In July 2020, SAP announced that its 8 billion dollar acquisition Qualtrics will return to the public market through an initial public offering (IPO) in the United States– with SAP still as the controlling shareholder. After much anticipation on the Qualtrics IPO date, 2021 opened with the Experience Management company’s initial trading last week, 28th of January, on Nasdaq, the second-largest stock and securities exchange in the world after NYSE.

Trading under the ticker symbol “XM”, Qualtrics’ stocks opened at $41.85, after raising about $1.55 billion in its upsized IPO. The firm has amended filing with the U.S. Securities and Exchange Commission days before the trading date and planned to sell 50.4 million shares at $27 to $29 each. Qualtrics ended up pricing it at $30 per share. A market capitalization of up to $14.6 billion was forecasted from the IPO listing which will enable SAP to repay $1.76 billion of debt as stated in the filing.

Qualtrics IPO Journey

The outstanding debut in Nasdaq showed nearly a 40% jump, valuing Qualtrics at $27.3 billion and selling about 51.7 million shares as the day closed. With today’s surging demand for high-growth cloud software companies amid the coronavirus pandemic, it is not a surprise that the Nasdaq jumped 1.6% on Thursday and is trading near a record after climbing 46% in the past year.

SAP CEO Christian Klein shared in an interview with CNBC before trading day how they look forward to the IPO, which he said is massively oversubscribed. He exclaimed that SAP’s acquisition of the XM company in 2018, which was finalised in early 2019, has been a massive success with SAP contributing to Qualtrics’ doubled revenue.

“They have done so well inside the SAP customer base, and now we are opening them up. They can also now penetrate the market outside of our customer base,” he added.

The SAP CEO reiterated that SAP remains the majority shareholder in Qualtrics after going public and said that the German software giant will also gain from Qualtrics’ future success.

The cloud software vendor Qualtrics, which had originally planned to go public prior to SAP’s buy out, is SAP’s second-biggest acquisition next to Concur. The travel and expense software company was acquired by SAP in 2014 at a hefty price of $8.3 billion.

Ryan Smith, Co-Founder and Chairman of Qualtrics, shared in an interview last week their remarkable journey. He said:

“We were on our roadshow in 2018 and we showed metrics and slides as they took notes.

We came back to the same investor group and there’s not a lot of turnover. Everyone pulled out their notes from two years ago and asked questions.”

Since SAP’s acquisition, Qualtrics has increased its customer base to 13,000 from about 9,000 with revenue reaching over 30% in the first three-quarters of 2020 to $550 million from $413.4 million in the same period a year earlier and $289.6 million in 2018 before the acquisition.

Before 2020 closed, Qualtrics had announced that private equity firm Silver Lake was buying a little over 4% of the stock for $550 million, while Smith was purchasing over 1% for $120 million and will still be the largest individual shareholder.

The post First Qualtrics IPO Date of Trading Closed at 52% higher appeared first on InsideSAP Asia.

“I am pleased that our operational excellence measures are already showing effect. Our non-IFRS operating profit and margin performance is remarkable considering the margin headwinds from our latest acquisition and the recent short-term trade-related uncertainty in Asia that impacted our software revenue performance in the region. With continued strong customer demand and our tight focus on profitability, we remain as confident in our 2019 outlook as we are in our mid-term ambition.”

Simply Wall Street, a new platform for tracking stocks and visualizing stock data, took a look at the potential of SAP SE Stock holistically in its recent article on Yahoo Finance. SAP is a sound investment case having excellent fundamentals in more than one area and remains to be a financially sound company with an impressive track record of dividend payments and an excellent future outlook.

Here are some key takeaways from the analysis:

SAP has high growth potential with an adequate balance sheet

SAP’s expected earnings growth is at 28{aa282f308afcc222aaa21b0478c79e01a8fedd01972e2180867097bd93930f22}, underlying the notable 20{aa282f308afcc222aaa21b0478c79e01a8fedd01972e2180867097bd93930f22} return on equity over the next few years leading up to 2022. This is a sweet spot for investors. The German software giant’s debt-to-equity ratio stands at 5.3{aa282f308afcc222aaa21b0478c79e01a8fedd01972e2180867097bd93930f22}. SAP’s acceptable debt level indicates a good balance between taking advantage of low-cost funding through debt financing but having enough financial flexibility and headroom to grow debt in the future. Also, SAP has produced operating cash levels of 2.75x total debt over the past year. This means that the management was able to generate enough cash to cover a sufficient portion of borrowings.

SAP is a dividend company

SAP, as a dividend company, has a substantial net income to cover its dividend payout. Over the past decade, it has been consistently growing, giving much favor to the income investors.

Simply Wall Street also identified three fundamental aspects to examine with SAP SE stock investment.

1.    Historical Performance. Make an in-depth analysis of SAP’s past track record.

2.    Valuation: Know SAP’s worth today and assess if the stock is undervalued, even when its growth outlook is factored into its intrinsic value.

3.   Other Attractive Alternatives: Are there other well-rounded stocks you could be holding instead of SAP?

In SAP’s Quarterly Statement Q2 2019, double-digit growth was seen across the board. The Cloud revenue was up by 40{aa282f308afcc222aaa21b0478c79e01a8fedd01972e2180867097bd93930f22} while both the Cloud & Software revenue and total revenue was up by 11{aa282f308afcc222aaa21b0478c79e01a8fedd01972e2180867097bd93930f22}. All of these were achieved despite the recent short-term trade-related uncertainty in Asia that impacted its software revenue performance in the region. Earlier this year, SAP CEO Bill McDermott has announced that SAP’s value will double by 2023 and China was identified as the fastest-growing market. 

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