As filed with the Securities and Exchange Commission on November 5, 2018.

Registration No. 333-227892

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 2 to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

QUALTRICS INTERNATIONAL INC.

(Exact name of Registrant as specified in its charter)

Delaware	7372	47-1754215
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

333 West River Park Drive

Provo, Utah 84604

385-203-4999

(Address, including zip code and telephone number, including area code, of Registrant’s principal executive offices)

Ryan Smith

Chief Executive Officer

Qualtrics International Inc.

333 West River Park Drive

Provo, Utah 84604

385-203-4999

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Anthony J. McCusker Bradley C. Weber Goodwin Procter LLP 601 Marshall Street Redwood City, California 94063 650-752-3100 David Faugno Chief Financial Officer Qualtrics International Inc. 333 West River Park Drive Provo, Utah 84604 385-203-4999 Dave Peinsipp Charles S. Kim Andrew S. Williamson Cooley LLP 101 California Street, 5th Floor San Francisco, California 94111 415-693-2000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	ý	Smaller reporting company	¨
Emerging growth company	ý

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ý

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered(1)	Proposed Maximum Offering Price Per Share(2)	Proposed Maximum Aggregate Offering Price(2)	Amount of Registration Fee(3)
Class B Common Stock, par value $0.0001 per share	23,589,744	$21.00	$495,384,624	$60,041

(1) Includes the 3,076,923 shares of Class B common stock that the underwriters have the option to purchase.

(2) Estimated solely for the purpose of computing the amount of registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended. Includes offering price of the additional shares that the underwriters have the option to purchase.

(3) The registrant previously paid $24,240 of the registration fee with the initial filing of this registration statement.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS (Subject to Completion)

Issued November 5, 2018

20,512,821 Shares

CLASS B COMMON STOCK

Qualtrics International Inc. is offering 20,512,821 shares of its Class B common stock. This is our initial public offering, and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $18.00 and $21.00  per share.

We have applied to list our Class B common stock on The Nasdaq Global Select Market under the symbol “XM.”

We have three classes of common stock: Class A-1 common stock, Class A-2 common stock, and Class B common stock. The rights of the holders of Class A-1 common stock, Class A-2 common stock, and Class B common stock are different with respect to voting, conversion, and transfer rights. Each share of Class B common stock is entitled to one vote. Each share of Class A-1 common stock is entitled to ten votes. Each share of Class A-2 common stock is also entitled to ten votes, but in the event that the total voting power of the Class A-2 common stock represents less than 51% of the total voting power of all our outstanding capital stock, then the voting power of each share of Class A-2 common stock will be automatically increased so that the Class A-2 common stock collectively holds 51% of our total voting power. In such event, the voting power of shares of Class B common stock (the shares being issued in this offering) and Class A-1 common stock will be automatically and proportionately reduced. Upon completion of this offering, approximately 87% of our Class A-2 common stock will be held by Grandview Holdings, LLC, the managers of which are our founders, including our Chief Executive Officer (who is also a director), our President (who is also a director), and our former President (who is also a director). This means that, for the foreseeable future, investors in this offering and holders of our Class B common stock in the future will not have a meaningful voice in our corporate affairs and that the control of our company will be concentrated with Grandview Holdings, LLC and the other holders of our Class A-2 common stock. See the section titled “Risk Factors—Risks Related to Ownership of Our Class B Common Stock and this Offering” for additional information.

We are an “emerging growth company” as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for this and future filings. Investing in our Class B common stock involves risk. See “Risk Factors” beginning on page 18.

PRICE $       A SHARE

	Price to Public	Underwriting Discounts and Commissions(1)	Proceeds to Qualtrics
Per Share	$	$	$
Total	$	$	$

(1) See “Underwriters” for a description of the compensation payable to the underwriters.

We have granted the underwriters the right to purchase up to an additional 3,076,923  shares of Class B common stock solely to cover over-allotments, if any.

The Securities and Exchange Commission and state regulators have not approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares of Class B common stock to purchasers on               , 2018.

MORGAN STANLEY				GOLDMAN SACHS & CO. LLC
BARCLAYS	RBC CAPITAL MARKETS		JEFFERIES	DEUTSCHE BANK SECURITIES	BMO CAPITAL MARKETS
KEYBANC CAPITAL MARKETS		RAYMOND JAMES		CANACCORD GENUITY	BAIRD	BTIG

          , 2018

TABLE OF CONTENTS

	Page
Prospectus Summary	1
Risk Factors	18
Special Note Regarding Forward-Looking Statements	47
Market and Industry Data	49
Use of Proceeds	50
Dividend Policy	51
Capitalization	52
Dilution	55
Selected Consolidated Financial and Other Data	58
Management’s Discussion and Analysis of Financial Condition and Results of Operations	62
Letter From The Qualtrics Founders	89
Business	92

	Page
Management	127
Executive Compensation	135
Certain Relationships and Related Party Transactions	145
Principal Stockholders	150
Description of Capital Stock	154
Shares Eligible For Future Sale	162
Material U.S. Federal Income Tax Consequences to Non-U.S. Holders of Our Class B Common Stock	165
Underwriters	169
Legal Matters	177
Experts	178
Where You Can Find Additional Information	179
Index to Consolidated Financial Statements	F-1

Through and including             , 2018 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

We have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy, shares of Class B common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the Class B common stock.

For investors outside the United States: Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside of the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of Class B common stock and the distribution of this prospectus outside of the United States.

i

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our Class B common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes included elsewhere in this prospectus and the information set forth under the sections titled “Risk Factors,” “Special Note Regarding Forward-Looking Statements,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Unless the context otherwise requires, we use the terms “Qualtrics,” “company,” “our,” “us,” and “we” in this prospectus to refer to Qualtrics International Inc. and its consolidated subsidiaries. Our fiscal year ends December 31.

QUALTRICS INTERNATIONAL INC.

Overview

Qualtrics has pioneered a new category of software that enables organizations to succeed in today’s experience economy. Our mission is to help organizations deliver the experiences that turn their customers into fanatics, employees into ambassadors, brands into religions, and products into obsessions.

We Live in an Experience Economy

Today, organizations thrive or fail based on the experiences they deliver. In a world of abundant choice, experiences differentiate brands and products, and foster customer and employee loyalty. Great experiences drive customer loyalty, upsell and expansion, employee engagement, brand quality, improved retention and referral, and ultimately, greater shareholder value. Conversely, unfavorable experiences lead to increased churn, lower productivity, diminished competitiveness, and value destruction. With the advent of digital communication channels, favorable or unfavorable experiences can be shared instantly and spread virally, amplifying these impacts and raising the stakes for organizations of all types and sizes.

Executives Must Own All Dimensions of Experience

In this environment, C-level executives are increasingly accountable for issues that transcend basic product and service quality and encompass all of the dimensions that surround those offerings. This extends to thousands of often subtle factors that determine the quality of experiences their organizations deliver, including company culture, speed, convenience, attentiveness, design, and ease of use. We believe that customer, employee, brand, and product experience represent the four vital signs of organizational well-being and that executives are now measured on their performance across these domains. Customer and employee expectations are high, setting up the potential for significant gaps between actual and anticipated experiences. Yet, executives often lack the tools to understand, assess, and take decisive action to address these “experience gaps” as they arise. Today, disruptive start-ups and other businesses flourish by identifying such gaps and designing experiences that attack these blind spots of incumbents.

Organizations Need to Address Experience Directly, in the Moment

While organizations have traditionally deployed consultants or other third parties to gather data about customer and employee satisfaction, the increasing centrality, complexity, and nuance of delivering great experiences has compelled C-level executives to seek the capability to understand and take ownership of these matters directly and in real time. Given the immediate nature of experience, there is also a strong desire to allow individuals at every level in an organization to comprehend changes in experience quality and empower them to act decisively when it matters most.

We Pioneered Experience Management to Power the Experience Economy

We have created a new category of software, Experience Management, or XM^™, which enables organizations to address the challenges and opportunities presented by the experience economy. XM^™ allows organizations to accomplish the following:

• Comprehensively gather and analyze a new class of data, Experience Data, or X-data^™, that is richer, more immediate, and more salient to understanding quality of experience than traditional operational data, or O-

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data^™, which comes from sources such as customer relationship management, or CRM, enterprise resource planning, or ERP, human capital management, or HCM, Customer Service, and Marketing Automation systems. X-data^™ is the human factor data — individual beliefs, emotions, and intentions — collected across multiple channels through which customers and employees engage with an organization.

• Go beyond an assessment of what is happening within organizations to an understanding of why trends are emerging in the moment.

• Address experience holistically, unifying information and insights from customers, employees, and partners and recognizing the operational linkages between the sentiment of these constituencies.

• Become more predictive and proactive, closing feedback loops, and turning insight into real-time action to prevent and close experience gaps where they exist.

• Democratize and own analysis and decision making across the organization by delivering powerful capabilities in a simple, easy-to-use product.

In today’s experience economy, we believe that XM^™ is more critical to improving customer experience than CRM, more influential upon employee experience than HCM systems, and more important to enhancing brand experience than Marketing Automation. Consequently, we believe that XM^™ represents a vast, rapidly growing, and underpenetrated market opportunity, and we estimate our total addressable market to be approximately $44 billion in 2018.

Our History Uniquely Positioned Us to Create and Lead XM^™ 

Our history uniquely positioned us to pioneer and develop this new XM^™ category. Founded in 2002 with the goal of solving the most complex problems encountered by the most advanced academic researchers, we were forged in an environment that required rigorous analytical methods, ease of use, the versatility to address the broadest range of inquiries, and the scalability to reach millions of touch points globally. Our leading presence with academic institutions has introduced millions of students to Qualtrics and allowed them to become proficient in the use of our software. As these students have migrated into the workplace, they have often brought us with them, spawning a whole new class of commercial customers and developing new use cases for our XM^™ Platform. Led by these customers, we evolved beyond our traditional research product offering to develop our platform, which incorporates our core research capability and is also designed to specifically address customer, employee, brand, and product use cases. Taken together, we believe that this platform provides a System of Action for organizations to monitor and act upon the vital signs that drive performance in any organization.

Our Platform Defines All the Elements of Experience Management

Our XM^™ Platform is purpose-built to help organizations collect feedback and data across the four vital signs of a business: Customers, Employees, Brand, and Product. XM^™ transforms that data into insight, and drives action to create value. The key elements of our platform include:

• Research Core — A collection of powerful, flexible research tools to build and distribute data collection systems, aggregate and analyze data, build reports, and draw insight from data. Research Core is designed specifically to instrument, gather, and index human factor data in any format through any channel. Users can synthesize and identify trends within minutes and immediately dig deeper into any data point to extract additional insight.

• Customer Experience (CX) — Enables a deep understanding of customer sentiment throughout every customer journey allowing organizations to monitor, measure, and take action where there may be any experience gaps, with a focus on identifying specific challenges and designing solutions to remediate issues and improve satisfaction in the moment.

• Employee Experience (EX) — Allows managers and employees to identify gaps in the employee experience from recruiting and on-boarding to performance management in order to improve employee engagement, raise productivity, and limit attrition from start to finish at every touchpoint.

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• Brand Experience (BX) — Identifies key drivers of brand perception, including psychographic information, marketing effectiveness, and competitive positioning.

• Product Experience (PX) — Facilitates the aggregation and analysis of critical feedback to identify and isolate the features and experiences that drive product differentiation and quality and permit more informed pricing and packaging decisions across all products.

While our XM^™ Platform represents a deeply integrated set of capabilities, each component features functionality and analytics that are significantly differentiated from one another, allowing our customers to adopt the entire platform or individual solutions that directly address their specific needs. Our platform delivers insight to customers in the form of rich visualizations that unify diverse data streams, demonstrate trends, and identify important deviations that signal the need for action.

We Have Built a Powerful and Innovative Go-To-Market Model

Today, our XM^™ Platform is used by over 9,000 customers globally, including over 75% of the Fortune 100. As our research product evolved into our XM^™ Platform, our customer base and go-to-market model have evolved as well. From our academic roots, we built a strong, low-touch sales model that allowed us to target users in any size organization. By integrating Research Core and emerging use cases into our platform, we began to penetrate larger businesses and developed more outbound sales capability to drive a land and expand sales motion. More recently, we have developed a strong direct sales capability to address larger customers. Throughout this evolution, we have sought to broaden our reach, delight our growing base of customers, and operate efficiently and profitably.

We Bootstrapped Our Company and Have Consistently Generated Cash

We believe that we have built a scalable and sustainable business model. As we built Qualtrics, we relied primarily on capital generated by the business. The primary capital we raised remains on our balance sheet, demonstrating the cash flow efficiency of our business. We have been free cash flow positive in every year since our inception, while driving rapid adoption of our solution among organizations of all sizes around the world. For the years ended December 31, 2016 and 2017, our revenue was $190.6 million, and $289.9 million, respectively, representing year over year growth of 52%. For the years ended December 31, 2016 and 2017, our net income (loss) was ($12.0) million and $2.6 million, respectively, and free cash flow was $3.4 million and $21.3 million, respectively.

Industry Trends in Our Favor

Experiences Drive Differentiation and Competitive Advantage

Today, the value of any organization is dictated by the experiences of its customers, employees, and other constituencies. We now live in a world where those experiences can be shared and amplified globally and instantaneously through digital channels, and brand perception and reputation can shift quickly and profoundly.

Quality of experience has significant impact on organizations of all types and sizes and can be defined by a broad range of factors. Organizations that detect these factors and thoughtfully shape interactions with customers and employees create differentiated experiences and sustained competitive advantage.

Experience Gaps Create Challenges for Organizations

Experience is all-important in winning and retaining customers and employees; however, actual experiences often fall short of expectations. The difference between the experience an organization believes they are delivering and the actual experience delivered is the “experience gap.” Experience gaps often have detrimental consequences for an organization, including lost customers, lower spend, complaints, employee turnover, employee disengagement, poor performance, and product failures.

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Organizations Struggle to Explain Why Experience Gaps Exist

Organizations rely on systems of record, such as CRM, ERP, HCM, Customer Service, and Marketing Automation systems, for gathering and reporting O-data^™. While these systems are useful for reporting what is happening as of a certain date, they are not designed to explain why something is happening.

Most organizations are O-data^™ rich and X-data^™ poor. X-data^™ is the human factor data, the beliefs, emotions, and intentions that tell you why things are happening and, more importantly, what is going to happen. X-data^™ is fragmented, often unstructured, and needs to be collected across all engagement methods, including e-mail, SMS, chat, phone, website, and in-app links. Together, X-data^™ and O-data^™ can provide differentiated and related insights to understand where experience gaps exist and how to address them.

Insight from Direct Feedback Drives Value

Direct commerce models have allowed businesses to create multiple touch points with customers and garner data that allows them to rapidly evolve and improve their offerings and operations. Companies without this direct customer connectivity, including those that operate via indirect channels, find themselves at an increasing disadvantage, often resulting in the inability to gather direct customer experience data and reducing the ability to assess customer sentiment and needs.

Organizations Need to Manage Experiences Across Customers, Employees, Brand, and Product

The success of organizations today depends on the quality of the experiences that they deliver to constituents across four critical areas: customer experience, employee experience, brand experience, and product experience.

Organizations must be able to manage all four of these experiences individually and understand the impact that these interconnected experiences have upon each other. Organizations able to manage these experiences in an integrated manner create a competitive advantage that drives increased organizational success and shareholder value.

Organizations Need a Holistic Experience Management Platform

Experience management capabilities need to be available to everyone throughout an organization, from C-level executives who are accountable for results down to those on the front lines best positioned to respond to feedback. To measure experiences, organizations have used a combination of various processes and tools for specific uses:

• Third Party Market Research Firms and Consultants: This is a labor-intensive approach to researching a specific topic at a specific point in time and can be effective at answering specific questions using sampling panels from their large networks. However, their methods of data collection and analysis lack a software-driven approach that can span across broad use cases in a timely manner.

• Point Solutions: Services-intensive point solutions require a high level of system integration and human involvement to interpret results, are not available broadly to employees, and lack applicability across all vital signs of an organization.

• Survey Tools: Survey tools are useful for broad sampling across thousands of subjects, but lack the ability to combine data in different formats across different channels, correlate with O-data^™, and apply the analytical rigor needed to determine what actions need to be taken to improve results.

A comprehensive experience management platform that empowers organizations to identify, assess, and close experience gaps needs the following capabilities: comprehensive data collection, powerful analytics, ability to address experience holistically, real time, easy to use, configurable, scalable, and enterprise-grade privacy and security.

Our Roots

We founded Qualtrics in 2002 to make sophisticated research simple for the academic market. Our roots in academia helped us to develop our research engine with an interface that was intuitive and easy-to-use, yet powerful in functionality. Students trained on our software began to graduate into corporate roles at the same time corporate mandates to reduce outsourced spending and improve data driven decision making were emerging.

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Corporate use of our software was discovered to be driven largely by four core use cases: customer, employee, brand, and product related feedback and research. We developed focused solutions consisting of use case specific capabilities, content, dashboards, and workflow integration built on top of the base research and analytics engine. In 2017, we launched the Qualtrics XM^™ Platform.

The Qualtrics XM^™ Platform

Our XM^™ Platform consists of solutions for Customer Experience, Employee Experience, Brand Experience, and Product Experience, all built on our Research Core and integrated with our Research on Demand offering. Our platform is designed to help organizations measure, prioritize, and optimize the experiences that they provide to customers, employees, and other constituencies.

Key benefits of our platform include:

• Comprehensive Data Collection. Our XM^™ Platform enables organizations to personalize their communication with customers, employees, and partners and interact with these groups through the most effective channels. Through simple integrations, users can incorporate O-data^™ into XM^™ analysis using native formats or through Excel exports, without the use of outside professional services.

• Differentiated Analytical Capabilities. Our XM^™ Platform is powered by a proprietary analytics engine that organizations of all types use to address some of the most demanding research projects. Our platform leverages the latest in artificial intelligence and natural language processing. These capabilities are incorporated into our platform through our intelligent engine, iQ, enabling advanced analytical features to make statistical analysis and insights available to everyone.

• Ability to Address Experience Holistically. We provide specific solutions across the key areas that have the highest impact on an organization: customers, employees, brand, and product. Our XM^™ Platform analyzes experiences within each of these areas individually and correlates data across areas to provide insight into how they impact each other.

• Real-time Insight and Action. Our XM^™ Platform is able to extract real-time feedback and provide insights and analysis when it matters most and drive action natively or by integrating with systems that an organization already uses. For example, our platform can automatically generate a customer ticket when a negative sentiment is expressed on a social media site and prompt an organization to action all the way to issue resolution, serving as a System of Action to remedy potential problems in a timely manner.

• Ease of Use Enabling Democratization of Research Across All Users. We designed our XM^™ Platform for every knowledge worker. Users can design a customer feedback program in minutes using simple drag and drop functions. This ease of use allows our platform to be used by employees across the organization.

• Flexible Configuration to Meet Specific Needs. Our customers have configured our XM^™ Platform to meet diverse needs. Through an intuitive and elegant interface, users can design programs that implement complex logic, and advanced workflows. Users can also design, deploy, and alter these programs without help from professional services or IT, leading to faster and more impactful insights.

• Scalable for the Needs of the Largest Organizations. In addition to scaling seamlessly across use cases, our XM^™ Platform can collect, analyze, and interpret data across millions of touch points, meeting the needs of the world’s most sophisticated and demanding organizations.

• Security and Privacy Designed for the Enterprise. Our XM^™ Platform adheres to the highest standards of security and privacy that are demanded by the largest organizations in the world. Our platform enables role-based permissioning to ensure that only the right people have access to the most sensitive customer and employee information. Additionally, organizations own and retain all their data gathered on our platform.

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What Sets Us Apart

As the creator and leader of XM^™, we have several distinguishing advantages:

• Pioneer and Market Leader for Experience Management. Our experiential learning over the past 16 years has helped us develop, test, and refine our software solutions. Today, users across over 9,000 organizations rely on our software for differentiated and actionable insights into their businesses.

• Scalable within Organizations from Departments to Enterprise-Wide. Our XM^™ Platform combines ease of use with the scalability required by the world’s largest enterprises. Built for enterprise scale, Qualtrics has been architected as an open and easily configurable platform to facilitate a wide breadth of use cases. For example, Qualtrics now powers over 57,000 dashboards for Walmart’s managers to track employee experience.

