SAP Acquires Cloud Unicorn Qualtrics For $8 Billion Just Before Its IPO

Qualtrics CEO Ryan Smith

SAP is acquiring survey software maker Qualtrics for $8 billion

SAP is acquiring Qualtrics for $8 billion just before its planned IPO. The all-cash deal has been approved by the boards of both companies and by Qualtrics shareholders, SAP said in a statement on Sunday.

Qualtrics competes with SurveyMonkey, which went public in September. Qualtrics is bigger and growing faster than SurveyMonkey and is also more profitable.

SAP has been counting on new cloud products for growth as the transition away from traditional desktop software has taken business from its core enterprise resource planning business. In October, the German software company raised its outlook following a 41 percent jump in third-quarter cloud revenue. SAP said it now expects revenue growth of 7.5 percent to 8.5 percent this year, up from the prior range of 6 to 7.5 percent.

The deal is SAP’s second-biggest acquisition ever, following the $8.3 billion purchase of travel and expense software company Concur in 2014. To build its cloud business, SAP acquired Success Factors in 2011 for $3.4 billion, and earlier this year purchased Callidus for sales performance management at a price of $2.4 billion.

Qualtrics is the latest software company to get acquired just before its planned IPO. Cisco bought AppDynamics in 2017 right before its debut, and Workday bought Adaptive Insights earlier this year prior to an IPO.

It also marks another blockbuster software deal and comes just two weeks after IBM announced plans to buy Red Hat for $34 billion, the industry’s biggest ever acquisition. Earlier this year, Microsoft bought GitHub for $7.5 billion and Salesforce paid $6.5 billion for MuleSoft.

J.P. Morgan Chase advised SAP on the deal. Qatalyst Partners, Frank Quattrone’s firm, advised Qualtrics even though Goldman Sachs and Morgan Stanley were the listed lead banks for the IPO. Goldman and Morgan Stanley did not know about the sale, according to a person familiar with the matter, who asked not to be named because the discussions were private.

Qualtrics was founded in 2002 by brothers Ryan and Jared Smith and their dad, Scott, along with Stuart Orgill, who resigned from the board last year. The company had 1,915 employees as of Sept. 30, and is based in Provo, Utah.

Qualtrics has more than 9,000 customers, including BlackRock, Kellogg, Microsoft, Mastercard and Under Armour. In addition to SurveyMonkey, Qualtrics said its competitors include Aon Hewitt, Medallia and Willis Towers Watson.

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