SUSE S.A.: SUSE Q3 FY23 Quarterly Statement
EQS-News: SUSE S.A. / Key word(s): Quarter Results
SUSE S.A.: SUSE Q3 FY23 Quarterly Statement
30.08.2023 / 07:30 CET/CEST
The issuer is solely responsible for the content of this announcement.*SUSE Q3 FY23 Quarterly Statement*
· Q3 IFRS Revenue of $173 million was up 2% versus the prior year, and IFRS Operating Profit Before D&A was $36 million, down 11%, reflecting continued investments in initiatives to support future growth
· ARR (as at April 30, 2023) of $665 million was up 4%
· Adjusted Revenue of $173 million, up 1% (same at constant currency), was supported by earlier-than-expected revenue from retrospective consumption contracts
· Adjusted EBITDA Margin of 32%, down 6 ppt, also reflects investments into initiatives to support future growth, including in R&D
· Adjusted Unlevered Free Cash Flow of $60 million, down 2%, with cash conversion of 108%, was supported by a core working capital inflow
· During Q3 FY23 and since the end of the quarter, SUSE’s expectations for future performance and market outlooks have not changed materially
· There will be no further announcement of Q3 results, previously due on September 21, 2023, and no management conference call today
· On August 17, 2023, post quarter end, SUSE announced that its majority shareholder Marcel LUX III SARL (EQT Private Equity) intends to take the company private by delisting it from the Frankfurt Stock Exchange. As part of that, EQT Private Equity announced a voluntary public purchase price offer to acquire the shares it does not own. The offer price per SUSE share to be paid by EQT Private Equity will be EUR 16.00 less the gross amount per SUSE share of an interim dividend to be paid by SUSE to all shareholders, representing a premium of 67% on the XETRA closing share price on 17 August
· The interim dividend will be funded by SUSE through a combination of existing cash and additional borrowing and will be paid to all shareholders, allowing EQT Private Equity to finance its purchase of SUSE shares under the offer and certain transaction costs. For more information see ir.suse.com
· SUSE’s Management Board and Supervisory Board support the strategic opportunity from delisting of the company as it will allow SUSE to focus fully on its operational priorities and execution of its long-term strategy
· On August 14, 2023, SUSE announced the appointments of Ian Halifax as Chief Financial Officer from December 11, 2023, and Frank Feldman as Chief Strategy Officer with immediate effect. These appointments completed SUSE’s strengthened executive leadership team
All USD $m unless otherwise stated FY23
Q3 FY22
Q3 YoY
Actual YoY
CCY FY23
Q3 YTD FY22
Q3 YTD YoY
Actual YoY
CCY
Non-IFRS measures
ACV 117.0 114.4 2% 1% 394.6 397.6 (1)% 0%
ARR (as at April 30) 664.9 639.6 4% 664.9 639.6 4%
Adjusted Revenue 173.3 171.2 1% 1% 504.7 487.5 4% 4%
Adjusted EBITDA 55.9 65.1 (14)% (12)% 175.2 176.0 (0)% (3)%
Adjusted EBITDA Margin 32% 38% 35% 36%
Adjusted uFCF 60.1 61.5 (2)% 151.5 143.8 5%
IFRS measures
Revenue 173.0 170.1 2% 503.3 483.4 4%
Gross Profit 159.4 156.8 2% 462.5 444.7 4%
Operating Profit Before D&A 36.2 40.8 (11)% 118.8 107.9 10%
Net Cash Inflow from Operating Activities 40.9 54.0 (24)% 103.4 105.1 (2)% *Luxembourg – August 30, 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 third quarter of financial year 2023, which ended July 31, 2023.
*Notes*
This document contains Alternative Performance Measures as defined in Appendix 4.
Operating expenses exclude non-recurring items, as shown in the IFRS operating loss to Adjusted EBITDA reconciliation in Appendix 2.
Constant Currency movements (CCY) have been provided for ACV, Adjusted Revenue and Adjusted EBITDA. The definition of constant currency is included within Appendix 4.
Statutory data for the financial period is reported in Appendix 1. Reconciliations to IFRS measures are shown in Appendix 2.
*Summary IFRS Income Statement, KPIs and Adjusted Profit and Loss for Q3 and Q3 YTD FY23, and Q3 and Q3 YTD FY22*
*Summary IFRS Income Statement*
All USD $m unless otherwise stated FY23
Q3 FY22
Q3 YoY
Actual FY23
Q3 YTD FY22
Q3 YTD YoY
Actual
Revenue 173.0 170.1 2% 503.3 483.4 4%
Cost of sales (13.6) (13.3) 2% (40.9) (38.7) 6%
Gross profit 159.4 156.8 2% 462.4 444.7 4%
Operating expenses (123.2) (116.0) 6% (343.6) (336.8) 2%
Amortization of intangible assets (34.4) (35.2) (2)% (102.7) (107.6) (5)%
Depreciation - PPE (1.2) (0.9) 33% (3.3) (2.8) 18%
Depreciation - Right of Use assets (1.2) (1.7) (29)% (4.2) (5.9) (29)%
Operating profit/(loss) (0.6) 3.0 n.m. 8.6 (8.4) n.m.
Net finance costs (12.5) (9.1) 37% (40.1) (30.7) 31%
Share of losses on associate (0.2) (0.3) (33)% (1.4) (1.7) (18)%
Profit/(Loss) before tax (13.3) (6.4) 108% (32.9) (40.8) (19)%
Taxation (0.7) (6.5) (89)% (6.6) 1.4 n.m.
