SAP to launch an IPO of its Qualtrics survey-software unit

In an announcement on Monday, SAP (ETR: SAP) expressed plans of spinning off Qualtrics. The company had originally acquired the survey-software unit in 2018 for £6.22 billion. According to FactSet, Qualtrics was the largest acquisition of the German software multinational corporation to date.

Shares of SAP opened about 3.5% up on Monday but tanked roughly 2% in the next hour. At £126.25 per share, the German firm is currently 13% up year to date in the stock market after recovering from a low of £80 per share in March. SAP partnered with Siemens on Industry 4.0 earlier in July.

The listing is likely to value Qualtrics at £12.78 billion

The company is launching an IPO (Initial Public Offering) for its subsidiary that will put some of its shares on sale on the United States public market. Learn more about the basics of an IPO.

According to Jefferies’ analysts, the listing is likely to value Qualtrics at £12.78 billion. SAP, however, did not announce an expected date when the share-sale will be launched.

Analysts Firoz Valliji and Mark Moerdler of Bernstein Research also commented on the news on Monday and said:

“We believe that many SAP investors do not fully understand Qualtrics or its vision for the future, and this would probably help at least as it relates to better understanding its value.”

SAP recently went under a management change as Bill McDermott exited the role of the Chief Executive Officer and Christian Klein took over the role of the company’s new CEO.

SAP publishes its Q2 financial results on Monday

SAP also published its quarterly financial results on Monday that highlighted the company to have recovered from the impact of COVID-19. The company said that its operating profit (NON-IFRS) came in at £1.79 billion that represents a 7% growth on a year over year basis at constant currency.

In terms of revenue, the company that makes enterprise software that helps manage customer relations and business operations at large recorded a 1% growth on an annualised basis. For the full year, SAP said, it now expects its operating profit to see a 1% to a 6% growth.

The earnings report on Monday also highlighted a 32% increase in revenue generated from Qualtrics in the second quarter. In comparison to SAP’s other business segments, however, it remained the smallest with £6.39 million of profit in Q2.

At the time of writing, SAP SE is valued £155.47 billion and has a price to earnings ratio of 38.85.