• Academic Roots. Our academic roots have allowed us to differentiate in the following key ways:

• Technology focus: Our initial focus on the academic market required us to build sophisticated software that balanced the complex design requirements requested by researchers with our goal of providing a user-friendly interface for professors, researchers, and students.

• Effective on-ramp: We estimate that over 2 million academic users have been introduced to Qualtrics as students or researchers, who in turn have helped bring Qualtrics into their organizations as they have entered the workforce.

• Modern Technology Architecture. We have a modern technology platform that enables us to scale, store, and process efficiently large batches of data and can support our broad portfolio of solutions.

• Rapid Time to Value. By making the complex capabilities of our XM^™ Platform simple to use, we allow customers of all types and sizes to generate value quickly.

• Powerful and Innovative Go-to-Market Model. We deploy a powerful and innovative go-to-market model that addresses the many ways a customer may choose to buy. We utilize a combination of a highly productive inside sales team and a field sales team to target customers. In addition, we leverage the Qualtrics Partner Network, or QPN, for joint go-to-market opportunities, product enhancement, and service delivery.

• Customer-centric Product Innovation. We are focused on continuously improving our software, and we have a customer-centric focus that is embedded in our culture. Using our own XM^™ Platform, we are able to collect continuous feedback from our customers in real-time, enabling us to drive product innovation. For example, both our Customer Experience and Employee Experience solutions were created based on observing our customers using Research Core for specific customer and employee use cases.

Our Growth Strategy

Key elements of our growth strategy include:

• Drive New Customer Sales. We believe that our market opportunity remains largely underpenetrated. We will continue to invest aggressively in our direct and indirect sales and marketing capabilities to continue to acquire new customers, including continued growth in the number of enterprise customers.

• Expand Within Existing Customers. Our customer base of over 9,000 organizations represents a significant growth opportunity for us. Our XM^™ Platform has the flexibility to allow a single division or a specific team to use it on a small scale, which could grow to an organization-wide deployment. As a result, there is an opportunity to expand both the scale and use cases within an organization.

• Expand Our International Presence. To penetrate international markets, we have developed a hub-and-spoke sales model, comprised of centralized inside-sales teams surrounded by regional direct sales groups. For the nine months ended September 30, 2018, 23% of our revenue was from international markets, and we believe that there is significant opportunity for continued growth from outside the United States.

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• Continue to Innovate and Enhance Our Platform. We use our technology to draw insights and ensure that we are best serving our customers’ needs. We believe continued innovation will lead to a greater value proposition for our customers and increased adoption of our XM^™ Platform by both new and existing customers.

• Grow Revenue from Key Industry Verticals. While our XM^™ Platform is industry-agnostic, we have made a number of industry specific investments that will accelerate our adoption within certain verticals, including government, education, and financial services. We have developed Certified XM^™ Solutions, leveraging partners’ expertise and embedding industry specific content into our products.

• Further Develop Our Partner Network. We are building out a network of content and consulting partners, delivery partners, and technology partners who enrich our offerings, scale our coverage, and help us reach a broader audience than we would be able to reach on our own. At our March 2018 X4 Summit, we announced the launch of the QPN.

Risk Associated with Our Business and Investments in Our Class B Common Stock

Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this prospectus summary. Some of these risks are:

• Our rapid growth makes it difficult to evaluate our future prospects and may increase the risk that we will not continue to grow at or near historical rates.

• We may not be able to sustain our revenue growth rate or maintain profitability in the future.

• If we fail to effectively manage our growth, our business and results of operations could be harmed.

• The software category in which we participate is new and rapidly changing, and if we do not compete effectively, our business, results of operations, and financial condition could be harmed.

• If we are unable to retain customers at existing levels or sell additional functionality to our existing customers, our revenue growth will be adversely affected.

• Experience management is a new and evolving software category. If the category does not develop further, develops more slowly, or in a way that we do not expect, our business will be adversely affected.

• If we are not able to develop new solutions and enhancements to our existing solutions that achieve market acceptance and that keep pace with technological developments, or if we are not able to deliver these new or enhanced solutions so that they can be easily and consistently deployed by our customers, our business and results of operations would be harmed.

• If our security measures are breached or unauthorized access to customer data is otherwise obtained, our XM^™ Platform may be perceived as insecure, we may lose existing customers or fail to attract new customers, our reputation may be harmed, and we may incur significant liabilities.

• Our business could be harmed by any significant disruption of service on our XM^™ Platform or loss of content.

• If we fail to offer high quality customer support, our business and reputation could suffer.

• We invest significantly in research and development, and to the extent our research and development investments do not translate into new solutions or material enhancements to our current solutions, or if we do not use those investments efficiently, our business and results of operations would be harmed.

• Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our ability to expand our number of customers will be impaired and our business, results of operations, and financial condition will be harmed.

• Failure to effectively expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our XM^™ Platform.

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• We rely on the performance of highly skilled personnel, including our management and other key employees, and the loss of one or more of such personnel, or of a significant number of our team members, could harm our business.

• The multiple class structure of our common stock has the effect of concentrating voting control with certain stockholders, in particular, our chief executive officer and his affiliates, which will limit your ability to influence the outcome of important transactions, including a change in control.

Channels for Disclosure of Information

Investors, the media and others should note that, following the completion of this offering, we intend to announce material information to the public through filings with the Securities and Exchange Commission, or the SEC, the investor relations page on our website, press releases, and public conference calls and webcasts.

Corporate Information

We were formed in 2002 as Qualtrics Labs, Inc. In 2012, Qualtrics, LLC, a Delaware limited liability company, was established as a new parent company for our operating business. In September 2014, we incorporated Qualtrics International Inc. in Delaware. Through a corporate restructuring in September 2014, Qualtrics, LLC became a wholly-owned subsidiary of Qualtrics International Inc. Our principal executive offices are located at 333 West River Park Drive, Provo, Utah 84604, and our telephone number is 385-203-4999. Our website address is www.Qualtrics.com. Information contained on, or that can be accessed through, our website does not constitute part of this prospectus and inclusions of our website address in this prospectus are inactive textual references only.

“Qualtrics” and our other registered or common law trade names, trademarks, or service marks appearing in this prospectus are our property. Other trademarks and trade names referred to in this prospectus are the property of their respective owners.

Implications of Being an Emerging Growth Company

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012. We will remain an emerging growth company until the earlier of (1) December 31, 2023 (the last day of the fiscal year following the fifth anniversary of our initial public offering), (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer”, as defined in the rules under the Securities Exchange Act of 1934, or the Exchange Act, and (4) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. We refer to the Jumpstart Our Business Startups Act of 2012 herein as the “JOBS Act,” and any reference herein to “emerging growth company” has the meaning ascribed to it in the JOBS Act.

An emerging growth company may take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:

• being permitted to present only two years of audited financial statements and only two years of related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus;

• not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act;

• reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements, including in this prospectus; and

• exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We have elected to take advantage of certain of the reduced disclosure obligations in this prospectus and may elect to take advantage of other reduced reporting requirements in our future filings with the SEC. As a result, the information

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that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.

The JOBS Act also provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

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The Offering

Class B common stock offered by us	20,512,821 shares
Class B common stock to be outstanding after this offering	32,920,553 shares (35,997,476 shares, if the underwriters exercise their over-allotment option in full)
Class A-1 common stock to be outstanding after this offering	81,636,234 shares
Class A-2 common stock to be outstanding after this offering	101,395,607 shares
Total Class A-1, Class A-2, and Class B common stock to be outstanding after this offering	215,952,394 shares
Underwriters’ over-allotment option	3,076,923 shares
Use of proceeds	We estimate that the net proceeds from the sale of shares of our Class B common stock in this offering will be approximately $373.1 million (or approximately $429.8 million if the underwriters exercise their over-allotment option in full), based upon the assumed initial public offering price of $19.50 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
	The principal purposes of this offering are to increase our capitalization and financial flexibility, create a public market for our Class B common stock and enable access to the public equity markets for us and our stockholders. We intend to use the net proceeds from this offering to satisfy tax withholding and remittance obligations of up to $57.4 million (as of November 15, 2018) related to the settlement of certain outstanding restricted stock units, or RSUs, in connection with the effectiveness of this offering. This amount is based upon the assumed initial public offering price of $19.50 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus. We also intend to use the net proceeds from this offering for working capital or other general corporate purposes, including funding our growth strategies discussed in this prospectus. We may also use a portion of the net proceeds to acquire or make investments in businesses, products, services or technologies. However, we do not have agreements or commitments for any acquisitions at this time. See the section titled "Use of Proceeds" for additional information.

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Voting rights	We will have three classes of common stock outstanding upon the completion of this offering: Class A-1 common stock, Class A-2 common stock, and Class B common stock. Class B common stock is entitled to one vote per share and Classes A-1 and A-2 common stock are entitled to ten votes per share. Holders of our Class A-2 common stock are also entitled to additional voting rights in the event that the total aggregate number of votes represented by all of the outstanding shares of our Class A-2 common stock would constitute less than 51% of the total voting power of all classes of our then-outstanding capital stock. In such a case, and for so long as the number of outstanding shares of Class A-2 common stock represents at least 10% of the total number of shares of all classes of our outstanding capital stock, the holders of our Class A-2 common stock will be entitled to a number of votes per share of their Class A-2 common stock as would cause the total number of votes of all outstanding shares of Class A-2 common stock to equal 51% of the total voting power of all of our then-outstanding shares of capital stock. Accordingly, in such event, the aggregate voting power of all outstanding shares of Class A-1 common stock and Class B common stock would be proportionately reduced.
	Holders of Class A-1, Class A-2, and Class B common stock will generally vote together as a single class, unless otherwise required by Delaware law or our amended and restated certificate of incorporation. The holders of our outstanding Class A-1 and Class A-2 common stock, certain of whom are our founders, executive officers, and directors, will hold 98% of the voting power of our outstanding shares (approximately 54% is attributable to Class A-2 common stock held by them) following this offering and will have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of our directors and the approval of any change in control transaction. See the sections titled "Principal Stockholders" and "Description of Capital Stock" for additional information.
Directed share program	At our request, the underwriters have reserved for sale, at the initial public offering price, up to 7% of the shares of our Class B common stock offered hereby for persons associated with us who have expressed an interest in purchasing shares of our Class B common stock in this offering. See the section titled “Underwriters” for additional information.
Proposed Nasdaq trading symbol	“XM”

The number of shares of our Class A-1 common stock, Class A-2 common stock, and Class B common stock that will be outstanding after this offering is based on 81,636,234 shares of our Class A-1 common stock, 101,395,607 shares of our Class A-2 common stock (each as including preferred stock on an as-converted basis), and 12,407,732 shares of our Class B common stock (which includes 1,701,002 unvested restricted stock awards, or RSAs, for shares of our Class B common stock and up to 7,098,042 shares of our Class B common stock to be issued at the closing of this offering on the vesting and settlement of certain outstanding RSUs, respectively, subject to a performance condition in connection with the completion of this offering) outstanding as of September 30, 2018 , and excludes:

• 1,722,087shares of our Class B common stock issuable upon the exercise of options to purchase shares of our Class B common stock outstanding as of September 30, 2018, with a weighted-average exercise price of $12.11per share;

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• 459,821 shares of our Class B common stock issuable upon the exercise of options to purchase shares of our Class B common stock that were granted after September 30, 2018, with a weighted-average exercise price of $15.38 per share;

• 27,947,763  RSUs for shares of our Class B common stock outstanding as of September 30, 2018 that will settle upon future satisfaction of service conditions following the completion of this offering , up to approximately 9,502,239 shares of which we plan to withhold, based on an assumed 34 % tax withholding rate, to satisfy income tax obligations upon settlement of the RSUs, as discussed in the section titled “Risk Factors— We may invest or spend the proceeds of this offering in ways with which you may not agree or in ways which may not yield a return ” and Note 12 to our consolidated financial statements included elsewhere in this prospectus;

• 2,144,473 RSUs for shares of our Class B common stock that were granted after September 30, 2018 that will settle upon future satisfaction of service conditions following the completion of this offering;

• 1,618,852 shares of our Class B common stock reserved for future issuance under our 2014 Stock Option and Grant Plan, as amended, or the 2014 Plan, provided that no new awards will be issued under the 2014 Plan following the completion of this offering; and

• 23,750,000 shares of our Class B common stock reserved for future issuance under our equity compensation plans, which will become effective prior to the completion of this offering, consisting of:

• 20,000,000 shares of our common stock reserved for future issuance under our 2018 Stock Option and Incentive Plan, or the 2018 Plan, which will become available for issuance effective upon the effectiveness of the registration statement of which this prospectus is a part, as well as any automatic increases in the number of shares of our common stock reserved for future issuance under this plan (which amount includes approximately 3,650,000 shares to be covered by new equity awards that we currently intend to grant in November or December 2018 following the completion of this offering) , and

• 3,750,000 shares of our common stock reserved for future issuance under our 2018 Employee Stock Purchase Plan, or ESPP, which will become available for issuance effective upon the effectiveness of the registration statement of which this prospectus is a part, as well as any automatic increases in the number of shares of our common stock reserved for future issuance under this plan.

Our 2018 Plan and ESPP will each provide for annual automatic increases in the number of shares reserved thereunder and our 2018 Plan also will provide for increases to the number of shares of Class B common stock that may be granted thereunder based on shares underlying any awards under our 2014 Plan that expire, are forfeited, or are otherwise terminated, as more fully described in the section titled “Executive Compensation—Employee Benefits and Stock Plans.”

Except as otherwise indicated, all information in this prospectus assumes the following as of September 30, 2018:

• the automatic conversion of all outstanding shares of our Series A-1 redeemable convertible preferred stock and Series A-2 redeemable convertible preferred stock into an aggregate of 101,395,607 shares of our Class A-2 common stock, the conversion of which will occur immediately prior to the completion of this offering;

• the automatic conversion of all outstanding shares of our Series A-3 redeemable convertible preferred stock and Series B redeemable convertible preferred stock into an aggregate of 81,636,234 shares of our Class A-1 common stock, the conversion of which will occur immediately prior to the completion of this offering;

• the issuance of up to  7,098,042 shares of Class B common stock at the closing of this offering on the vesting and settlement of certain outstanding RSUs subject to a performance condition in connection with the completion of this offering;

• the filing and effectiveness of our amended and restated certificate of incorporation in Delaware and the effectiveness of our amended and restated bylaws, each of which will occur immediately prior to the completion of this offering;

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• a 2-for-1 reverse stock split of our common stock and redeemable convertible preferred stock that was effected on October 24, 2018; and

• no exercise by the underwriters of their over-allotment option.

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Summary Consolidated Financial Data

The following tables summarize our consolidated financial data. We have derived the summary consolidated statements of operations data for the years ended December 31, 2016 and 2017 from our audited consolidated financial statements included elsewhere in this prospectus. We have derived the summary consolidated statements of operations data for the nine months ended September 30, 2017 and 2018 and our summary consolidated balance sheet data as of September 30, 2018 from our unaudited interim consolidated financial statements included elsewhere in this prospectus. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal, recurring nature that are necessary for a fair statement of the unaudited interim consolidated financial statements. Our historical results are not necessarily indicative of the results that may be expected in the future, and the results for the nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the full year or any other future period. The following summary consolidated financial data should be read in conjunction with the sections titled “Selected Consolidated Financial and Other Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.

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	Year Ended December 31,					Nine Months Ended September 30,
	2016			2017		2017		2018
Consolidated Statements of Operations Data:	(In thousands, except per share data)
Revenue:
Subscription	$	142,525		$	213,274	$	151,699	$	215,533
Research on Demand	38,147			51,812		37,524		51,489
Professional services and other	9,931			24,817		17,856		22,544
Total revenue	190,603			289,903		207,079		289,566
Cost of revenue(1)(2):
Subscription	27,904			25,552		18,162		26,520
Research on Demand	21,322			26,639		19,585		22,237
Professional services and other	11,754			26,893		18,859		27,581
Total cost of revenue	60,980			79,084		56,606		76,338
Gross profit	129,623			210,819		150,473		213,228
Operating expenses(1)(2):
Research and development	22,303			40,680		29,078		45,643
Sales and marketing	95,919			140,524		102,994		138,318
General and administrative	21,909			26,522		17,239		26,958
Total operating expenses	140,131			207,726		149,311		210,919
Operating income (loss)	(10,508		)	3,093		1,162		2,309
Other non-operating income (expense), net	(501		)	1,370		1,131		274
Income (loss) before income taxes	(11,009		)	4,463		2,293		2,583
Provision for income taxes	1,025			1,907		1,322		1,088
Net income (loss)	$	(12,034	)	$	2,556	$	971	$	1,495
Net income (loss) per share attributable to common stockholders, basic	$	(4.85	)	$	0.01	$	0.01	$	0.01
Net income (loss) per share attributable to common stockholders, diluted	$	(4.85	)	$	0.01	$	0.01	$	0.01
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic	2,482			2,889		2,801		3,597
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, diluted	2,482			185,734		185,493		186,934
Pro forma net income per share attributable to common stockholders, basic				$	0.01			$	0.01
Pro forma net income per share attributable to common stockholders, diluted				$	0.01			$	0.01
Weighted-average shares used in computing pro forma net income per share attributable to common stockholders, basic				189,157				193,617
Weighted-average shares used in computing pro forma net income per share attributable to common stockholders, diluted				200,078				203,342

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____________________

(1) Includes stock-based compensation expense as follows:

	Year Ended December 31,				Nine Months Ended September 30,
	2016		2017		2017		2018
	(In thousands)
Cost of revenue	$	7	$	7	$	6	$	4
Research and development	309		1,438		1,348		1,568
Sales and marketing	64		4,415		4,414		559
General and administrative	322		1,087		750		973
Total stock-based compensation expense	$	702	$	6,947	$	6,518	$	3,104

____________________

(2) Includes amortization of acquired intangible assets as follows:

	Year Ended December 31,				Nine Months Ended September 30,
	2016		2017		2017		2018
	(In thousands)
Cost of revenue	$	81	$	135	$	101	$	500
Research and development	—		—		—		—
Sales and marketing	47		32		30		111
General and administrative	59		59		44		104
Total amortization of acquired intangible assets	$	187	$	226	$	175	$	715

	As of September 30, 2018
	Actual			Pro Forma(1)			Pro Forma As Adjusted(2)(3)
	(In thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	137,739		$	137,739		$	510,839
Working capital(4)	$	210,373		$	163,313		$	536,413
Total assets	$	334,317		$	334,317		$	707,417
Total deferred revenue	$	228,199		$	228,199		$	228,199
Redeemable convertible preferred stock	$	129,609		$	—		$	—
Accumulated deficit	$	(79,829	)	$	(179,598	)	$	(179,598	)
Total stockholders’ (deficit) equity	$	(69,846	)	$	12,703		$	385,801

____________________

(1) The pro forma column in the balance sheet data table above reflects (a) the automatic conversion of all outstanding shares of our Series A-1 and Series A-2 redeemable convertible preferred stock into an aggregate of  101,395,607  shares of our Class A-2 common stock, which conversion will occur immediately prior to the completion of this offering, (b) the automatic conversion of all outstanding shares of our Series A-3 redeemable convertible preferred stock and Series B redeemable convertible preferred stock into an aggregate of  81,636,234  shares of our Class A-1 common stock, which conversion will occur immediately prior to the completion of this offering, (c) stock-based compensation expense of approximately $99.8 million associated with outstanding RSUs subject to a performance condition for which the service-based vesting condition was satisfied as of September 30, 2018 and which we will recognize on the effectiveness of our registration statement in connection with this offering, as further described in Note 12 to our consolidated financial statements included elsewhere in this prospectus, (d) the increase in accrued liabilities and an equivalent decrease in additional paid-in capital of $47.1 million in connection with the withholding tax obligations, assuming an initial public offering price of $ 19.50  per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, assuming that we issue shares of Class B common stock on a net basis to satisfy all the associated withholding tax obligations, although it is contemplated that certain employees may elect to pay cash to cover withholding amounts, (e) the net issuance of up to  7,098,042  shares of Class B common stock at the closing

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of this offering on the vesting and settlement of certain RSUs subject to a performance condition in connection with the effectiveness of this offering, and (f) the filing and effectiveness of our amended and restated certificate of incorporation in Delaware.

