Plans changed quickly for Qualtrics CEO Ryan Smith.
On Sunday, days before his pioneering experience management (XM) platform was scheduled to go public, Smith sold his company to enterprise software giant SAP for $8 billion. The sale was completed under the condition Smith would stay on as CEO and be given the chance to grow the company he co-founded in 2002.
Qualtrics is a software-as-a-service (SaaS) firm offering a range of data tools and services to gather and analyze customer satisfaction, product testing, brand performance and employee evaluations, among other areas. It provides products and services to more than 9,000 enterprises worldwide, including 99 of the top 100 U.S. business schools, according to Qualtrics, whose clients have included Crate and Barrel, CVS, Neiman Marcus Group, Mastercard and Pandora Media.
Now, Qualtrics will work on behalf of SAP, where its XM technology will support one of the world’s largest business management systems.
“SAP already touches 77 percent of the world’s transactions,” SAP CEO Bill McDermott said. “When you combine our operational data with Qualtrics’ experience data, we will accelerate the XM category with an end-to-end solution with immediate global scale.”
Considering 413,000 business and public customers already rely on SAP for enterprise software, SAP says the addition of Qualtrics’ customer relationship management (CRM) suite will allow its users to manage employees, networks and supply chains with greater efficiency.
“Our mission is to help organizations deliver the experiences that turn their customers into fanatics, employees into ambassadors, products into obsessions and brands into religions,” Smith added. “Supported by a global team of over 95,000, SAP will help us scale faster and achieve our mission on a broader stage. This will put the XM platform everywhere overnight.”
Per the terms of the agreement, SAP will acquire all outstanding shares of Qualtrics for $8 billion, about $7.88 billion of which has been secured through financing. The transaction, expected to close in early 2019, will be the second-largest SaaS acquisition behind Oracle’s $9.3 billion purchase of Netsuite in 2016, according to Techcrunch.
Qualtrics’ headquarters in Provo, Utah, and Seattle will remain operational.
Late last month, Qualtrics submitted a Form S-1 to the SEC that detailed its plans to go public. Along with the required information, it revealed third-quarter data for the company that showed strong year-over-year growth in 2018. Revenue had risen to $105.4 million in the quarter, up from $75.6 million during the same period in 2017. Gross profit jumped to $78.1 million from $54.9 million in 2017.
In a statement announcing the acquisition, Qualtrics said it expects fiscal year 2018 revenue to exceed $400 million and projects a forward growth rate of 40 percent without including potential gains from cooperation with SAP.