SUSE SUSE S.A.
Quarterly Statement Q2 FY23, for the Three Months ended April 30, 2023
Leadership strengthened to drive performance improvements
- Q2 IFRS Revenue of $162 million was up 1%, and IFRS Operating Profit Before D&A was $12 million, down 63% primarily reflecting a higher unrealized foreign exchange loss
- IFRS Net Cash Inflow from Operating Activities was $4 million, down 83% driven by lower ACV and shorter contract lengths
- ARR (as at January 31, 2023) of $658 million was up 6% with continued growth from new and existing customers
- Adjusted Revenue of $162 million was up 1%, up 1% at constant currency
- Adjusted EBITDA Margin of 32%, down 4 ppt, reflects continued disciplined investments across the business, including an increase in R&D spending to drive product development
- Adjusted Unlevered Free Cash Flow of $18 million was down 53% driven by lower ACV and shorter contract lengths, with conversion of 34%
- SUSE reiterates its latest FY23 guidance
- On May 1, Dirk-Peter van Leeuwen joined SUSE as CEO
- SUSE announced a new regional sales structure, and sales leadership changes are underway, including appointment of new CRO Werner Knoblich, to enable closer customer relationships
- On June 30, CFO Andy Myers stepped down, with his replacement to be announced in due course
- SUSE delivered a new version of Rancher and added new paid-for components to enhance the value of Rancher Prime; and launched the latest version of its enterprise Linux platform, designed to deliver high-performance computing capabilities which are essential for AI workloads
All USD $m unless otherwise stated | FY23 | FY22 | YoY | YoY |
Q2 | Q2 | Actual | CCY | |
Non-IFRS measures | ||||
ACV | 130.6 | 139.4 | (6)% | (6)% |
ARR (as at January 31) | 657.5 | 619.1 | 6% | |
Adjusted Revenue | 162.4 | 161.3 | 1% | 1% |
Adjusted EBITDA | 52.2 | 58.6 | (11)% | (14)% |
Adjusted EBITDA Margin | 32% | 36% | ||
Adjusted uFCF | 17.9 | 37.7 | (53)% | |
IFRS measures | ||||
Revenue | 161.9 | 159.8 | 1% | |
Gross Profit | 148.3 | 146.2 | 1% | |
Operating Profit Before D&A | 11.7 | 31.7 | (63)% | |
Net Cash Inflow From Operating Activities | 4.3 | 25.0 | (83)% | |
FY23 | FY22 | YoY | YoY |
H1 | H1 | Actual | CCY |
277.6 | 283.2 | (2)% | 0% |
657.5 | 619.1 | 6% | |
331.4 | 316.3 | 5% | 5% |
119.3 | 110.9 | 8% | 2% |
36% | 35% | ||
91.4 | 82.3 | 11% | |
330.3 | 313.3 | 5% | |
303.1 | 287.9 | 5% | |
82.7 | 67.1 | 23% | |
62.5 | 51.1 | 22% | |
1
Luxembourg - July 6, 2023 - SUSE S.A. (the "Company" or "SUSE"), an independent leader in open source software specializing in Enterprise Linux operating systems, Enterprise Container Management and Edge software solutions, today announced its results for the second quarter of financial year 2023, which ended April 30, 2023.
"I have spent my first two months getting to know SUSE and key stakeholders, and I am impressed with the culture of openness, innovation and excellence," said Dirk-Peter van Leeuwen, CEO of SUSE. "We have some challenges to address; I have already taken swift actions to unlock future growth and we will continue to set up our organization for success over the coming quarters. With these changes and the growth in our markets, open source model and strong product portfolio, I am very confident we are well placed to deliver on our long-term potential."
"We are navigating the current headwinds and we continue to grow, with high profit margins, and to generate cash," said Jonathan Atack, Interim CFO of SUSE. "By maintaining an appropriate level of investments across the business, we are ensuring that we will reaccelerate growth as our performance and markets recover."
Notes
This document contains Alternative Performance Measures as defined in Appendix 3.
Operating expenses exclude non-recurring items, as shown in the IFRS operating loss to Adjusted EBITDA reconciliation in Appendix 1.
Constant Currency movements (CCY) have been provided for ACV, Adjusted Revenue and Adjusted EBITDA.The definition of constant currency is included within Appendix 3.