(2) The pro forma as adjusted column in the balance sheet data table above gives effect to (a) the pro forma adjustments set forth above and (b) the sale and issuance by us of  20,512,821  shares of our Class B common stock in this offering, based upon the assumed initial public offering price of $ 19.50  per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

(3) Each $1.00 increase or decrease in the assumed initial public offering price of $ 19.50  per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, the amount of each of our cash and cash equivalents, working capital, total assets and total stockholders’ equity by $19.4 million , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase or decrease of 1.0 million shares in the number of shares offered by us would increase or decrease, as applicable, the amount of each of our cash and cash equivalents, working capital, total assets and total stockholders’ equity by $18.4 million , assuming an initial public offering price of $ 19.50  per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

(4) Working capital is defined as current assets less current liabilities, excluding current deferred revenue. See our audited consolidated financial statements and related notes included elsewhere in this prospectus for further details regarding our current assets and current liabilities.

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RISK FACTORS

Investing in our Class B common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this prospectus, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, before making a decision to invest in our Class B common stock. The risks and uncertainties described below may not be the only ones we face. If any of the risks actually occur, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that event, the market price of our Class B common stock could decline, and you could lose part or all of your investment.

Risks Related to Our Business and Industry

Our rapid growth makes it difficult to evaluate our future prospects and may increase the risk that we will not continue to grow at or near historical rates.

We have been growing rapidly over the last several years, and as a result, our ability to forecast our future results of operations is subject to a number of uncertainties, including our ability to effectively plan for and model future growth. Our recent and historical growth should not be considered indicative of our future performance. We have encountered in the past, and will encounter in the future, risks and uncertainties frequently experienced by growing companies in new and rapidly changing markets. If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations, our growth rates may slow and our business would suffer.

We may not be able to sustain our revenue growth rate or maintain profitability in the future.

In future periods, our revenue could grow more slowly than in recent periods or decline for a number of reasons, including any reduction in demand for our XM^™ Platform, increase in competition, limited ability to, or our decision not to, increase pricing, contraction of the experience management software category, or our failure to capitalize on growth opportunities. In addition, our revenue from subscription, Research on Demand, and professional services and other may grow at different rates than in recent periods or decline for a number of reasons, including those described above. We expect expenses to increase substantially in the near term, particularly as we continue to make significant investments in research and development and technology infrastructure, expand our operations globally and develop new solutions and features for, and enhancements of, our platform. In addition, in connection with operating as a public company, we will incur significant additional legal, accounting and other expenses that we did not incur as a private company. While we have achieved profitability in prior fiscal years, as a result of these significant investments, we do not expect to achieve profitability for the year ended December 31, 2018, and may not be able to achieve profitability in future periods. In addition, the additional expenses we will incur may not lead to sufficient additional revenue to maintain historical revenue growth rates and profitability.

If we fail to effectively manage our growth, our business and results of operations could be harmed.

We have experienced, and may continue to experience, rapid growth, which has placed, and may continue to place, significant demands on our management and our operational and financial resources. For example, our headcount has grown from 1,501 employees as of September 30, 2017 to 1,915 employees as of September 30, 2018. In addition, we operate globally, sell subscriptions to over 9,000 customers in more than 100 countries, and have employees in the United States, Australia, Canada, France, Germany, Ireland, Japan, Poland, Singapore, and the United Kingdom. We plan to continue to expand our international presence in the future, which will place additional demands on our resources and operations. Additionally, we continue to increase the breadth and scope of our XM^™ Platform and our operations and continue to develop our partner network. To support this growth, and to manage any future growth effectively, we must continue to improve our IT and financial infrastructures, our operating and administrative systems, and our ability to manage headcount, capital, and internal processes in an efficient manner and deepen our industry experience in key verticals. Our organizational structure is also becoming more complex as we grow our operational, financial, and management infrastructure and we must continue to improve our internal controls as well as our reporting systems and procedures. We intend to continue to invest to expand our business, including investing in technology and sales and marketing operations, developing new solutions and features for our existing solutions, hiring additional personnel,

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and upgrading our infrastructure. These investments will require significant capital expenditures and the allocation of management resources, and any investments we make will occur in advance of experiencing the benefits from such investments, making it difficult to determine in a timely manner if we are efficiently allocating our resources. If we do not achieve the benefits anticipated from these investments, or if the achievement of these benefits is delayed, our results of operations may be adversely affected.

The software category in which we participate is new and rapidly changing, and if we do not compete effectively, our business, results of operations, and financial condition could be harmed.

The experience management software category is new and rapidly changing and has relatively low barriers to entry. While we do not believe that any of our competitors currently offer a full suite of experience management solutions that competes with our XM^™ Platform, certain features of our platform compete in certain segments of the overall experience management software category. For example, Medallia, Inc. is a provider of software for specific use cases for customer experience, Aon Hewitt LLC and Willis Towers Watson PLC are traditional professional and marketing research services firms, and SurveyMonkey Inc. provides individual-focused and self-service survey tools. While we believe we compete favorably against these competitors, some of our competitors and potential competitors are larger and have greater brand name recognition, longer operating histories, larger marketing budgets and established marketing relationships, access to larger customer bases, and significantly greater resources for the development of their offerings. These competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards, or customer requirements

With the introduction of new technologies, the evolution of our solutions, and new market entrants, we expect competition to intensify in the future. We also anticipate that potential competition may come in the future from incumbent software providers. For example, as we expand our focus into new use cases or other solutions beyond our XM^™ Platform, we expect competition to increase. Pricing pressures from competitors undercutting our prices, and increased competition generally could result in reduced sales, reduced margins, losses, or the failure of our solutions to achieve or maintain more widespread market acceptance, any of which could harm our business, results of operations, and financial condition. Furthermore, our actual and potential competitors may establish cooperative relationships among themselves or with third parties, or consolidate through acquisitions or be sold to our competitors with greater resources than we have, that may further enhance their resources and offerings in the market we address and may increase the likelihood of our competitors offering bundled or integrated products with which we cannot compete effectively. Additionally, some current and potential customers and partners, particularly large organizations, have elected, and may in the future elect, to develop or acquire their own internal experience management software tools that would reduce or eliminate the demand for our solutions. For all of these reasons and others we cannot anticipate today, we may not be able to compete successfully against our current and future competitors, which could harm our business, results of operations, and financial condition.

If we are unable to retain customers at existing levels or sell additional functionality to our existing customers, our revenue growth will be adversely affected.

To increase our revenue, we must retain existing customers, convince them to expand their use of our solutions across their organizations and for a variety of use cases, and expand their subscriptions on terms favorable to us. If we are not able to renew our agreements with existing customers or attract new business from existing customers on terms favorable or comparable to prior periods, this could have an adverse effect on our business, revenue, gross margins, and other operating results, and accordingly on the value of our common stock. The rate at which our customers purchase new or enhanced solutions from us, as well as the expansion of use of our solutions across organizations, depends on a number of factors, including general economic conditions, customer specific conditions, competitive pricing, integration with existing technologies, and satisfaction and market acceptance of our platform generally. If our efforts to sell additional functionality and solutions to our customers are not successful, our business and growth prospects may suffer. Our customers have no obligation to renew their subscriptions for our solutions after the expiration of their initial subscription period, and a majority of our subscription contracts were one year in duration for the year ended December 31, 2017. However, some of our customer agreements allow for cancellation on 30 days or less notice but without refund.

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Experience management is a new and evolving software category. If the category does not develop further, develops more slowly, or in a way that we do not expect, our business will be adversely affected.

We generate, and expect to continue to generate, revenue from the sale of subscriptions to our XM^™ Platform. As a result, widespread acceptance and use of experience management solutions in general, and our platform in particular, is critical to our future growth and success. If the experience management software category fails to grow or grows more slowly than we currently anticipate, demand for our platform could be negatively affected.

Changes in user preferences for experience management may have a disproportionately greater impact on us than if we offered multiple platforms or disparate products. Demand for experience management solutions in general, and our XM^™ Platform in particular, is affected by a number of factors, many of which are beyond our control. Some of these potential factors include:

• awareness of the experience management category generally;

• availability of products and solutions that compete with ours;

• ease of adoption and use;

• features, performance and overall platform experience;

• brand;

• security and privacy;

• accessibility across several devices, operating systems, and applications;

• customer support;

• continued innovation; and

• pricing.

The experience management software category is subject to rapidly changing user demand and trends in preferences. If we fail to successfully predict and address these changes and trends, meet user demands, or achieve more widespread market acceptance of our platform, our business, results of operations, and financial condition could be harmed.

If we are not able to develop new solutions and enhancements to our existing solutions that achieve market acceptance and that keep pace with technological developments, or if we are not able to deliver these new or enhanced solutions so that they can be easily and consistently deployed by our customers, our business and results of operations would be harmed.

Our ability to attract new customers and increase revenue from existing customers depends in large part on our ability to enhance and improve our existing solutions and to introduce compelling new solutions. The success of any enhancement to our solutions depends on several factors, including timely completion and delivery, competitive pricing, adequate quality testing, integration with existing technologies and our XM^™ Platform, and overall market acceptance. Any new solution that we develop may not be introduced in a timely or cost-effective manner, may contain errors, vulnerabilities or bugs, or may not achieve the market acceptance necessary to generate significant revenue. If we are unable to successfully develop new solutions, enhance our existing solutions to meet customer requirements, or otherwise gain market acceptance, our business, results of operations, and financial condition would be harmed.

Our ability to attract new customers and increase revenue from existing customers also depends on our ability to deliver any enhanced or new solutions to our customers in a format where they can be easily and consistently deployed by most or all users without significant customer support. If our customers believe that deploying our enhanced or new solutions would be overly time-consuming, confusing, or technically challenging, then our ability to grow our business would be substantially harmed. We need to create and deliver a repeatable, user-friendly, prescriptive approach to deployment that allows users of all kinds to effectively and easily deploy our solutions, and if we fail to do so, our business and results of operations would be harmed.

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Our success also depends on our ability to identify important and emerging use cases for our customers and quickly develop new and effective solutions to address those use cases. For example, before March 2017, we did not offer a solution specifically tailored for either Brand Experience or Product Experience. We developed solutions for these specific use cases because we were able to identify that many of our customers were using our existing tools for those purposes. If we are unable to identify similar emerging use cases or applications of our XM^™ Platform in a timely manner and innovate in a way that allows us to address these emerging use cases or applications, and also present them to our customers in a compelling package that differentiates those solutions from our existing capabilities, then we may lose customers to more innovative competitors or alternative solutions, and we will experience difficulties in attracting new customers and expanding revenue from existing customers. In addition, after we launch any new solutions, we must also continuously improve and develop these solutions to make them as robust and rich in features and capabilities as the other solutions on our XM^™ Platform.

If our security measures are breached or unauthorized access to customer data is otherwise obtained, our platform may be perceived as insecure, we may lose existing customers or fail to attract new customers, our reputation may be harmed, and we may incur significant liabilities.

Unauthorized access to, or other security breaches of, our XM^™ Platform or the other systems or networks used in our business, including those of our vendors, contractors, or those with which we have strategic relationships, could result in the loss, compromise or corruption of sensitive customer data, loss of business, reputational damage adversely affecting customer or investor confidence, regulatory investigations and orders, litigation, indemnity obligations, damages for contract breach, penalties for violation of applicable laws or regulations, significant costs for remediation, and other liabilities. We have errors and omissions insurance coverage for certain security and privacy damages and claim expenses, but this coverage may be insufficient to compensate us for all liabilities that we may incur.

Our platform and the other systems or networks used in our business are also at risk for breaches as a result of third party action, or employee, vendor, or contractor error or malfeasance. Security incidents have occurred in the past, and may occur in the future, resulting in unauthorized access to, loss of or unauthorized disclosure of this information, regulatory enforcement actions, litigation, indemnity obligations, and other possible liabilities, as well as negative publicity, which could damage our reputation, impair our sales, and harm our business. Cyberattacks and other malicious internet-based activity continue to increase, and cloud-based platform providers of services have been and are expected to continue to be targeted. In addition, to traditional computer “hackers,” malicious code (such as viruses and worms), employee theft or misuse, and denial-of-service attacks, sophisticated nation-state and nation-state supported actors now engage in attacks (including advanced persistent threat intrusions). Despite significant efforts to create security barriers to such threats, it is virtually impossible for us to entirely mitigate these risks. If our security measures are compromised as a result of third party action, employee or customer error, malfeasance, stolen or fraudulently obtained log-in credentials or otherwise, our reputation could be damaged, our business may be harmed, and we could incur significant liability. We have not always been able in the past and may be unable in the future to anticipate or prevent techniques used to obtain unauthorized access or to compromise our systems, because they change frequently and are generally not detected until after an incident has occurred. Concerns regarding data privacy and security may cause some of our customers to stop using our solutions and fail to renew their subscriptions. This discontinuance in use or failure to renew could substantially harm our business, operating results, and growth prospects. Further, as we rely on third party and public-cloud infrastructure, we will depend in part on third party security measures to protect against unauthorized access, cyberattacks, and the mishandling of customer data. In addition, failures to meet customers’ expectations with respect to security and confidentiality of their data and information could damage our reputation and affect our ability to retain customers, attract new customers, and grow our business. In addition, a cybersecurity event could result in significant increases in costs, including costs for remediating the effects of such an event; lost revenue due to decrease in customer trust and network downtime; increases in insurance coverage due to cybersecurity incidents; and damages to our reputation because of any such incident.

Our business could be harmed by any significant disruption of service on our platform or loss of content.

Our brand, reputation, and ability to attract, retain, and serve our customers are dependent upon the reliable performance of our XM^™ Platform, including our underlying technical infrastructure. Our technical infrastructure may not be adequately designed with sufficient reliability and redundancy to avoid performance delays or outages that could

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be harmful to our business. If our platform is unavailable when users attempt to access it, or if it does not load as quickly as they expect, users may not use our platform as often in the future, or at all.

As our user base and the amount and types of information stored and shared on our platform continue to grow, we will need an increasing amount of technical infrastructure, including network capacity and computing power, to continue to satisfy the needs of our users. Further, as we continue to grow and scale our business to meet the needs of our users, we may overestimate or underestimate our infrastructure capacity requirements, which could adversely affect our results of operations. We continuously evaluate our short- and long-term infrastructure capacity requirements to ensure adequate capacity for new and existing users while minimizing unnecessary excess capacity costs. If we overestimate the demand for our platform and therefore secure excess infrastructure capacity, our operating margins could be reduced. If we underestimate our infrastructure capacity requirements, we may not be able to service the expanding needs of new and existing users, and our hosting facilities, network, or systems may fail. In some cases, our contracts with our customers stipulate a minimum uptime availability of our platform, and to the extent we do not meet these obligations, we may be subject to contractual claims from our customers. If any of these events occur, our reputation, business, and financial condition would be harmed.

If we fail to offer high quality customer support, our business and reputation could suffer.

Our customers rely on our customer support teams to resolve technical and operational issues if and when they arise. We may be unable to respond quickly enough to accommodate short-term increases in customer demand for customer support. We also may be unable to modify the nature, scope, and delivery of our customer support to compete with changes in customer support services provided by our competitors. Increased customer demand for customer support, without corresponding revenue, could increase costs and harm our results of operations. In addition, as we continue to grow our operations and reach a global and vast customer base, we need to be able to provide efficient customer support that meets our customers’ needs globally at scale. The number of our customers has grown significantly, and that will put additional pressure on our support organization. As our business scales, we may need to engage third party customer support service providers, which could negatively impact the quality of our customer support if such third parties are unable to provide customer support that is as effective as that we provide ourselves. Our sales are highly dependent on our business reputation and on positive recommendations from our existing customers. Accordingly, high quality customer support is important for the renewal and expansion of our agreements with existing customers and any failure to maintain such standards of customer support, or a market perception that we do not maintain high quality customer support, could harm our reputation, our ability to sell product to existing and prospective customers, and our business, results of operations, and financial condition.

We invest significantly in research and development, and to the extent our research and development investments do not translate into new solutions or material enhancements to our current solutions, or if we do not use those investments efficiently, our business and results of operations would be harmed.

A key element of our strategy is to invest significantly in our research and development efforts to develop new solutions and rapidly introduce new technologies, features and functionality our existing solutions. For the years ended December 31, 2016 and 2017, our research and development expenses were 11.7% and 14.0% of our revenue, respectively, and during the nine months ended September 30, 2017 and 2018, our research and development expenses were 14.0% and 15.8% of our revenue, respectively. If we do not spend our research and development budget efficiently or effectively on compelling innovation and technologies, our business may be harmed and we may not realize the expected benefits of our strategy. Moreover, research and development projects can be technically challenging and expensive. The nature of these research and development cycles may cause us to experience delays between the time we incur expenses associated with research and development and the time we are able to offer compelling solutions and generate revenue, if any, from such investment. Additionally, anticipated customer demand for a solution or solutions we are developing could decrease after the development cycle has commenced, and we would nonetheless be unable to avoid substantial costs associated with the development of any such solutions or solution. If we expend a significant amount of resources on research and development and our efforts do not lead to the successful introduction or improvement of solutions that are competitive in our current or future markets, it would harm our business and results of operations.

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Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our ability to expand our number of customers will be impaired and our business, results of operations, and financial condition will be harmed.

We believe that our brand identity and awareness have significantly contributed to our success and have helped fuel our efficient go-to-market model. We also believe that maintaining and enhancing the Qualtrics brand is critical to expanding our number of customers. We anticipate that, as our market becomes increasingly competitive, maintaining and enhancing our brand may become increasingly difficult and expensive. Any unfavorable publicity or consumer perception of our XM^™ Platform, or a competitor’s platform in the experience management software category generally, could adversely affect our reputation and our ability to attract and retain customers on our platform, and diminish customer interest in the experience management market generally. Additionally, if we fail to promote and maintain the Qualtrics brand, or if we incur excessive expenses in this effort, our business, results of operations, and financial condition will be materially and adversely affected.

Failure to effectively expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our platform.

Our ability to broaden our customer base, particularly our business customer base, and achieve broader market acceptance of our platform will depend to a significant extent on the ability of our sales and marketing organizations to work together to drive our sales pipeline and cultivate customer and partner relationships to drive revenue growth. We have invested in and plan to continue to invest aggressively to expand our sales and marketing organizations, both domestically and internationally. Identifying, recruiting, and training sales personnel will require significant time, expense, and attention. We also plan to dedicate significant resources to sales and marketing programs, including user conferences (such as our annual X4 Summit), online advertising, webinars, blogs, corporate communications, white papers, and case studies. In addition, we have developed go-to-market partnerships with a number of key technology, system integrator, and consultant and content partners. If we are unable to recruit, hire, develop, and retain talented sales or marketing personnel, if our new sales or marketing personnel and partners are unable to achieve desired productivity levels in a reasonable period of time, or if our sales and marketing programs are not effective, our ability to broaden our customer base and achieve broader market acceptance of our platform could be harmed. In addition, the investments we make in our sales and marketing organization will occur in advance of experiencing benefits from such investments, making it difficult to determine in a timely manner if we are efficiently allocating our resources in these areas.

We rely on the performance of highly skilled personnel, including our management and other key employees, and the loss of one or more of such personnel, or of a significant number of our team members, could harm our business.

Our success and future growth depend upon the continued services of our management team and other key employees. In particular, Ryan Smith, our Chief Executive Officer and one of our co-founders, is critical to our vision, strategic direction, culture, and offerings. From time to time, there may be changes in our management team resulting from the hiring or departure of executives and key employees, which could disrupt our business. We also are dependent on the continued service of our existing employees because of the complexity of our solutions. Our senior management and key employees are employed on an at-will basis. We may terminate any employee’s employment at any time, with or without cause, and any employee may resign at any time, with or without cause. The loss of one or more of our senior management or other key employees could harm our business, and we may not be able to find adequate replacements. We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees. In particular, recruiting and hiring senior product engineering personnel has been, and we expect to continue to be, challenging given the intense competition in the software industry for skilled product engineering talent. In addition, as our business grows and scales, including internationally, we will need to continue to find and attract talented experience managers both in the United States and internationally. If we are unable to hire talented personnel, we may be unable to scale our operations or release new products in a timely fashion and, as a result, customer satisfaction with our products may decline. Additionally, many of our employees and members of our management team may receive significant proceeds from sales of our equity in the public markets after this offering, which may reduce their motivation to continue to work for us.

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If we are unable to develop and maintain successful relationships with certain partners, our business, results of operations, and financial condition could be harmed.

