As expected, SAP will sell its 423 million shares in Qualtrics to joint buyers Silver Lake (a US private equity group) and CPP Investments (the Canada Pension Plan Investment Board) as part of a deal worth $12.4 billion.
The transaction has been recommended by the board of Qualtrics, which includes the SAP Executive and Supervisory Boards.
Christian Klein, SAP’s CEO and member of the Executive Board said:
“Silver Lake has both the operational expertise and the track record with software companies to help Qualtrics extend its leadership in the XM category it pioneered. Since we acquired Qualtrics in 2019 the company has more than tripled its revenue while delivering profitability. SAP intends to remain a close go-to-market and technology partner, servicing joint customers and continuing to contribute to Qualtrics’ success.”
Over the time of SAP’s ownership Qualtrics has been adopted by a further 8000 companies and brands. Last year Qualtrics generated $1.5 billion in annual sales with 80% of that coming from subscriptions.
SAP acquired the company for $8 billion in cash and offloaded a small portion of their shares as part of the initial public offering in 2021. They are now divesting the remaining 71% stake in the company.
Though selling its stake in a major experience management company, SAP has been keen to show that it is continuing to innovate in the area of customer relationship management. A statement was jointly posted by SAP Executives Julia White and Thomas Saueressig:
“SAP will continue to deliver customer experience (CX/CRM) solutions. Now we’ll focus on adding an industry lens, delivering industry-tailored CX solutions and bringing the front office together with the back office to provide the unmatched value customers expect from SAP solutions.”
SAP launched a new cloud-based version of SAP Sales Cloud and added SAP Customer Data Platform functions for B2B contexts in October last year.
So while SAP is going ahead with its sale of Qualtrics this does not signify a retreat from the CRM space. SAP is looking for ways to create closer links between all sections of its ERP portfolio including CRM functions and embedding AI technology in its customer-facing solutions.
The sale of Qualtrics will add to SAP’s operating cash flow as it pivots towards being primarily a cloud-based Software-as-a-Service ERP provider. A close strategic relationship including cross-selling opportunities between SAP and Qualtrics will remain in place.
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