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SAP SE's (SAP) Subsidiary Qualtrics Set to Go Public in 2021

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SAP SE’s (SAP - Free Report) subsidiary company Qualtrics is set for initial public offering (IPO) in 2021, per a filing with Securities and Exchange Commission (SEC).SAP’s shares were up 3.5% on Dec 28 and closed at $130.91.

Post the IPO, Qualtrics will have two classes of shares. Qualtrics’ Class B common shares numbering 423.2 million will be entirely held by SAP America.

Qualtrics will be pricing per share of Class A common stock in the range of $20-$24. The company will be listed on Nasdaq under the symbol “XM”. J.P. Morgan and Morgan Stanley are acting as the lead underwriters for Qualtrics’ IPO.

In the filing, Qualtrics disclosed that Silver Lake Technology Management, L.L.C will be buying $550 million worth of Class A shares. Silver Lake will be purchasing $225 million worth of shares at the IPO price and another 15,018,484 shares at $21.64 per share.

SAP SE Price and Consensus

 

SAP SE Price and Consensus

SAP SE price-consensus-chart | SAP SE Quote

 

Also, Q II agreed to buy 6 million Class A shares at $20.00 per share. Q II is controlled by Qualtrics founder and executive chairman Ryan Smith.

The IPO is expected to provide Qualtrics with enhanced agility and autonomy to expand its footprint in the Software-as-a-Service (SaaS)-based experience management software market.

A Look at Qualtrics’ Financial Performance

For the nine months ended Sep 30, 2020, Qualtrics generated revenues of $550 million, up 31% year over year. Subscription revenues amounted to $415 million, up 34% year over year for the nine months ended Sep 30, 2020.

Net loss for the nine months ended Sep 30 came at $258 million compared with $860.4 million for the nine months ended Sep 30, 2019.

In the last 12 months ended Sep 30, 2020, Qualtrics’ revenues climbed 36% year over year to $723 million. Subscription revenues amounted to $535 million, up 35% year over year for the trailing 12 months ended Sep 30, 2020.

Qualtrics boasts of more than 12,000 customers across 25 countries. The company has over 1200 customers with annualized recurring revenue (ARR) of more than $100,000.

The company’s total addressable market is valued at $60 billion in 2020. It has dual headquarters in Provo, UT, and Seattle, Was and was founded in 2002.

SAP acquired Qualtrics for $8 billion in cash in 2019. Post the acquisition, Qualtrics operated as a separate unit under SAP’s Cloud Business Group.

Zacks Rank and Key Picks

Currently, SAP carries a Zacks Rank #3 (Hold).

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Long-term earnings growth rate for Qorvo, Avnet and Cirrus Logic is currently pegged at 15.8% 18.3% and 7.1%, respectively.

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