Profit/(Loss) for the period (14.0) (12.9) 9% (39.5) (39.4) 0%
*KPIs and Adjusted Profit and Loss*
All USD $m unless otherwise stated FY23
Q3 FY22
Q3 YoY
Actual YoY
CCY FY23
Q3 YTD FY22
Q3 YTD YoY
Actual YoY
CCY
ACV by Solution
Core 93.4 93.2 0% (1)% 319.4 326.7 (2)% (1)%
Emerging 23.6 21.2 11% 11% 75.2 70.9 6% 7%
Total ACV 117.0 114.4 2% 1% 394.6 397.6 (1)% 0%
ARR (as at April 30) 664.9 639.6 4% 664.9 639.6 4%
NRR as % (as at April 30) 100.4% 107.6% (7)% 100.4% 107.6% (7)%
Adjusted Revenue by Solution
Core 144.0 142.9 1% 0% 413.5 407.0 2% 2%
Emerging 29.3 28.3 4% 4% 91.2 80.5 13% 13%
Total Adjusted Revenue 173.3 171.2 1% 1% 504.7 487.5 4% 4%
Adjusted Cost of Sales 13.4 13.3 1% 0% 40.2 38.2 5% 7%
Adjusted Gross Profit 159.9 157.9 1% 1% 464.5 449.3 3% 3%
Adjusted Gross Profit Margin 92% 92% 92% 92%
Sales, Marketing & Operations 47.7 45.0 6% 5% 134.2 134.3 (0)% 2%
Research & Development 33.4 27.1 23% 21% 93.1 81.2 15% 16%
General & Administrative 22.9 20.7 11% 6% 62.0 57.8 7% 9%
Total Operating Expenses 104.0 92.8 12% 10% 289.3 273.3 6% 8%
Adjusted EBITDA 55.9 65.1 (14)% (12)% 175.2 176.0 (0)% (3)%
Adjusted EBITDA Margin 32% 38% 35% 36%
Depreciation & Amortization 4.9 5.0 (2)% 15.0 16.3 (8)%
Adjusted EBIT 51.0 60.1 (15)% 160.2 159.7 0%
Net Finance Costs 12.5 9.1 37% 40.1 30.7 31%
Adjusted Profit Before Tax 38.5 51.0 (25)% 120.1 129.0 (7)%
Notional Tax 11.0 14.2 (23)% 38.4 37.2 3%
Adjusted Profit After Tax 27.5 36.8 (25)% 81.7 91.8 (11)%
Weighted average shares in issue 170.6 169.2 1% 169.9 169.1 0%
Basic Adjusted Earnings Per Share 0.16 0.22 (27)% 0.48 0.54 (11)%
Diluted Adjusted Earnings Per Share 0.16 0.21 (24)% 0.47 0.53 (11)%
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 third quarter, was 174.2 million, and during the Q3 YTD FY23 was 173.5 million.*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.
A reconciliation to the IFRS financials is included in Appendix 2. Results are shown using actual exchange rates.
*Business and Markets Update*
On August 17, 2023, post quarter end, SUSE announced that its majority shareholder Marcel LUX III SARL (EQT Private Equity) intends to take the company private by delisting it from the Frankfurt Stock Exchange via a merger into an unlisted Luxembourg entity in the legal form of an S.A. As part of that, EQT Private Equity has announced a voluntary public purchase price offer to acquire the shares it does not own. The offer price per SUSE share to be paid by EQT Private Equity will be EUR 16.00 less the gross amount per SUSE share of an interim dividend to be paid by SUSE to all shareholders, representing a premium of 67% on the XETRA closing share price on 17 August.
The interim dividend will be paid to all shareholders prior to the settlement of the offer and will allow EQT Private Equity to finance its purchase of SUSE shares under the offer and certain transaction costs incurred by it. The payment of the interim dividend will be funded by SUSE through a combination of existing cash and additional borrowing. Any additional borrowing will be in the form of loans taken out by companies of the SUSE group to a maximum of EUR 500 million. The amount of the loans taken out will only be determined after the expiry of the offer acceptance period.
SUSE’s Management Board and Supervisory Board support the strategic opportunity from delisting of the company as it will allow SUSE to focus fully on its operational priorities and execution of its long-term strategy.
For more information, see the press release and ad hoc announcement at https://ir.suse.com/websites/suse/English/4900/eqt-purchase-offer.html
On August 14, 2023, SUSE announced the appointments of Ian Halifax as Chief Financial Officer from December 11, 2023, and Frank Feldman as Chief Strategy Officer with immediate effect. These appointments completed SUSE’s strengthened executive leadership team.
Ian Halifax will take over as CFO on December 11, 2023, following a handover with the interim CFO Jonathan Atack, who retains full responsibility for the role until then. Ian Halifax has more than 30 years' experience in senior financial leadership positions, including as Chief Financial Officer at leading global technology providers such as Trellix, Riverbed Technology, ON24, Wind River Systems and Micromuse. He has substantial strategic and executional experience in private and public technology companies, and he has developed and led global teams to drive performance, rapid growth and diversification.
Frank Feldmann’s career includes more than 15 years in several senior management roles at Red Hat, as well as at Novell. Feldmann has a strong foundation in technology product management, sales and technology marketing, focused on business and technology transformation and growth. His role at SUSE includes the development and execution of long-term business strategies.
*ACV and Revenues*
Q3 ACV was $117.0 million, up 2%, comprising Core ACV of $93.4 million, flat versus the prior year, and Emerging ACV of $23.6 million, up 11%. At constant currency, Q3 total ACV growth was up 1%, Core was down 1% and Emerging up 11%.
Q3 Adjusted Revenue was $173.3 million, up 1%, comprising Core Revenue of $144.0 million, up 1%, and Emerging Revenue of $29.3 million, up 4%. At constant currency, movements are the same for total Adjusted Revenue and Emerging Revenue, with Core Revenue flat versus the prior year.
