SAP Unit Qualtrics Heads for IPO
December 28 2020 - 6:08PM
Dow Jones News
By Matt Grossman and Maureen Farrell
German business software giant SAP SE said it would return
Qualtrics International Inc. to public markets, in a listing
expected to value the business at least 50% above what it paid for
the startup two years ago.
SAP said in November 2018 it planned to buy the
customer-relationship management software vendor shortly before
Qualtrics was about to go public. SAP paid around $8 billion, one
of its largest acquisitions ever, in a bid to keep pace with rivals
such as Salesforce.com Inc.
Provo, Utah-based Qualtrics, in a regulatory filing Monday, set
an initial price range of between $20 and $24, which would value
the company on a fully diluted basis between $12 billion and $14.4
billion, according to a person familiar with the matter. Pricing
can change based on investor feedback until the day before a
company's stock starts trading.
SAP CEO Christian Klein in July said the company would take
Qualtrics public while remaining the majority shareholder. The
deal, he said, would allow Qualtrics to better pursue non-SAP
business opportunities.
Qualtrics shares will trade on the Nasdaq under the ticker
symbol "XM." SAP will retain a controlling stake in Qualtrics
following the planned IPO, including all of the company's Class B
shares that give it extra voting rights.
The listing comes amid a tumultuous period of the German tech
company, in part brought on by the pandemic. SAP in April abandoned
its dual-chief-executive structure, less than six months after
embracing the leadership model. It said the move was aimed at
expediting decision-making during the health crisis after the
company cut its full-year guidance. In October, the Walldorf,
Germany-based company again cut its outlook as coronavirus cases
began to surge again.
SAP's acquisition of Qualtrics, which closed in 2019, helped the
company improve its competitiveness in the cloud-computing market,
SAP has said. Shares of companies that provide cloud services, such
as Snowflake Inc. and ServiceNow Inc., run by former SAP CEO Bill
McDermott, have surged during the pandemic as more businesses have
embraced such services. SAP's shares are down 12.5% this year.
In its filing, Qualtrics said that Silver Lake would purchase
$550 million of its stock, including 15 million shares at $21.64
per share and the remainder at the IPO price as part of the
offering. Silver Lake, earlier this year, provided financing to
pandemic-hit Airbnb Inc. with warrants that, when exercised, would
value the company at $18 billion. Airbnb was valued at $47 billion
on a fully diluted basis at its IPO price when it made its debut in
December. Its stock price has more than doubled since it made its
debut.
Qualtrics, in the regulatory filing, said this year's sales
through the end of September rose to $415 million, up from $309
million over the year-prior period. It recorded a $258 million net
loss for the first nine months, compared with a $860.4 million loss
in the same period a year earlier.
Qualtrics said it has more than 12,000 customers, and over 3,300
employees spread across more than 25 countries. The company was
founded in 2002 by Ryan Smith, who served as chief executive until
this summer and remains the company's chairman. Zig Serafin, a
former Microsoft Corp. executive, took over as CEO in July.
The planned IPO helps cap a year in which tech companies have
seen their valuations soar to the highest levels since the dot-com
bubble of the early 2000s. Airbnb is now valued at around $93
billion, far more than traditional lodging companies such as
Marriott International Inc. or Hilton Worldwide Holdings Inc.
Snowflake Inc., a data-warehousing company that held its trading
debut in September, is worth more than 180 times the $89 million in
revenue is earned in the 12 months to October.
Write to Matt Grossman at matt.grossman@wsj.com and Maureen
Farrell at maureen.farrell@wsj.com
(END) Dow Jones Newswires
December 28, 2020 18:53 ET (23:53 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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