SUSE
DGAP-News: SUSE S.A. / Key word(s): Quarterly / Interim Statement
SUSE S.A.: Quarterly Statement Q2 2021, for the Three Months ended April 30, 2021
2021-07-15 / 07:30
The issuer is solely responsible for the content of this announcement.
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SUSE Continues Its Growth Trajectory in the Second Quarter
. Q2 trading was in line with expectations and the guidance for the full year is confirmed.
. Total ARR of USD519.3 million, growth of 16% on the prior year; Rancher ARR was USD50.7 million, up 91%; SUSE ARR was
USD468.6 million, up 11%.
. ACV of USD109.0 million in Q2, an increase of 11% above prior year. Underlying growth was 22%, excluding one
unusually large contract in the prior period. ACV growth in H1 was 19%.
. Adjusted Revenues were USD136.8 million, an increase of 9% above prior year, driven by 47% growth in the Emerging
business, leading to 13% growth in H1.
. Adjusted EBITDA was USD48.2 million in Q2 representing a margin of 35%, delivering USD108.9 million and 40% margin for
H1.
. Adjusted Cash EBITDA for Q2 was USD54.4 million, representing a margin of 40% and driving unlevered Free Cashflow of
USD67.6 million. H1 margin was 60% with cash conversion of 98%.
. Successful integration of Rancher contributed to significant growth through cross-sells while executing cost-saving
targets.
USD USD millions Q2 Q2 Growth H1 H1 Growth
2021 2020 % 2021 2020 %
ACV 109.0 98.6 11% 246.6 207.1 19%
Adjusted Revenue 136.8 125.5 9% 270.9 240.4 13%
Adjusted EBITDA 48.2 49.8 -3% 108.9 87.4 25%
% Adj EBITDA Margin 35% 40% 40% 36%
Adjusted Cash EBITDA 54.4 59.2 -8% 161.5 115.1 40%
% Margin 40% 47% 60% 48%
Adjusted uFCF 67.6 66.7 1% 106.4 95.6 11%
Cash Conversion 140% 134% 98% 109% Note: This table contains Alternative Performance Measures as defined in Appendix 4 of this document. The presentation is based on pro forma numbers including Rancher on a coterminous basis in the prior year and in 2021 as if acquired on November 1, 2020. Statutory data for the Half Year is separately available in the Interim Report of SUSE S.A. and its subsidiaries for the six months ended 30 April 2021 on the company website. Luxembourg - July 15, 2021 - SUSE S.A. (the "Company" or "SUSE"), an independent leader in open source software specializing in Enterprise Linux operating systems, Container Management and Edge software solutions, today announced its results for the second quarter of financial year 2021, which ended April 30 2021. "During the second quarter, we continued to develop and grow our highly profitable business in line with expectations," said Melissa Di Donato, CEO of SUSE. "Our efforts culminated in SUSE's successful listing on the Frankfurt Stock Exchange and catapulted us onto the world stage as Europe's largest software IPO of 2021, to date. This validates our position as a leader in Enterprise Linux and Container Management - the two most foundational technologies powering digital transformation today. It proves that our vision to help enterprises freely innovate everywhere is resonating powerfully with customers across the globe. Our initial public offering has also allowed us to create greater share ownership for our employees, which aligns SUSE's growth with our most important asset: our people. Our global workforce has never been more energized or excited to deliver on our vision for our customers." "We are seeing strong traction in annual contract value and revenues - benchmarked against an exceptionally strong Q2 FY20," said Andy Myers, CFO of SUSE. "We are particularly excited about the encouraging trajectory of our Cloud business driven by deepened relationships with cloud service providers, and the successful integration of Rancher which continues to drive new business growth. Thanks to our unique business model and fiscal discipline, we have achieved consistently high margins and cash conversion even while we continued to invest in innovation, brand awareness and sales force expansion. Key growth markets such as our North American Federal business, as well as our Asia Pacific and Japan (APJ) and Latin America regions, are all showing the positive impact of new investment, underpinning the confirmation of our guidance. Following the IPO, we have deleveraged - and our ability to raise new capital will enable us to accelerate SUSE's growth as we pursue acquisitions." Financial and Business Review The information in this section is based on the presentation of Alternative Performance Measures as defined in Appendix 4 and has not been audited. Historical data is also based on pro forma figures including Rancher prior to its acquisition by SUSE in December 2020. The half-year numbers for 2021 include six months for Rancher on a pro forma basis. A reconciliation to the IFRS financials is included in Appendix 1 and the statutory data for the Half Year is separately available in the IAS 34 Interim Report of SUSE S.A. and its subsidiaries for the six months ended 30 April 2021 on the company website. Results are shown using actual exchange rates. Market and Revenues
