Search
Close this search box.

The SAP Spin-Off of Qualtrics is Official as IPO Paperwork is Filed

The News: The cloud software vendor, which SAP acquired two years ago on the eve of a planned IPO, filed its paperwork with the Securities and Exchange Commission on Monday to carry on as an independent company. The initial pricing range of $20 to $24 a share would value Qualtrics at $12 billion to $14.4 billion, up from the $8 billion SAP paid.

Qualtrics will trade on the Nasdaq under the ticker “XM.” Read the full news piece on CNBC.

Analyst Take: Earlier this year, the news had broken that there would be a likely spin-off of Qualtrics as SAP sought to unwind the massive $8 billion acquisition it had made a few years earlier under previous CEO Bill McDermott. This came at the tail-end of a soft quarter where the company was facing some concerns about its cloud business trajectory. 

The immediate reaction by some was that the Qualtrics deal was a failure and the company was getting out as the ship was taking on water. However, that wasn’t at all my reaction to the deal. Rather, I saw it as a move made from a position of strength by SAP CEO Christian Klein, taking a play out of Michael Dell’s brilliant playbook, which led to Dell Tech’s acquisition of more than 80% of VMware. While Dell is looking at further divestment according to the company’s 13D filling with the SEC, for SAP the move to spin-off Qualtrics will be a financial windfall, especially when IPOs are creating exponential growth rates for in-demand tech companies. (Note the recent Airbnb, Doordash, and C3.ai IPOs). 

Of course, a 100% gain on IPO day is no guarantee, but SAP holding 80% of the stock post-IPO would create a limited number of available shares and create a stir of demand for the remaining float. This could easily push the price north of the $20-$24 range and enable SAP to see its original $8 billion investment more than doubled in a few years. Hard to argue with that strategy. 

Overall Impressions of the SAP Spin-off of Qualtrics

The initial acquisition for SAP was quite a coup and indicated the powerful sway that SAP and McDermott had at the time. The company being only hours from an IPO made it an even bigger indication of SAP’s pull. However, the transition of leadership and the shift that followed has meant a slightly more reserved SAP that appears more focused on its core business and integration of several smaller acquisitions. This especially true as cloud capabilities become a greater demand, and SAP is working to rise to meet that demand. Meanwhile, this move will provide a strong short-term return, and SAP will maintain a controlling interest in Qualtrics. 

My initial sentiment stands. Strong financial engineering and a good overall move for SAP and Qualtrics in the current market conditions.

Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice.

Read more analysis from Futurum Research:

Salesforce’s Acquisition of Slack Could be the First in a String of Several Deals to Remodel Itself

Cisco WebexOne: Cisco Injects Webex with a Massive Dose of Exciting AI-powered Features

Oracle Delivers Solid Q2 as SaaS and Cloud Growth Continues

Image: Qualtrics

Author Information

Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.

From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.

A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.

An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.

SHARE:

Latest Insights:

Adobe Reports Record FY2024 Revenue Driven by Strong Digital Media and Digital Experience Segments While Leveraging AI to Drive Innovation and Meet Analyst Expectations
Keith Kirkpatrick, Research Director at The Futurum Group, analyzes Adobe’s FY2024 performance. Growth in the Digital Media and Digital Experience segments contributed to record revenue while addressing challenges like the impacts of foreign exchange.
Matt Yanchyshyn, VP at AWS, joins Dion Hinchcliffe to share insights on the evolving cloud marketplace landscape, highlighting AWS Marketplace's new features and the impact of GenAI on business operations.
Avi Shetty, Sr. Director at Solidigm, joins Keith Townsend on Six Five On The Road, sharing insights on the indispensable role of high-density storage in powering AI advancements and the collaborative mission with Dell to lead in energy-efficient AI solutions.
Daniel Newman and Patrick Moorhead share insights on how NVIDIA, Microsoft, Qualcomm, OpenText, and Meta navigate AI-driven innovation, supply chain challenges, and market diversification.