In addition to our sales force, we work with certain strategic partners to help grow and develop our sales and distribution channels and implement our XM^™ Platform. We believe that continued growth in our business is dependent upon identifying, developing, and maintaining strategic relationships with our existing and potential partners that can drive substantial revenue and provide additional solutions to our customers. We engage certain partners to generate customer acquisition opportunities, and certain other partners to implement our XM^™ Platform with our existing customers. We do not yet have sufficient data or feedback regarding the effectiveness of these partnerships. If the delivery partners are unable to successfully implement our platform with existing customers, or if we are unable to develop and maintain successful relationships with these partners, our business, results of operations, and financial condition could be harmed.

Our sales cycle with enterprise, government, and international customers can be long and unpredictable.

The timing of our sales with our enterprise, government, and international customers and related revenue recognition is difficult to predict because of the length and unpredictability of the sales cycle for these customers. We sell to United States federal, state and local, as well as foreign, governmental agency customers, and government demand and payment for our offerings are affected by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our offerings. We are often required to spend significant time and resources to better educate and familiarize these potential customers with the value proposition of paying for our solutions. The length of our sales cycle for these customers, from initial evaluation to payment for our offerings is generally more than the six months for other customers, and can vary substantially from customer to customer, and thus it is difficult to predict whether and when a sale will be completed.

Our ability to sell subscriptions to our platform could be harmed by real or perceived material defects or errors in our platform.

The software technology underlying our XM^™ Platform is inherently complex and may contain material defects or errors, particularly when first introduced or when new features or capabilities are released. We have from time to time found defects or errors in our platform, and new defects or errors in our existing platform or new software may be detected in the future by us or our users. There can be no assurance that our existing platform and new software will not contain defects. Any real or perceived errors, failures, vulnerabilities, or bugs in our platform could result in negative publicity or lead to data security, access, retention, or other performance issues, all of which could harm our business. The costs incurred in correcting such defects or errors may be substantial and could harm our results of operations and financial condition. Moreover, the harm to our reputation and legal liability related to such defects or errors may be substantial and could harm our business, results of operations, and financial condition.

We also utilize hardware purchased or leased and software and services licensed from third parties to host and provide security over our platform. Any defects in, or unavailability of, our or third party software, services, or hardware that cause interruptions to the availability of our platform, loss of data, or performance issues could, among other things:

• cause a reduction in revenue or delay in market acceptance of our platform;

• require us to issue refunds to our users or expose us to claims for damages;

• cause us to lose existing users and make it more difficult to attract new users;

• divert our development resources or require us to make extensive changes to our platform, which would increase our expenses;

• increase our technical support costs; and

• harm our reputation and brand.

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If we cannot maintain our company culture as we grow, we could lose the innovation, teamwork, passion, and focus on execution that we believe contribute to our success and our business may be harmed.

We believe that a critical component to our success has been our company culture. Our company is aligned behind our culture and key values and we have invested substantial time and resources in building our team within this company culture. Additionally, as we grow and develop the infrastructure of a public company, or acquire other companies, we may find it difficult to maintain these important aspects of our company culture. Any failure to preserve our culture could harm our future success, including our ability to retain and recruit personnel, innovate and operate effectively, and execute on our business strategy.

We are continuing to expand our operations outside the United States, where we may be subject to increased business and economic risks that could impact our results of operations.

A key focus of our company is to continue to penetrate unaddressed global markets. In order to do so, we use a hub-and-spoke sales model, comprised of a centralized inside-sales team surrounded by regional direct sales efforts. We have invested significant effort to building and optimizing our international growth. For the nine months ended September 30, 2018, 23% of our revenue is from international markets, and we have recently invested in offices in nine countries. We expect to continue to expand our international operations, which may include opening additional offices in new jurisdictions and providing our XM^™ Platform in additional languages. Any new markets or countries into which we attempt to sell subscriptions to our platform may not be receptive. For example, we may not be able to expand further in some markets if we are not able to satisfy certain government- and industry-specific requirements. If we are not successful in converting our investments in international expansion to additional revenue, our business and results of operations may be harmed. In addition, our ability to manage our business and conduct our operations internationally requires considerable management attention and resources and is subject to the particular challenges of supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal and regulatory systems, alternative dispute systems, and commercial markets. International expansion has required, and will continue to require, investment of significant funds and other resources. Operating internationally subjects us to new risks and may increase risks that we currently face, including risks associated with:

• recruiting and retaining talented and capable employees outside the United States and maintaining our company culture across all of our offices;

• providing our platform and operating our business across a significant distance, in different languages and among different cultures, including the potential need to modify our platform and features to ensure that they are culturally appropriate and relevant in different countries;

• compliance with applicable international laws and regulations, including laws and regulations with respect to privacy, data protection, consumer protection, and unsolicited email, and the risk of penalties to our users and individual members of management or employees if our practices are deemed to be out of compliance;

• management of an employee base in jurisdictions that may not give us the same employment and retention flexibility as does the United States;

• operating in jurisdictions that do not protect intellectual property rights to the same extent as does the United States;

• compliance by us and our business partners with anti-corruption laws, import and export control laws, tariffs, trade barriers, economic sanctions, and other regulatory limitations on our ability to provide our platform in certain international markets;

• foreign exchange controls that might require significant lead time in setting up operations in certain geographic territories and might prevent us from repatriating cash earned outside the United States;

• political and economic instability;

• double taxation of our international earnings and potentially adverse tax consequences due to changes in the income and other tax laws of the United States or the international jurisdictions in which we operate; and

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• higher costs of doing business internationally, including increased accounting, travel, infrastructure, and legal compliance costs.

Compliance with laws and regulations applicable to our global operations substantially increases our cost of doing business in international jurisdictions. We may be unable to keep current with changes in laws and regulations as they change. Although we have implemented policies and procedures designed to support compliance with these laws and regulations, there can be no assurance that we will always maintain compliance or that all of our employees, contractors, partners, and agents will comply. Any violations could result in enforcement actions, fines, civil and criminal penalties, damages, injunctions, or reputational harm. If we are unable to comply with these laws and regulations or manage the complexity of our global operations successfully, our business, results of operations, and financial condition could be adversely affected.

We may acquire other companies or technologies which could divert our management’s attention, result in additional dilution to our stockholders, and otherwise disrupt our operations and harm our results of operations.

As we have in the past, we may in the future seek to acquire or invest in businesses, people, or technologies that we believe could complement, expand, or enhance our platform or otherwise offer growth opportunities. The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating, and pursuing suitable acquisitions, whether or not they are ultimately consummated.

Any integration process may result in unforeseen operating difficulties and require significant time and resources and, we may not be able to integrate the acquired personnel, operations, and technologies successfully or effectively manage the combined business in connection with any future acquisition. Our prior acquisitions have been relatively small, and thus we are relatively inexperienced in effectively implementing an integration process. We may also not achieve the anticipated benefits from the acquired business due to a number of factors, including, among others:

• costs or liabilities associated with the acquisition;

• diversion of management’s attention from other business concerns;

• inability to integrate or benefit from acquired content, technologies, or solutions in a profitable manner;

• harm to our existing relationships with customers and partners as a result of the acquisition;

• difficulty integrating the accounting systems, operations, and personnel of the acquired business;

• difficulty converting the customers of the acquired business onto our platform and contract terms;

• the potential loss of key employees;

• use of resources that are needed in other parts of our business; and

• the use of substantial portions of our available cash or equity to consummate the acquisition.

In the future, if our acquisitions do not yield expected returns, we may be required to take charges for the write-down or impairment of amounts related to goodwill and acquired intangible assets, which could negatively impact our results of operations. We may issue additional equity securities in connection with any future acquisitions that would dilute our existing stockholders, use cash that we may need in the future to operate our business, incur debt on terms unfavorable to us or that we are unable to pay, incur large charges or substantial liabilities, and become subject to adverse tax consequences, substantial depreciation, or deferred compensation charges. These challenges could adversely affect our business, financial conditions, results of operations, and prospects.

Privacy, data protection, and information security concerns, and data collection and transfer restrictions and related domestic or foreign regulations, may limit the use and adoption of our platform and adversely affect our business.

Use of our XM^™ Platform involves the storage, transmission, and processing of data from our customers and their employees or other personnel, including certain personal or individually identifying information. Personal privacy, information security, and data protection are significant issues in the United States, Europe, and many other jurisdictions

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where we offer our platform. The regulatory framework governing the collection, processing, storage, and use of business information, particularly information that includes personal data, is rapidly evolving and any failure or perceived failure to comply with applicable privacy, security, or data protection laws, regulations and/or contractual obligations may adversely affect our business.

The United States federal and various state and foreign governments have adopted or proposed requirements regarding the collection, distribution, use, security, and storage of personally identifiable information and other data relating to individuals, and federal and state consumer protection laws are being applied to enforce regulations related to the online collection, use, and dissemination of data. Some of these requirements include obligations of companies to notify individuals of security breaches involving particular personal information, which could result from breaches experienced by us or by our vendors, contractors, or organizations with which we have formed strategic relationships. Even though we may have contractual protections with such vendors, contractors, or other organizations, notifications and follow-up actions related to a security breach could impact our reputation, cause us to incur significant costs, including legal expenses, harm customer confidence, hurt our expansion into new markets, cause us to incur remediation costs, or cause us to lose existing customers.

Further, many foreign countries and governmental bodies, including the European Union, or EU, where we conduct business, have laws and regulations concerning the collection and use of personal data obtained from their residents or by businesses operating within their jurisdictions. These laws and regulations often are more restrictive than those in the United States. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure, and security of data that identifies or may be used to identify or locate an individual, such as names, email addresses and, in some jurisdictions, Internet Protocol, or IP, addresses. With regard to transfers of personal data from our European employees and customers to the United States, we historically relied on our adherence to the United States Department of Commerce’s Safe Harbor Privacy Principles and compliance with the EU-U.S. and Swiss-U.S. Safe Harbor Frameworks as agreed to and set forth by the United States Department of Commerce, the EU, and Switzerland, which established means for legitimizing the transfer of personal data by companies doing business in Europe from the EU and Switzerland to the United States. The EU-U.S. Safe Harbor Framework was deemed an invalid method of compliance with EU restrictions on data transfers in a ruling by the Court of Justice of the European Union in October 2015. We have since taken certain measures to legitimize our transfers of personal data, both internally and on behalf of our customers, from the EU and Switzerland to the United States. These frameworks were established by EU, Swiss, and U.S. authorities to provide mechanisms for companies to transfer EU and Swiss personal data to the United States. It is unclear at this time whether the EU-U.S. or Swiss-U.S. Privacy Shield Frameworks will serve as an appropriate means for us to transfer personal data from the EU or Switzerland to the United States. However, this Framework is under review and there is currently litigation challenging other EU mechanisms for adequate data transfers (i.e., the standard contractual clauses), as well as a call by the EU parliament for the suspension of the Framework as it relates to the U.S. It is uncertain whether the standard contractual clauses will be similarly invalidated by the European courts. We will be impacted by this change in law as a result of a future review of these transfer mechanisms by European regulators, as well as current challenges to these mechanisms in the European courts.

International privacy and data security regulations may become more complex and have greater consequences. For instance, as of May 25, 2018, the General Data Protection Regulation, or GDPR, has replaced the Data Protection Directive with respect to the collection and use of personal data of data subjects in the EU. The GDPR applies extra territorially and imposes several stringent requirements for controllers and processors of personal data, including, for example, higher standards for obtaining consent from individuals to process their personal data, more robust disclosures to individuals and a strengthened individual data rights regime, shortened timelines for data breach notifications, limitations on retention of information, increased requirements pertaining to special categories of personal data and pseudonymised (i.e., key-coded) data and additional obligations when we contract third party processors in connection with the processing of the personal data. The GDPR provides that EU member states may make their own further laws and regulations limiting the (i) processing of personal data, including special categories of special data (e.g., racial or ethnic origin, political opinions, religious or philosophical beliefs), and (ii) profiling and automated individual decision-making of individual; which could limit our ability to use and share personal data or other data and could cause our costs to increase, and harm our business and financial condition. Noncompliance with the GDPR can trigger steep fines of up to €20 million or 4% of global annual revenue, whichever is higher. Separate EU laws and regulations (and member states’ implementations thereof) govern the protection of consumers and of electronic communications.

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Further, as the GDPR has recently come into effect, enforcement priorities and interpretation of certain provisions are still unclear. To comply with the new data protection rules imposed by GDPR we may be required to put in place additional mechanisms ensuring compliance and other substantial expenditures. This may be onerous and adversely affect our business, financial condition, results of operations, and prospects.

The implementation of the GDPR has led other jurisdictions to amend, or propose legislation to amend, their existing data protection laws to align with the requirements of the GDPR with the aim of obtaining an adequate level of data protection to facilitate the transfer of personal data from the EU. Accordingly, the challenges we face in the EU will likely also apply to other jurisdictions outside the EU that adopt laws similar in construction to the GDPR or regulatory frameworks of equivalent complexity. For example, in 2018, the State of California adopted the California Consumer Privacy Act of 2018, or the CCPA.

The CCPA has been characterized as the first “GDPR-like” privacy statute to be enacted in the United States because it mirrors a number of the key provisions of the GDPR. The CCPA establishes a new privacy framework for covered businesses by creating an expanded definition of personal information, establishing new data privacy rights for consumers in the State of California, imposing special rules on the collection of consumer data from minors, and creating a new and potentially severe statutory damages framework for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches. As currently enacted, we and our customers will be required to comply with these requirements before the CCPA becomes effective on January 1, 2020.

These new requirements could reduce demand for our XM^™ Platform, increase our costs, impair our ability to grow our business, or restrict our ability to store and process data or, in some cases, impact our ability to offer our platform in some locations and may subject us to liability. Further, in view of new or modified federal, state, or foreign laws and regulations, industry standards, contractual obligations, and other legal obligations, or any changes in their interpretation, we may find it necessary or desirable to fundamentally change our business activities and practices or to expend significant resources to modify our platform and otherwise adapt to these changes. We may be unable to make such changes and modifications in a commercially reasonable manner, or at all, and our ability to develop new content and features could be limited. Further, failure to comply with the GDPR, the CCPA and other countries’ privacy or data security-related laws, rules or regulations could result in material penalties imposed by regulators, affect our compliance with client contracts and have an adverse effect on our business, financial condition, and results of operations.

Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand.

Our success and ability to compete depends in part upon our intellectual property and other proprietary rights. We primarily rely on a combination of patent, copyright, trade secret and trademark laws, trade secret protection and confidentiality or license agreements with our employees, customers, partners and others to protect our intellectual property rights. However, the steps we take to protect our intellectual property rights may be insufficient, and our intellectual property may still be challenged, invalidated, or subject to other attacks from competitors or former employees, and we cannot guarantee that any of our pending applications will be approved or that our existing and future intellectual property rights will be sufficiently broad to protect our proprietary technology. For example, competitors may try to use brand names confusingly similar to ours for similar services in order to benefit from our brand’s value. Others, including our competitors, may independently develop similar technology, duplicate our services or design around our intellectual property and, in such cases, we may not be able assert our intellectual property rights against such parties. Further, our contractual arrangements may not effectively prevent disclosure of our confidential information or provide an adequate remedy in the event of unauthorized disclosure of our confidential information, and we may be unable to detect the unauthorized use of, or take appropriate steps to enforce, our intellectual property rights.

We hold a number of patents and patent applications in the United States and a number of international patent applications that we may use to pursue patents and patent applications in other foreign jurisdictions. We make business decisions about when to seek patent protection for a particular technology and when to rely upon trade secret protection, and the approach we select may ultimately prove to be inadequate. Even in cases where we seek patent protection, there is no assurance that the resulting patents will effectively protect every significant feature of our solutions, technology,

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or proprietary information, or provide us with any competitive advantages. Moreover, we cannot guarantee that any of our pending patent applications will issue or be approved. The United States Patent and Trademark Office, or the USPTO, and various foreign governmental patent agencies also require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process and after a patent has issued. There are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If this occurs, our competitors might be able to enter the market, which would have a material adverse effect on our business. In addition, we believe that the protection of our trademark rights is an important factor in platform recognition, protecting our brand, and maintaining goodwill. If we do not adequately protect our rights in our trademarks from infringement, any goodwill that we have developed in those trademarks could be lost or impaired, which could harm our brand and our business. Furthermore, we may not always detect infringement of our intellectual property rights, and any infringement of our intellectual property rights, even if successfully detected, prosecuted and enjoined, could be costly to deal with and could harm our business. In any event, in order to protect our intellectual property rights, we may be required to spend significant resources to monitor and protect these rights. We cannot assure you that our monitoring efforts will detect every infringement of our intellectual property rights by a third party. Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets.

Effective trademark, copyright, patent, and trade secret protection may not be available in every country in which we conduct business. In addition, many foreign countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Further, intellectual property law, including statutory and case law, particularly in the United States, is constantly developing, and any changes in the law could make it harder for us to enforce our rights.

Litigation brought to protect and enforce our intellectual property rights, has been in the past, and could be in the future, costly, time consuming and distracting to management. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and counter-suits attacking the validity and enforceability of our intellectual property rights, which could result in the impairment or loss of portions of our intellectual property rights. An adverse determination of any litigation proceedings could put our intellectual property at risk of being invalidated or interpreted narrowly and could put our related pending patent applications at risk of not issuing. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential or sensitive information could be compromised by disclosure in the event of litigation. In addition, during the course of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Our failure to secure, protect, and enforce our intellectual property rights could delay further implementation of our platform, impair functionality of our platform, delay introductions of new products and services, result in our substituting inferior or more costly technologies into our platform or harm our brand and our business. Further, we may not always detect infringement of our intellectual property rights, and defending our intellectual property rights, even if successfully detected, prosecuted, enjoined, or remedied, could result in the expenditure of significant financial and managerial resources.

Moreover, a portion of our intellectual property has been acquired from one or more third parties. While we have conducted diligence with respect to such acquisitions, because we did not participate in the development or prosecution of much of the acquired intellectual property, we cannot guarantee that our diligence efforts identified and/or remedied all issues related to such intellectual property, including potential ownership errors, potential errors during prosecution of such intellectual property, and potential encumbrances that could limit our ability to enforce such intellectual property rights.

We may be sued by third parties for alleged infringement or misappropriation of their proprietary rights.

There is considerable patent and other intellectual property development activity in our industry. Our future success depends in part on not infringing upon or misappropriating the intellectual property rights of others. From time to time, our competitors or other third parties have claimed in the past, and may claim in the future, that we are infringing upon or misappropriating their intellectual property rights, and we may be found to be infringing upon or misappropriating such rights. We may not be successful in defending against any such challenges, securing settlements, or obtaining licenses to avoid or resolve any intellectual property disputes.

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In a patent infringement claim against us, we may assert, as a defense, that we do not infringe the relevant patent claims, that the patent is invalid, or both. The strength of our defenses will depend on the patents asserted, the interpretation of these patents, and our ability to invalidate the asserted patents. However, we could be unsuccessful in advancing non-infringement and/or invalidity arguments in our defense. In the United States, issued patents enjoy a presumption of validity, and the party challenging the validity of a patent claim must present clear and convincing evidence of invalidity, which is a high burden of proof. Conversely, the patent owner need only prove infringement by a preponderance of the evidence, which is a lower burden of proof. We may be unaware of the intellectual property rights of others that may cover some or all of our technology, or technology that we obtain from third parties. Because patent applications can take years to issue and are often afforded confidentiality for some period of time there may currently be pending applications, unknown to us, that later result in issued patents that could cover one or more of our products. Any claims or litigation (with or without merit) could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our solutions or using certain technologies, require us to implement expensive work-arounds, or require that we comply with other unfavorable terms. In the case of infringement or misappropriation caused by technology that we obtain from third parties, any indemnification or other contractual protections we obtain from such third parties, if any, may be insufficient to cover the liabilities we incur as a result of such infringement or misappropriation. We may also be obligated to indemnify our customers or business partners in connection with any such litigation and to obtain licenses, modify our solutions, or refund fees, which could further exhaust our resources. In addition, we may incur substantial costs to resolve claims or litigation, whether or not successfully asserted against us, which could include payment of significant settlement, royalty, or license fees, modification of our solutions or refunds to customers of fees, which would negatively impact our financial performance. Even if we were to prevail in the event of claims or litigation against us, any claim or litigation regarding our intellectual property could be costly and time-consuming and divert the attention of our management and other employees from our business operations and disrupt our business or harm our brand and reputation.

Moreover, our intellectual property acquired from one or more third parties may have previously been the subject of one or more intellectual property infringement suits and/or allegations. While we have conducted diligence with respect to such acquisitions, we cannot guarantee that our diligence efforts identified and/or remedied all issues related to such intellectual property infringement suits and/or allegations. Moreover, we cannot guarantee that we understand and/or have complied with all obligations related to the settlement of such intellectual property suits and/or the resolution of such intellectual property allegations.

