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SUSE S.A. Earnings Release 2022
4510_10-q_2022-09-22_dee253e6-659c-4ab1-984e-d521e27db179.pdf
Earnings Release
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SUSE's Robust Revenue Supports High Profitability in Q3
- SUSE delivered Group ARR of \$639.6 million in Q3, up 14%, demonstrating the continued strength of our subscription business
- Total ACV was \$114.4 million, down 4%, down 1% at constant currency
- Core ACV was down 8%, down 5% at constant currency, as expected and driven by the available renewal pool in Q3, and Emerging ACV was up 21%, up 25% at constant currency
- Adjusted Revenue growth was 13%, 15% at constant currency, underpinned by continued strength in cloud revenue
- Adjusted EBITDA margin was 38%, with margins supported by strong cost control
- Adjusted Unlevered Free Cash Flow was \$61.5 million, with Cash Conversion of 94%
- Change in Deferred Revenue was negative \$18.9 million, down from positive \$9.8 million in the prior year, driven by higher revenue recognition and lower ACV in the quarter
- SUSE Rancher, NeuVector and Linux products announced in May and June, highlighting SUSE's commitment to cloud-native security, landed well with customers and are supporting our order pipeline
- In September, SUSE announced a new strategic collaboration with AWS including integrated goto-market activities across sales and marketing, shared channel enablement and training, and dedicated personnel worldwide who will support smoother migration of customers' SAP landscapes to AWS
- SUSE reaffirms full year 2022 guidance for Adjusted Revenue and Adjusted EBITDA margin. We now expect Core ACV growth around 10%, Emerging ACV growth around 20% and Adjusted Unlevered Free Cash Flow conversion of over 80% in 2022, prior to FX impacts
| 3 Months ended 31 July 2022 |
3 Months ended 31 July 2021 |
Year on Year Movement |
Year on Year Movement |
9 Months ended 31 July 2022 |
9 Months ended 31 July 2021 |
Year on Year Movement |
Year on Year Movement |
|
|---|---|---|---|---|---|---|---|---|
| Actual FX | Actual FX | % | % | Actual FX | Actual FX | % | % | |
| USD SM | USD SM | Actual FX | CCY FX | USD SM | USD SM | Actual FX | CCY FX | |
| ACV | 114.4 | 119.0 | (4)% | (1)% | 397.6 | 365.6 | రిశ్రీ | 12% |
| ARR (as at April) | 639.6 | 562.3 | 14% | 639.6 | 562.3 | 14% | ||
| Adjusted Revenue | 171.2 | 151.0 | 13% | 15% | 487.5 | 421.9 | 16% | 17% |
| Adjusted EBITDA | 65.1 | 55.2 | 18% | 16% | 176.0 | 164.1 | 7% | 4% |
| Adjusted EBITDA Margin | 38% | 37% | 36% | 39% | ||||
| Adjusted Cash EBITDA | 46.2 | 65.0 | (29)% | 215.2 | 226.5 | 5 )% | ||
| Adjusted Cash EBITDA Margin | 27% | 43% | 44% | 54% | ||||
| Adjusted uFCF | 61.5 | 39.0 | 58% | 143.8 | 145.4 | (1)% | ||
| Cash conversion | 94% | 71% | 82% | 89% |
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 2021 as if acquired on
November 1, 2020. NeuVector is included from November 1, 2021, in all APMs, and no prior year numbers are included, being immaterial to the group.
Constant Currency movement has been provided for ACV, Adjusted Revenue and Adjusted EBITDA. The definition of Constant Currency is included within Appendix 4.
Statutory data for the year-to-date is included in Appendix 1. Reconciliations to IFRS measures are shown in Appendix 2.
Luxembourg – September 22, 2022 – 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 2022, which ended July 31, 2022.
"We have delivered strong revenue and profitability amid macro-economic and geopolitical uncertainty," said Melissa Di Donato, CEO of SUSE. "We are working to address the challenges facing our business and have devised a robust plan to develop our Rancher business."
