The experience market is booming and software giant SAP has taken notice. This emerging category of enterprise software helps companies undergoing a digital transformation provide better experiences for their customers.
Since it acquired Qualtrics for $8 billion in 2018, SAP has embedded and integrated the experience enterprise system into most of its products, including SuccessFactors HXM. Subsequently, the product line continues to grow at over 34% annually. In Q2, Qualtrics generated $168 million in revenue.
Now SAP plans to take the cloud-based software business public through an initial public offering.
"SAP's acquisition of Qualtrics has been a great success and has outperformed our expectations with 2019 cloud growth in excess of 40%, demonstrating very strong performance in the current setup," SAP Chief Executive Officer Christian Klein said in a statement. "We decided that an IPO would provide the greatest opportunity for Qualtrics to grow."
Founded by Ryan Smith along with his father and brother in 2002, Qualtrics takes credit for popularizing experience management software. Specifically, the company measures and improves the way customers and employees experience products, services, and their roles inside companies. It competes against Medallia, SurveyMonkey, and marketing research firms like Aon Hewitt and Towers Watson
The Utah tech company was acquired by German giant SAP four days before its intended IPO in a deal that closed in January, 2019.
Smith has remained CEO of the company since the acquisition. "It's rare to have the leadership team of an acquired company remain intact almost two years post acquisition," he said. "It demonstrates the strength of SAP/Qualtrics partnership."
Over the last few months, Qualtrics has been one of SAP's brightest businesses, as it grappled with the effects of the global pandemic. As companies increase online sales and need more efficient ways to track customers and employees remotely, SAP's e-commerce units, especially Qualtrics, have excelled.
The announcement comes as numerous companies test the public markets after an initial slowdown following the COVID-19 breakout, and despite the ongoing economic and health crisis. At the beginning of July, healthcare company Accolade was the first Seattle-area company to go public in 2020.