The average contract duration on a last-12-months basis was 18 months, the same as the prior quarter. This only considers contracts paid up front.
*ACV – By Route-to-Market*
All USD $m unless otherwise stated FY23
Q3 FY22
Q3 YoY
Actual FY23
Q3 YTD FY22
Q3 YTD YoY
Actual
End User & Cloud 108.0 101.9 6% 343.8 335.9 2%
IHV & Embedded 9.0 12.5 (28)% 50.8 61.7 (18)%
Total ACV 117.0 114.4 2% 394.6 397.6 (1)%End User and Cloud ACV was up 6% in Q3, driven by growth in both Cloud and End User routes-to-market.
Independent Hardware Vendors (IHV) and Embedded ACV declined 28% in Q3, driven by lower hardware shipments and a shift to selling through other routes, primarily through Cloud Service Providers.*ACV – By Region*
All USD $m unless otherwise stated FY23
Q3 FY22
Q3 YoY
Actual FY23
Q3 YTD FY22
Q3 YTD YoY
Actual
Europe, Middle East and Africa 53.8 41.4 30% 178.8 159.7 12%
North America 43.8 53.6 (18)% 154.0 171.5 (10)%
Asia Pacific and Japan 9.7 10.8 (10)% 29.1 28.5 2%
Greater China 5.4 4.6 17% 16.9 20.8 (19)%
Latin America 4.3 4.0 8% 15.8 17.1 (8)%
Total ACV 117.0 114.4 2% 394.6 397.6 (1)%
*Annual Recurring Revenue and Net Retention Rate*
Total Annual Recurring Revenue (ARR) as at April 30, 2023, was $664.9 million, up 4%.
SUSE’s Net Retention Rate (NRR) as at April 30, 2023, was 100.4%.
ARR and NRR are reported three months in arrears as a significant portion of the revenues are invoiced retrospectively.
*Costs*
SUSE’s Q3 Adjusted Cost of Sales grew broadly in line with Adjusted Revenue versus the prior year, resulting in a consistently high Adjusted Gross Profit margin of 92%.
Total Operating Expenses increased by 12% in Q3, 10% at constant currency.
*Profitability*
All USD $m unless otherwise stated FY23
Q3 FY22
Q3 YoY
Actual FY23
Q3 YTD FY22
Q3 YTD YoY
Actual
Adjusted EBITDA 55.9 65.1 (14)% 175.2 176.0 (0)%
Adjusted EBITDA Margin 32% 38% 35% 36%
Change in Deferred Revenue (13.6) (18.9) (28)% (17.8) 39.2 n.m
Adjusted Cash EBITDA 42.3 46.2 (8)% 157.4 215.2 (27)%
Adjusted Cash EBITDA Margin 24% 27% 31% 44%
Adjusted EBITDA declined 14% versus the prior year, as revenue growth was more than offset by higher operating costs.
Change in Deferred Revenue was negative $13.6 million, despite higher ACV and stable contract lengths in Q3 versus the prior year, as revenue recognition more than offset the total contract value booked in the period.
The decrease in Adjusted EBITDA was partly offset by the lower negative Change in Deferred Revenue, leading to Q3 Adjusted Cash EBITDA of $42.3 million, down 8%.
*Cash Flow*
All USD $m unless otherwise stated FY23
Q3 FY22
Q3 YoY
Actual FY23
Q3 YTD FY22
Q3 YTD YoY
Actual
Adjusted Cash EBITDA 42.3 46.2 (8)% 157.4 215.2 (27)%
Gross capital expenditure (1.3) (2.5) (48)% (6.9) (7.2) (4)%
Change in core working capital 27.5 27.2 1% 30.6 (27.2) n.m.
Commission paid (net of amortization) (2.6) (5.3) (51)% (10.9) (18.6) (41)%
Leases paid (2.1) (1.9) 11% (6.3) (5.7) 11%
Cash taxes (3.7) (2.2) 68% (12.4) (12.7) (2)%
Adjusted uFCF 60.1 61.5 (2)% 151.5 143.8 5%
Adj. uFCF Conv from Adj. EBITDA 108% 94% 86% 82%
Adjusted Unlevered Free Cash Flow of $60.1 million in Q3 was down 2% versus the prior year, driven primarily by the lower Adjusted Cash EBITDA, partly offset by lower commissions paid (net of amortization). The Core Working Capital inflow of $27.5 million in Q3 was broadly similar to the prior year, reflecting customer payment for contracts signed in the prior quarter.
*Leverage*
All USD $m unless otherwise stated FY23
End Q3 FY22
End Q3 YoY
Actual
Net Debt 507.3 604.1 (16)%
Adjusted Cash EBITDA (LTM) 237.4 266.9 (11)%
Leverage 2.1 2.3 (9)%
Net Debt at the end of Q3 was $507.3 million, a reduction of $96.8 million versus the prior year, driven by SUSE’s strong cash flow.
*Outlook*
During Q3 FY23 and since the end of the quarter, SUSE’s expectations for future performance and market outlooks have not changed materially.
*Additional Information*
*About SUSE*
SUSE is a global leader in innovative, reliable and secure enterprise-grade open source solutions, relied upon by more than 60% of the Fortune 500 to power their mission-critical workloads. The company behind Rancher, NeuVector and SUSE Linux Enterprise (SLE), SUSE collaborates with partners and communities to empower customers to innovate everywhere – from the data center to the cloud, to the edge and beyond. SUSE puts the “open” back in open source, giving customers the ability to tackle innovation challenges today and the freedom to evolve their strategy and solutions tomorrow. The company employs more than 2,400 people globally and is listed on the Frankfurt Stock Exchange. For more information, visit www.suse.com.
