SAP to acquire digital adoption platform WalkMe for $1.5B

Enterprise software giant SAP on Wednesday said it is acquiring "digital adoption" platform provider WalkMe for $1.5 billion in cash.

SAP's $14-per-share offer represents a premium of about 45% on WalkMe's closing price of $9.64 on Tuesday.

Founded out of Israel in 2011, WalkMe was initially designed to simplify website navigation by providing real-time, on-screen guidance. Over the years, the company moved its headquarters to San Francisco and bolstered its platform with more features, focusing more on both consumer and enterprise applications — for instance, to guide users through new features or to onboard new employees.

This took the form of little balloon overlays or even on-screen prompts to try and convert free users into paying customers. The company essentially sought to automate a process that would otherwise be a resource-intensive endeavor with human help alone.

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

It is this focus on automating contextual, in-app support that SAP sees as bringing value to its own enterprise customers.

Automation for the enterprise

WalkMe had raised around $300 million before its 2021 IPO, but like many companies during the pandemic period, its valuation plummeted in the intervening years, going from a peak of $2.8 billion in September 2021 to a little more than $600 million within a year — substantially below its last-known private valuation of around $2 billion. The company's market capitalization has hovered around $800 million to $900 million this year, but off the back of strong earnings last month, its shares rose 25% in two weeks.

Indeed, in May, WalkMe reported that its first-quarter revenue rose 4% from a year earlier and unveiled WalkMeX, a new AI-powered copilot that suggests "the best next step for any workflow, anywhere" using its existing contextual awareness smarts. SAP said it intends to integrate WalkMeX with its own Joule copilot, which it debuted last September.

SAP, for its part, has been on a tear of late, with its strong financial performance pushing its valuation to an all-time high of $230 billion this year.

Notably, the WalkMe deal is designed to complement two other acquisitions SAP has made in the past few years. It acquired fellow German firm Signavio, a business process automation company, for $1.2 billion in 2021. And late last year, it bought another German company called LeanIX, which specializes in enterprise architecture management — basically helping companies modernize more quickly.

WalkMe fits into that pattern, insofar as it's all about helping companies transform for the modern software era, where people, AI and the cloud intersect.

"Applications, processes, data, and people are the four key elements of a successful business transformation," SAP CEO Christian Klein said in a press release. "By acquiring WalkMe, we are doubling down on the support we provide our end users, helping them to quickly adopt new solutions and features to get the maximum value out of their IT investments."

SAP said it expects the acquisition to close, subject to regulatory and shareholder approval, in Q3 2024.