USD USD millions Q2 Q2 Growth H1 H1 Growth
2021 2020 % 2021 2020 %
ACV by Solution Core 94.6 90.3 5% 205.9 185.4 11%
Emerging 14.4 8.3 73% 40.7 21.7 88%
Total 109.0 98.6 11% 246.6 207.1 19%
Revenue/ACV Conversion Core 128% 127% 117% 119%
Emerging 107% 127% 76% 89%
Total 126% 127% 110% 116%
Adjusted Revenue Core 121.4 115.0 6% 240.0 221.1 9%
Emerging 15.4 10.5 47% 30.9 19.3 60%
Total 136.8 125.5 9% 270.9 240.4 13% SUSE has continued to see strong growth across its business in the second quarter of 2021, showing momentum particularly in the Cloud channel and with SUSE Rancher. Annual contract value (ACV) was USD109.0 million for the second quarter of 2021, representing growth of 11% compared with the same period for the prior year. After growing 27% in the first quarter of 2021, the company saw overall growth of 19% for the half year. There was a large renewal combined with a significant upsell in our Core business in Q2 2020 which affects the reported growth rates. Adjusting for this, the year-on-year total ACV growth would have been 22%. The Emerging business showed ACV growth of 73% to USD14.4 million in the quarter, as more customers adopted cloud-native and container technologies. This is driving strong growth from SUSE Rancher with several large bookings, including the first deal with an independent software vendor (ISV). SUSE Rancher is also seeing an increase in contract lengths and good progress in the EMEA market with products being sold to existing SUSE customers. The pipeline for Emerging continues to grow based on SUSE Rancher momentum. Global trends in technology, workforces, economies and supply chains are driving the continued migration of on-premises workloads to the Cloud. So growth for SUSE was particularly strong in the Cloud route to market (RTM), which saw over 50% growth in ACV, consistently across Q1 and Q2. This was supported by strong performance with the hyperscalers and significant contracts signed with Managed Service Providers (MSP). As the corresponding demand for multi-cloud and cloud-native infrastructures grows, SUSE Rancher nearly doubled in size year-on-year in Q2. ACV for Independent Hardware Vendor (IHV) RTM was slightly weaker in the second quarter, partly due to hardware supply chain issues increasing customer lead times. But two large contracts in embedded business supported the figures. Geographically, the North American market was very strong with ACV growth in excess of 30%, supported by several large contracts and benefitting from a high proportion of the SUSE Rancher growth. Excluding the large contract in Core in Q2 2020, the Europe, Middle East and Africa (EMEA) region grew over 10%. In the key target markets of Latin America and APJ, the ongoing investment in sales capabilities continues to deliver with ACV growth of over 50% and 30% respectively, from relatively small bases. Overall contract duration for the last 12 months to the end of Q2 was unchanged from the preceding quarter at 19 months and was slightly down from the prior year. The change over the last 12 months primarily reflects the increased proportion of Cloud business and the move from direct end-user to cloud service provider, where contract lengths tend to be shorter initially. This has been offset by an increase in the length of end-user contracts, especially in the last six months, which has stabilized average contract lengths. Adjusted Revenue for the quarter was USD136.8 million, up 9% from USD125.5 million in the prior year. The increase was 6% in Core and 47% in Emerging. For the first half year, the revenue growth was 13%. The 6% growth in Core Adjusted Revenues reflects a higher comparable figure in Q2 2020 due to a 'one time' royalty true up of USD4.5 million and slightly lower ACV conversion as contracts lengthen in the Cloud business. Adjusted Revenue growth in Emerging of 47% to USD15.4 million was driven by SUSE Rancher. The conversion rate in the quarter is lower than prior year due to back-end loading of ACV billings within this quarter. EUR/USD is the only significant foreign exchange rate to impact our revenues. Excluding the impact of the favorable Euro exchange rate movement, the Adjusted Revenue growth was 9% in the second quarter and 12% in the first half. Excluding the corresponding FX impact on ACV, the growth was 7% in the second quarter and 15% in the first half. This is based on EUR/USD foreign exchange (FX) rates in Q2 2020 of 1.09, and (MORE TO FOLLOW) Dow Jones Newswires
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