For reference you'll find all releases here https://www.suse.com/news/
*Contacts*
*Investors: *
Matt Jones
Investor Relations, SUSE
Phone: +44 7809 690 336
Email: ir@suse.com
*Media:*
Christopher Deifuss
Kekst CNC
Phone: +49 162 2059754
Email: christopher.Deifuss@kekstcnc.comMonique Perks
Kekst CNC
Phone: +44 758 1033 557
Email: monique.perks@kekstcnc.com
*Webcast Details*
There will be no management conference call covering Q3 FY23 results. Please see above contact details for any questions.
*Important Notice*
Certain statements in this communication may constitute forward-looking statements. These statements are based on assumptions that are believed to be reasonable at the time they are made, and are subject to significant risks and uncertainties, including, but not limited to, those risks and uncertainties described in SUSE's disclosures. You should not rely on these forward-looking statements as predictions of future events, and we undertake no obligation to update or revise these statements. Our actual results may differ materially and adversely from any forward-looking statements discussed in these statements due to several factors, including without limitation, risks from macroeconomic developments, external fraud, lack of innovation capabilities, inadequate data security and changes in competition levels.
The Company undertakes no obligation, and does not expect to publicly update, or publicly revise, any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to it or to persons acting on its behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this communication.
*APPENDIX 1 IFRS Figures*
*Interim Condensed Consolidated Statement of Comprehensive Income (unaudited)*
*For the nine months ended 31 July 2023*
* * * * *Nine months ended 31 July 2023* * * *Nine months ended 31 July 2022*
* * * * * * *Separately* * * * * * * *Separately* * *
*Income statement:* * * * *
*Headline* *reported items * * *
*Total* * * * *
*Headline* *reported items* * *
*Total*
* * * * *US$’000* *US$’000* *US$’000* * * *US$’000* *US$’000* *US$’000*
*Revenue* * * *503,307* *-* *503,307* * * *483,409* - *483,409*
Cost of sales * * (40,857) - (40,857) (38,751) - (38,751)
*Gross profit* * * *462,450* *-* *462,450* * * *444,658* - *444,658*
Selling and distribution costs * * (140,646) (6,836) (147,482) (136,914) - (136,914)
Research and development costs * * (95,858) - (95,858) (86,075) - (86,075)
Administrative expenses * * (100,940) - (100,940) (114,378) - (114,378)
Impairment credit on trade receivables * * 657 - 657 531 - 531
*Operating profit before depreciation/impairment and amortization * *125,663* *(6,836)* *118,827* * * *107,822* *-* *107,822* * *
Amortization of intangible assets * * (102,707) - (102,707) (107,568) - (107,568)
Depreciation – Property, plant and equipment * * (3,266) - (3,266) (2,760) - (2,760)
Depreciation/impairment – Right of use assets * * (4,237) - (4,237) (5,888) - (5,888)
*Operating profit/( loss)* * * *15,453* *(6,836)* *8,617* * * *(8,394)* *-* *(8,394)* * * * * * * * * * * * * * * * *
Finance costs * * (44,132) - (44,132) (30,949) - (30,949)
Finance income * * 4,074 - 4,074 268 - 268
*Net finance costs* * * *(40,058)* *-* *(40,058)* * * *(30,681)* *-* *(30,681)*
* * * * * * * * * * * * * * * * * *
Share of losses of associate * * (1,501) - (1,501) (1,745) - (1,745)
*Loss before tax* * * *(26,106)* *(6,836)* *(32,942)* * * *(40,820)* *-* *(40,820)* * *
Taxation * * (8,295) 1,706 (6,589) 1,419 - 1,419
*Loss for the period* * * *(34,401)* *(5,130)* *(39,531)* * * *(39,401)* *-* *(39,401)*
Attributable to: * * * * * * * * * * * * * * * *
Equity shareholders of the parent * * (34,401) (5,130) (39,531) (39,401) - (39,401)
Non-controlling interests * * - - - - - -
*Loss for the period* * * *(34,401)* *(5,130)* *(39,531)* *(39,401)* *-* *(39,401)*
* * * * * * * * * * * * * * * * * *
*Basic** **loss** **per share (USD/share) **^(1)* * * * * * * *(0.2)* * * * * * * *(0.2)*
^(1)For the nine months ended 31 July 2023 and 31 July 2022, potential ordinary shares are anti-dilutive, as their inclusion in the diluted loss per share calculation would reduce the loss per share, and hence have been excluded.