We use open source software in our platform that may subject our platform to general release or require us to re-engineer our platform, which may harm our business.

We use open source software in our XM^™ Platform and expect to continue to use open source software in our platform in the future. There are uncertainties regarding the proper interpretation of and compliance with open source software licenses. Moreover, we cannot assure you that our processes for controlling our use of open source software in our XM^™ Platform have been or will be effective. Consequently, any of these circumstances could result in reputational harm and harm to our business and results of operations. In addition, if the license terms for the open source software we utilize change, we may be forced to re-engineer our platform or incur additional costs to comply with the changed license terms or to replace the affected open source software. Although we have implemented policies and tools to regulate the use and incorporation of open source software into our XM^™ Platform, we cannot be certain that we have not incorporated open source software in our platform in a manner that is inconsistent with such policies.

Responding to any infringement claim, regardless of its validity, or discovering open source software code in our platform could harm our business, operating results, and financial condition, by, among other things:

• resulting in time-consuming and costly litigation;

• diverting management’s time and attention from developing our business;

• requiring us to pay monetary damages or enter into royalty and licensing agreements that we would not normally find acceptable;

• causing delays in the deployment of our platform;

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• requiring us to stop selling certain of our platform;

• requiring us to redesign certain components of our platform using alternative non-infringing or non-open source technology or practices, which could require significant effort and expense;

• requiring us to disclose our software source code, the detailed program commands for our software; and

• requiring us to satisfy indemnification obligations to our customers.

Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.

Our agreements with customers and other third parties may include indemnification or other provisions under which we agree to indemnify or otherwise be liable to them for losses suffered or incurred as a result of claims of intellectual property infringement, damages caused by us to property or persons, or other liabilities relating to or arising from our solutions or other acts or omissions. The term of these contractual provisions often survives termination or expiration of the applicable agreement. Large indemnity payments or damage claims from contractual breach could harm our business, results of operations and financial condition. Although we normally contractually limit our liability with respect to such obligations, we may still incur substantial liability related to them. Any dispute with a customer with respect to such obligations could have adverse effects on our relationship with that customer and other current and prospective customers, reduce demand for our solutions, and harm our business, results of operations, and financial condition.

Our business is subject to a variety of United States and international laws that could subject us to claims, increase the cost of operations, or otherwise harm our business due to changes in the laws, changes in the interpretations of the laws, greater enforcement of the laws, or investigations into compliance with the laws.

Our business is subject to regulation by various federal, state, local, and foreign governmental agencies, including agencies responsible for monitoring and enforcing copyright laws, employment and labor laws, workplace safety, consumer protection laws, privacy and data protection laws, anti-bribery laws, import and export controls, federal securities laws, and tax laws and regulations. In certain foreign jurisdictions, these regulatory requirements may be more stringent than those in the United States. These laws and regulations are subject to change over time and thus we must continue to monitor and dedicate resources to ensure continued compliance. Non-compliance with applicable regulations or requirements could subject us to investigations, sanctions, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties, or injunctions. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, operating results, and financial condition could be materially adversely affected. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees. Enforcement actions and sanctions could harm our business, operating results, and financial condition.

We are also subject to consumer protection laws that may impact our sales and marketing efforts, including laws related to subscriptions, billing, and auto-renewal. These laws, as well as any changes in these laws, could make it more difficult for us to retain existing customers and attract new ones.

We are subject to governmental export and import controls, economic sanctions, and anti-corruption laws and regulations that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws.

Our business activities are subject to various restrictions under United States export and similar laws and regulations, including the United States Department of Commerce’s Export Administration Regulations, or the EAR, and various economic and trade sanctions regulations administered by the United States Treasury Department’s Office of Foreign Assets Controls, or OFAC. The United States export control laws and United States economic sanctions laws include restrictions or prohibitions on the sale or supply of certain products and services to United States embargoed or sanctioned countries, governments, persons and entities. In addition, various countries regulate the import of certain technology and have enacted or could enact laws that could limit our ability to provide our customers access to our XM^™ Platform or could limit our customers’ ability to access or use our platform in those countries.

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Although we take precautions to prevent our platform from being provided in violation of such laws, we may have provided services to some customers in apparent violation of U.S. economic sanction laws. In addition, we may have exported software to some customers prior to submitting filings to the U.S. Department of Commerce’s Bureau of Industry and Security, or BIS, as required by the EAR. As a result, we have submitted to OFAC and to BIS initial notifications of voluntary self-disclosure concerning potential violations. If we are found to be in violation of U.S. economic sanctions or export control laws, it could result in substantial fines and penalties for us and for the individuals working for us. We may also be adversely affected through other penalties, reputational harm, loss of access to certain markets, or otherwise.

In addition, various countries regulate the import and export of certain encryption and other technology, including import and export permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our platform or could limit our users’ ability to access our platform in those countries. Changes in our XM^™ Platform, or future changes in export and import regulations may prevent our users with international operations from utilizing our platform globally or, in some cases, prevent the export or import of our platform to certain countries, governments, or persons altogether. Any change in export or import regulations, economic sanctions, or related legislation, or change in the countries, governments, persons, or technologies targeted by such regulations, could result in decreased use of our platform by, or in our decreased ability to export or sell subscriptions to our platform to, existing or potential users with international operations. Any decreased use of our platform or limitation on our ability to export or sell our platform would likely adversely affect our business, results of operations, and financial results.

We are also subject to various domestic and international anti-corruption laws, such as the United States Foreign Corrupt Practices Act and the U.K. Bribery Act, as well as other similar anti-bribery and anti-kickback laws and regulations. These laws and regulations generally prohibit companies and their employees and intermediaries from authorizing, offering, providing, and accepting improper payments or benefits for improper purposes. These laws also require that we keep accurate books and records and maintain compliance procedures designed to prevent any such actions. Although we take precautions to prevent violations of these laws, our exposure for violating these laws increases as our international presence expands and as we increase sales and operations in foreign jurisdictions.

Our quarterly and annual results of operations may vary and may be difficult to predict. If we fail to meet the expectations of investors or securities analysts, our stock price and the value of your investment could decline.

Our quarterly and annual billings, revenue, and results of operations have fluctuated in the past and may vary in the future due to a variety of factors, many of which are outside of our control. Our financial results in any one quarter should not be relied upon as indicative of future performance. We may not be able to accurately predict our future billings, revenue, or results of operations. Factors that may cause fluctuations in our quarterly results of operations include, but are not limited to, those listed below:

• fluctuations in the demand for our platform, and the timing of sales;

• our ability to attract new customers or retain existing customers;

• the budgeting cycles and internal purchasing priorities of our customers;

• the payment terms and subscription term length associated with our platform sales and their effect on our billings and free cash flow;

• our ability to anticipate or respond to changes in the competitive landscape, including consolidation among competitors;

• the timing of expenses and recognition of revenue;

• the timing of our recognition of stock-based compensation expense for our equity awards, particularly in cases where awards covering a large number of our shares are tied to a specific event or date, such as the performance condition on many of our awards that will be satisfied upon the effectiveness of this offering and recognized in the period in which this offering occurs;

• the amount and timing of operating expenses related to the maintenance and expansion of our business,

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operations, and infrastructure;

• the timing and success of new product features and solutions by us or our competitors;

• actual or perceived security breaches;

• changes in laws and regulations that impact our business; and

• general economic and market conditions.

If our billings, revenue, or results of operations fall below the expectations of investors or securities analysts in a particular quarter, or below any guidance that we may provide, the price of our Class B common stock could decline.

As an example of these risks, we note that as of September 30, 2018, we had outstanding restricted stock awards covering 1.0 million shares and outstanding restricted stock unit awards covering 7.1 million shares that are scheduled to vest upon the effectiveness of this offering, when the performance condition in such awards will be satisfied. If the performance condition had been satisfied with respect to these awards on September 30, 2018, we would have recorded $99.8 million of stock-based compensation expense in the three months ended September 30, 2018. Accordingly, in the period during which we complete this offering, we will record this large stock based compensation charge, which will result in a period-over-period decrease in our profitability as calculated under GAAP, for a reason that we believe is unrelated to the underlying performance of our business. It is for this and similar reasons that we note for investors that our quarterly and annual financial results may fluctuate due to factors identified above and we do not believe that our financial results in any one quarter or any other period should be relied upon by investors as indicative of our future financial performance.

We do not have the history with our subscription or pricing models that we need to accurately predict optimal pricing necessary to attract new customers and retain existing customers.

We have limited experience with respect to determining the optimal prices for our solutions and, as a result, we have in the past and expect in the future that we will need to change our pricing model from time to time. As the market for our solutions matures, or as competitors introduce new solutions that compete with ours, we may be unable to attract new customers at the same price or based on the same pricing models as we have used historically. We provide our software on a subscription basis priced on the number of solutions and level of functionality required by customers and the number of users and level of interactions through our software, and therefore, pricing decisions may also impact the mix of adoption among our subscription plans and negatively impact our overall revenue. Further, pricing pressures and increased competition generally could result in reduced sales, reduced margins, losses, or the failure of our products to achieve or maintain more widespread market acceptance, any of which could harm our business, results of operations, and financial condition. For example, in the fourth quarter of 2017, we revised our pricing model, and we are still evaluating the impact of that recent change on our business. As a result, in the future we may be required to reduce our prices or develop new pricing models, which could adversely affect our revenue, gross margin, profitability, financial position, and cash flow.

Interruptions or delays in service from our data center facilities could impair the delivery of our platform and harm our business.

We currently serve our customers both from our data center facilities in the United States and Canada, and from third party data center facilities located in Australia, Germany, and the United States. Any damage to, or failure of, our systems generally could result in interruptions in our XM^™ Platform. As we continue to add new data centers, add capacity in our existing data centers and transition existing data centers from a managed service hosting model to a co-location model, we may move or transfer our data and our customers’ data. Despite precautions taken during this process, any unsuccessful data transfers may impair the use of our platform. Any damage to, or failure of, our platform, or those of our third party data centers, could result in interruptions in use of our platform. Impairment of or interruptions in customers accessing our platform may reduce our revenue, cause us to issue credits or pay penalties, subject us to claims and litigation, cause our customers to terminate their subscriptions and adversely affect our renewal rates and our ability to attract new customers. We have experienced interruptions and delays in service in the past and we may experience interruptions and delays in service in the future. Our business will also be harmed if our customers and

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potential customers believe our XM^™ Platform is unreliable.

We do not control, or in some cases have limited control over, the operation of the data center facilities we use, and they are vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunications failures and similar events. They may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct, and to adverse events caused by operator error. We cannot rapidly switch to new data centers or move customers from one data center to another in the event of any adverse event. Despite precautions taken at these facilities, the occurrence of a natural disaster, an act of terrorism or other act of malfeasance, a decision to close the facilities without adequate notice or other unanticipated problems at these facilities could result in lengthy interruptions in accessing our platform and the loss of customer data.

Our transition from third party hosted data centers to our own managed co-location facilities is expensive and could impact our gross margins and our financial results.

We have made and will continue to make substantial investments in new equipment to support growth at our data centers and provide enhanced levels of service to our customers. We continue to transition certain of our data centers from a managed service hosting model, where a third party manages most aspects of our cloud operations, to a predominantly co-location model, where we will have more direct control over our hosting infrastructure and its operation. We anticipate that this transition will be expensive in the near term as we invest in new equipment and accelerate depreciation on certain assets from our co-located data centers and incur additional rent expenses as we complete this transition. We currently expect our planned transitions to be substantially complete by the end of 2018. If it takes longer than we expect to complete this transition, the impact on our operating results would likely exceed our initial expectations, particularly if the scope of the project grows and we deploy additional resources and hire additional personnel to complete the project. Additionally, to the extent that we are required to add data center capacity to accommodate customer demands, we may need to significantly increase the bandwidth, storage, power or other elements of our hosting operations, and the costs associated with adjustments to our data center architecture could also harm our margins and operating results.

We recognize revenue from subscriptions ratably over the term of our customer contracts, and as such our reported revenue and billings may differ significantly in a given period, and our revenue in any period may not be indicative of our financial health and future performance.

We recognize revenue from subscriptions ratably over the subscription term of the underlying customer contract, which is generally one year. Our billings are recorded upon invoicing for access to our XM^™ Platform, and thus a significant portion of the billings we report in each quarter are generated from customer agreements entered and invoiced during the period. As a result, much of the revenue we report each quarter is derived from contracts that we entered into with customers in prior periods. Consequently, a decline in new or renewed subscriptions in any quarter will not be fully reflected in revenue or other results of operations in that quarter but will negatively affect our revenue and other results of operations across future quarters. It is difficult for us to rapidly increase our revenue from additional billings in a given period. Any increases in the average term of subscriptions would result in revenue for those contracts being recognized over longer periods of time with little impact on our results of operations in the near term. Our Research on Demand revenue and professional services and other revenue is recognized upon completion of the performance or as the service is rendered. Accordingly, our revenue in any given period may not be an accurate indicator of our financial health and future performance.

If we fail to integrate our solutions with a variety of operating systems, software applications, platforms, and hardware that are developed by others, our solutions may become less marketable, less competitive, or obsolete and our results of operations would be harmed.

Our solutions must integrate with a variety of network, hardware, and software platforms, and we need to continuously modify and enhance our solutions to adapt to changes in hardware, software, networking, browser, and database technologies. In particular, we have developed our solutions to be able to easily integrate with third party SaaS applications, including the applications of software providers that compete with us, through the interaction of application programming interfaces, or APIs. In general, we rely on the fact that the providers of such software systems continue to allow us access to their APIs to enable these customer integrations. To date, we have not relied on a long-term written contract to govern our relationship with these providers. Instead, we are subject to the standard terms and conditions

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for application developers of such providers, which govern the distribution, operation, and fees of such software systems, and which are subject to change by such providers from time to time.

Our business could be adversely impacted by changes in internet access for our users or laws specifically governing the internet.

Our XM^™Platform depends on the quality of our users’ access to the internet. Certain features of our platform require significant bandwidth and fidelity to work effectively. Internet access is frequently provided by companies that have significant market power that could take actions that degrade, disrupt, or increase the cost of user access to our platform, which would negatively impact our business. We could incur greater operating expenses and our ability to acquire and retain customers could be negatively impacted if network operators:

• implement usage-based pricing;

• discount pricing for competitive products;

• otherwise materially change their pricing rates or schemes;

• charge us to deliver our traffic at certain levels or at all;

• throttle traffic based on its source or type;

• implement bandwidth caps or other usage restrictions; or

• otherwise try to monetize or control access to their networks.

In December 2017, the Federal Communications Commission announced it will revise the “net neutrality” rules. The rules were designed to ensure that all online content is treated the same by internet service providers and other companies that provide broadband services. Should the net neutrality rules be relaxed or eliminated, we could incur greater operating expenses, which could harm our results of operations.

As the internet continues to experience growth in the number of users, frequency of use, and amount of data transmitted, the internet infrastructure that we and our users rely on may be unable to support the demands placed upon it. The failure of the internet infrastructure that we or our users rely on, even for a short period of time, could undermine our operations and harm our results of operations.

In addition, there are various laws and regulations that could impede the growth of the internet or other online services, and new laws and regulations may be adopted in the future. These laws and regulations could, in addition to limiting internet neutrality, involve taxation, tariffs, privacy, data protection, information security, content, copyrights, distribution, electronic contracts and other communications, consumer protection, and the characteristics and quality of services, any of which could decrease the demand for, or the usage of, our platform. Legislators and regulators may make legal and regulatory changes, or interpret and apply existing laws, in ways that require us to incur substantial costs, expose us to unanticipated civil or criminal liability, or cause us to change our business practices. These changes or increased costs could materially harm our business, results of operations, and financial condition.

Our international operations subject us to potentially adverse tax consequences.

We are subject to income taxes as well as non-income-based taxes, such as payroll, sales, use, value-added, property, and goods and services taxes, in both the United States and various foreign jurisdictions. Our domestic and international tax liabilities are subject to various jurisdictional rules regarding the timing and allocation of revenue and expenses. Additionally, the amount of income taxes paid is subject to our interpretation of applicable tax laws in the jurisdictions in which we file and to changes in tax laws. Significant judgment is required in determining our worldwide provision for income taxes and other tax liabilities. From time to time, we may be subject to income and non-income tax audits. While we believe we have complied with all applicable income tax laws, there can be no assurance that a governing tax authority will not have a different interpretation of the law and assess us with additional taxes. Should we be assessed with additional taxes, there could be a material adverse effect on our business, results of operations, and financial condition.

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Our future effective tax rate may be affected by such factors as changes in tax laws, regulations, or rates, changing interpretation of existing laws or regulations, the impact of accounting for equity-based compensation, the impact of accounting for business combinations, changes in our international organization, and changes in overall levels of income before tax. In addition, in the ordinary course of our global business, there are many intercompany transactions and calculations where the ultimate tax determination is uncertain. Although we believe that our tax estimates are reasonable, we cannot ensure that the final determination of tax audits or tax disputes will not be different from what is reflected in our historical income tax provisions and accruals.

We may have exposure to greater than anticipated tax liabilities and may be affected by changes in tax laws or interpretations, any of which could adversely impact our results of operations.

We are subject to income taxes in the United States and various jurisdictions outside of the United States. Our effective tax rate could fluctuate due to changes in the mix of earnings and losses in countries with differing statutory tax rates. Our tax expense could also be impacted by changes in non-deductible expenses, changes in excess tax benefits of equity-based compensation, changes in the valuation of deferred tax assets and liabilities and our ability to utilize them, the applicability of withholding taxes, effects from acquisitions, and the evaluation of new information that results in a change to a tax position taken in a prior period. A successful assertion by a country, state, or other jurisdiction that we have an income tax filing obligation could result in substantial tax liabilities for prior tax years.

Our tax position could also be impacted by changes in accounting principles, changes in United States federal, state, or international tax laws applicable to corporate multinationals, other fundamental law changes currently being considered by many countries, including the United States, and changes in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions. For example, on December 22, 2017, tax reform legislation referred to as the Tax Cuts and Jobs Act, or the Tax Act, was enacted in the United States. The Tax Act significantly revises United States federal income tax law, including by lowering the corporate income tax rate to 21%, limiting the deductibility of interest expense, imposing new limitations on utilizing net operating losses, or NOLs, created in tax years beginning after December 31, 2017, implementing a modified territorial tax system, and imposing a one-time repatriation tax on deemed repatriated earnings and profits of United States -owned foreign subsidiaries. While the Tax Act will result in a lower domestic corporate income tax rate, which could impact our effective tax rate, we currently do not expect the impact on our effective tax rate to be material. We have reflected the expected impact of the Tax Act in our financial statements in accordance with our understanding of the Tax Act and guidance available as of the date of this prospectus. However, many consequences of the Tax Act, including whether and how state, local, and foreign jurisdictions will react to such changes are not entirely clear at this time and the United States Department of Treasury has broad authority to issue regulations and interpretive guidance that may significantly impact how the Tax Act will apply to us. Any of the foregoing changes could have an adverse impact on our results of operations, cash flows, and financial condition.

Additionally, the Organization for Economic Co-Operation and Development has released guidance covering various topics, including transfer pricing, country-by-country reporting, and definitional changes to permanent establishment that could ultimately impact our tax liabilities as it is implemented in various jurisdictions.

Our results of operations may be harmed if we are required to collect sales or other related taxes for our subscription solutions in jurisdictions where we have not historically done so.

We collect sales and similar value-added taxes as part of our customer agreements in a number of jurisdictions. Sales and use, value-added, and similar tax laws and rates vary greatly by jurisdiction. One or more states or countries may seek to impose additional sales, use, or other tax collection obligations on us, including for past sales by us. The U.S. Supreme Court’s recent decision in South Dakota v. Wayfair, Inc. may increase that risk by increasing states’ ability to assert taxing jurisdiction on out-of-state retailers. A successful assertion by a state, country, or other jurisdiction that we should have been or should be collecting additional sales, use, or other taxes on our platform could, among other things, result in substantial tax liabilities for past sales, create significant administrative burdens for us, discourage customers from purchasing our platform, or otherwise harm our business, results of operations, and financial condition.

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We may not be able to utilize a significant portion of our NOLs or research tax credit carryforwards, which could adversely affect our potential profitability.

