According to analysts at MDK Global Advisors, SAP, the global technology giant, announced today that it has agreed to buy Qualtrics, the survey and research software company, for USD 8 billion in Cash, shortly before it was scheduled to go public. The deal is set to be finalised in the first half of 2019.

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PRESS RELEASE
TAIPEI, TAIWAN | 12 NOVEMBER 2018
MDK GLOBAL ADVISORS COMMENTS ON SAP AGREEING TO ACQUIRE QUALTRICS
FOR $8BN IN CASH
According to analysts at MDK Global Advisors, SAP, the global technology giant, announced today that it has agreed to buy
Qualtrics, the survey and research software company, for USD 8 billion in Cash, shortly before it was scheduled to go public. The
deal is set to be finalised in the first half of 2019.
"Qualtrics last round of venture capital investment back in 2016 raised $180 million with a company valuation of $2.5 billion,"
commented Su Tai, Research Director at MDK Global Advisors. "This is the second-largest ever purchase of a SaaS product,
after Oracle's $9.3 billion acquisition of Netsuite in 2016," she added.
SAP CEO Bill McDermott said in a conference call that the IPO of Qualtrics was still over-subscribed and that the two firms
began negotiations a couple of months earlier. SAP says that its software contributes to 77 per cent of the world's payment
revenue, while the offerings of Qualtrics include survey software that allows its 9,000 users to gauge issues like customer
experience and employee engagement.
McDermott compared the possible effect of integrating SAP's operating data with consumer and usage data from Qualtrics to
Facebook's purchase of Instagram. "The legacy players who brought their '90s technology into the 21st century just got
trounced. We have made existing participants in the market disappear," he said. (SAP's main competitors include IBM,
Microsoft, Salesforce.com and Oracle.)
"SAP, with its corporate headquarters in Walldorf, Germany, said it had secured €7 billion in capital to finance acquisition-
related expenses and the acquisition price, which also includes unregulated worker bonuses and cash on the balance sheet."
Commented an Executive Research at MDK Global Advisors.
Ryan Smith, who co-founded Qualtrics in 2002, will remain the CEO. The business will become part of SAP's Cloud Business
Group when the merger is completed but will keep its two headquarters in Provo, Utah and Seattle, as well as its own branding
and employees.
"The company raised a total of $400 million in VC funding from investors including Accel, Sequoia and Insight Capital Partners.
For its debut, it had planned to sell 20.5 million shares for $18 to $21, which may have possibly grossed up to about USD 495
million," the Executive Researcher added. "That would have put its value around $3.9 billion to $4.5 billion." they concluded.
This year, according to its IPO filing, Qualtrics' revenue rose 8.5 per cent from USD 97.1 million in the second quarter to USD
105.4 million in the third quarter. It recorded GAAP net income of USD 4.9 million in the third quarter. That was an increase
from the USD 975,000 it posted in the previous quarter and its net income of USD 4.7 million in the same period a year earlier.
During the first nine months of 2018, Qualtrics boosted its net cash flow to USD 52.5 million, compared with USD 36.1 million
for the same duration of 2017.
In today's public announcement, Qualtrics said it expects its full-year 2018 revenue to surpass USD 400 million and estimates
a forward-looking growth rate of over 40 per cent, not counting the possible synergies of the SAP acquisition. Qualtrics major
rivals include SurveyMonkey, which went public in September.
© MDK Global Advisors