*Interim Condensed Consolidated Statement of Comprehensive Income (unaudited)*
*For the nine months ended 31 July 2023*
* * *Nine months ended 31 July 2023* * * *Nine months ended 31 July 2022*
* * * * *Separately* * * * * * * *Separately* * *
* * * *
*Headline* *reported items* * *
*Total* * * * *
*Headline* *reported items* * *
*Total*
* * *US$’000* *US$’000* *US$’000* * * *US$’000* *US$’000* *US$’000*
* * * * * * * * * * * * * * * *
*Loss** **for the period* *(34,401)* *(5,130)* *(39,531)* * * *(39,401)* *-* *(39,401)*
*Other comprehensive (loss)/income:*
Items not to be reclassified to income statement:
Remeasurement of defined benefit pension schemes 325 - 325 2,304 - 2,304
Related tax impact (8) - (8) (706) - (706)
Items that may be reclassified to income statement:
Currency translation differences (32,587) - (32,587) 48,671 - 48,671
Cash flow hedge – changes in fair value 7,832 - 7,832 (49) - (49)
Cash flow hedge – reclassified to income statement 89 - 89 4,386 - 4,386
Related tax impact (1,861) - (1,861) (1,003) - (1,003)
*Other comprehensive (loss)/income for the period* *(26,210)* *-* *(26,210)* * * *53,603* *-* *53,603*
*Total comprehensive (loss)/income for the period* *(60,611)* *(5,130)* *(65,741)* * * *14,202* *-* *14,202* * * * * * * * * * * * * * *
Attributable to: * * * * * * * * * * * * * *
Equity shareholders of the parent (60,611) (5,130) (65,741) 14,202 - 14,202
Non-controlling interests - - - - - -
*Total comprehensive (loss)/income for the period* *(60,611)* *(5,130)* *(65,741)* * * *14,202* *-* *14,202*
*Interim Condensed Consolidated Statement of Financial Position (unaudited)*
*As at 31 July 2023*
* * * * *As at *
*31 July 2023* *As at *
*31 October 2022*
* * * * *US$’000* *US$’000*
*Non-current assets* * * * * * *
Goodwill * * 2,686,320 2,686,320
Intangible assets * * 294,269 393,427
Property, plant and equipment * * 17,580 13,914
Right of use assets * * 16,681 18,089
Investment in associate * * 10,775 12,276
Derivative asset * * 12,194 4,051
Long-term pension assets * * 569 484
Other receivables * * 8,813 8,697
Deferred tax assets * * 184,374 178,680
Contract related assets * * 94,714 78,183
* * * * *3,326,289* *3,394,121*
*Current assets* * *
Trade and other receivables * * 111,943 158,044
Current tax receivables * * 3,597 3,597
Cash and cash equivalents * * 258,787 177,544
Contract related assets * * 32,307 37,796 * * *406,634* *376,981*
*Total assets* * * *3,732,923* *3,771,102*
*Current liabilities* * * * * * *
Trade and other payables * * 88,633 110,490
Borrowings * * 3,600 3,600
Lease liabilities * * 6,705 6,249
Provisions * * 692 337
Current tax liabilities * * 7,950 10,113
Deferred income – contract liabilities * * 361,186 351,197
* * * * *468,766* *481,986*
*Non-current liabilities* * * * * * *
Borrowings * * 730,675 695,989
Lease liabilities * * 12,458 14,431
Provisions * * 1,043 1,033
Non-current tax liabilities * * 8,083 8,083
Deferred tax liabilities * * 102,050 98,831
Retirement benefit obligations * * 2,163 2,142
Deferred income – contract liabilities * * 188,700 215,034
Other payables * * 2,574 3,861
* * * * *1,047,746* *1,039,404*
*Total liabilities* * * *1,516,512* *1,521,390*
*Equity* * * * * * *
Share capital * * 17,079 16,936
Share premium * * 2,522,835 2,522,978
Retained losses * * (441,337) (400,262)
Other reserves * * 104,922 72,482
Cash flow hedging reserve * * 11,972 4,051
Foreign currency translation reserve * * 940 33,527
*Total equity* * * *2,216,411* *2,249,712*
*Total liabilities and equity* * * *3,732,923* *3,771,102*
*Interim Condensed Consolidated Statement of Changes in Equity (unaudited) *
*For the nine months ended 31 July 2023*
* * * * * *
* *
*Share *
*capital* * *
* *
*Share premium* * *
* *
*Retained losses* * *
* *
*Other reserve* * *
*Cash flow*
*hedging reserve* *Foreign currency translation reserve* * *
* *
*Total *
*equity*
* * * * *US$’000* *US$’000* *US$’000* *US$’000* *US$’000* *US$’000* *US$’000*
* * * * * * * * * * * * * * * * * *
*As at 1 November 2022* * * *16,936* *2,522,978* *(400,262)* *72,482* *4,051* *33,527* *2,249,712* * * * * * * * * * * * * * * * *
Loss for the period * * - - (39,531) - - - *(39,531)*
Other comprehensive (loss)/income for the period - - (1,544) - 7,921 (32,587) *(26,210)*
* * * * * * * * * * * * * * * *
*Total comprehensive (expense)/income for the period* *-* *-* *(41,075)* *-* *7,921* *(32,587)* *(65,741)* * * * * * * * * * * * * * * * *
Transactions recorded in equity: * * * * * * * * * * * * * * * *
Issue of share capital * * 143 (143) - - - - *-*
Equity settled share-based payments * * - - - 32,440 - - *32,440* * *
*Total transactions with owners* * * *143* *(143)* *-* *32,440* *-* *-* *32,440*
* * * *
*As at 31 July 2023* * * *17,079* *2,522,835* *(441,337)* *104,922* *11,972* *940* *2,216,411*
*Interim Condensed Consolidated Statement of Changes in Equity (unaudited) *
*For the nine months ended 31 July 2022*
* *
* * * * * *
* *
*Share *
*capital* * *
* *
*Share premium* * *
* *
*Retained losses* * *
* *
*Other*
*reserve* * *
*Cash flow*
*hedging reserve* *Foreign currency translation reserve* * *
* *
*Total *
*equity*
* * * * *US$’000* *US$’000* *US$’000* *US$’000* *US$’000* *US$’000* *US$’000*
