SAP To Take Its Qualtrics Unit Public

Qualtrics Internatonal Inc filed for an initial public offering (IPO) with the U.S. Securities and Exchange Commission (SEC) on Monday. The filing comes less than two years after the company was acquired by German software giant SAP SE (NYSE: SAP) as part of its move to expand its cloud-based services.

The IPO filing for the Utah-based cloud software firm contains a preliminary price range of $20 to $24 per share with a valuation target between $12 billion and $14.4 billion.

SAP paid $8 billion for Qualtrics in 2018.

Qualtrics will trade on the Nasdaq under the symbol (XM). The ticker refers to experience management, a category of software Qualtrics takes credit for popularizing.

While SAP did not offer a clear explanation as to why it decided to make its subsidiary a semi-independent unit, the firm’s first full year as part of SAP seemed a strong one. According to the filing, Qualtrics saw its revenue jump by more than 30% in the first nine months of FY 2020 to $550 million, from $413.4 million the same period last year.

The filing shows the company recorded an operating loss of $244.1 million for the first three-quarters of 2020, down from $849.2 million for the same period a year ago. It should be noted that $218 million of 2020’s $244.1 million was due to stock-based compensation. If that number gets excluded, the operating loss narrows to $24.9 million, down $6 million from the same period a year earlier.

The filing also shows Qualtrics agreeing to a private placement of $550 million, or little over 4%, with private equity firm Silver Lake. Additionally, Q II — an entity controlled by Qualtrics co-founder Ryan Smith, will buy 1% of the company for $120 million. Silver Lake’s Egon Durban is joining the board, along with Zoom Video Communications, Inc. (ZM) CFO Kelly Steckelberg.

Even after the IPO, SAP will still be the majority shareholder in Qualtrics.

Qualtrics has more than 12,000 customers. It also has about 3,370 full-time employees, up from 1,866 before selling to SAP.

The offering, which is being led by banking giants Morgan Stanley (MS) and JP Morgan (JPM), is expected to close sometime in January.

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About Ari Haruni 142 Articles
Ari Haruni is the Co-Founder & CEO of Wall Street Pit.

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