"We have demonstrated the strength of our business model with our robust revenue and profitability," said Andy Myers, CFO of SUSE. "I am pleased to confirm our revenue and EBITDA guidance for FY 2022, and while we are seeing short-term impacts on our ACV, I have continued confidence in our ability to capitalize on our market opportunity and in delivery of our medium-term guidance."
Summary KPIs and Adjusted Profit and Loss Account for Q3 2022
| 3 Months ended 31 July 2022 Actual FX USD \$M |
3 Months ended 31 July 2021 Actual FX USD \$M |
Year on Year Movement % Actual FX |
Year on Year Movement % CCY FX |
9 Months ended 31 July 2022 Actual FX USD \$M |
9 Months ended 31 July 2021 Actual FX USD \$M |
Year on Year Movement % Actual FX |
Year on Year Movement % CCY FX |
|
|---|---|---|---|---|---|---|---|---|
| ACV by Solution | ||||||||
| Core | 93.2 | 101.5 | (8)% | (5)% | 326.7 | 307.4 | 6% | 10% |
| Emerging | 21.2 | 17.5 | 21% | 25% | 70.9 | 58.2 | 22% | 25% |
| Total ACV | 114.4 | 119.0 | (4)% | (1)% | 397.6 | 365.6 | 9% | 12% |
| ARR - Total (as at April) | 639.6 | 562.3 | 14% | 639.6 | 562.3 | 14% | ||
| NRR - Total as % (as at April) | 107.6% | 110.8% | (3)% | 107.6% | 110.8% | (3)% | ||
| Adjusted Revenue by Solution Core |
142.9 | 133.2 | 7% | 8% | 407.0 | 373.2 | 9% | 10% |
| Emerging | 28.3 | 17.8 | 59% | 60% | 80.5 | 48.7 | 65% | 66% |
| Total Adjusted Revenue | 171.2 | 151.0 | 13% | 15% | 487.5 | 421.9 | 16% | 17% |
| Cost of Sales | 13.3 | 11.6 | 15% | 20% | 38.2 | 30.2 | 26% | 31% |
| Adjusted Gross Profit | 157.9 | 139.4 | 13% | 14% | 449.3 | 391.7 | 15% | 15% |
| Adjusted Gross Profit Margin | 92% | 92% | 92% | 93% | ||||
| Sales, Marketing & Operations | 45.0 | 39.0 | 15% | 19% | 134.3 | 106.4 | 26% | 29% |
| Research & Development | 27.1 | 25.4 | 7% | 10% | 81.2 | 69.8 | 16% | 20% |
| General & Administrative | 20.7 | 19.8 | 5% | 6% | 57.8 | 51.4 | 12% | 18% |
| Total Operating Expenses | 92.8 | 84.2 | 10% | 13% | 273.3 | 227.6 | 20% | 24% |
| Adjusted EBITDA | 65.1 | 55.2 | 18% | 16% | 176.0 | 164.1 | 7% | 4% |
| Adjusted EBITDA Margin | 38% | 37% | 36% | 39% | ||||
| Depreciation & Amortization | 5.0 | 4.8 | 4% | 16.3 | 14.9 | రిశ్రీ | ||
| Adjusted EBIT | 60.1 | 50.4 | 19% | 159.7 | 149.2 | 7% | ||
| Net Finance Costs | 9.1 | 8.1 | 12% | 30.7 | 38.1 | (19)% | ||
| Adjusted Profit before Tax | 51.0 | 42.3 | 21% | 129.0 | 111.1 | 16% | ||
| Notional Tax | 14.2 Not Reported | 37.2 Not Reported | ||||||
| Adjusted Earnings | 36.8 Not Reported | 91.8 Not Reported | ||||||
| Number of Shares | 169.2 | Not Meaningful |
169.1 | Not Meaningful |
||||
| Adjusted Earnings Per Share (USD) | 0.22 | Not Meaningful |
0.54 | Not Meaningful |
Note: ARR and NRR are reported one quarter in arrears in USD millions at actual FX rates. Operating expenses exclude non-recurring items, as shown in the IFRS operating loss to Adjusted EBITDA reconciliation in Appendix 2. The presentation is based on pro forma numbers including Rancher on a coterminous basis in 2021 as if acquired on November 1, 2020. NeuVector is included from November 1, 2021, in all APMs, and no prior year numbers are included, being immaterial to the group.