* * * * * * * * * * * * * * * * * *
*As at 1 November 2021* * * *16,903* *2,523,011* *(355,870)* *21,169* *(4,337)* *(14,866)* *2,186,010* * * * * * * * * * * * * * * * *
Loss for the period * * - - (39,401) - - - *(39,401)*
Other comprehensive income for the period - - 595 - 4,337 48,671 *53,603*
* * * * * * * * * * * * * * * *
*Total comprehensive (expense)/income for the period* *-* *-* *(38,806)* *-* *4,337* *48,671* *14,202* * * * * * * * * * * * * * * * *
Transactions recorded in equity: * * * * * * * * * * * *
Issue of share capital * * 26 (26) - - - - *-*
Equity settled share-based payments * * - - - 37,024 - - *37,024* * * * *
*Total transactions with owners* * * *26* *(26)* *-* *37,024* *-* *-* *37,024*
* * * * * *
*As at 31 July 2022* * * *16,929* *2,522,985* *(394,676)* *58,193* *-* *33,805* *2,237,236*
*Interim Condensed Consolidated Statement of Cash Flows (unaudited)*
*For the nine months ended 31 July 2023*
* * *Nine months ended*
*31 July 2023* *Nine months ended*
*31 July 2022* * * *US$’000* *US$’000*
* * * * * *
*Loss for the period* *(39,531)* *(39,401)*
Net finance costs * * 40,058 30,681
Taxation * * 6,589 (1,419)
Share of losses of associate * * 1,501 1,745
*Operating profit/(loss) for the period* * * *8,617* *(8,394)*
*Addback:* * * * * * *
Depreciation – Property, plant and equipment * * 3,266 2,760
Depreciation/impairment – Right of use assets * * 4,237 5,888
Amortization of intangible assets * * 102,707 107,568
Amortization of contract related assets * * 15,317 10,733
Share-based payments expense * * 34,078 37,771
Restructuring charges * * 6,836 -
Foreign exchange movements * * (5,303) 13,340
Impairment credit on trade receivables * * (657) (531)
*Movements:* * *
Movements in trade receivables * * 54,579 11,104
Movements in other receivables * * (7,939) (839)
Movements in trade payables * * (8,319) (5,505)
Movements in other payables * * (6,229) (43,857)
Movement in other pensions * * (606) (494)
Movements in provisions * * (6,471) (2,499)
Movements in contract related assets * * (26,243) (29,294)
Contract assets - fair value haircut * * (116) (286)
Movements in contract liabilities * * (17,887) 39,238
Contract liabilities - fair value haircut * * 1,542 4,290
Cash-settled share-based payments * * (1,892) (198)
*Cash generated from operations * * * *149,517* *140,795*
Interest paid * * (37,711) (23,069)
Interest received * * 4,074 8
Tax paid * * (12,443) (12,655)
*Net cash inflow from operating activities* * * *103,437* *105,079*
* * * *
*Cash flow used in investing activities* * *
Purchase of property, plant and equipment * * (6,868) (7,151)
Purchase and development of intangible assets * * (9,266) (957)
Acquisition of a business, net of cash * * - (2,545)
*Net cash outflow from investing activities* * * *(16,134)* *(10,653)*
*Net cash inflow before financing activities* *87,303* *94,426*
*Interim Condensed Consolidated Statement of Cash Flows (unaudited)*
*For the nine months ended 31 July 2023*
* * * * *Nine months ended*
*31 July 2023* *Nine months ended*
*31 July 2022*
* * * * *US$’000* *US$’000*
* * * * * *
*Cash flows used in financing activities* * * * *
Repayment of bank borrowings * * (2,700) (2,700)
Payment of interest rate swap premia * * (88) (4,386)
Lease payments * * (6,251) (5,675)
*Net cash outflow from financing activities* *(9,039)* *(12,761)*
* * * *
*Net increase in cash and cash equivalents* *78,264* *81,665*
Foreign exchange movements * * 2,979 (2,191)
Cash and cash equivalents at beginning of period * * 177,544 61,061
*Cash and cash equivalents at end of period* * * *258,787* *140,535*
*APPENDIX 2 Reconciliation from IFRS to Adjusted Pro Forma Figures*
*IFRS Revenue to Adjusted Revenue*
All USD $m unless otherwise stated FY23
Q3 FY22
Q3 YoY
Actual FY23
Q3 YTD FY22
Q3 YTD YoY
Actual
Revenue - IFRS 173.0 170.1 2% 503.3 483.4 4%
Adjustments
Deferred revenue haircut amortized 0.3 1.1 (73)% 1.5 4.3 (65)%
Contract Asset haircut amortized 0.0 0.0 0% (0.1) (0.2) (50)%
Adjusted Revenue 173.3 171.2 1% 504.7 487.5 4%
*IFRS Operating Profit/(Loss) to Adjusted EBITDA*
All USD $m unless otherwise stated FY23
Q3 FY22
Q3 YoY
Actual FY23
Q3 YTD FY22
Q3 YTD YoY
Actual
Operating profit/(loss) - IFRS (0.6) 3.0 n.m. 8.6 (8.4) n.m.
Adjustments
Depreciation and Amortization 36.7 37.7 (3)% 110.2 116.2 (5)%
Separately reported items 0.0 0.0 0% 6.8 0.0 100%
Contract liability haircut amortized 0.3 1.1 (73)% 1.5 4.3 (65)%
Contract Asset haircut amortized 0.0 0.0 0% (0.1) (0.2) (50)%
Non-recurring items 10.4 5.3 96% 15.2 14.4 6%
Share-based payments - charge 10.1 15.2 (34)% 34.1 37.8 (10)%
Share-based payments - ER taxes (0.3) 0.0 n.m. 0.3 0.9 (67)%
Foreign exchange - unrealized (0.7) 2.8 n.m. (1.4) 11.0 n.m
Adjusted EBITDA 55.9 65.1 (14)% 175.2 176.0 0%*Adjusted Deferred Revenue to IFRS Deferred Revenue*
All USD $m unless otherwise stated FY23
Q3 FY22
Q3 YoY
Actual FY23
Q3 YTD FY22
Q3 YTD YoY
Actual
Change in Deferred Revenue (13.6) (18.9) (28)% (17.8) 39.2 n.m.
Adjustments
Contract liability haircut amortized 0.3 1.1 (73)% 1.5 4.3 (65)%
Contract asset haircut amortized 0.0 0.0 0% (0.1) (0.2) (50)%
Change in deferred revenue - IFRS (13.3) (17.8) (25)% (16.4) 43.3 n.m.
