●

Total revenue was $95.4 million, an increase of 20% year-over-year.

●

Enterprise sales revenue was $27.4 million, an increase of 53% year-over year. Enterprise sales revenue accounted for approximately 29% of total revenue, up from approximately 23% in Q3 2019. We ended the quarter with approximately 7,700 enterprise sales customers, up 25% from approximately 6,100 in Q3 2019.

●

Self-serve revenue was $68.0 million, an increase of 11% year-over-year.

●

Deferred revenue was $165.1 million, an increase of 24% year-over-year. Remaining performance obligations (RPO) were $183.3 million, an increase of 20% year-over-year.

●

Paying users totaled approximately 803,000, an increase of approximately 90,000, or 13% from more than 713,000 in Q3 2019, and an increase of approximately 22,000 paying users from Q2 2020. Approximately 87% of our paying users were on annual plans, up from 82% a year ago.

●

Average revenue per user was $478, up approximately 7% from $448 in Q3 2019.

●

GAAP operating margin was negative 23.7% and non-GAAP operating margin was 2.2%.

●

GAAP net loss was $26.1 million and GAAP basic and diluted net loss per share was $0.19. Non-GAAP net loss was $1.3 million and non-GAAP basic and diluted net loss per share was approximately $0.01.

●

Net cash provided by operating activities was $17.9 million and free cash flow was $16.2 million for 18.7% and 17.0% margin, respectively.

●

Cash and cash equivalents totaled $206.3 million and total debt was $214.1 million for net debt of $7.8 million as of September 30, 2020.

●

Launched the GetFeedback platform, SurveyMonkey’s easy-to-deploy, cost-efficient customer experience (CX) solution that helps organizations set up their CX program within days to quickly understand and act on customer insights. Combining the power of the GetFeedback and Usabilla solutions acquired by SurveyMonkey in 2019, the unified platform offers customers a cohesive user experience to manage programs across any digital channel. The latest features include an AI-powered analytics layer and the ability to unify data and customer attributes, CX program automation, and integration with customers’ existing systems of record like Salesforce, Microsoft, Slack, and Jira.

●

Hosted its inaugural CX Impact Summit for organizations and leaders focused on customer experience. The well-attended virtual event featured the launch of the GetFeedback platform, over 25 speakers from Salesforce, Box, PagerDuty, Snap Inc., InVision, CustomerThink, and other CX-minded companies, and 15 virtual sessions across three tracks.

●

Announced plans to launch a robust integration between GetFeedback and Salesforce Commerce Cloud to deepen the platform’s connection with Salesforce solutions and strengthen the link between feedback and action for joint customers.

●

Formed a launch partnership with Zoom to expand its integration and improve the virtual feedback experience.

●

Announced its latest app release for Microsoft Teams to help organizations use in-the-moment feedback to improve employee experience through new diversity, equity, and inclusion survey templates, shared analytics, private and expanded surveys, and enhanced security.

●

Launched Contributor Seats as part of SurveyMonkey Team plans to help distributed workforces collaborate more effectively by providing more flexibility on who can create and own surveys, or leverage survey results to make key decisions.

●

Launched the SurveyMonkey Technology Ecosystem Program (STEP), an expanded partner platform that will allow companies to build, launch, and scale their SurveyMonkey integrations with developer resources and go-to-market opportunities.

●

Launched its Tableau Election Data Hub and Exclusive Polling Partnership with Axios to provide broad access to public opinion data driving one of the most-watched elections of our lifetimes.

●

Became a Charter Member of The Board Challenge, a new initiative to help improve the representation of Black directors in corporate U.S. boardrooms.

●

Released its latest Mobility Confidence Index Study with J.D. Power, which revealed a slight decrease in attitudes toward autonomous and electric vehicles in late 2020 compared to earlier this year.

●

Published research on the current state of customer experience, which indicated that companies with no formal CX program had the lowest rate of financial growth (33%), while organizations with established (50%) and advanced (62%) CX programs were much more likely to experience growth, according to respondents. The company published an additional study, Adapting in Times of Crisis 2020, that highlights curiosity and agility as the top characteristics needed for companies to successfully navigate the pandemic.

