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SAP's Emarsys Buyout to Improve Customer Experience Portfolio

Zacks Equity Research
·5 mins read

SAP SE SAP recently announced the acquisition of Emarsys to augment its offerings under the SAP Customer Experience (CX) portfolio. The terms of the deal have not been disclosed yet by either of the companies.

The acquisition, subject to customary and regulatory approval, is projected to conclude in the fourth-quarter of 2020. Post the closure, Emarsys will join SAP’s Customer Experience business division.

Established in 2000 in Vienna, Emarsys operates as a cloud-based omnichannel marketing platform that makes customer interactions more effective and ramps up results for enterprises. Emarsys has more than 1500 customers globally and boast more than 5 billion customers contacts in its database with over 10 billion personalized interactions monthly.

SAP SE Price and Consensus

SAP SE Price and Consensus
SAP SE Price and Consensus

SAP SE price-consensus-chart | SAP SE Quote

With the Emarsys acquisition, SAP is looking to offer brands the ability to conduct commerce any time across all channels (social, e-mail, mobile, SMS, and web at scale) and provide customers with customized one-to-one interactions.

The acquisition is expected to boost demand for its CX solutions and instil investors’ optimism in the stock. Notably, shares of SAP, which carries a Zacks Rank #3 (Hold), have increased 16.2% in the year-to-date period compared with the industry’s rally of 31.5%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Solid Uptick in Digital Commerce Augurs Well

Rapid proliferation of internet and smartphones along with rising disposable income will be driving the global business to commerce market as per a Grand View Research report. Also, usage of social media channels for advertisement is expected to increase online shopping trends. The worldwide business to customers (B2C) market is expected to witness a CAGR of 7.9% between 2020 and 2027.

Moreover, the coronavirus induced stay-at-home trends has given more boost to digital commerce and as a result brands have been scrambling to enhance customer experiences and drive revenue growth.

As a result, there is increasing demand among brands for advertising solutions that enhance customer experience resulting in higher conversions and facilitate desired business outcomes.

Per another Grand View Research report, the global digital marketing software solutions market is expected to witness a CAGR of 17.4% between 2020 and 2027.

SAP is focused on providing marketing solutions to its clients to capture a bigger share of this fast-growing market. The Emarsys buyout is a part of this endeavour.

SAP will integrate Emarsys platform with its SAP S/4HANA and Experience Management technology platform from Qualtrics. SAP S/4HANA is a part of its ERP suite and is witnessing rapid adoption. In the second quarter of 2020, S/4HANA adoption rallied 22% year over year to around 14,600 customers. In the said quarter, net new customers comprised 37% of additional S/4HANA customers.

Apart from Emarsys, the company had acquired Qualtrics for $8 billion in cash in 2018 to strengthen its CX portfolio.

Nevertheless, SAP now plans to spin out Qualtrics and file an initial public offering (IPO) in the United States. The aim is to aid Qualtrics increase its autonomy and expand presence in Experience Management domain within SAP’s customer base and beyond. Notably, SAP will hold majority ownership of Qualtrics.

Competitive Scenario

Growth in digital commerce due to COVID-19 crisis led to increase in demand for marketing tools. Technology companies including Microsoft MSFT, salesforce CRM and Oracle ORCL are leaving no stone unturned to capitalise on this opportunity.

Recently, Microsoft added several new features to its customer data platform like Engagement Insights for brands to better understand customers and their needs.

Also, Oracle recently updated its Oracle Unity platform to help B2B (business to business) and B2C clients improve customer interaction and boost revenues. Established in 2018, Unity Platform is a customer data management platform that uses ML to offer best course of action to the businesses after analysing all data sources pertaining to customers.

salesforce helps companies of every industry to connect with their customers in new ways through existing and innovative technologies including social, cloud, mobile,  IoT and AI. The acquisition of Tableau is in sync with the company’s strategy to diversify beyond its customer relationship management and provide more data insights to the clients.

Stiff competition in this space and increasing expenses to strengthen its CX offerings are persistent overhangs for SAP.

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Microsoft Corporation (MSFT) : Free Stock Analysis Report
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