*IFRS Net Cash Inflow from Operating Activities to Adjusted uFCF*
All USD $m unless otherwise stated FY23
Q3 FY22
Q3 YoY
Actual FY23
Q3 YTD FY22
Q3 YTD YoY
Actual
Net cash inflow from operating activities 40.9 54.0 (24)% 103.4 105.1 (2)%
Interest paid 12.8 8.0 60% 33.6 23.1 45%
Tax paid 3.7 2.2 68% 12.4 12.7 (2)%
Cash generated from operations 57.4 64.2 (11)% 149.4 140.9 6%
Addbacks - non cash items (51.7) (62.1) (17)% (161.7) (181.6) (11)%
Movements - other working capital (29.4) (27.7) 6% (32.2) 39.0 n.m.
Movement in other pensions 0.0 0.0 0% 0.6 0.5 20%
Movements in provisions 0.9 0.5 80% 6.5 2.5 160%
Movements in contract related assets 8.0 9.0 (11)% 26.3 29.3 (10)%
Movements in deferred revenue 13.6 18.9 (28)% 17.8 (39.2) n.m.
Cash-settled share-based payments 0.6 0.2 200% 1.9 0.2 850%
Operating profit/(loss) per IFRS (0.6) 3.0 n.m. 8.6 (8.4) n.m.
Depreciation and Amortization 36.7 37.7 (3)% 110.2 116.2 (5)%
EBITDA per IFRS Statements 36.1 40.7 (11)% 118.8 107.8 10%
Separately reported items 0.0 0.0 0% 6.8 0.0 n.m.
Contract liability haircut amortized 0.3 1.1 (73)% 1.5 4.3 (65)%
Contract asset haircut amortized 0.0 0.0 0% (0.1) (0.2) (50)%
Non-recurring items 10.4 5.3 96% 15.2 14.4 6%
Share-based payments - charge 10.1 15.2 (34)% 34.1 37.8 (10)%
Share-based payments - ER taxes (0.3) 0.0 n.m. 0.3 0.9 (67)%
Foreign exchange - Unrealized (0.7) 2.8 n.m. (1.4) 11.0 n.m.
Adjusted EBITDA 55.9 65.1 (14)% 175.2 176.0 0%
Change in deferred revenue (13.6) (18.9) (28)% (17.8) 39.2 n.m.
Adjusted Cash EBITDA 42.3 46.2 (8)% 157.4 215.2 (27)%
Gross tangible capital expenditure (1.3) (2.5) (48)% (6.9) (7.2) (4)%
Change in core working capital 27.5 27.2 1% 30.6 (27.2) n.m.
Commissions paid (net of amortization) (2.6) (5.3) (51)% (10.9) (18.6) (41)%
Leases paid (2.1) (1.9) 11% (6.3) (5.7) 11%
Cash taxes (3.7) (2.2) 68% (12.4) (12.7) (2)%
Adjusted Unlevered Free Cash Flow 60.1 61.5 (2)% 151.5 143.8 5%
*IFRS Working Capital Movements to Change in Core Working Capital*
All USD $m unless otherwise stated FY23
Q3 FY22
Q3 YoY
Actual FY23
Q3 YTD FY22
Q3 YTD YoY
Actual
Working Capital Movements - IFRS
Movements in trade receivables 23.9 26.2 (9)% 54.6 11.1 392%
Movements in other receivables 2.9 3.7 (22)% (7.9) (0.8) 888%
Movements in trade payables (7.2) (0.3) 2300% (8.3) (5.5) 51%
Movements in other payables 9.8 (2.1) n.m. (6.2) (43.9) (86)%
Total Working Capital Movements - IFRS 29.4 27.5 7% 32.2 (39.1) n.m.
Remove non-recurring items:
Third party consulting fees (1.1) (0.3) 267% (0.9) (1.0) (10)%
Transaction costs 0.0 0.0 0% 1.3 12.9 (90)%
Integration costs (0.8) 0.0 n.m. (2.0) 0.0 n.m.
Total Working Capital Adjustments (1.9) (0.3) 533% (1.6) 11.9 (113)%
Change in core working capital (within uFCF) 27.5 27.2 1% 30.6 (27.2) n.m.
*APPENDIX 3 Comparable Data for Prior Periods*
All USD $m unless otherwise stated FY21 FY22 FY23 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
ACV by Solution
Core 98.7 119.9 113.6 93.2 102.4 118.5 107.5 93.4
Emerging 26.3 23.9 25.8 21.2 35.9 28.5 23.1 23.6
Total ACV 125.0 143.8 139.4 114.4 138.3 147.0 130.6 117.0
Adjusted Revenue by Solution
Core 133.4 130.2 133.9 142.9 139.8 137.5 132.0 144.0
Emerging 20.6 24.8 27.4 28.3 30.5 31.5 30.4 29.3
Total Adjusted Revenue 154.0 155.0 161.3 171.2 170.3 169.0 162.4 173.3
Adjusted Cost of Sales 10.8 11.8 13.1 13.3 12.7 13.4 13.4 13.4
Adjusted Gross Profit 143.2 143.2 148.2 157.9 157.6 155.6 149.0 159.9
Adjusted Gross Profit Margin 93% 92% 92% 92% 93% 92% 92% 92%
Sales, Marketing & Operations 45.7 43.0 46.3 45.0 45.1 42.0 44.5 47.7
Research & Development 24.8 27.0 27.1 27.1 26.0 28.0 31.7 33.4
General & Administrative 24.7 20.9 16.2 20.7 20.6 18.5 20.6 22.9
Total Operating Expenses 95.2 90.9 89.6 92.8 91.7 88.5 96.8 104.0
Adjusted EBITDA 48.0 52.3 58.6 65.1 65.9 67.1 52.2 55.9
Adjusted EBITDA Margin 31% 34% 36% 38% 39% 40% 32% 32%
Change in deferred revenue 3.7 40.8 17.3 (18.9) 14.1 2.5 (6.7) (13.6)
Adjusted Cash EBITDA 51.7 93.1 75.9 46.2 80.0 69.6 45.5 42.3
Adjusted Cash EBITDA Margin 34% 60% 47% 27% 47% 41% 28% 24%
*APPENDIX 4 Alternative Performance Measures (APMs)*
This document contains certain alternative performance measures (collectively, “APMs”) as defined below that are not required by, or presented in accordance with, IFRS, Luxembourg GAAP or any other generally accepted accounting principles. Certain of these measures are derived from the IFRS accounts of the Company and others are derived from management reporting or the accounting or controlling systems of the Group.