Constant Currency movement has been provided for ACV, Adjusted Revenue, Cost of Sales, Adjusted Gross Profit, Opex and Adjusted EBITDA. The definition of Constant Currency is included within Appendix 4.
Adjusted Earnings Per Share is calculated on the basis of the weighted average number of ordinary shares in issue during the period. The number of ordinary shares in issue as at July 31, 2022, was 169,291,648.
In Q2 2022, SUSE updated its ARR methodology. Q2 and Q3 2022 ARR have been reported based on the updated methodology, and Q1 2022 and 2021 were restated based on the new methodology. NRR has also been updated to reflect the new methodology with limited impact on reported figures.
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 November 2020. The Q1 numbers for 2021 include three months for Rancher on a pro forma basis. NeuVector is included in 2022 reporting only; prior year numbers have not been restated on a pro forma basis for NeuVector.
A reconciliation to the IFRS financials is included in Appendix 2. Results are shown using actual exchange rates.
Business Update
SUSE delivered robust revenue and profitability in Q3. Early in the quarter we launched significant enhancements to SUSE Rancher, SUSE NeuVector and SUSE Linux Enterprise, highlighting SUSE's commitment to cloud-native security. These enhancements were well received by our existing and prospective customers, and they demonstrate SUSE's continued commitment to delivering innovative, open source subscription software to customers around the world.
Enterprise customers continue to sign multi-year contracts with up-front payment, and this is the basis for our confidence in our plans for long-term, sustainable growth with high profit margins and high cash conversion. In the quarter we signed important deals with new and existing customers, including a largevalue SUSE Linux Enterprise renewal with upsell to a Fortune 500 company, capitalizing on our incumbency, and our first SUSE Liberty support sale in India to a prominent banking and payments institution, supplementing an existing SUSE Rancher subscription.
SUSE's markets are expanding, driven by established global mega trends and supporting demand for our products. This underpins our growth, and we continue to see strong Rancher usage and downloads as a result.
However, the current macro-economic environment continues to particularly impact our Emerging business with slower purchase decision making for new contracts and some customer project delays. This effect is less marked in our Core business where a smaller proportion of our business is new, given the strong existing subscription base. In our Emerging business, while Rancher renewals remain strong, potential new Rancher customers are more willing to run unsupported with the free version for longer as their focus on costs has intensified. Coupled with higher churn in our work force earlier in the year, these factors have impacted Emerging growth.
We are therefore evolving our Rancher business to capitalize on the significant opportunity presented by our market-leading product, with strong usage in rapidly growing markets. We are introducing, throughout Q4 FY22 and Q1 FY23, additional security certifications and capabilities for paying Rancher customers, to directly serve the evolving needs of enterprises. Furthermore, we have expanded our sales force and are now developing a specialized Rancher sales force. Finally, we are increasing Rancher's capacity for product development and technical sales support to ensure we can deliver our new capabilities and maintain our market-leading position.
In Q3 2022 we expanded our organization, adding 69 people to our workforce despite a tough hiring environment. Wage inflation continues to be elevated but in line with our expectations accounted for within our guidance. Following elevated churn in our sales force earlier in the year, actions taken by SUSE and the softening hiring market have led to a more stable workforce with lower churn.
In early September we announced a new strategic collaboration with Amazon Web Services, Inc. (AWS) to support smoother migration of customers' SAP landscapes to AWS. This multi-year agreement is an expansion of our work with AWS and includes integrated go-to-market activities across sales and marketing, shared channel enablement and training, and dedicated personnel worldwide.