Q4 2020

Revenue

$99 million - $101  million

19% YoY growth at mid-point

Non-GAAP operating margin

2% to 4%

(in thousands)

September 30, 2020

December 31, 2019

Assets

Current assets:

Cash and cash equivalents

$

206,334

$

131,035

Accounts receivable, net

20,434

17,795

Deferred commissions, current

4,630

3,078

Prepaid expenses and other current assets

8,673

9,382

Total current assets

240,071

161,290

Property and equipment, net

22,510

35,072

Operating lease right-of-use assets

58,496

63,904

Capitalized internal-use software, net

29,802

33,156

Acquisition intangible assets, net

23,697

33,150

Goodwill

465,602

462,927

Deferred commissions, non-current

8,464

5,384

Other assets

8,781

9,376

Total assets

$

857,423

$

804,259

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

5,752

$

2,677

Accrued expenses and other current liabilities

15,715

16,077

Accrued compensation

25,693

24,031

Deferred revenue, current

164,282

139,990

Operating lease liabilities, current

8,091

8,381

Debt, current

1,900

1,900

Total current liabilities

221,433

193,056

Deferred revenue, non-current

776

1,015

Deferred tax liabilities

5,480

4,870

Debt, non-current

212,191

213,616

Operating lease liabilities, non-current

76,340

82,668

Other non-current liabilities

9,402

7,050

Total liabilities

525,622

502,275

Commitments and contingencies

Stockholders’ equity:

Preferred stock

—

—

Common stock

1

1

Additional paid-in capital

806,002

705,143

Accumulated other comprehensive income (loss)

1,807

(444

)

Accumulated deficit

(476,009

)

(402,716

)

Total stockholders’ equity

331,801

301,984

Total liabilities and stockholders’ equity

$

857,423

$

804,259

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except per share amounts)

2020

2019

2020

2019

Revenue

$

95,429

$

79,317

$

274,635

$

223,097

Cost of revenue ⁽¹⁾⁽²⁾

21,899

19,626

62,852

56,203

Gross profit

73,530

59,691

211,783

166,894

Operating expenses:

Research and development ⁽¹⁾

30,068

22,718

83,196

65,931

Sales and marketing ⁽¹⁾⁽²⁾

43,875

30,926

128,544

86,665

General and administrative ⁽¹⁾

22,181

20,992

65,452

61,294

Restructuring

—

—

—

(66

)

Total operating expenses

96,124

74,636

277,192

213,824

Loss from operations

(22,594

)

(14,945

)

(65,409

)

(46,930

)

Interest expense

2,379

3,572

7,887

10,878

Other non-operating income, net

(143

)

(887

)

(1,277

)

(3,441

)

Loss before income taxes

(24,830

)

(17,630

)

(72,019

)

(54,367

)

Provision for (benefit from) income taxes

1,289

(1,320

)

1,274

(1,802

)

Net loss

$

(26,119

)

$

(16,310

)

$

(73,293

)

$

(52,565

)

Net loss per share, basic and diluted

$

(0.19

)

$

(0.12

)

$

(0.53

)

$

(0.40

)

Weighted-average shares used in computing basic and diluted net loss per share

141,034

133,417

138,907

130,434

(1)

Includes stock-based compensation, net of amounts capitalized as follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands)

2020

2019

2020

2019

Cost of revenue

$

1,222

$

718

$

3,229

$

2,805

Research and development

8,322

5,468

22,275

15,863

Sales and marketing

5,912

2,918

15,096

8,714

General and administrative

6,150

5,678

17,979

17,665

Stock-based compensation, net of amounts capitalized

$

21,606

$

14,782

$

58,579

$

45,047

(2)

Includes amortization of acquisition intangible assets as follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands)

2020

2019

2020

2019

Cost of revenue

$

1,800

$

1,557

$

5,813

$

3,448

Sales and marketing

1,270

964

3,983

2,267

Amortization of acquisition intangible assets

$

3,070

$

2,521

$

9,796

$

5,715

Nine Months Ended September 30,

(in thousands)

2020

2019

Cash flows from operating activities

Net loss

$

(73,293

)

