of 2018, that number stood at $121.2 million.

Although they’ve been struggling with significant losses, they’ve managed to reduce these over the past year from $76.4 million in 2016 to $24 million in 2017.

The sold 15 million shares at $12 for their IPO, higher than its expected price of $9-11. They also sold $40 million in stock to Salesforce's venture capital arm, valuing SurveyMonkey at $1.5 billion.

Facebook’s COO Sherryl Sandberg owns the second highest stake single own stake in SurveyMonkey at 9.9%. Her late husband, Dave Goldberg ran SurveyMonkey for 6 years until his death in 2015. She has said her shares will be donated to her & her late husband foundation, the Sheryl Sandberg & David Goldberg Family Foundation, which works to build a more equal and resilient world. They bring people together to support each other through two key initiatives, empowering women and helping people to find meaning in the face of adversity.

Why watch Qualtrics?

Qualtrics was founded in 2002 by brothers Ryan and Jared Smith and their dad, Scott, along with Stuart Orgill, who resigned from the board last year.

After the Smith family, the biggest shareholders are venture firms Accel, Insight Venture Partners and Sequoia Capital – Sequoia Capital has invested in what seems like every ‘unicorn’ company such as Airbnb, Dropbox, GitHub, Google, Houzz, Hubspot, Instagram, LinkedIn, Nvidia, PayPal, Reddit, Stripe, Tumbler, WhatsApp, Yahoo – just to name a few!

Qualtrics had 1,915 employees as of Sept. 30 and will be trading under the ticker symbol XM to signify what the company stands for, experience management.

In the first half of 2018, Qualtrics recorded revenue growth of 41.7 percent to $184.2 million. By contrast, SurveyMonkey had $121.2 million in revenue during that same period, up 14 percent. After generating a profit in 2017, Qualtrics reported a $3.4 million net loss for the first six months of this year.

They’re bigger than SurveyMonkey and are growing much faster with more than 9,000 customers, including BlackRock, Kellogg, Microsoft, Mastercard and Under Armour.

In addition to SurveyMonkey, Qualtrics said its competitors include Aon Hewitt, Medallia and Willis Towers Watson.

SurveyMonkey’s stock price has already dropped since Qualtrics filed their IPO, and with over 40% growth, Qualtrics’s IPO is shaping up to be one to watch!

Please know, the value of investments can go up as well as down and you may receive back less than your original investment, meaning, when investing your capital is at risk.

Disclaimer: At Evarvest we believe in making investing and investment education more accessible, but we don’t provide investment advice and individual investors should make their own decisions. While we try our best, we cannot ensure the accuracy of the information we provide.

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