SAP announces IPO of Qualtrics

The German software giant SAP says it intends to float American subsidiary Qualtrics, which it bought for $8bn two years ago just days before the US company had itself planned to go public.

The acquisition of Qualtrics, which specialises in gathering and analysing customer experience data, was one of SAP’s largest deals, designed to strengthen its portfolio of cloud-based services.

The Walldorf-based group said it intended to remain Qualtrics’ largest shareholder, and that the US listing was designed to strengthen the company and help it expand beyond SAP’s customer base.

It added that Qualtrics co-founder Ryan Smith intended to become the company’s largest single shareholder.

Unlike several other SAP subsidiaries, Qualtrics had been operating with a large amount of autonomy. However, its products have only been used by a fraction of SAP’s 440,000 customers.

At SAP’s annual meeting in May, chief executive Christian Klein revealed that Qualtrics had just 12,000 clients, of which roughly 7,000 are existing SAP customers.

However, he emphasised that the development of Qualtrics had “only just started” and that SAP was confident that it was just at the “tip of the iceberg of the opportunities”.

On Sunday evening, as he announced the company’s intention to float Qualtrics, Mr Klein insisted that SAP’s acquisition was “a great success and has outperformed our expectations with 2019 cloud growth in excess of 40 per cent”.

SAP, he added, would remain Qualtrics’ “largest and most important go-to-market and development partner” after its public offering, while the Utah-based company would get “greater independence to build its own ecosystem for experience management through partnerships”.

SAP had hoped that Qualtrics, which was bought while Mr Klein’s predecessor Bill McDermott was still at the helm, would help drive adoption of its core resource-management suite S4/Hana, by offering insights on employees and customers to its corporate clients.

“There are millions of complaints every day about disappointing customer experiences,” Mr McDermott said in 2018, as he laid out the rationale for the purchase. “This is called the experience gap.” 

Most recently, SAP deployed Qualtrics to gather feedback from its customers’ employees about returning to workplaces in the wake of Covid-19.

SAP did not reveal the terms or timing of the planned IPO, saying it would be dependent on the market environment.