$

(52,565

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

36,328

32,468

Non-cash leases expense

9,958

9,185

Stock-based compensation expense, net of amounts capitalized

58,579

45,047

Deferred income taxes

608

(1,866

)

Provision for doubtful accounts

1,156

309

Gain on sale of a private company investment

(1,001

)

(1,001

)

Other

1,834

143

Changes in assets and liabilities:

Accounts receivable

(3,929

)

(1,382

)

Prepaid expenses and other assets

(6,900

)

(2,908

)

Accounts payable and accrued liabilities

5,851

5,955

Accrued compensation

1,689

(1,401

)

Deferred revenue

24,242

23,486

Operating lease liabilities

(11,135

)

(10,237

)

Net cash provided by operating activities

43,987

45,233

Cash flows from investing activities

Acquisitions, net of cash acquired

—

(114,603

)

Purchases of property and equipment

(772

)

(2,026

)

Capitalized internal-use software

(7,051

)

(9,593

)

Proceeds from sale of a private company investment and other

1,095

1,001

Net cash used in investing activities

(6,728

)

(125,221

)

Cash flows from financing activities

Proceeds from stock option exercises

37,301

41,846

Proceeds from employee stock purchase plan

3,082

2,662

Repayment of debt

(1,650

)

(1,650

)

Net cash provided by financing activities

38,733

42,858

Effect of exchange rate changes on cash

(957

)

(435

)

Net increase (decrease) in cash, cash equivalents and restricted cash

75,035

(37,565

)

Cash, cash equivalents and restricted cash at beginning of period

131,683

154,371

Cash, cash equivalents and restricted cash at end of period

$

206,718

$

116,806

Supplemental cash flow data:

Interest paid for term debt

$

7,386

$

10,391

Income taxes paid

$

709

$

756

Non-cash investing and financing transactions:

Fair value of common stock issued as acquisition consideration

$

—

$

36,204

Stock compensation included in capitalized software costs

$

1,692

$

2,889

Lease liabilities arising from obtaining right-of-use assets, net

$

—

$

7,548

Derecognized financing obligation related to building due to adoption of ASC 842

$

—

$

92,009

Derecognized building due to adoption of ASC 842

$

—

$

71,781

Three Months Ended

(in thousands)

Sep. 30, 2020

Jun. 30, 2020

Mar. 30, 2020

Dec. 31, 2019

Sep. 30, 2019

Jun. 30, 2019

Mar. 30, 2019

Self-serve revenue

$

68,001

$

65,398

$

63,107

$

62,948

$

61,348

$

60,071

$

57,619

Enterprise revenue

27,428

25,543

25,158

21,376

17,969

15,068

11,022

Revenue

$

95,429

$

90,941

$

88,265

$

84,324

$

79,317

$

75,139

$

68,641

Year Ended December 31,

(in thousands)

2019

2018

Self-serve revenue

$

241,986

$

220,822

Enterprise revenue

65,435

33,502

Revenue

$

307,421

$

254,324

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except percentages)

2020

2019

2020

2019

GAAP Loss from operations

$

(22,594

)

$

(14,945

)

$

(65,409

)

$

(46,930

)

GAAP Operating margin

(24

)%

(19

)%

(24

)%

(21

)%

Stock-based compensation, net

21,606

14,782

58,579

45,047

Amortization of acquisition intangible assets

3,070

2,521

9,796

5,715

Restructuring

—

—

—

(66

)

Non-GAAP Income from operations

$

2,082

$

2,358

$

2,966

$

3,766

Non-GAAP Operating margin

2

%

3

%

1

%

2

%

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except per share amounts)

2020

2019

2020

2019

GAAP Net loss

$

(26,119

)

$

(16,310

)

$

(73,293

)

$

(52,565

)

GAAP Net loss per diluted share

$

(0.19

)

$

(0.12

)

$

(0.53

)

$

(0.40

)

Weighted-average shares used to compute GAAP net loss per diluted share

141,034

133,417

138,907

130,434

Stock-based compensation, net

21,606

14,782

58,579

45,047

Amortization of acquisition intangible assets

3,070

2,521

9,796

5,715

Restructuring

—

—

—

(66

)

Gain on sale of a private company investment

—

—

(1,001

)

(1,001

)

Income tax effect on Non-GAAP adjustments ⁽²⁾

97

(1,029

)

72

(1,219

)

Non-GAAP Net loss

$

(1,346

)

$

(36

)

$

(5,847

)

$

(4,089

)

Non-GAAP Net loss per diluted share

$

(0.01

)

$

—

$

(0.04

)

$

(0.03

)

Weighted-average shares used to compute Non-GAAP net loss per diluted share

141,034

133,417

138,907

130,434

(1)

Please see Appendix A for explanation of non-GAAP measures used.

