SAP to float Qualtrics two years af­ter $8bn takeover

The Daily Telegraph - Business - - Technology Intelligen­ce - By

Michael Cog­ley

GER­MAN soft­ware gi­ant SAP plans to float its cus­tomer sur­vey unit Qualtrics less than two years af­ter it bought it in a block­buster $8bn (£6.2bn) deal.

The pur­chase marked the fi­nal act by for­mer chief ex­ec­u­tive Bill Mc­Der­mott, who touted the deal as a way to ac­cel­er­ate growth by com­bin­ing SAP’s sales force and a trove of op­er­a­tional data with Qualtrics’ cus­tomer ex­pe­ri­ence feed­back.

The Wall­dorf-based com­pany said it now in­tended to float part of Qualtrics in the US but would re­main the ma­jor­ity owner.

An IPO could value Qualtrics, which mea­sures and gen­er­ates re­ports on cus­tomer and em­ployee sat­is­fac­tion, at as much as $18.7bn, ac­cord­ing to Bloomberg In­tel­li­gence anal­y­sis.

Ryan Smith, who started Qualtrics with brother Jared in the base­ment of their par­ents’ home in Utah, will be the largest in­di­vid­ual share­holder and will gain ad­di­tional au­ton­omy un­der the mar­ket list­ing.

The sur­prise about-face sig­nals a strate­gic shift un­der Chris­tian Klein, the new chief ex­ec­u­tive.

“SAP’s ac­qui­si­tion of Qualtrics has been a great suc­cess and has out­per­formed our ex­pec­ta­tions, with 2019 cloud growth in ex­cess of 40pc, demon­strat­ing very strong per­for­mance in the cur­rent set-up,” he said.

Mr Klein added that an IPO would pro­vide the “great­est op­por­tu­nity” for Qualtrics to grow.

“SAP will re­main Qualtrics’ largest and most im­por­tant go-to-mar­ket and re­search and de­vel­op­ment part­ner while giv­ing Qualtrics greater in­de­pen­dence to broaden its base by part­ner­ing and build­ing out the en­tire ex­pe­ri­ence man­age­ment ecosys­tem,” Mr Klein said.

The tim­ing of the IPO will be de­ter­mined later and is sub­ject to mar­ket con­di­tions, SAP said.

The com­pany yes­ter­day raised its out­look for free cash flow in 2020 to €4bn (£3.65bn), which was up from €3.5bn pre­vi­ously.

Op­er­at­ing cash flow will be above €5bn, it said.

Qualtrics’ rev­enue rose 34pc to €168m in the se­cond quar­ter from a year ear­lier.

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