Enterprise

Qualtrics’ explosive IPO gave Bill McDermott his ‘told ya so’ moment

SAP's former CEO faced criticism over the price tag of an $8 billion deal back in 2018. It looks pretty savvy now.

Qualtrics’ explosive IPO gave Bill McDermott his ‘told ya so’ moment

Bill McDermott would like to set the record straight on Qualtrics.

Image: ServiceNow

It's quickly becoming the norm among software IPOs, but Qualtrics had a blockbuster public offering on Thursday.

Shares of the company, which provides customer sentiment monitoring, ended the day up 51%, giving it above a $24 billion valuation, higher than Wall Street initially expected. That's great news for CEO Ryan Smith and his over 3,000 employees. But it's also a win for SAP and vindication for former CEO Bill McDermott, who bought Qualtrics in 2018 as part of an acquisition spree for $8 billion. At the time, that price tag was criticized by analysts.

"Let's set the record straight," McDermott, who is now CEO of ServiceNow, told Protocol. "Not a single one of those large-scale transactions were anything less than successful. One such example is Qualtrics."

For Qualtrics, at least, McDermott's right. And SAP should get credit for helping the company grow as quickly as it did. Revenue in the first nine months of 2020 alone rose 30% year-over-year to $550 million, per its S-1 filing. While Smith requested the spinout after former SAP co-CEO Jennifer Morgan left in April, he and the company have acknowledged just how influential the German software firm was in helping reach the scale it's at now.

"Over the past two years we have increased our deal sizes, broadened and deepened our geographic footprint, and continued to build an exceptional team," Qualtrics wrote in the filing.

That's a reflection of the power that SAP still wields in C-suites despite its own struggles. And the two companies plan to continue to work together despite the IPO, namely because SAP still has a majority stake in the company.

But it remains to be seen how close the connection stays, especially since SAP has its own uphill battle to worry about. And there are already signs Qualtrics is pushing for growth without the SAP sales engine: It recently brought on former Microsoft executive Brad Anderson as the product and services president, as well as former Salesforce PR leader Gina Sheibley as chief communications officer, among other hires. Anderson, who helped lead Microsoft 365 deployment at enterprises, will be key to expanding sales among new and existing customers, while Sheibley led Salesforce's PR efforts for several key acquisitions, including Tableau and MuleSoft.

But whatever the future holds for Qualtrics, today McDermott finally gets his "told ya so" moment.

Joe Williams

Joe Williams is a writer-at-large at Protocol. He previously covered enterprise software for Protocol, Bloomberg and Business Insider. Joe can be reached at JoeWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.

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