(2)

Due to the full valuation allowance on our US deferred tax assets, there were no tax effects associated with the Non-GAAP adjustments for stock-based compensation, net, restructuring and gain on sale of a private company investment. Non-GAAP adjustments pertain to the income tax effects of amortization of acquisition-related intangible assets.

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands)

2020

2019

2020

2019

Net cash provided by operating activities

$

17,892

$

23,521

$

43,987

$

45,233

Purchases of property and equipment

—

(691

)

(772

)

(2,026

)

Capitalized internal-use software

(1,679

)

(3,066

)

(7,051

)

(9,593

)

Free cash flow

$

16,213

$

19,764

$

36,164

$

33,614

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except percentages)

2020

2019

2020

2019

GAAP Gross profit

$

73,530

$

59,691

$

211,783

$

166,894

GAAP Gross margin

77

%

75

%

77

%

75

%

Stock-based compensation, net

1,222

718

3,229

2,805

Amortization of acquisition intangible assets

1,800

1,557

5,813

3,448

Non-GAAP Gross profit

$

76,552

$

61,966

$

220,825

$

173,147

Non-GAAP Gross margin

80

%

78

%

80

%

78

%

GAAP Research and development

$

30,068

$

22,718

$

83,196

$

65,931

GAAP Research and development margin

32

%

29

%

30

%

30

%

Stock-based compensation, net

8,322

5,468

22,275

15,863

Non-GAAP Research and development

$

21,746

$

17,250

$

60,921

$

50,068

Non-GAAP Research and development margin

23

%

22

%

22

%

22

%

GAAP Sales and marketing

$

43,875

$

30,926

$

128,544

$

86,665

GAAP Sales and marketing margin

46

%

39

%

47

%

39

%

Stock-based compensation, net

5,912

2,918

15,096

8,714

Amortization of acquisition intangible assets

1,270

964

3,983

2,267

Non-GAAP Sales and marketing

$

36,693

$

27,044

$

109,465

$

75,684

Non-GAAP Sales and marketing margin

38

%

34

%

40

%

34

%

GAAP General and administrative

$

22,181

$

20,992

$

65,452

$

61,294

GAAP General and administrative margin

23

%

26

%

24

%

27

%

Stock-based compensation, net

6,150

5,678

17,979

17,665

Non-GAAP General and administrative

$

16,031

$

15,314

$

47,473

$

43,629

Non-GAAP General and administrative margin

17

%

19

%

17

%

20

%

(1)

Please see Appendix A for explanation of non-GAAP measures used.

•

Stock-based compensation, net: We incur stock based-compensation expense on a GAAP basis resulting from equity awards granted to our employees. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.

•

Amortization of intangible assets: We incur amortization expense on intangible assets on a GAAP basis resulting from prior acquisitions. Amortization of acquired intangible assets is inconsistent in amount and frequency and is significantly affected by the timing and size of any acquisitions. Investors should note that the use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our future period revenues as well. Amortization of acquired intangible assets will recur in future periods.

•

Restructuring: Restructuring expenses consist of employee severance and other exit costs. We believe it is useful for investors to understand the effects of these items on our total operating expenses. We expect that restructuring costs will generally diminish over time with respect to past acquisitions and/or strategic initiatives.  However, we may incur these expenses in future periods in connection with any new acquisitions and/or strategic initiatives.

•

Gain on sale of a private company investment: Gain on sale of a private company investment was recognized on a GAAP basis resulting from the sale of certain corporate assets. We expect that such transactions will be infrequent in occurrence and are therefore excluded from our Non-GAAP results as they do not otherwise relate to our core business operations.