We have federal and state NOLs, due to prior period losses, which if not utilized will begin to expire in 2035 and 2025 for federal and state purposes, respectively. As of December 31, 2017, we had federal and state NOLs of approximately $39.0 million and $41.7 million, respectively. As of December 31, 2017, we had federal research tax credit carryforwards of $4.2 million and Utah research tax credit carryforwards of $0.7 million, which if not utilized will begin to expire in 2034 and 2029, respectively. These NOLs and research tax credit carryforwards, and NOLs of companies we may acquire, could expire unused and be unavailable to reduce future income tax liabilities, which could adversely affect our profitability. Realization of our NOL carryforwards and tax credits is dependent on generating sufficient taxable income prior to their expiration. Although a portion of these carryforwards and tax credits are subject to the provisions of Internal Revenue Code Sections 382 and 383, we have not performed a formal study to determine the amount of a limitation, if any.

In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, our ability to utilize NOLs or other tax attributes, such as research tax credits, in any taxable year may be limited if we experience an “ownership change.” Such an “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage. This offering and the transactions contemplated hereby may trigger an “ownership change.”

If we determine that an ownership change has occurred and our ability to use our historical NOL and tax credit carryforwards is materially limited, it would harm our future operating results by effectively increasing our future tax obligations. Also, even assuming that no such ownership changes have occurred, and thus no such limits on the usage of our NOLs under Section 382 would apply, the recently enacted amendments to the Code under the Tax Act reduced the value of our NOLs by reducing the corporate tax rate, and included additional limitations on our ability to utilize our NOLs. In general, the Tax Act provides that the portion of such NOLs arising in tax years beginning after December 31, 2017 cannot be utilized to offset more than 80% of our taxable income, determined without regard to the application of NOLs.

We are subject to tax examinations of our tax returns by the Internal Revenue Service, or IRS, and other tax authorities. An adverse outcome of any such audit or examination by the IRS or other tax authority could have a material adverse effect on our results of operations, financial condition, and liquidity.

We are, and expect to continue to be, subject to regular review and audit by the IRS and other tax authorities in various jurisdictions. As a result, we have received, and may in the future receive, assessments in multiple jurisdictions on various tax-related assertions. For instance, in July 2018, the IRS notified us of an upcoming income tax audit for the 2014 and 2015 tax years, which remains ongoing. Taxing authorities have also challenged, and may in the future challenge, our tax positions and methodologies on various matters, including our positions regarding the collection of sales and use taxes and the jurisdictions in which we are subject to taxes, which could expose us to additional taxes. We regularly assess the likelihood of adverse outcomes resulting from ongoing tax examinations to determine the adequacy of our provision for income taxes. These assessments can require considerable estimates and judgments. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a variety of jurisdictions. There can be no assurance that our tax positions and methodologies or calculation of our tax liabilities are accurate or that the outcomes from ongoing and future tax examinations will not have an adverse effect on our operating results and financial condition. A difference in the ultimate resolution of tax uncertainties from what is currently estimated could have an adverse effect on our operating results and financial condition.

The nature of our business requires the application of complex revenue and expense recognition rules, and any significant changes in current rules could affect our financial statements and results of operations.

The accounting rules and regulations that we must comply with are complex and subject to interpretation by the Financial Accounting Standards Board, or the FASB, the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. Recent actions and public comments from the FASB and the SEC have focused on the integrity of financial reporting and internal controls over financial reporting. In addition, many companies’ accounting policies and practices are being subject to heightened scrutiny by regulators and the public. Further, the

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accounting rules and regulations are continually changing in ways that could materially impact our financial statements. For example, in May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, or Topic 606, as amended, which has superseded nearly all existing revenue recognition guidance. For public business entities, the standard is effective for annual reporting periods beginning after December 15, 2017. We have early adopted Topic 606 using the full retrospective transition method. Other companies in our industry may apply these accounting principles differently than we do, adversely affecting the comparability of our financial statements. See Note 2 to our accompanying financial statements for information about Topic 606. In addition, if we were to change our critical accounting estimates, including those related to the recognition of subscription revenue and other revenue sources or the period of benefit for deferred contract acquisition costs, our results of operations could be significantly affected.

If our judgments or estimates relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline in our stock price.

The preparation of our financial statements in conformity with United States generally accepted accounting principles, or GAAP, requires management to make judgments, estimates, and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the results of which form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our Class B common stock. Significant judgments, estimates, and assumptions used in preparing our consolidated financial statements include, or may in the future include, those related to revenue recognition, deferred contract acquisition costs, the period of benefit generated from deferred contract acquisition costs, stock-based compensation expense, goodwill and intangible assets, and accounting for income taxes, including deferred tax assets and liabilities.

If we fail to maintain an effective system of internal controls, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the rules and regulations of the listing standards of The Nasdaq Global Select Market, or Nasdaq. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting, and financial compliance costs, make some activities more difficult, time-consuming, and costly, and place significant strain on our personnel, systems, and resources. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight.

Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that

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will be filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which could have a negative effect on the trading price of our Class B common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on Nasdaq. We are not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. As a public company, we will be required to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second Annual Report on Form 10-K. 

Our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company” as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed, or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business and results of operations and could cause a decline in the price of our Class B common stock.

We might require additional capital to support our growth, and this capital might not be available on acceptable terms, if at all.

We intend to continue to make investments to support our growth and may require additional funds to respond to business challenges, including the need to develop new features or enhance our existing XM^™ Platform or acquire complementary businesses, technologies, and content. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock. Any debt financing secured by us in the future could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. In addition, we may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our growth and to respond to business challenges could be significantly impaired.

Certain estimates of market opportunity, forecasts of market growth, and our operating metrics included in this prospectus may prove to be inaccurate.

Market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The estimates and forecasts in this prospectus relating to the size and expected growth of our target market may prove to be inaccurate. Even if the markets in which we compete meet the size estimates and growth forecasted in this prospectus, our business could fail to grow at similar rates, if at all. These estimates are calculated using internal data and are subject to a number of assumptions and extrapolations, and as a result, the actual market opportunity and growth forecasts may be different than our disclosed numbers.

We may face exposure to foreign currency exchange rate fluctuations.

Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro, British Pound sterling, and Australian Dollar. We have not instituted a hedging program. We expect our international operations to continue to grow in the near term and we are continually monitoring our foreign currency exposure to determine when we should begin a hedging program. Today, our international contracts are denominated in either U.S. dollars or local currency, while our international operating expenses are often denominated in local currencies. Additionally, as we expand our international operations, a larger portion of our operating expenses will be denominated in local currencies. Therefore, fluctuations in the value of the U.S. dollar and foreign currencies may affect our results of operations when translated into U.S. dollars.

Catastrophic events may disrupt our business.

Natural disasters or other catastrophic events may cause damage or disruption to our operations, international

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commerce, and the global economy, and thus could harm our business. In the event of a major earthquake, hurricane or catastrophic event such as fire, power loss, telecommunications failure, cyber-attack, war, or terrorist attack, we may be unable to continue our operations and may endure reputational harm, delays in developing our platform and solutions breaches of data security and loss of critical data, all of which could harm our business, results of operations and financial condition.

Additionally, we rely on our network and third party infrastructure and applications, internal technology systems, and our websites for our development, marketing, operational support, hosted services, and sales activities. If these systems were to fail or be negatively impacted as a result of a natural disaster or other event, our ability to deliver solutions to our customers would be impaired.

As we grow our business, the need for business continuity planning and disaster recovery plans will grow in significance. If we are unable to develop adequate plans to ensure that our business functions continue to operate during and after a disaster, and successfully execute on those plans in the event of a disaster or emergency, our business and reputation would be harmed.

Adverse economic conditions could negatively impact our business.

Our results of operations may vary based on the impact of changes in our industry or the global economy on us or our customers. Our business depends on demand for business software applications generally and for collaboration software solutions in particular. In addition, the market adoption of our solutions and our revenue is dependent on the number of users of our solutions. To the extent that weak economic conditions reduce the number of personnel providing development or engineering services or that limit the available budgets within organizations for software solutions, demand for our solutions may be harmed. If economic conditions deteriorate, our customers and prospective customers may elect to decrease their information technology budgets, which would limit our ability to grow our business and harm our results of operations.

Risks Related to Ownership of Our Class B Common Stock and this Offering

The multiple class structure of our common stock has the effect of concentrating voting control with certain stockholders, in particular, our Chief Executive Officer and his affiliates, which will limit your ability to influence the outcome of important transactions, including a change in control.

Our Class A-1 common stock and Class A-2 common stock have ten votes per share, and our Class B common stock, which are the shares we are selling in this offering, have one vote per share. The holders of Class A-2 common stock shall also have special voting rights which become effective in the event that the total number of votes represented by all of the outstanding shares of our Class A-2 common stock would constitute less than 51% of the total voting power of all classes of our then-outstanding capital stock. In such a case, and for so long as the number of outstanding shares of Class A-2 common stock represents at least 10% of the total number of shares of all classes of our outstanding capital stock, the holders of our Class A-2 common stock will be entitled to a number of votes per share of their Class A-2 common stock as would cause the total number of votes of all outstanding shares of Class A-2 common stock to equal 51% of the total voting power of all of our then-outstanding shares of capital stock. Accordingly, in such event, the aggregate voting power of all outstanding shares of Class A-1 common stock and Class B common stock would be proportionately reduced. The Class A-2 common stock, 87% of which is held by our founders, certain of whom are executive officers and directors of the company, will represent approximately  54% of the voting power of our outstanding capital stock following this offering.

After the completion of this offering, the holders of our Class A-2 common stock will collectively continue to control a majority of the combined voting power of our share capital and therefore be able to control substantially all matters submitted to our stockholders for approval until the fifteen year anniversary of the closing of this offering, or such other date as described in our amended and restated certificate of incorporation. These holders of our Class A-2 common stock may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentrated control may have the effect of delaying, preventing, or deterring a change in control of our company, could deprive our stockholders of an opportunity to receive a premium for their shares as part of a sale of our company and might ultimately affect the market price of our Class B common stock.

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Future transfers by holders of our Class A-1 common stock or Class A-2 common stock will generally result in those shares converting into our Class B common stock, subject to limited exceptions, such as certain transfers effected for estate planning purposes. The conversion of our Class A-1 common stock and Class A-2 common stock into our Class B common stock will have the effect, over time, of increasing the relative voting power of those holders of Class A-1 common stock and Class A-2 common stock who retain their shares in the long term.

We have also granted our founders, Ryan Smith, our Chief Executive Officer and member of our board of directors, and Jared Smith, our President and member of our board of directors, RSUs for an aggregate of 11.25 million shares of our Class B common stock, or collectively, the Founder Grants, which will vest and settle upon the future satisfaction of service conditions and the achievement of certain stock price goals following the completion of this offering. See “Executive Compensation—Founder Restricted Stock Unit Grants” for additional information regarding the Founder Grants. If all, or a large portion, of the Founder Grants should vest and settle, our founders will significantly influence any separate vote of our Class B common stock. Although the terms of our amended and restated certificate of incorporation will only provide for a separate vote of the holders of our Class B common stock on limited matters, under Delaware law, certain actions may require the approval of the holders of the Class B common stock voting as a separate class. For example, if we amend our amended and restated certificate of incorporation to adversely affect our Class B common stock, Delaware law could require approval of the holders of our Class B common stock voting separately as a single class. For any vote of the Class B common stock voting as a separate class, our founders will significantly influence such vote if all, or a large portion, of the Founder Grants should vest and settle, and until the number of outstanding shares of Class B common stock significantly increases. To the extent that the Founder Grants vest and settle, our founders will have the ability to gain liquidity by selling shares of our Class B common stock without reducing their voting power by converting their Class A-2 common stock.

In addition, in July 2017, FTSE Russell and Standard & Poor’s announced that they would cease to allow most newly public companies utilizing dual or multi-class capital structures to be included in their indices. Affected indices include the Russell 2000 and the S&P 500, S&P MidCap 400, and S&P SmallCap 600, which together make up the S&P Composite 1500. Under the announced policies, our multi-class capital structure would make us ineligible for inclusion in any of these indices, and as a result, mutual funds, exchange-traded funds, and other investment vehicles that attempt to passively track these indices will not be investing in our stock. These policies are relatively new and it is as of yet unclear what effect, if any, they will have on the valuations of publicly traded companies excluded from the indices, but it is possible that they may depress these valuations compared to those of other similar companies that are included.

An active trading market for our Class B common stock may never develop or be sustained.

We have applied to list our Class B common stock on Nasdaq, under the symbol “XM.” However, there has been no prior public trading market for our Class B common stock. We cannot assure you that an active trading market for our Class B common stock will develop on that exchange or elsewhere or, if developed, that any market will be sustained. Accordingly, we cannot assure you of the likelihood that an active trading market for our Class B common stock will develop or be maintained, the liquidity of any trading market, your ability to sell your shares of our Class B common stock when desired, or the prices that you may obtain for your shares.

We are an “emerging growth company” and the reduced disclosure requirements applicable to emerging growth companies may make our Class B common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced financial disclosure obligations, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. However, we have irrevocably elected not to avail ourselves of the extended transition period for complying with new or revised accounting standards and therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

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We may take advantage of these provisions until we are no longer an “emerging growth company.” We would cease to be an “emerging growth company” upon the earliest to occur of: (i) the last day of the fiscal year in which we have more than $1.07 billion in annual revenue; (ii) the date we qualify as a large accelerated filer, with at least $700 million of equity securities held by non-affiliates; (iii) the issuance, in any three-year period, by us of more than $1.0 billion in non-convertible debt securities; and (iv) the last day of the fiscal year ending after the fifth anniversary of this offering. We may choose to take advantage of some but not all of these reduced reporting requirements. If we take advantage of any of these reduced reporting requirements in future filings, the information that we provide our security holders may be different than the information you might get from other public companies in which you hold equity interests. We cannot predict if investors will find our Class B common stock less attractive because we may rely on these exemptions.

The market price of our Class B common stock may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price.

The trading price of our Class B common stock is likely to be volatile and could fluctuate widely regardless of our operating performance. The market price of our Class B common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

• actual or anticipated fluctuations in our results of operations;

• the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections;

• failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings changes by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

• announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;

• changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;

• price and volume fluctuations in the overall stock market from time to time, including as a result of trends in the economy as a whole;

• changes in accounting standards, policies, guidelines, interpretations, or principles;

• actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;

• announced or completed acquisitions of businesses or technologies by us or our competitor;

• developments or disputes concerning our intellectual property or our solutions, or third party proprietary rights;

• new laws or regulations, new interpretations of existing laws, or the new application of existing regulations to our business;

• any major change in our board of directors or management;

• additional Class B common stock being sold into the market by us or our existing stockholders or the anticipation of such sales;

• changes in operating performance and stock market valuations of technology companies in our industry;

• lawsuits threatened or filed against us; and

• other events or factors, including those resulting from war, incidents of terrorism, or responses to these events.

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In addition, the stock markets, and in particular the market on which our Class B common stock will be listed, have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies. Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from operating our business, and harm our business, results of operations, and financial condition.

If securities or industry analysts do not publish research or reports about our business, or if they downgrade our common stock, the price of our Class B common stock could decline.

The trading market for our Class B common stock depends, in part, on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. In addition, if our results of operations fail to meet the forecast of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our Class B common stock could decrease, which might cause our stock price and trading volume to decline.

We may invest or spend the proceeds of this offering in ways with which you may not agree or in ways which may not yield a return.

We intend to use the net proceeds from this offering to satisfy tax withholding and remittance obligations related to the settlement of certain outstanding RSUs in connection with the completion of this offering, and for working capital and other general corporate purposes. On the settlement date, we plan to withhold and remit income taxes at applicable statutory rates based on the then-current value of the underlying shares. We currently expect that the average of these withholding tax rates will be approximately 34 %. If the price of our common stock at the time of settlement were equal to $19.50  per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, we estimate that this tax obligation would be approximately $47.1 million in the aggregate. To settle these RSUs, assuming an approximate 34 % tax withholding rate and assuming that no employee elects to pay cash to us to cover withholding amounts, we anticipate that we will net-settle the awards by delivering an aggregate of approximately 4.7 million shares of Class B common stock to RSU holders and withholding an aggregate of approximately 2.4 million shares of Class B common stock, based on RSUs outstanding as of September 30, 2018 for which the service-based requirement was satisfied on that da y.

We also intend to use some of the net proceeds to satisfy tax withholding obligations related to the vesting and settlement of RSUs, which will begin to vest after the completion of this offering. We do not currently know the amount of net proceeds that would be used to satisfy these tax withholding obligations because it depends on many factors, including our share price on the date of settlement and the number of shares underlying RSUs that are settled on such date.

We may also use a portion of the net proceeds to acquire complementary businesses, products, or technologies. However, we do not have any agreements or commitments for any acquisitions at this time. Our management will have considerable discretion in the application of the net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used effectively. The net proceeds may be invested with a view towards long-term benefits for our stockholders and this may not increase our operating results or market value. The failure by our management to apply these funds effectively may adversely affect the return on your investment. See the section titled “Use of Proceeds” for additional information.

Purchasers in this offering will immediately experience substantial dilution in net tangible book value.

We anticipate the initial public offering price of our Class B common stock will be substantially higher than the pro forma net tangible book value per share of our Class B common stock immediately following this offering. Therefore, if you purchase shares of our Class B common stock in this offering, you will experience immediate dilution of $17.98  per share, based on the initial public offering price of $19.50 per share (which is the midpoint of the estimated offering price range set forth on the cover page to this prospectus), the difference between the price per share you pay for our

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Class B common stock and the pro forma net tangible book value per share as of September 30, 2018 , after giving effect to the issuance of shares of our Class B common stock in this offering. See the section titled “Dilution” for additional information.

Substantial future sales of our Class B common stock could cause the market price of our Class B common stock to decline.

The market price of our Class B common stock could decline as a result of substantial sales of our Class B common stock, particularly sales by our directors, executive officers, and significant stockholders, a large number of our Class B common stock becoming available for sale or the perception in the market that holders of a large number of shares intend to sell their shares. After this offering, we will have 81,636,234 shares outstanding of Class A-1 common stock, 101,395,607 shares outstanding of Class A-2 common stock and  32,920,553  shares outstanding of Class B common stock, based on the number of shares outstanding as of September 30, 2018 . This includes the Class B common stock offered in this offering, which may be resold in the public market immediately. The remaining shares of our capital stock are currently restricted as a result of market stand-off agreements restricting their sale for a period of up to 180 days after the date of this prospectus, subject to certain exceptions. In addition, certain of these shares are subject to lock-up agreements with the underwriters, and either Morgan Stanley & Co. LLC or Goldman Sachs & Co. LLC, as representatives of the underwriters, may, in its sole discretion, permit our officers, directors, employees, and current securityholders who are subject to lock-up agreements to sell shares prior to the expiration of the lock-up agreements.

In addition, we expect that up to 3.0 million  shares of our Class B common stock may be sold in open market transactions within 180 days following the closing of this offering to generate enough proceeds to cover taxes that may become due as a result of the vesting and/or settlement of RSUs that are scheduled to vest and/or settle at, or in the 180 days following, the offering. Of these shares, the shares that are not sold to cover such taxes will remain subject to lock-up agreements with the underwriters. In addition, we expect that up to  11.8 million  shares of our Class B common stock may be delivered to our employees and former employees as a result of the vesting and/or settlement of RSUs that are scheduled to vest and/or settle at, or in the 180 days following, the offering.

Additionally, the shares subject to outstanding options and RSU awards (including the Founder Grants) under our equity incentive plans and, to the extent such shares are issued, the shares reserved for future issuance under our equity incentive plans will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations. See the section titled “Shares Eligible for Future Sale” for a more detailed description of sales that may occur in the future.

Upon completion of this offering, stockholders owning an aggregate of 81,636,234 shares of Class A-1 common stock and 101,395,607 shares of Class A-2 common stock, will be entitled, under contracts providing for registration rights, to require us to register their shares for public sale in the United States. We also intend to register Class B common stock that we may issue under our employee equity incentive plans and ESPP. Once we register these shares, they will be able to be sold freely in the public market upon issuance, subject to certain market stand-off or lock-up agreements.

Sales of our Class B common stock as these restrictions end or pursuant to registration rights may make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. These sales also could cause the market price of our Class B common stock to fall and make it more difficult for you to sell our Class B common stock.

We will incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies, particularly after we are no longer an “emerging growth company,” which could adversely affect our business, financial condition, and results of operations.

