SAP / Qualtrics
Image Credit: SAP / Qualtrics

SAP SE, Europe's largest technology company, is selling a stake in its Qualtrics customer-survey software unit through a US public offering, less than two years after buying the firm to help compete with Salesforce Inc.

SAP said it will continue to hold majority ownership of Qualtrics, and Qualtrics founder Ryan Smith will remain its largest shareholder. SAP said the timing and final decision for the IPO is still pending, and subject to market conditions.

SAP SE, Europe's largest technology company, is selling a stake in its Qualtrics customer-survey software unit through a US public offering, less than two years after buying the firm to help compete with Salesforce Inc.

SAP will keep a majority interest in Qualtrics while giving the business greater autonomy under existing managers including founder Ryan Smith, Walldorf, Germany-based SAP said in a statement Sunday.

Smith, who started Qualtrics with brother Jared in the basement of their parents' home in Utah, will be the largest individual shareholder.

The decision marks a quick turnaround from the $8 billion purchase of Qualtrics in November 2018, which received a lukewarm reception from investors who blanched at its price tag.

Qualtrics was the capstone of former Chief Executive Officer Bill McDermott's $26 billion shopping spree to help push the 48-year-old software giant into faster-growing cloud-based software and services.

New CEO Christian Klein must compete with younger companies, such as Salesforce.com and Workday Inc., while managing a shrinking legacy software business.

McDermott had defended the deal, believing that combining SAP's workforce and a trove of operational data with Qualtrics's customer experience feedback would accelerate growth. The business, which has more than 11,500 customers, had revenue of 508 million euros ($591 million) in the most recent financial year.

The timing of the IPO will be determined later and is subject to market conditions, SAP said. As majority owner, the German company plans to continue to fully consolidate Qualtrics' results and said there will be no affect on 2020 guidance.

SAP said earlier this month that while software license revenues were below normal levels in the second quarter, they recovered more than expected in the period buoyed by a resumption in software deals in Asia.

That recovery may have given Klein the confidence to go ahead with the deal. The company is due to report its full financial results for the second quarter on Monday.