SUSE presents APMs because they are used by management in monitoring, evaluating and managing its business, and management believes these measures provide an enhanced understanding of SUSE’s underlying results and related trends. The definitions of the APMs may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should, therefore, not be considered in isolation or as a substitute for analysis of SUSE’s operating results as reported under IFRS or Luxembourg GAAP. SUSE has defined each of its APMs as follows:
*Annual Contract Value or ACV* represents the first 12 months value of a contract. If total contract duration is less than 12 months, 100% of invoicing is included in ACV.
*Annual Recurring Revenue or ARR* represents the sum of the monthly contractual value for subscriptions and recurring elements of contracts in a given one month period, multiplied by 12. ARR is calculated three months in arrears, given backdated royalties relating to IHV and Cloud Service Providers, and hence reflects the customer base as of three months prior.
*Adjusted Cash EBITDA* represents Adjusted EBITDA plus changes in contract liabilities (also referred to as deferred revenue) in the related period and excludes the impact of contract liabilities haircut (also referred to as deferred revenue haircut).
*Adjusted Cash EBITDA Margin* expressed as a percentage, this APM represents Adjusted Cash EBITDA divided by Adjusted Revenue.
*Adjusted Gross Profit* represents Adjusted Revenue less cost of sales adjusted for non-recurring items.
*Adjusted Gross Profit Margin* expressed as a percentage, this APM represents Adjusted Gross Profit divided by Adjusted Revenue.
*Adjusted Earnings per share* represents Adjusted Profit after Tax divided by 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.
*Adjusted EBITDA* represents earnings before net finance costs, share of loss on associate and tax, adjusted for depreciation and amortization of intangible assets, share–based payments, contract liabilities haircut, separately reported items, specific non-recurring items and net unrealized foreign exchange (gains)/losses.
*Adjusted EBITDA Margin* expressed as a percentage, this APM represents Adjusted EBITDA divided by Adjusted Revenue.
*Adjusted Effective Tax Rate* represents the IFRS effective tax rate adjusted for the tax effect of adjusting items (those items adjusted for to arrive at Adjusted Profit before Tax).
*Adjusted Profit Before Tax* represents Adjusted EBITDA, less depreciation and amortization (excluding intangible amortization for customer relationships, intellectual property and non-compete agreements) less net finance costs.
*Adjusted Profit After Tax* represents Adjusted Profit Before Tax less notional tax.
*Adjusted Revenue* represents Revenue as reported in the statutory accounts of the Group, adjusted for contract liability fair value adjustment (also referred to as deferred revenue haircut).
*Adjusted unlevered Free Cash Flow or Adjusted uFCF* represents Adjusted Cash EBITDA less tangible capital expenditure related cash outflow, working capital movements (including commissions paid net of amortization of contract-related assets and excluding non-recurring items), cash taxes paid and leases paid.
*Cash Conversion* expressed as a percentage, this APM represents Adjusted uFCF divided by Adjusted EBITDA.
*Constant Currency* Reported for Adjusted Revenue, ACV and Adjusted EBITDA. Prior year metrics are re-stated at prevailing exchange rates, to compare with current year results.
*Contractual Liabilities and Remaining Performance Obligations or “RPO”* a Contract Liability is an entity’s obligation to transfer goods or services to a customer and is recognized in the Statement of Financial Position, when a payment from a customer is invoiced, before a related performance obligation is satisfied. A remaining performance obligation is a promise to transfer goods or services to a customer (with a contract agreed), at a point in the future, but is yet to be invoiced or recognized in the Statement of Financial Position.
*Leverage* expressed as a multiple, Leverage is Net Debt divided by Adjusted Cash EBITDA.
*Net Debt* represents the sum of current and non-current interest bearing borrowings (excluding un-amortized capitalized arrangement fees, gains or losses on loan modifications), current and non-current lease liabilities, less cash and cash equivalents.
*Net Retention Rate or NRR* expressed as a percentage, NRR indicates the proportion of ARR that has been retained over the prior 12-month period, which is inclusive of up-sell, cross-sell, down-sell, churn and pricing. It excludes ARR from net new logo End user customers. The NRR is calculated three months in arrears, aligned to the calculation of ARR.
*Notional Tax* represents total income tax charge/credit for the year less the taxation charge/credit associated with adjusting items (those items adjusted for to arrive at Adjusted Profit before Tax).
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30.08.2023 CET/CEST Dissemination of a Corporate News, transmitted by EQS News - a service of EQS Group AG.
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Language: English
Company: SUSE S.A.
11-13 Boulevard de la Foire
1528 Luxembourg
Luxemburg
ISIN: LU2333210958
WKN: SUSE5A
Indices: SDAX,
Listed: Regulated Unofficial Market in Berlin, Dusseldorf, Frankfurt, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange; Luxembourg Stock Exchange
EQS News ID: 1714327
End of News EQS News Service