As a public company, and particularly after we cease to be an “emerging growth company,” we will incur greater legal, accounting, and other expenses than we incurred as a private company. We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, and the rules and regulations of Nasdaq. These requirements have increased and will continue to increase our legal, accounting, and financial compliance costs and have made, and will continue to make, some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more

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expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to maintain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as our executive officers. After we are no longer an “emerging growth company,” we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. In that regard, we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current board of directors, and limit the market price of our Class B common stock.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws to be effective in connection with the closing of this offering may have the effect of delaying or preventing a change of control or changes in our management. Our amended and restated certificate of incorporation and amended and restated bylaws will include provisions that:

• authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock;

• require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent if such action occurs after the first date that the total aggregate number of votes represented by all then-issued and outstanding shares of Class A-2 common stock constitute less than 51% of the total aggregate number of votes represented by all then-issued and outstanding shares of our capital stock, or the Written Consent Threshold Date;

• until the Written Consent Threshold Date, allow our stockholders to be able to act by written consent if the action is first recommended or approved by our board of directors;

• specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, our chief executive officer or our president (in the absence of our chief executive officer);

• provide for a tri-class common stock structure in which holders of our Class A-1 and Class A-2 common stock have the ability to control the outcome of certain matters requiring stockholder approval, even if they own significantly less than a majority of the aggregate outstanding shares of our Class A-1, Class A-2, and Class B common stock, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets;

• establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors;

• establish that our board of directors is divided into three classes, with each class serving three-year staggered terms;

• prohibit cumulative voting in the election of directors;

• provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum, or by a sole remaining director; and

• require the approval of our board of directors or the holders of at least sixty-six and two-thirds percent (66 ²⁄₃%) of the voting power of our outstanding shares of capital stock entitled to vote thereon, voting together as a single class, to amend our amended and restated bylaws and certain provisions of our amended and restated certificate of incorporation.

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As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law, or the DGCL, which imposes certain restrictions on mergers, business combinations, and other transactions between us and holders of 15% or more of our outstanding common stock. Any provision of our amended and restated certificate of incorporation, amended and restated bylaws or Delaware law that has the effect of delaying, preventing or deterring a change in control or changes in our management could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our Class B common stock.

Our amended and restated bylaws to be effective in connection with the closing of this offering will designate a state or federal court located within the State of Delaware as the exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or other employees.

Our amended and restated bylaws to be effective in connection with the closing of this offering will provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees or our stockholders to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provisions of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located within the state of Delaware, in all cases subject to the court’s having jurisdiction over indispensable parties named as defendants. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to this provision. This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage such lawsuits. Alternatively, if a court were to find the choice of forum provision in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.

We do not expect to declare dividends in the foreseeable future.

We currently anticipate that we will retain future earnings for the development, operation, and expansion of our business, and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the increase, if any, of our share price, which may never occur.

Risks Related to Our Organizational Structure

Our principal asset is our interest in Qualtrics, LLC, and we are, and expect to continue to be, dependent upon the results of operations and cash flows of Qualtrics, LLC and its consolidated subsidiaries and distributions we receive from Qualtrics, LLC.

Qualtrics International Inc. is, and we expect to continue to be, a holding company with no material assets other than our ownership of the capital stock of Qualtrics, LLC, which we control directly. As such, Qualtrics International Inc. will have no independent means of generating revenue or cash flow, and our ability to pay our taxes and operating expenses or declare and pay dividends in the future, if any, will be dependent upon the results of operations and cash flows of Qualtrics, LLC and its consolidated subsidiaries and distributions we receive from Qualtrics, LLC. There can be no assurance that our direct and indirect subsidiaries will generate sufficient cash flow to distribute funds to us or that applicable state law and contractual restrictions, including negative covenants in any future debt instruments, will permit such distributions. In addition, in the event that the board of directors and stockholders of Qualtrics International Inc. were to approve a sale of all of our direct and indirect interests in Qualtrics, LLC, your equity interest would be in a holding company with no material assets other than those assets and other consideration received in such transaction.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this prospectus include, but are not limited to, statements about:

• our future financial performance, including our revenue, cost of revenue, gross profit, operating expenses, ability to continue to generate positive cash flow, and ability to be profitable;

• anticipated technology trends, such as the use of and demand for experience management software;

• our ability to attract and retain customers to use our products;

• our ability to attract enterprises and international organizations as customers for our products;

• our ability to expand our network with content consulting partners, delivery partners, and technology partners;

• the evolution of technology affecting our products and markets;

• our ability to introduce new products and enhance existing products;

• our ability to successfully enter into new markets and manage our international expansion;

• the attraction and retention of qualified employees and key personnel;

• our ability to effectively manage our growth and future expenses and maintain our corporate culture;

• our anticipated investments in sales and marketing and research and development;

• our ability to maintain, protect, and enhance our intellectual property rights;

• our ability to successfully defend litigation brought against us;

• the sufficiency of our cash and cash equivalents to meet our liquidity needs;

• our ability to comply with modified or new laws and regulations applying to our business;

• the increased expenses associated with being a public company; and

• our use of the net proceeds from this offering.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this prospectus.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this prospectus primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this prospectus. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this prospectus. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

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The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this prospectus to reflect events or circumstances after the date of this prospectus or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

You should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.

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MARKET AND INDUSTRY DATA

This prospectus contains statistical data, estimates, and forecasts from various sources, including independent industry publications and other information from our internal sources. This information is based upon a number of assumptions and limitations, and you are cautioned not to give undue weight to such information. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements,” that could cause results to differ materially from those expressed in these publications and reports.

The source of certain statistical data, estimates, and forecasts contained in this prospectus are the following independent industry publications or reports:

• CX Quality Can Affect Stock Performance, February 2018, Forrester Research.

• Experience is Everything: Here’s How to Get it Right, © 2018 PwC.

• Net Promoter Score Benchmark Study, October 2017, Temkin Group.

Industry publications, surveys, and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but such information may not be accurate or complete. We have not independently verified any of the data from third party sources nor have we ascertained the underlying economic assumptions relied on therein.

Certain information included in this prospectus concerning our industry and the markets we serve, including our market share, are also based on our good-faith estimates derived from management’s knowledge of the industry and other information currently available to us.

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USE OF PROCEEDS

We estimate that the net proceeds to us from the sale of shares of our Class B common stock in this offering will be approximately $ 373.1 million , based upon the assumed initial public offering price of $ 19.50  per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters’ over-allotment option is exercised in full, we estimate that the net proceeds to us would be approximately $ 429.8 million , after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

Each $1.00 increase or decrease in the assumed initial public offering price of $ 19.50  per share would increase or decrease, as applicable, the net proceeds that we receive from this offering by approximately $ 19.4 million , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase or decrease of 1.0 million in the number of shares offered by us would increase or decrease, as applicable, the net proceeds that we receive from this offering by approximately $ 18.4 million , assuming an initial public offering price of $ 19.50  per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

The principal purposes of this offering are to increase our capitalization and financial flexibility, create a public market for our Class B common stock, and enable access to the public equity markets for us and our stockholders.

We intend to use the net proceeds from this offering to satisfy tax withholding and remittance obligations of up to $ 57.4 million (as of November 15, 2018) related to the settlement of certain outstanding RSUs in connection with the effectiveness of this offering. This amount is based upon the assumed initial public offering price of $ 19.50  per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus. A $1.00 increase (decrease) in the assumed initial public offering price of $ 19.50  per share of Class B common stock, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, assuming no change to the applicable tax rates, would increase (decrease) the amount we would be required to pay to satisfy these tax withholding obligations by approximately $ 2.9 million . We also intend to use some of the net proceeds to satisfy tax withholding obligations related to the vesting and settlement of RSUs, which will begin to vest after the completion of this offering. We do not currently know the amount of net proceeds that would be used to satisfy these tax withholding obligations because it depends on many factors, including our share price on the date of settlement and the number of shares underlying RSUs that are settled on such date. We also intend to use the net proceeds from this offering for working capital or other general corporate purposes, including funding our growth strategies discussed in this prospectus. These uses and growth strategies include investing in research and development, enhancing our XM ^™ Platform and solutions, hiring additional personnel in our engineering, customer support and sales and marketing teams, investing in marketing and partnership programs, growing our international operations, and upgrading our infrastructure; however, we do not currently have any definitive or preliminary plans with respect to the use of proceeds for such purposes.

We may also use a portion of the net proceeds to acquire or make investments in businesses, products, services, or technologies. However, we do not have agreements or commitments for any acquisitions at this time.

We cannot specify with certainty the particular uses of the net proceeds that we will receive from this offering. Accordingly, we will have broad discretion in using these proceeds. Pending the use of proceeds from this offering as described above, we plan to invest the net proceeds that we receive in this offering in short-term and long-term interest-bearing obligations, including government and investment-grade debt securities and money market funds.

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DIVIDEND POLICY

We have never declared or paid any cash dividends on our capital stock. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future. Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual restrictions, general business conditions, and other factors that our board of directors may deem relevant.

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CAPITALIZATION

The following table sets forth cash and cash equivalents, as well as our capitalization, as of September 30, 2018 as follows:

• on an actual basis;

• on a pro forma basis, giving effect to (i) the automatic conversion of all outstanding shares of our Series A-1 and Series A-2 redeemable convertible preferred stock into an aggregate of 101,395,607 shares of our Class A-2 common stock, which conversion will occur immediately prior to the completion of this offering, (ii) the automatic conversion of all outstanding shares of our Series A-3 redeemable convertible preferred stock and Series B redeemable convertible preferred stock into an aggregate of 81,636,234 shares of our Class A-1 common stock, which conversion will occur immediately prior to the completion of this offering, (iii) stock-based compensation expense of approximately $ 99.8 million associated with outstanding RSUs subject to a performance condition for which the service-based vesting condition was satisfied as of September 30, 2018 and which we will recognize on the effectiveness of our registration statement in connection with this offering, as further described in Note 12 to our consolidated financial statements included elsewhere in this prospectus, (iv) the increase in accrued liabilities and an equivalent decrease in additional paid-in capital of $ 47.1 million  in connection with certain withholding tax obligations, assuming an initial public offering price of $ 19.50 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, assuming that we issue shares of Class B common stock on a net basis to satisfy all the associated withholding tax obligations, although it is contemplated that certain employees may elect to pay cash to cover withholding amounts, (v) the net issuance of up to  7,098,042  shares of Class B common stock at the closing of this offering on the vesting and settlement of certain RSUs subject to a performance condition in connection with the effectiveness of this offering, and (vi) the filing and effectiveness of our amended and restated certificate of incorporation in Delaware; and

• on a pro forma as adjusted basis, giving effect to the pro forma adjustments set forth above and the sale and issuance by us of 20,512,821 shares of our Class B common stock in this offering, based upon the assumed initial public offering price of $ 19.50 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

You should read this table together with our consolidated financial statements and related notes, and the sections titled “Selected Consolidated Financial and Other Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that are included elsewhere in this prospectus.

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	As of September 30, 2018
	Actual			Pro Forma(1)			Pro Forma As Adjusted(2)
	(In thousands except share and per share data)
Cash and cash equivalents	$	137,739		$	137,739		$	510,839
Redeemable convertible preferred stock, $0.0001 par value per share, issuable in Series A-1, A-2, A-3, B-1, B-2, B-3, B-3A, B-4, B-5, and B-5A: 207,060,845 shares authorized, 183,031,841 shares issued and outstanding, actual; no shares issued or outstanding, pro forma and pro forma as adjusted	$	129,609		$	—		$	—
Stockholders’ (deficit) equity:
Class A-1 common stock, $0.0001 par value per share: 81,636,234 shares authorized, no shares issued and outstanding, actual; 81,636,234 shares authorized, issued and outstanding, pro forma and pro forma as adjusted	—			8			8
Class A-2 common stock, $0.0001 par value per share: 112,897,836 shares authorized, no shares issued and outstanding, actual; 101,395,607 shares authorized, issued and outstanding, pro forma and pro forma as adjusted	—			10			10
Class B common stock, $0.0001 par value per share: 215,971,093 shares authorized, 5,309,690 shares issued and outstanding, actual;215,971,093shares authorized,12,407,732shares issued and outstanding, pro forma; 215,971,093 shares authorized,32,920,553shares issued and outstanding, pro forma as adjusted	1			1			3
Additional paid-in capital	10,747			193,047			566,143
Accumulated other comprehensive loss	(765		)	(765		)	(765		)
Accumulated deficit	(79,829		)	(179,598		)	(179,598		)
Total stockholders’ (deficit) equity	(69,846		)	12,703			385,801
Total capitalization	$	59,763		$	12,703		$	385,801

____________________

(1) The pro forma data as of September 30, 2018 gives effect to stock-based compensation expense of $ 99.8 million associated with outstanding RSUs subject to a performance condition for which the service-based vesting condition was satisfied as of September 30, 2018 and which we will recognize on the effectiveness of our registration statement in connection with this offering. The pro forma adjustment related to stock-based compensation expense of $ 99.8 million has been reflected as an increase to additional paid-in capital and accumulated deficit.

(2) Each $1.00 increase or decrease in the assumed initial public offering price of $ 19.50  per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, the amount of each of our pro forma as adjusted cash and cash equivalents, additional paid-in capital, total stockholders’ deficit, and total capitalization by $ 19.4 million , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase or decrease of 1.0 million shares in the number of shares offered by us would increase or decrease, as applicable, the amount of each of our pro forma as adjusted cash and cash equivalents, additional paid-in capital, total stockholders’ deficit, and total capitalization by $ 18.4 million , assuming an initial public offering price of $ 19.50  per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

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If the underwriters’ over-allotment option were exercised in full, pro forma as adjusted cash and cash equivalents, additional paid-in capital, total stockholders’ equity, total capitalization and shares of Class B common stock outstanding as of September 30, 2018 would be $ 567.5 million , $ 622.8 million , $ 442.5 million , $ 442.5 million , and 35,997,476 , respectively.

The number of shares of our Class A-1 common stock, Class A-2 common stock, and Class B common stock that will be outstanding after this offering is based on 81,636,234 shares of our Class A-1 common stock, 101,395,607 shares of our Class A-2 common stock (each as including preferred stock on an as-converted basis), and 12,407,732 shares of our Class B common stock (which includes 1,701,002 unvested RSAs for shares of our Class B common stock and up to 7,098,042 shares of our Class B common stock to be issued at the closing of this offering on the vesting and settlement of certain outstanding RSUs, respectively, subject to a performance condition in connection with the completion of this offering) outstanding as of September 30, 2018 , and excludes:

• 1,722,087 shares of our Class B common stock issuable upon the exercise of options to purchase shares of our Class B common stock outstanding as of September 30, 2018, with a weighted-average exercise price of $12.11 per share;

• 459,821 shares of our Class B common stock issuable upon the exercise of options to purchase shares of our Class B common stock that were granted after September 30, 2018, with a weighted-average exercise price of $15.38 per share;

• 27,947,763  RSUs for shares of our Class B common stock outstanding as of September 30, 2018 that will settle upon future satisfaction of service conditions following the completion of this offering , up to approximately 9,502,239 shares of which we plan to withhold, based on an assumed 34 % tax withholding rate, to satisfy income tax obligations upon settlement of the RSUs, as discussed in the section titled “Risk Factors— We may invest or spend the proceeds of this offering in ways with which you may not agree or in ways which may not yield a return ” and Note 12 to our consolidated financial statements included elsewhere in this prospectus;

• 2,144,473 RSUs for shares of our Class B common stock that were granted after September 30, 2018 that will settle upon future satisfaction of service conditions following the completion of this offering;

• 1,618,852 shares of our Class B common stock reserved for future issuance under our 2014 Plan, provided that no new awards will be issued under the 2014 Plan following the completion of this offering; and

• 23,750,000 shares of our Class B common stock reserved for future issuance under our equity compensation plans, which will become effective prior to the completion of this offering, consisting of:

• 20,000,000  shares of our common stock reserved for future issuance under our 2018 Plan, which will become available for issuance effective upon the effectiveness of the registration statement of which this prospectus is a part, as well as any automatic increases in the number of shares of our common stock reserved for future issuance under this plan (which amount includes approximately 3,650,000 shares to be covered by new equity awards that we currently intend to grant in November or December 2018 following the completion of this offering) , and

• 3,750,000 shares of our common stock reserved for future issuance under our ESPP, which will become available for issuance effective upon the effectiveness of the registration statement of which this prospectus is a part, as well as any automatic increases in the number of shares of our common stock reserved for future issuance under this plan.

Our 2018 Plan and ESPP will each provide for annual automatic increases in the number of shares reserved thereunder and our 2018 Plan also will provide for increases to the number of shares of Class B common stock that may be granted thereunder based on shares underlying any awards under our 2014 Plan that expire, are forfeited or are otherwise terminated, as more fully described in the section titled “Executive Compensation—Employee Benefits and Stock Plans.”

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DILUTION

If you invest in our Class B common stock in this offering, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share of our Class B common stock and the pro forma as adjusted net tangible book value per share of our Class B common stock immediately after this offering. Net tangible book value dilution per share to new investors represents the difference between the amount per share paid by purchasers of shares of our Class B common stock in this offering and the pro forma as adjusted net tangible book value per share of our Class B common stock immediately after completion of this offering.

Net tangible book value per share is determined by dividing our total tangible assets (total assets less contract acquisition costs, intangible assets, goodwill, and capitalized offering costs) less our total liabilities by the number of shares of our common stock outstanding. Our historical net tangible value as of September 30, 2018 was $ 1.2 million , or $ 0.22 per share. Our pro forma net tangible book value as of September 30, 2018 was $ 1.2 million , or $ 0.01 per share, based on the total number of shares of our common stock outstanding as of September 30, 2018 , after giving effect to (i) the automatic conversion of all outstanding shares of our Series A-1 and Series A-2 redeemable convertible preferred stock into an aggregate of 101,395,607 shares of our Class A-2 common stock, which conversion will occur immediately prior to the completion of this offering, (ii) the automatic conversion of all outstanding shares of our Series A-3 redeemable convertible preferred stock and Series B redeemable convertible preferred stock into an aggregate of 81,636,234 shares of our Class A-1 common stock, which conversion will occur immediately prior to the completion of this offering, and (iii) the net issuance of up to  7,098,042  shares of Class B common stock at the closing of this offering on the vesting and settlement of certain RSUs subject to a performance condition in connection with the effectiveness of this offering.

After giving effect to the sale by us of  20,512,821  shares of our Class B common stock in this offering at the assumed initial public offering price of $ 19.50  per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of September 30, 2018 would have been $ 327.2 million , or $ 1.52  per share. This represents an immediate increase in pro forma net tangible book value of $ 1.51  per share to our existing stockholders and an immediate dilution in pro forma net tangible book value of $ 17.98  per share to investors purchasing shares of our Class B common stock in this offering at the assumed initial public offering price. The following table illustrates this dilution:

Assumed initial public offering price per share			$	19.50
Pro forma net tangible book value per share as of September 30, 2018	$	0.01
Increase in pro forma net tangible book value per share attributable to new investors in this offering	1.51
Pro forma net tangible book value per share, as adjusted to give effect to this offering			1.52
Dilution in pro forma net tangible book value per share, as adjusted to new investors in this offering			$	17.98

Each $1.00 increase or decrease in the assumed initial public offering price of $ 19.50  per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, our pro forma as adjusted net tangible book value to new investors by $ $19.4 million , and would increase or decrease, as applicable, dilution per share to new investors in this offering by $ 0.08 , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase or decrease of 1.0 million shares in the number of shares offered by us would increase or decrease, as applicable, our pro forma as adjusted net tangible book value by $ 0.08 per share and increase or decrease, as applicable, the dilution to new investors by $ 0.08 per share, assuming an initial public offering price of $ 19.50  per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

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If the underwriters’ over-allotment option is exercised in full, the pro forma as adjusted net tangible book value per share of our Class B common stock, as adjusted to give effect to this offering, would be $ 1.75  per share, and the dilution in pro forma net tangible book value per share to new investors in this offering would be $ 17.75  per share.