Statutory data for the financial period is reported in SUSE's separate Interim Report.Reconciliations to IFRS measures are shown in Appendix 1.
2
Summary IFRS Income Statement, KPIs and Adjusted Profit and Loss for Q2 and H1 FY23, and Q2 and H1 FY22
Summary IFRS Income Statement
All USD $m unless otherwise | FY23 | FY22 | YoY | FY23 | FY22 | YoY | |
stated | Q2 | Q2 | Actual | H1 | H1 | Actual | |
Revenue | 161.9 | 159.8 | 1% |
Cost of sales | (13.6) | (13.6) | 0% |
Gross profit | 148.3 | 146.2 | 1% |
Operating expenses | (136.6) | (114.5) | 19% |
Amortization of intangible assets | (34.3) | (36.1) | (5)% |
Depreciation - PPE | (1.1) | (1.0) | 10% |
Depreciation - Right of Use Assets | (1.6) | (2.6) | (38)% |
Operating profit/(loss) | (25.3) | (8.0) | 216% |
Net finance costs | (12.9) | (10.0) | 29% |
Share of losses on associate | (0.2) | (0.5) | (60)% |
Profit/(loss) before tax | (38.4) | (18.5) | 108% |
Taxation | 6.8 | 4.8 | 42% |
Profit/(loss) for the period | (31.6) | (13.7) | 131% |
330.3 | 313.3 | 5% |
(27.2) | (25.4) | 7% |
303.1 | 287.9 | 5% |
(220.4) | (220.8) | 0% |
(68.4) | (72.4) | (6)% |
(2.1) | (1.9) | 11% |
(3.0) | (4.2) | (29)% |
9.2 | (11.4) | n.m. |
(27.6) | (21.6) | 28% |
(1.2) | (1.4) | (14)% |
(19.6) | (34.4) | (43)% |
(5.9) | 7.9 | n.m. |
(25.5) | (26.5) | (4)% |
Items reported separately due to their significance and non-operating nature are $1.4 million in net costs for the quarter ended April 30, 2023 (quarter ended April 30, 2022: nil). Further details are set out in Appendix 1.
3
KPIs and Adjusted Profit and Loss
All USD $m unless otherwise stated | FY23 | FY22 | YoY | YoY | FY23 | FY22 | YoY | YoY |
Q2 | Q2 Actual | CCY | H1 | H1 Actual | CCY | |||
ACV by Solution | ||||||||
Core | 107.5 | 113.6 | (5)% | (5)% | 226.0 | 233.5 | (3)% | (2)% |
Emerging | 23.1 | 25.8 | (10)% | (10)% | 51.6 | 49.7 | 4% | 5% |
Total ACV | 130.6 | 139.4 | (6)% | (6)% | 277.6 | 283.2 | (2)% | 0% |
ARR (as at January 31) | 657.5 | 619.1 | 6% | 657.5 | 619.1 | 6% | ||
NRR (as at January 31) | 102.0% | 109.4% | (7)% | 102.0% | 109.4% | (7)% | ||
Adjusted Revenue by Solution | ||||||||
Core | 132.0 | 133.9 | (1)% | (1)% | 269.5 | 264.1 | 2% | 2% |
Emerging | 30.4 | 27.4 | 11% | 11% | 61.9 | 52.2 | 19% | 19% |
Total Adjusted Revenue | 162.4 | 161.3 | 1% | 1% | 331.4 | 316.3 | 5% | 5% |
Adjusted Cost of Sales | 13.4 | 13.1 | 2% | 4% | 26.8 | 24.9 | 8% | 11% |
Adjusted Gross Profit | 149.0 | 148.2 | 1% | 1% | 304.6 | 291.4 | 5% | 5% |
Adjusted Gross Profit Margin | 92% | 92% | 92% | 92% | ||||
Sales, Marketing & Operations | 44.5 | 46.3 | (4)% | (2)% | 86.5 | 89.3 | (3)% | 0% |
Research & Development | 31.7 | 27.1 | 17% | 20% | 59.7 | 54.1 | 10% | 14% |
General & Administrative | 20.6 | 16.2 | 27% | 31% | 39.1 | 37.1 | 5% | 10% |
Total Operating Expenses | 96.8 | 89.6 | 8% | 11% | 185.3 | 180.5 | 3% | 6% |
Adjusted EBITDA | 52.2 | 58.6 | (11)% | (14)% | 119.3 | 110.9 | 8% | 2% |
Adjusted EBITDA Margin | 32% | 36% | 36% | 35% | ||||
Depreciation & Amortization | 5.3 | 6.2 | (15)% | 10.1 | 11.2 | (10)% | ||
Adjusted EBIT | 46.9 | 52.4 | (10)% | 109.2 | 99.7 | 10% | ||
Net Finance Costs | 12.9 | 10.0 | 29% | 27.6 | 21.6 | 28% | ||
Adjusted Profit before Tax | 34.0 | 42.4 | (20)% | 81.6 | 78.1 | 4% | ||
Notional Tax | 11.5 | 12.9 | (11)% | 27.4 | 23.0 | 19% | ||
Adjusted Profit after Tax | 22.5 | 29.5 | (24)% | 54.2 | 55.1 | (2)% | ||
Weighted average shares in issue | 170 | 169 | 0% | 170 | 169 | 0% | ||
Basic Adjusted Earnings Per Share | 0.13 | 0.17 | (24)% | 0.32 | 0.33 | (3)% | ||
Diluted Adjusted Earnings Per Share | 0.13 | 0.17 | (25)% | 0.31 | 0.32 | (4)% |
