Two months after shedding nearly 5% of its global workforce through layoffs, Utah business software firm Qualtrics is being sold for $12.5 billion and will return to being a private company.
CEO Zig Serafin will continue to run Qualtrics, which has more than 5,500 employees and will retain its headquarters in Provo and Seattle, Wash. No staffing changes and no further layoffs have been announced. About 1,200 employees work in the company’s Provo headquarters.
SAP, a German multinational software company, bought Qualtrics in 2018. Four years later, SAP is selling its majority ownership interest to Silver Lake, a private equity firm based in Menlo Park, Calif.
In between, SAP took Qualtrics public two years ago with an IPO that raised $1.55 billion.
Silver Lake is partnering with the Canada Pension Plan Investment Board (CPP Investments) in an all-cash transaction that values Qualtrics at approximately $12.5 billion, according to a Qualtrics news release. That’s $4.5 billion more than SAP paid to buy Qualtrics in November 2018.
Silver Lake will acquire all of the shares it does not already own, including SAP’s 71% interest, and make Qualtrics “an independent, privately held company,” the release said.
The company’s value plunged from about $24 billion in early 2021 to about $5 billion by the end of 2022, according to TechCrunch, which editorialized that “on the surface at least,” the Silver Lake offer “might seem like a fair price for a company that has seemingly been underperforming for some time.”
According to the news release, Qualtrics shareholders will receive $18.15 per share. Qualtrics hasn’t traded at $18.15 a share on the Nasdaq since April 2022.
According to Reuters business columnist Karen Kwok, SAP “hasn’t exactly taken a bath on the maker of online surveys for corporate customers, but nor has it created much value for shareholders.”
She pegged SAP’S return on its investment at 10%, which she described as “a reasonable but hardly world-beating return. That probably flatters the German parent, since it doesn’t account for all the cash that Qualtrics has burnt during its ownership.”
According to the financial news and analysis service Benzinga, as of Feb. 14, Qualtric’s executive chairman Ryan Smith owned 18,065,438 shares of Qualtrics, which will be worth $327,887,700 in the sale to Silver Lake.
(Francisco Kjolseth | The Salt Lake Tribune) Dwyane Wade, three-time NBA champion and part owner of the Utah Jazz joins Ryan Smith, Founder and Executive Chairman of Qualtrics and owner of the Utah Jazz as they joke around on stage during the Silicon Slopes Tech Summit in Salt Lake City on Wednesday, Oct. 13, 2021.
The cloud-based subscription software platform company was founded in 2002 by Ryan Smith (now the owner of the Utah Jazz and co-owner of Real Salt Lake), Scott M. Smith, Jared Smith, and Stuart Orgill.
“I couldn’t be more excited for this step in our journey,” said Ryan Smith. “Silver Lake’s belief in our vision and their amazing track record of helping founders and management teams speaks for itself. We look forward to working together.”
Silver Lake has more than $92 billion in combined assets in North America, Europe and Asia, which generate more than $272 billion of revenue annually. Its companies employ about 681,000 people.
Both Ryan Smith and Egon Durban, co-CEO of Silver Lake, said the deal will allow Qualtrics to create “the next great enterprise software platform.
“We are strong believers in the amazing technology platform that Ryan, Zig and their phenomenal engineering and sales teams are building,” said Durban, “and we’re thrilled to support the continued efficient growth of Qualtrics into a generational, highly profitable platform company by enabling further investment across all aspects of the business.”
In its annual report for the fiscal year that ended Dec. 31, 2022, Qualtrics said it had more than 18,750 customers and its revenue has been growing significantly, though it has reported a net loss for the past three years.
Qualtrics reported $1.458 billion in revenue in 2022; $1.075 billion in 2021; and $763.5 million in 2020, “representing year-over-year growth of 36% and 41%, respectively,” the report said.
Its net loss was $1.061 billion in 2022; $1.059 billion in 2021; and $272.5 million in 2020, the report said.
According to Kwok, “analysts reckon Qualtrics is about to finally start generating prodigious free cash flows — to the tune of roughly $200 million next year, using Visible Alpha data. Silver Lake, a specialist in tech buyouts, is well-placed to keep that growing.”
