Implications of a SurveyMonkey IPO
Updated: Jan 21, 2020
On August 29, 2018 SurveyMonkey filed an initial registration statement with the SEC (symbol “SVMK”) to float an IPO; the offering is now expected in late September. A recent update to its IPO filing includes a first pass at pricing; it has printed a price range of $9-$11 which, at a midpoint valuation, is $1.29 billion (lower than originally estimated).
In 2017, SurveyMonkey had revenues of $219MM, up 5.5% from 2016, and appears to be on track for around $240MM in 2018. However, the company is losing money: the loss of $24MM in 2017 has already been exceeded in the first six months of 2018 ($27MM). The company attributes this to increased R&D spending, but this accounts for $15MM of that figure.
In the research space, there are other possible IPO candidates, e.g., Qualtrics (we expect an IPO eventually), Decipher (part of FocusVision), and Confirmit (already listed on the Oslo exchange). Of all of the SaaS offerings, SurveyMonkey has perhaps the most to gain as it contemplates expansion – or sets itself up to be acquired. The list of potential suitors could include social media, e.g., Facebook (Sheryl Sandberg owns 5% of SVMK) or Google, and on the research/data science side are ResearchNow/SSI, IBM (SPSS), or even Microsoft.
Yet the opposite might be true: SVMK notes that their large user base, offerings, extensive data set, and integrations provide opportunities to drive acquisition: remember Zoomerang?
The S1 statement is interesting from a trends standpoint, as SVMK makes the following observations (paraphrased) about the survey research industry:
The nature of engagement between organizations and their key constituents is fundamentally changing by becoming more open, bi-directional and frequent. Internet-enabled business models, together with rapidly evolving societal changes have revolutionized constituent expectations for service, speed and experience. Organizations that ignore, misinterpret or react too slowly to feedback risk falling behind the competition.
“Big data” alone is insufficient to optimize decision making. To make good decisions, organizations need to marry “big data” with “people powered data” so that organizations can see beyond basic trends and better understand issues affecting key constituents.
Employees are increasingly empowered to make decisions, and decision making within organizations has become decentralized. Employees throughout organizations are directly collecting and analyzing feedback. Access to information enables more decisions to be made at more levels across the organization. This accelerates the operating speed of the organization and increases accountability for decision making at all levels. As this data set is aggregated, organizational leadership is also using these insights to improve organization-wide decision making.
Technology adoption is changing: IT solutions are now shaped by decentralized use. As organizations let employees become more empowered, technology becomes accessible to more individuals with varying levels of skill. IT departments then must step in and impose enterprise-grade security, customized company branding, and integration with software applications.
SVMK bolsters its IPO case by noting that quality research requires design, analysis time, and expertise that many companies do not have. Thus, individuals with absolutely no research expertise can gather and analyze data like a pro. As a long-time marketing research consultant, I find this assertion to be silly. Believe what you want; an additional planned layer of AI technology is envisioned to add support to this naive conceptual model.
Of note, a study conducted by SVMK in 2017 showed that 45% of business users who utilize online survey software considered SurveyMonkey to be their survey platform of choice. This makes perfect sense to me: SurveyMonkey fits the needs of individuals and small teams who need answers to basic questions. The design tool and integrations are good, and the online reporting is solid (better than several enterprise platforms), and the mobile app is very good.
In the right hands, SurveyMonkey can work as well as enterprise platforms, giving SVMK much more runway to grow. Conversely, growth in enterprise platforms like Qualtrics is flattening, as more revenue must come from consulting services and thus stealing business from full-service research firms. And, unlike many enterprise platforms, SVMK has developed a huge stable of free integrations to expand its functionality, while other companies charge ridiculous amounts for the same thing.
There is no question that the impact of SurveyMonkey on the survey research industry has been vast: there are 60 million registered users, of which 16 million are active. While most accounts are non-revenue generating (i.e., free), there are still 600K paying customers across 300K organizations.