Successful IPO: US subsidiary pours billions into SAP's cash register

Friday 29th January 2021

Successful IPO
US subsidiary flushes billions into SAP's cash register

With the sale of shares in the US market research firm Qualtrics, the parent company SAP is killing two birds with one stone: Debts are to be reduced, while dividends are increasing. SAP hopes that this will restore increasing investor confidence.

Europe's largest software company, SAP, wants to use the proceeds from the US IPO of its market research subsidiary Qualtrics to reduce its own debts. However, CFO Luka Mucic said in a conference call that the supervisory board would also be proposed to increase the dividend. According to Mucic, the previous day with the sale of shares, SAP achieved revenues of around 2.4 billion US dollars (2.0 billion euros). 500 million dollars of this would be made available to Qualtrics as liquidity and around 1.9 billion should flow to Walldorf.

The IPO on the Nasdaq offers Qualtrics the "best opportunities to grow" according to the parent company. The "very successful" IPO shows that investors see just as much potential in Qualtrics as we do, said SAP CEO Christian Klein. The US subsidiary, in which SAP wants to hold the majority "in the long term" according to Mucic, made its debut on the US technology exchange on Thursday and was valued at almost $ 21 billion.

This is a good opportunity for investors to rethink SAP's market value, Mucic said. Most recently, the dividend was 1.58 euros per share. As a rule, the company presents the official dividend proposal in February.

Turbulent year due to Corona

Meanwhile, SAP confirmed the quarterly and annual figures published on January 14th and the outlook for the current year. The group has had a turbulent year with the pandemic and strategic U-turns. Sales declined slightly due to the reluctance of customers and exchange rate effects, while earnings before interest and taxes adjusted for special effects barely grew.

The bottom line was that the net profit climbed by more than half to 5.3 billion euros, among other things because SAP had spent a lot of money on downsizing the year before. In addition, the falling share price meant that far fewer expenses were incurred for share-based compensation for employees.