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SAP acquired Qualtrics back in January 2019 for $8 billion thus halting the intended IPO.
Cloud-based subscription software platform Qualtrics International Inc has filed for an IPO with the United States Securities and Exchange Commission (SEC) after two years under SAP SE (NYSE: SAP). According to its IPO prospectus, Qualtrics has set the initial price range between $20 and $24. Hereby anticipating to raise its valuation from $8 billion to between $12 and $14 billion.
Notably, Qualtrics will trade on the Nasdaq exchange under the ticker “XM.” SAP acquired Qualtrics back in January 2019 for $8 billion thus halting the intended IPO. Apparently, Qualtrics intended to raise gross proceeds of $200 million through an initial public offering (IPO) of its Class B shares, hence making the acquisition attractive.
As a result of the IPO announcement, SAP shares jumped 3.85% on Monday to close the day trading at $130.89. In addition, they were up approximately 0.75% during Tuesday’s premarket.
Being a tech company that provides much-needed services to revamp the economy from the coronavirus devastation, both SAP and Qualtrics are set to benefit significantly from the surge in demand for their services. As a result, its IPO is set to attract a huge investor base and likely to increase its prices after the launch.
After the IPO, SAP will own approximately 80% of the total outstanding shares, thus the majority stakeholder. Other private investors have chipped in, whereby Silver Lake is buying approximately 4% of the stock for $550 million, while Smith is buying 1% for $120 million.
As a result, Silver Lake’s Egon Durban is expected to join the Qualtrics board, alongside Zoom CFO Kelly Steckelberg.
Qualtrics Market Outlook Ahead of IPO
Having been under one of the largest software company, Qualtrics has seen its revenue and infrastructure tremendously grow in the past two years.
Notably, Qualtrics’ revenue jumped over 30% in the first three-quarters of 2020 to $550 million, from $413.4 million the same period last year and $289.6 million in 2018, just before the acquisition.
In the first nine months of 2020, Qualtrics recorded an operational loss of $24.9 million from $30.9 million in the same period a year earlier. However, its sales climbed from $309 million to $415 in the first nine months in comparison to the same period last year.
According to its IPO prospectus, Qualtrics reported having a customer base of up to 12,000 globally with 3,300 global employees.
Previously, Qualtrics has been involved in private funding including the $70 million in Series A investment from Sequoia Capital and Accel back in 2012. Two years later, the company conducted its Series B funding, led by Insight Partners worth $150 million. And back in 2017, it raised $180 million from returning investors Accel, Sequoia Capital, and Insight Venture Partners in a Series C funding round.