German business software giant SAP SE said it would return Qualtics International Inc. to the public markets, hoping to price the business at least 50% above what it paid for the startup two years ago.
Provo, Utah-based Qualtrix, in a regulatory filing on Monday, set an initial price range of between $ 20 to $ 24, which, according to a person familiar with the case, cost the company between $ 12 billion and $ 14.4 billion altogether. Will give a price on a diluted basis. Pricing may change depending on the response of the investor until one day before the start of trading of a company’s stock.
SAP CEO Christian Klein said in July that the company would make Qualtix public while being a majority shareholder. The deal, he said, would allow Qualtix to improve non-SAP business opportunities.
Qualtrix shares will trade on the Nasdaq under the ticker symbol XM. SAP will retain a controlling stake in Qualtrics after the planned IPO, which includes all Class B shares of the company that give it additional voting rights.
In part brought by the epidemic, the period is too long for the German tech company. SAP abandoned its dual-chief-executive structure in April, less than six months after adopting the leadership model. The move was aimed at accelerating decision-making during the health crisis after the company cut its full-year guidance. In October, the German company Waldorf again cut its outlook as cases of coronovirus began to increase again.
SAP said the acquisition of Qualtrix, which closed in 2019, helped the company improve its competitiveness in the cloud-computing market. Shares of companies providing cloud services like Snowflake Inc.
And ServiceNow Inc.
Powered by former SAP CEO Bill McDermott, it has grown during the epidemic as more businesses have adopted such services. Shares of SAP are down 12.5% this year.
In its filing, Qualtrix stated that technology investment firm Silver Lake would buy $ 550 million of its stock, including 15 million shares at $ 21.64 per share, and the remainder at the IPO price as part of the offering. Earlier this year Silver Lake provided funding to the pandemic affected AirBnB Inc.
With the warrant, when exercised, the company would be valued at $ 18 billion. Airbnb’s IPO value at its inception in December was $ 47 billion on a fully diluted basis. Since its inception, its share price has more than doubled.
Qualitrix, in regulatory filings, reached $ 550 million in sales this year at the end of September, up from $ 418 million in the year-ago period. It reported a net loss of $ 258 million in the first nine months, compared to a loss of $ 860.4 million in the same period a year earlier.
Qualtrix said it has more than 12,000 customers, and more than 3,300 employees spread across more than 25 countries. The company was founded in 2002 by Ryan Smith, who served as chief executive until this summer and remains president of the company. Zig Serafin, a former Microsoft Corp.
The executive took over as CEO in July.
The planned IPO helps cap a year in which tech companies have raised their valuations to the highest level since the dot-com bubble of the early 2000s. Airbnb is now valued at around $ 93 billion, far more than traditional lodging companies such as Marriott International. Inc.
Or Hilton Worldwide Holdings Inc.
Snowflake Inc., a data-warehousing company that made its trading debut in September, is valued at more than $ 180 million in revenue in the 12 months to October.
Write Matt Grossman at [email protected] and Maureen Farrell at maureen.farrell.wsj.com
Improvement and amplification
Qualtrix said sales at the end of September increased from $ 418 million to $ 550 million in the year-ago period. An earlier version of this article incorrectly stated that sales increased from $ 309 million to $ 415 million. (Corrected on 29 December)
Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8