Notes: Basic Adjusted Earnings Per Share is calculated on the basis of the weighted average number of ordinary shares in issue during the period.Diluted Adjusted Earnings Per Share takes into account potential dilution from outstanding share grants and options.The weighted average number of ordinary shares in issue,fully diluted, during the second quarter,was 173.3 million,and during the first half was 173.1 million.
4
Financial and Business Review
The information in this section is based on the presentation of Alternative Performance Measures as defined in Appendix 3 and has not been audited.
A reconciliation to the IFRS financials is included in Appendix 1. Results are shown using actual exchange rates.
SUSE today also published its Interim Report. The report can be found on SUSE's website here: https://ir.suse.com/websites/suse/English/6000/financial-reports.html
Business and Markets Update
SUSE continues to grow, with high profit margins and cash generation.
However, trading was softer than anticipated in the quarter ended April 30, 2023. The impact of the ongoing economic uncertainty on customers' decision making resulted in further delays to the completion of new contracts and a reduction in average contract lengths. Furthermore, the salesforce reorganization during Q1 did not gain the expected level of traction and impacted performance. Growth in sales through the Cloud route-to-market were also lower than anticipated. These have collectively led to downward pressure on current and expected revenues and cashflow in 2023.
SUSE's new CEO, Dirk-Peter van Leeuwen, joined on May 1 following Melissa Di Donato stepping down as CEO in March.
Werner Knoblich joined as Chief Revenue Officer (CRO) on July 1. Werner has been a senior commercial leader in open source for more than two decades. Most recently, Werner was Global CRO at SaaS provider Mambu, and prior to that he led the Europe, Middle East and Africa (EMEA) business at Red Hat for 18 years, where he grew it from $20 million in 2003 to over $1.5 billion in 2021.
SUSE has also announced a new regional sales structure to enable closer customer relationships, unlocking sales of SUSE's full portfolio through one single point of contact.
On June 30, CFO Andy Myers stepped down, with his replacement to be announced in due course. SUSE's Vice President of Treasury and Investor Relations, Jonathan Atack, joined the Management Board and is serving as interim CFO as of July 1.
Despite the current headwinds, SUSE's markets continue to grow. With its open source business model, SUSE remains well placed to deliver on its long-term potential.
SUSE's headcount remained broadly flat in Q2 versus the prior quarter, as SUSE continued to invest in R&D functions, offset by a modest decline in its sales force.
In the quarter, SUSE signed important deals with new and existing customers. These included cross- selling of Rancher to a leading semiconductor design company; a SLES renewal with upsell to a major German Automotive manufacturer; and high value SLES renewals at two of Japan's largest banks.
SUSE continues to drive innovation and in April launched Rancher 2.7.2. The latest version of Rancher includes a new extension framework, empowering users and independent software vendors to create customized user experiences, significantly enhancing the operationalization of their entire Kubernetes
5
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
SUSE SA published this content on 06 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 July 2023 07:10:33 UTC.
