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Customer Experience management company Qualtrics on Monday said private equity firm Silver Lake and Canada Pension Plan Investment Board (CPP Investments) have agreed to buy the entire company for $12.5 billion in an all-cash transaction.  

CPP Investments, according to a joint statement, will pay $1.75 billion in equity and another $1 billion in debt for the deal.

US-based Silver Lake, which already owns 4% stake in the company, along with CPP Investments will acquire 100% of the outstanding shares in Qualtrics, including the entirety of ERP software provider SAP’s majority stake, the companies said.

“Qualtrics will become an independent, privately held company,” Qualtrics said, adding that it will continue to remain headquartered in Provo, Utah, and Seattle, Washington with CEO Zig Serafin at the helm.

SAP acquired a majority stake in Qualtrics in 2018 for $8 billion with the idea of marrying customer experience management with ERP software systems. By doing this amalgamation of real-time customer experience data with operational data, enterprises would be able to make adjustments to business strategies to perform better against their competition in their respective segments and domain.

In January, SAP said it is also exploring selling its majority stake in Qualtrics to refocus on its core business.

However, despite selling off its entire stake, SAP said it will continue to remain a technology and strategic partner with the company servicing joint customers.

The acquisition of Qualtrics by the investment firms, which is expected to close in the second half of 2023, will see SAP garner approximately $7.7 billion for its stake in Qualtrics, the ERP software provider said in a statement.

“Since we acquired Qualtrics in 2019 the company has more than tripled its revenue while delivering profitability,” Christian Klein, CEO and Member of the Executive Board of SAP SE said in a statement. “SAP intends to remain a close go-to-market and technology partner, servicing joint customers and continuing to contribute to Qualtrics’s success. The number of companies and brands using Qualtrics software has risen from 10,000 at the time of SAP’s purchase to over 18,000 today.”

Enterprise Applications, SAP

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Oracle on Monday said it will continue to invest $2.4 billion per quarter in its cloud business, which accelerated 48% in the second quarter, helping the company revenue grow 25% year-on-year, without accounting for currency fluctuations.

Cloud services as a category, according to CEO Safra Catz, has been growing faster than license support. The company expects cloud infrastructure (IaaS) margins to improve in the coming quarters.

“Capex this quarter was 2.4 billion as we continue to invest in our cloud to meet this accelerating demand,“ Catz said during an earnings call, according to a transcript from Motley Fool. “We now expect to spend about this amount per quarter for the next few quarters as we build capacity for our customers’ needs.“

Oracle said it had triple-digit bookings growth in its IaaS services for the past two quarters and that the investments in cloud would not impact its margins. “I would note that IaaS gross margins improved again this quarter, and I expect IaaS gross margins will continue to improve,” Catz said. “This level of spend, though, will not negatively impact our operating margins as we scale.”

Oracle’s adjusted operating margin for the quarter expanded to 41% from 39% in the previous quarter.

“In Q2, Oracle’s total revenue grew 25% in constant currency—exceeding the high end of our guidance by more than $200 million. That strong overall revenue growth was powered by our infrastructure and applications cloud businesses that grew 59% and 45% respectively, in constant currency,” Catz said.

Total cloud revenue (SaaS and IaaS combined) stood at $3.8 billion in the quarter, up 48% year-on-year, without accounting for currency fluctuations.

While IaaS accounted for $1 billion in revenue, SaaS revenue for the company stood at $2.8 billion.

In the last sequential quarter, cloud revenue for the company stood at $3.6 billion against a total revenue of $11.4 billion.

Oracle, which claims to have added “some” cloud infrastructure contracts over $1 billion during the quarter, currently has 22,000 infrastructure customers utilizing 55 cloud regions including public and national security regions, chairman Larry Ellison said during the earnings call.

For the third quarter, the company said it expected 46% to 50% growth in cloud revenue as against a 21% to 23% growth in overall revenue.

Double-digit growth across services

Oracle reported double digit growth across most of its businesses including Fusion Cloud ERP, NetSuite ERP and Cerner.

For the quarter ended November 30, Fusion Cloud revenue stood at $600 million, up 28% year-on-year. NetSuite revenue also stood at $600 million, up 29% year-on-year.

Oracle has 11,000 and 30,000 customers across its Fusion Cloud and NetSuite businesses respectively.

Cerner, the company that Oracle had acquired for $28.3 billion to focus its efforts on the healthcare sector, contributed $1.5 billion to its total revenue in the second quarter.

Cerner, according to Ellison, is focused on automating hospitals, doctors’ clinics and healthcare providers along with coming up with an early warning system for pathogens that can lead to Covid-19-like pandemics.

Profits back on growth trajectory

Oracle, which reported a decline in profits in the previous quarter, said its net income grew on the back of reduced operating expense for the second quarter.

The company’s operating expense for the quarter stood at $9.2 billion compared to $11.1 billion for the corresponding period last year.

It reported a net income of $1.7 billion compared to $1.2 billion for the same period last year.

Cloud Computing, IaaS

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Amazon Web Services (AWS) on Tuesday launched its second region in India and said it was committing $4.4 billion (Rs 36,300 crore) to scale it till the end of 2030.

The $4.4 billion investment is a huge increase from the initially announced investment of $2.8 billion for the region in 2020 as the cloud computing firm looks to capitalize on India’s double digit growth in cloud spending.

The new region, which will be based in Hyderabad (designated ap-south-2), will add three availability zones to AWS’ existing infrastructure in the country. AWS already has a region in Mumbai, which was launched in June 2016, and a local zone in New Delhi.

AWS Regions are composed of Availability Zones that place infrastructure in separate and distinct geographic locations.

Local zones, on the other hand, are infrastructure deployment that provides compute, storage and database services to a large population or industry centers.

“We welcome AWS’s commitment to invest approximately INR 36,300 crores in the AWS Region in Hyderabad, which strengthens Telangana’s position as a progressive data center hub in India,” K. T. Rama Rao, minister for information technology at the Government of Telangana said in a statement.

AWS estimates that the investment will see an addition of 48,000 jobs in the region over a broader time frame and add $7.6 billion to India’s gross domestic product by 2030.

The $4.4 billion investment, which includes capital expenditures on the construction of data centers and operational expenses, is expected to be implemented in phases and completed by the end of 2030, AWS said.

“The new AWS Asia Pacific (Hyderabad) Region is part of our long-term commitment to India to invest in cloud infrastructure, provide training to upskill the nation with digital capabilities, create local jobs, and enable a more sustainable future,” said Puneet Chandok, president for Commercial Business at AWS India and South Asia.

With the addition of the second region in India, the total tally of AWS’ regions in Asia Pacific (APAC) now stands at 10 regions. The regions in APAC are based in India, Singapore, China, Hong Kong, Japan, South Korea and Indonesia.

Globally, the company has a total of 96 availability zones across 30 geographic locations and has plans to launch 15 more availability zones and add five more AWS regions in Australia, Canada, Israel, Thailand, and New Zealand.

Hyderabad turns into a hot spot for data centers

AWS’s launch in the Hyderabad region comes after rivals Oracle and Microsoft have either opened up a data center in the city, or revealed plans to do so.

In 2020, Oracle opened its first data center in Hyderabad—second in the country—after launching the Mumbai data center in 2019. Globally, Oracle has plans to add five new regions.

Similarly, in March, Microsoft had revealed plans to launch a data center in Hyderabad with an investment of over $1.8 billion (Rs 15,000 crores). The company already has three other data centers in India across Mumbai, Pune and Chennai.

Cloud Computing, Data Center