SAP will acquire digital adoption platform WalkMe for $1.5 billion

Enterprise software giant SAP is acquire provider of a platform for “digital adoption”. Walk with me in an all-cash transaction valued at $1.5 billion.

SAP's offer of $14 per share represents a 45% premium to WalkMe's Nasdaq closing price yesterday of $9.64.

Founded in 2011 in Israel, WalkMe was initially designed to simplify website navigation by providing real-time on-screen guidance. Over the years, the company has moved its main global headquarters to San Francisco and expanded its platform to include more features, with a growing focus on both consumer and enterprise applications, for example to guide users through new features or onboard new employees . These can be small bubble overlays, or even on-screen prompts to try to convert free users into paying customers. It's all about automating a process that would otherwise be a labor-intensive endeavor, with only human assistance.

As part of the enterprise push, WalkMe also provides insights into end-user behavior, with an emphasis on providing additional support tools or information at points where a user is more likely to exit an application.

And it's this focus on automating contextual, in-app support that SAP believes adds value to its own enterprise customers.

Automation for the enterprise

WalkMe had raised about $300 million prior to its 2021 IPO, but like many companies during the pandemic period, its valuation plummeted in the intervening years, from a peak of $2.8 billion in September 2021 to just over $600 million within a year – considerable. below the last known private valuation of about $2 billion. The company's valuation has been hovering around $800-$900 million this year, but… thanks to strong profit figures last month, shares rose 25% in two weeks.

Indeed, WalkMe reported a 4% year-over-year revenue increase over May's Q1 earnings, and unveiled WalkMeX – a new AI-powered co-pilot that suggests “the best next step for any workflow, anywhere” using WalkMe's existing contextual awareness smarts. SAP said it plans to integrate WalkMeX with its own Joule copilot debuted last September.

SAP, in turn, has been on a tear lately strong financial figures pushing its valuation to a record high of $230 billion this year.

Notably, the WalkMe deal is intended to complement two other acquisitions SAP has made in recent years: It acquired German business process automation company Signavio for $1.2 billion in 2021. And late last year, SAP acquired one German company left. called LeanIX, which specializes in enterprise architecture management, essentially allowing companies to modernize faster.

WalkMe fits that pattern, as far as helping businesses transform for the modern software age where humans, AI and the cloud intersect.

“Applications, processes, data and people are the four most important elements of a successful business transformation,” says SAP CEO Christian Klein noted in a press release. “By acquiring WalkMe, we are doubling the support we provide to our end users, allowing them to quickly adopt new solutions and features to get the maximum value from their IT investments.”

SAP said it expects the acquisition to close in the third quarter of 2024, subject to regulatory and shareholder approval.

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