The following table presents, as of September 30, 2018 , after giving effect to (i) the automatic conversion of all outstanding shares of our Series A-1 and Series A-2 redeemable convertible preferred stock into an aggregate of 101,395,607 shares of our Class A-2 common stock, which conversion will occur immediately prior to the completion of this offering, (ii) the automatic conversion of all outstanding shares of our Series A-3 redeemable convertible preferred stock and Series B redeemable convertible preferred stock into an aggregate of 81,636,234 shares of our Class A-1 common stock, which conversion will occur immediately prior to the completion of this offering, (iii) 5,309,690 shares of our Class B common stock outstanding as of September 30, 2018 , and (iv) the net issuance of up to  7,098,042 shares of Class B common stock at the closing of this offering on the vesting and settlement of certain RSUs subject to a performance condition in connection with the completion of this offering, the differences between the existing stockholders and the new investors purchasing shares of our Class B common stock in this offering with respect to the number of shares purchased from us, the total consideration paid or to be paid to us, which includes net proceeds received from the issuance of our common stock and preferred stock, cash received from the exercise of stock options and the average price per share paid or to be paid to us at the assumed initial public offering price of $ 19.50  per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, before deducting underwriting discounts and commissions and estimated offering expenses payable by us:

	Shares Purchased			Total Consideration				Average Price Per Share
	Number	Percent		Amount		Percent
Existing stockholders	195,439,573	90.5	%	$	597,128,797	59.9	%	$	3.06
New investors	20,512,821	9.5	%	$	400,000,010	40.1	%	$	19.50
Total	215,952,394	100.0%		$	997,128,807	100.0%

Each $1.00 increase or decrease in the assumed initial public offering price of $ 19.50  per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, each of the total consideration paid by new investors and total consideration paid by all stockholders by approximately $ 19.4 million , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

Except as otherwise indicated, the above discussion and table assume no exercise of the underwriters’ over-allotment option. If the underwriters’ over-allotment option were exercised in full, our existing stockholders would own  89.2% and our new investors would own 10.8% of the total number of shares of our common stock outstanding upon completion of this offering.

The number of shares of our Class A-1 common stock, Class A-2 common stock, and Class B common stock that will be outstanding after this offering is based on 81,636,234 shares of our Class A-1 common stock, 101,395,607 shares of our Class A-2 common stock (each as including preferred stock on an as-converted basis), and 12,407,732 shares of our Class B common stock (which includes 1,701,002 unvested RSAs for shares of our Class B common stock and up to 7,098,042 shares of our Class B common stock to be issued at the closing of this offering on the vesting and settlement of certain outstanding RSUs, respectively, subject to a performance condition in connection with the completion of this offering) outstanding as of September 30, 2018 , and excludes:

• 1,722,087 shares of our Class B common stock issuable upon the exercise of options to purchase shares of our Class B common stock outstanding as of September 30, 2018, with a weighted-average exercise price of $12.11 per share;

• 459,821 shares of our Class B common stock issuable upon the exercise of options to purchase shares of our Class B common stock that were granted after September 30, 2018, with a weighted-average exercise price of $15.38 per share;

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• 27,947,763  RSUs for shares of our Class B common stock outstanding as of September 30, 2018 that will settle upon future satisfaction of service conditions following the completion of this offering , up to approximately 9,502,239 shares of which we plan to withhold, based on an assumed 34 % tax withholding rate, to satisfy income tax obligations upon settlement of the RSUs, as discussed in the section titled “Risk Factors— We may invest or spend the proceeds of this offering in ways with which you may not agree or in ways which may not yield a return ” and Note 12 to our consolidated financial statements included elsewhere in this prospectus;

• 2,144,473 RSUs for shares of our Class B common stock that were granted after September 30, 2018 that will settle upon future satisfaction of service conditions following the completion of this offering;

• 1,618,852 shares of our Class B common stock reserved for future issuance under our 2014 Plan, provided that no new awards will be issued under the 2014 Plan following the completion of this offering; and

• 23,750,000 shares of our Class B common stock reserved for future issuance under our equity compensation plans, which will become effective prior to the completion of this offering, consisting of:

• 20,000,000  shares of our common stock reserved for future issuance under our 2018 Stock Option and Incentive Plan, or the 2018 Plan, which will become available for issuance effective upon the effectiveness of the registration statement of which this prospectus is a part, as well as any automatic increases in the number of shares of our common stock reserved for future issuance under this plan (which amount includes approximately 3,650,000 shares to be covered by new equity awards that we currently intend to grant in November or December 2018 following the completion of this offering); and

• 3,750,000 shares of our common stock reserved for future issuance under our ESPP, which will become available for issuance effective upon the effectiveness of the registration statement of which this prospectus is a part, as well as any automatic increases in the number of shares of our common stock reserved for future issuance under this plan.

Our 2018 Plan and ESPP will each provide for annual automatic increases in the number of shares reserved thereunder and our 2018 Plan also will provide for increases to the number of shares of Class B common stock that may be granted thereunder based on shares underlying any awards under our 2014 Plan that expire, are forfeited or are otherwise terminated, as more fully described in the section titled “Executive Compensation—Employee Benefits and Stock Plans.”

To the extent that any outstanding options to purchase our Class B common stock or new awards are granted under our equity compensation plans, or we issue additional equity securities or convertible debt, there will be further dilution to investors participating in this offering.

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The following tables present our selected consolidated financial and other data. We have derived the selected consolidated statements of operations data for the years ended December 31, 2016 and 2017 and our selected consolidated balance sheet data as of December 31, 2016 and 2017 from our audited consolidated financial statements included elsewhere in this prospectus. We have derived the selected consolidated statements of operations data for the nine months ended September 30, 2017 and 2018 and our selected consolidated balance sheet data as of September 30, 2018 from our unaudited interim consolidated financial statements included elsewhere in this prospectus. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal, recurring nature that are necessary for a fair statement of the unaudited interim consolidated financial statements. Our historical results are not necessarily indicative of the results that may be expected in the future, and the results for the nine months ended September 30, 2017 or 2018 are not necessarily indicative of the results to be expected for the full year or any other future period. The following selected consolidated financial and other data should be read in conjunction with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.

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	Year Ended December 31,					Nine Months Ended September 30,
	2016			2017		2017		2018
Consolidated Statements of Operations Data:	(In thousands, except per share data)
Revenue:
Subscription	$	142,525		$	213,274	$	151,699	$	215,533
Research on Demand	38,147			51,812		37,524		51,489
Professional services and other	9,931			24,817		17,856		22,544
Total revenue	190,603			289,903		207,079		289,566
Cost of revenue(1)(2):
Subscription	27,904			25,552		18,162		26,520
Research on Demand	21,322			26,639		19,585		22,237
Professional services and other	11,754			26,893		18,859		27,581
Total cost of revenue	60,980			79,084		56,606		76,338
Gross profit	129,623			210,819		150,473		213,228
Operating expenses(1)(2):
Research and development	22,303			40,680		29,078		45,643
Sales and marketing	95,919			140,524		102,994		138,318
General and administrative	21,909			26,522		17,239		26,958
Total operating expenses	140,131			207,726		149,311		210,919
Operating income (loss)	(10,508		)	3,093		1,162		2,309
Other non-operating income (expense), net	(501		)	1,370		1,131		274
Income (loss) before income taxes	(11,009		)	4,463		2,293		2,583
Provision for income taxes	1,025			1,907		1,322		1,088
Net income (loss)	$	(12,034	)	$	2,556	$	971	$	1,495
Net income (loss) per share attributable to common stockholders, basic	$	(4.85	)	$	0.01	$	0.01	$	0.01
Net income (loss) per share attributable to common stockholders, diluted	$	(4.85	)	$	0.01	$	0.01	$	0.01
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic	2,482			2,889		2,801		3,597
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, diluted	2,482			185,734		185,493		186,934
Pro forma net income per share attributable to common stockholders, basic				$	0.01			$	0.01
Pro forma net income per share attributable to common stockholders, diluted				$	0.01			$	0.01
Weighted-average shares used in computing pro forma net income per share attributable to common stockholders, basic				189,157				193,617
Weighted-average shares used in computing pro forma net income per share attributable to common stockholders, diluted				200,078				203,342

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____________________

(1) Includes stock-based compensation expense as follows:

	Year Ended December 31,				Nine Months Ended September 30,
	2016		2017		2017		2018
	(In thousands)
Cost of revenue	$	7	$	7	$	6	$	4
Research and development	309		1,438		1,348		1,568
Sales and marketing	64		4,415		4,414		559
General and administrative	322		1,087		750		973
Total stock-based compensation expense	$	702	$	6,947	$	6,518	$	3,104

____________________

(2) Includes amortization of acquired intangible assets as follows:

	Year Ended December 31,				Nine Months Ended September 30,
	2016		2017		2017		2018
	(In thousands)
Cost of revenue	$	81	$	135	$	101	$	500
Research and development	—		—		—		—
Sales and marketing	47		32		30		111
General and administrative	59		59		44		104
Total amortization of acquired intangible assets	$	187	$	226	$	175	$	715

	As of December 31, 2016			As of December 31, 2017			As of September 30, 2018
Consolidated Balance Sheet Data:	(In thousands)
Cash and cash equivalents	$	61,860		$	113,435		$	137,739
Working capital(1)	$	113,947		$	188,679		$	210,373
Total assets	$	180,700		$	280,337		$	334,317
Total deferred revenue	$	133,391		$	185,145		$	228,199
Redeemable convertible preferred stock	$	99,762		$	129,609		$	129,609
Accumulated deficit	$	(83,880	)	$	(81,324	)	$	(79,829	)
Total stockholders’ deficit	$	(82,708	)	$	(72,597	)	$	(69,846	)

____________________

(1) Working capital is defined as current assets less current liabilities, excluding current deferred revenue. See our audited consolidated financial statements and related notes included elsewhere in this prospectus for further details regarding our current assets and current liabilities.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In particular, free cash flow is not a substitute for cash used in operating activities. Additionally, the utility of free cash flow as a measure of our liquidity is further limited as it

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does not represent the total increase or decrease in our cash balance for a given period. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

Non-GAAP Operating Income (Loss)

	Year Ended December 31,					Nine Months Ended September 30,
	2016			2017		2017		2018
	(In thousands)
GAAP operating income (loss)	$	(10,508	)	$	3,093	$	1,162	$	2,309
Add: Stock-based compensation expense	702			6,947		6,518		3,104
Add: Amortization of acquired intangible assets	187			226		175		715
Add: Legal costs related to acquisitions	60			—		—		648
Non-GAAP operating income (loss)	$	(9,559	)	$	10,266	$	7,855	$	6,776

We calculate non-GAAP operating income (loss), as GAAP operating income (loss) excluding stock-based compensation expense, amortization of acquired intangible assets, and legal costs related to acquisitions.

Free Cash Flow

	Year Ended December 31,						Nine Months Ended September 30,
	2016			2017			2017			2018
	(In thousands)
Net cash provided by operating activities	$	17,806		$	39,618		$	36,056		$	52,509
Less: Capital expenditures	(14,372		)	(18,272		)	(11,350		)	(16,388		)
Free cash flow	$	3,434		$	21,346		$	24,706		$	36,121

We calculate free cash flow as net cash provided by operating activities less capital expenditures.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the section titled “Selected Consolidated Financial and Other Data” and the consolidated financial statements and related notes thereto included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included elsewhere in this prospectus.

Overview

We created the first experience management platform to manage customer, employee, brand, and product experiences.

We’ve built a thriving global business with over 9,000 customers, including over 75% of the Fortune 100 and over 30% of the 2018 Global 2000. Our revenue was $190.6 million and $289.9 million for the years ended December 31, 2016 and 2017, respectively, representing an annual growth rate of 52%. We generated a net loss of $12.0 million for the year ended December 31, 2016 and net income of $2.6 million for the year ended December 31, 2017. We have been free cash flow positive in every year since inception. We generated positive free cash flow of $3.4 million and $21.3 million for the years ended December 31, 2016 and 2017, respectively.

The following graphic highlights key milestones since our founding in 2002.

We generate revenue by selling subscriptions to our XM^™ Platform, sales of our Research on Demand solution, and professional services which serve the experience management needs of our diverse customer base. We typically bill for subscriptions at the beginning of the contract term and recognize revenue ratably over the term of the subscription period. Over 98% of our subscription agreements have a subscription period of one year or longer. Our largest customer accounted for less than 2% of revenue for the year ended December 31, 2017. International customers can pay in U.S. dollars or a select number of foreign currencies.

We price and package our subscription software solutions based on the capacity and functionality needs of our customers. This pricing and packaging includes volume of expected responses, number of users accessing our platform, number of employees, and level of functionality provided, such as dashboards, iQ functionality, and integrations. Our customers expand their subscriptions as they increase volume of responses, add solutions, add users, and increase features within each solution.

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Our Research on Demand solution allows customers to gain market intelligence by procuring a curated group of respondents and returning tangible results, while conforming to best-practice design and methodology. We provide our Research on Demand solution as an automated, software-led approach, providing ease of use and efficiency for our customers. Our Research on Demand solution is sold into our existing XM^™ Platform customers, resulting in minimal incremental sales and marketing spend, and leads to higher platform usage for customers.

Our professional services consist primarily of implementations, configurations, and integrations to help customers deploy our XM^™ Platform. Other revenue consists of consulting and training fees.

We deploy an efficient, hybrid go-to-market model that addresses the many ways a customer may typically choose to buy. We utilize a combination of a highly productive inside sales team and a field sales team, as well as partners, to target customers.

Key Factors Affecting Our Performance

We believe that the growth and future success of our business depends on many factors. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations.

New Customer Acquisition

We are focused on continuing to acquire new customers to support our long-term growth. We have invested, and expect to continue to invest, heavily in our sales and marketing efforts to drive customer acquisition. As of September 30, 2018, we had over 9,000 customers, including over 75% of the Fortune 100 and 30% of the 2018 Global 2000. Our customers include businesses of all sizes, academic institutions, and government organizations. We define the number of customers at the end of any particular period as the number of parties or individual legal entities that have entered into a separate subscription contract with us for which the term has not ended. For avoidance of doubt, international subsidiaries of parent entities are not separately counted, but business units, brands, and academic institutions are counted if they are distinct legal entities. A single organization or customer may have multiple paid business accounts.

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Expand Sales to Existing Customers

Our business model relies on rapidly and efficiently landing new customers and expanding our relationship with them over time. As the chart below illustrates, we have a history of attracting new customers, driving expanded use through upselling our XM^™ Platform across the enterprise, and cross-selling through the subsequent deployment of additional solutions throughout the enterprise. Specifically, the chart below illustrates the total subscription billings of each cohort over the periods presented with each cohort representing customers who made their first purchase from us in a given fiscal year. For example, the 2014 cohort includes all customers that purchased their first subscription from us between January 1, 2014 and December 31, 2014. Our subscription billings from customers for the 2012 cohort, 2013 cohort, 2014 cohort, 2015 cohort, and 2016 cohort in 2017 represent an increase over each cohort’s initial aggregate subscription billings by 2.6x, 1.8x, 2.1x, 1.7x, and 1.2x, respectively.

We also use dollar-based net retention rate to measure our ability to expand business generated from our existing customers. Our net retention rate compares our subscription revenue from the same set of customers across comparable periods. We calculate our net retention rate on a trailing four-quarter basis. As of September 30, 2018, our net retention rate was 122%, and it has been greater than 120% in each of the last seven quarters. We have benefited from a higher net retention rate from our customers in the 2018 Global 2000, since they often purchase our solutions for one use case or within one department, and then expand across their organization. As such, our net retention rate for our customers in the 2018 Global 2000 was 140% as of September 30, 2018.

We focus on a dollar-based net retention rate metric, because it captures the full impact on revenue of our customers expanding, decreasing, or ending their subscriptions. We do not focus on a numerical-based customer retention rate, because it does not include expansion or contraction and it does not take into account the amount a customer spends and as such does not necessarily correlate consistently to revenue. Because the dollar-based net retention rate also includes expansion and contraction of customers, there is (and will likely continue to be for the foreseeable future) a material disparity between the dollar-based net retention rate and a numerical-based customer retention rate, which by definition cannot exceed 100%. We note that there has not been a material change in our period-over-period actual customer retention rate and associated impact on revenue during the periods presented.

To calculate our net retention rate, we first calculate the subscription revenue in one quarter from a cohort of customers that were customers at the beginning of the same quarter in the prior fiscal year, or cohort customers. We repeat this calculation for each quarter in the trailing four-quarter period. The numerator for net retention rate is the

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sum of subscription revenue from cohort customers for the four most recent quarters, or numerator period, and the denominator is the sum of subscription revenue from cohort customers for the four quarters preceding the numerator period. Net retention rate for the 2018 Global 2000 cohort follows the same calculation for our customers in the 2018 Global 2000 at the initial date of the calculation.

Investing for Growth

Our investment for growth encompasses multiple critical areas, including international growth, enterprise sales, partner network, and product expansion.

Our international revenue represented 19%, 21%, and 23% of our total revenue in the years ended December 31, 2016 and 2017 and the nine months ended September 30, 2018, respectively. We started our international expansion in English-speaking countries, such as Ireland, the United Kingdom, and Australia, as we were able to leverage our core technologies. We historically sold into international markets out of our Provo, Utah headquarters. Since opening our first international office in Dublin, Ireland in 2013, we now have sales offices in nine countries around the globe. These include Australia, Canada, France, Germany, Ireland, Japan, Singapore, and the United Kingdom, along with the United States. See Note 2 to our accompanying financial statements for further information regarding revenue by geographic areas.

In order to expand and further penetrate our enterprise customer base, we have made and plan to continue to make significant investments in expanding our direct sales teams and enterprise grade delivery capability, as well as increasing our brand awareness. We have also added sales support capability, such as subject matter experts and solution architects to help provide turnkey program delivery.

At our March 2018 X4 Summit, we announced the launch of the Qualtrics Partner Network, or QPN. We are building out a network of content and consulting partners, delivery partners, and technology partners who enrich our offerings, scale our coverage, and help us to reach a broader audience than we would be able to on our own. We expect our partner channel to extend our sales reach and provide implementation leverage both domestically and internationally.

We continue to enable our technology to draw insights and ensure that we are best serving our customers’ needs. We believe this will lead to increased retention and positive customer referrals that will continue to generate new business both within organizations and with new customers. Since 2015, we have established offices in Seattle and Poland to expand our engineering headcount focused on product innovation and development.

Key Business Metrics

We review a number of operating and financial metrics, including the following key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.

Large Customers

We define our large customers as those spending more than $100,000 in subscription annual contract value, or Subscription ACV, on our XM^™ Platform. We believe that our ability to increase the number of large customers is an indicator of our market penetration, the growth of our business, and our potential future business opportunities. Increasing awareness of our platform and its broad range of capabilities, coupled with the mainstream adoption of cloud-based technology, has expanded the diversity of our large customer base to include organizations of different sizes across virtually all industries. This cohort represented approximately 53% of our subscription revenue for the nine months ended September 30, 2018.

The below table sets forth the number of our large customers as of the respective dates presented:

					Growth Rate
	December 31,		September 30,		December 31,		September 30,
	2016	2017	2017	2018	2017		2018
Large customers	288	454	406	635	58	%	56	%

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Calculated Billings

We use calculated billings to measure and monitor our ability to provide our business with the working capital generated by upfront payments from our customers and our ability to sell subscriptions to our XM^™Platform to both existing and new customers. Calculated billings represent our total revenue plus the change in deferred revenue in the period, as presented in our consolidated financial statements. Calculated billings in any particular period aims to reflect amounts invoiced for subscriptions to access our XM^™Platform, Research on Demand, and professional services related to our new and existing customers. We primarily invoice our subscription customers annually in advance. While we believe that calculated billings provides valuable insight into the cash that will be generated from sales of our subscriptions, Research on Demand, and professional services, this metric may vary from period-to-period for a number of reasons, and therefore has a number of limitations as a quarter-to-quarter or year-over-year comparative measure. These reasons include, but are not limited to, (i) a variety of customer contractual terms could result in some periods having a higher proportion of multi-year time-based subscriptions than other periods, (ii) as we experience an increasing number of larger sales transactions, the timing of executing these larger transactions has and will continue to vary, with some transactions occurring in quarters subsequent to or in advance of those that we anticipated, (iii) fluctuations in payment terms affecting the billings recognized in a particular period, and (iv) seasonality in our billings, as described in quarterly trends. Because of these and other limitations, you should consider calculated billings along with revenue and our other GAAP financial results.

							Period-over-Period Growth Rate
	Year Ended December 31,				Nine Months Ended September 30,		Year Ended December 31,	Nine Months Ended September 30,
	2016		2017		2017	2018	2017	2018
	(In thousands)
Revenue	$	190,603	$	289,903