Solid numbers in the crisis: SAP brings Qualtrics to the stock exchange

With good financial figures behind him, SAP boss Christian Klein is starting to rebuild the German software company. To present the balance sheet for the second quarter of 2020, the SAP managers surprisingly announced that they wanted to bring Qualtrics to the stock exchange. Walldorf had only acquired the US cloud specialist for experience management in November 2018, four days before it went public – for the proud sum of eight billion dollars.

Klein’s predecessor on the SAP executive chair, today’s ServiceNow boss Bill McDermott, had big plans with Qualtrics. His goal was to redefine the customer relationship management (CRM) market. The aim was to finally stand up to the rival Salesforce, who has dominated the global CRM market for years with its cloud offering and has far outclassed the classic on-premises providers such as SAP.

Qualtrics, founded in 2002, describes itself as a pioneer in Experience Management (XM). With the “Qualtrics Customer Experience” software, companies can find out how customer requirements are changing, which customers offer prospects for their own business and how potential customers can be convinced of their own brand. The users promise that they always have the entire customer experience in view and can react accordingly and improve touch points. From a Qualtrics perspective, the same is also possible for other aspects of experience – for employees, products and your own brand.

From McDermott’s point of view, the added value for the takeover of Qualtrics for the customers was to be able to link their own operational data from the SAP systems with the experience data from the Qualtrics applications. “Together, SAP and Qualtrics will define a new standard, similar to how markets have changed through personalized operating systems, mobile devices and social networks,” commented the ex-SAP boss on the acquisition.

But this business did not really get going, especially since SAP only started building C / 4HANA, a future-proof new CRM platform. Klein and Qualtrics boss Ryan Smith are still trying to sell the software liaison positively. “The takeover of Qualtrics by SAP is a great success,” said the SAP boss and said he would remain Qualtrics’ largest and most important go-to-market and development partner even after an IPO. The Experience Management category and the XM platform will continue to be central elements of the SAP strategy for the intelligent company.

Between the lines, however, it sounds that there was probably no sparking between the two companies. “As part of the SAP cloud portfolio, Qualtrics has operated far more independently than previously acquired SAP companies,” says an official announcement. This had become clear again and again in the past, for example when Smith used his own Qualtrics corporate identity design instead of a SAP template for presentations at large events such as a Sapphire.

But right now, Klein needs a headstrong cloud daughter the least. The users are vehemently demanding that the group should ensure that the various cloud satellites are closely interlinked with the SAP core system. Klein and his team have promised to deliver.

Users demand: SAP has to do more for integration

SAP should remain the majority shareholder of Qualtrics in the future. There was no intention to outsource or otherwise sell this majority stake, it said. Qualtrics CEO Smith plans to become Qualtrics’ largest single shareholder. The prerequisites for an IPO currently seem favorable. Despite the corona crisis, a real stock market rally is currently underway for many tech stocks because investors are withdrawing their investments from classic, more crisis-prone segments such as mechanical engineering and the automotive industry.

This also reflects the development of SAP paper. After the share plummeted to below EUR 90 in the first crisis panic in March, SAP is now scratching new highs around the EUR 140 mark. With a capitalization of around 170 billion euros, the group has long been by far the most valuable DAX group. CEO Klein can therefore drive the restructuring forward from a strong position. Between April and June of this year, sales totaled 6.74 billion euros – two percent more than in the same period last year. Cloud revenues increased in the second quarter by 21 percent year on year to a good two billion euros. In contrast, the software license business slumped again – by 18 percent to 770 million euros.

Christian Klein becomes sole SAP boss

At this point, the SAP managers spoke of a significant improvement compared to the first quarter of 2020. At the beginning of the year, Walldorf residents had still complained about a 30 percent decline in the licensing business. The bottom line was a profit of 885 million euros, 52 percent more than in the same quarter of the previous year (582 million euros).