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SAP turns to advisor for potential $1 billion Litmos sale, sources reveal

German software giant will work with investment back Moelis & Co. to sell off the corporate eLearning business it acquired back in 2018

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SAP has sought the services of investment bank Moelis & Co. as the German software giant prepares to sell off its corporate eLearning business Litmos.

As revealed by Reuters, three sources told the news outlet that the company is looking to streamline its operations so it can place a greater focus on cloud-based revenue. According to these insiders, who requested anonymity due to the private nature of the move, the sale of Litmos could be valued at over $1 billion.

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Founded in 2007, California-based Litmos specialises in providing corporate eLearning and training solutions to thousands of companies around the world. The firm’s Learning Management System (LMS) is leveraged by global names such as IBM, YouTube, NETGEAR, Mercedes-Benz, Pepsico, and more. That equates to more than 30 million users across 150 countries, Litmos says.

The platform was first bought by CallidusCloud in 2011 before SAP took the reins as part of its $2.4 billion takeover of Callidus back in 2018.

Despite SAP now positioning itself to sell off the business, SAP Litmos is a profitable one. Instead, Reuters’ sources said the reason is that Litmos overlaps with SAP’s HR-orientated Human Experience Management (HXM) platform SuccessFactors. Where Litmos is compatible with a range of Human Resources software such as ADP and BambooHR, SAP SuccessFactors keeps things in-house.

The development follows recent comments made by SAP Chief Finance Officer Luka Mucic, who revealed on a recent earnings call that the company is looking to streamline its operations, including divestments, so it can “focus on growth drivers.”

SAP revealed that its cloud revenue grew 31% to €2.8 billion during Q1 2022, while its S/4HANA offering climbed 78% year-on-year to €400 million. The company’s overall revenue also exceeded analyst predictions, hitting €7.1 billion compared to €6.4 billion in 2021.

While SAP acknowledged that its earnings would take a €300 million hit due to its suspension of cloud operations in Russia, it said its 2022 forecast remains strong – with cloud revenue expected to reach between €11.5 billion and €11.9 billion.

On that call, Mucic said the company was moving to mitigate the Russian impact on its revenue stream and hinted at its plans to streamline operations.

“This is possible because of our increased cloud momentum, the initiation of disciplined expense management measures and the benefits associated with the streamlining of our portfolio that we expect to execute in the coming months as we continue to focus on strategic growth drivers,” he said.

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