We’ve rounded up the top news this week from SAP—from the tech giant’s announcement of taking Qualtrics public two years after its acquisition to the release of its financial results for the second quarter and the first half-year.
Topping SAP News This Week: Qualtrics is Going Public
On Sunday, SAP announced its intent to take Qualtrics public through an initial public offering (IPO) in the United States. The news came as a surprise for many venture capital experts, considering it has only been two years since SAP acquired the experience management company for $8 billion under former CEO Bill McDermott.
According to SAP, it will retain its position as the majority owner of Qualtrics. Founder Ryan Smith will still be the largest individual shareholder and will maintain leadership at the customer-experience management company headquartered in Provo, Utah, and Seattle, U.S.
Current SAP CEO Christian Klein explains why the ERP company is making this move,
“As Ryan Smith, Zig Serafin and I worked together, we decided that an IPO would provide the greatest opportunity for Qualtrics to grow the Experience Management category, serve its customers, explore its own acquisition strategy and continue building the best talent. SAP will remain Qualtrics’ largest and most important go-to-market and research and development (R&D) partner while giving Qualtrics greater independence to broaden its base by partnering and building out the entire experience management ecosystem.”
SAP further notes that since the company will continue to fully consolidate Qualtrics, the transaction is not expected to have an impact on its 2020 or longer-term financial targets.
SAP Reports Resilience Amid COVID-19 Crisis
Earlier this month, SAP announced its preliminary financial results for the second quarter ended June 30, 2020, highlighting significant increase in operating profit and operating margins despite business disruptions caused by the COVID-19 pandemic. This week, the company released the financial report showing substantial increase in operating cash flow.
CFO Luka Mucic’s report during the Q2 earnings call highlights the following:
- IFRS operating profit increased by 55% to €1.3 billion
- IFRS earnings per share increased by 54%
- Non-IFRS EPS increased by 7%
- operating cash flow increased by 41% to €3.8 billion, while free cash flow was up even further and grew by 59% to €3.1 billion in the first six months
“I’m really proud that our team successfully navigated a very challenging environment to deliver a better-than-anticipated quarter. We were happy to see a strong sequential improvement in software licenses revenue, robust margin expansion, and a strong free cash flow development.
Meanwhile, Klein said in his opening remarks,
“Our results reflect the progress we have made as a company since the pandemic hit hard in March. We have adapted to the situation by truly transforming into a virtual organization and allowing our customers to continue with their business. These results show yet again well our intelligent enterprise strategy is resonating with customers.”
Klein also reported the following business updates and wins:
- SAP adds over 500 S/4HANA customers in Q2 close to 40% of them net new
- IDC ranks S/4HANA as leader in cloud ERP enterprise applications
- Gartner ranks SAP as a leader in their Magic Quadrant
- Moderna selects SAP to help with the distribution of the potential COVID-19 vaccine
- major Q2 deals included L’Oréal and the Australian Department of Defense
- SAP SuccessFactors wins Bosch Group
- Google goes live on Ariba
The SAP CEO additionally said that the company’s strategy will remain its focus on existing markets—citing the company’s partnership with Siemens as a prime example of this key strategic element—while accelerating growth by expanding into new markets through modular industry apps and co-innovating with partners. He further notes that the company will be doubling down on building the world’s largest business network as a response to the changing market to help connect customers, manufacturers, suppliers and logistic providers in one network where they can manage cost dependencies in real-time.
Finally, the company will be expanding solutions to allow customers to measure and reduce carbon emissions along the value chain with sustainability and the Climate 21 program.