The total number of shares issued remains at 169.3 million following the increase earlier in the year, which resulted from the first Restricted Stock Unit vesting in May 2022.
Market and Revenues
Total ACV for Q3 was \$114.4 million, down 4% on the prior year, down 1% at constant currency given the impact of foreign currency headwinds, primarily a stronger U.S. dollar.
The decline in total ACV was driven by Core ACV of \$93.2 million in Q3, down 8%, 5% at constant currency. This decline was largely as expected and reflects our usual sales cycle, available renewal pool in Q3 2022 and a large retrospective consumption contract in Q3 2021, together with a foreign currency headwind.
Emerging ACV for Q3 was \$21.2 million, up 21%, 25% at constant currency, reflecting continued strong Rancher renewals partly offset by lower new business which has been particularly impacted by the current macro-economic environment and by higher churn in our work force earlier in the year.
The LTM ACV continues to grow, up 13%.
Weighted average contract lengths, on an LTM basis, remained stable versus the prior quarter at 20 months.
Adjusted Revenue of \$171.2 million was up 13%, 15% at constant currency, comprising \$142.9 million in Core and \$28.3 million in Emerging.
ACV – By Route to Market
| 3 Months ended 31 July 2022 Actual FX USD \$M |
3 Months ended 31 July 2021 Actual FX USD \$M |
Year on Year Movement % Actual FX |
9 Months ended 31 July 2022 Actual FX USD \$M |
9 Months ended 31 July 2021 Actual FX USD \$M |
Year on Year Movement % Actual FX |
|
|---|---|---|---|---|---|---|
| End User | 101.9 | 97.8 | 4% | 335.9 | 301.2 | 12% |
| IHV/Embedded | 12.5 | 21.2 | (41)% | 61.7 | 64.4 | (4)% |
| Total ACV | 114.4 | 119.0 | (4)% | 397.6 | 365.6 | 9% |
End User ACV, including the Cloud Service Provider (CSP) route-to-market, grew 4% in Q3, driven by continued strong growth in cloud sales across all CSPs.
Independent Hardware Vendors (IHV) and Embedded ACV declined 41% in Q3, driven primarily by a smaller renewal pool in our Embedded route-to-market. Sales to IHVs were also lower versus the prior year, driven by hardware shortages and a shift to selling through other routes, primarily through CSPs.
| 3 Months ended 31 July 2022 Actual FX USD \$M |
3 Months ended 31 July 2021 Actual FX USD SM |
Year on Year Movement 8 Actual FX |
9 Months ended 31 July 2022 Actual FX USD SM |
9 Months ended 31 July 2021 Actual FX USD SM |
Year on Year Movement % Actual FX |
|
|---|---|---|---|---|---|---|
| Europe, Middle East and Africa | 41.4 | 39.9 | 4% | 159.7 | 160.7 | (1)% |
| North America | 53.6 | 56.8 | (6)% | 171.5 | 143.5 | 20% |
| Asia Pacific and Japan | 10.8 | 9.0 | 20% | 28.5 | 26.1 | 9% |
| Greater China | 4.6 | 10.0 | (54)% | 20.8 | 26.4 | (21)% |
| Latin America | 4.0 | 3.3 | 21% | 17.1 | 8.9 | 92% |
| Total ACV | 114.4 | 119.0 | (4)% | 397.6 | 365.6 | 9% |
ACV – By Region
ACV growth in Asia, Pacific and Japan and in Latin America remained strong. ACV declined in North America in Q3, driven primarily by a smaller renewal pool, and in Greater China due to challenging market conditions in the region, with customers prioritizing local service providers.
Growth in sales through CSPs remained strong across all regions excluding Greater China, where sales through CSPs are a small part of our base.
Annual Recurring Revenue and Net Retention Rate
Annual Recurring Revenue (ARR) increased from \$562.3 million in the prior year to \$639.6 million in Q3 2022, representing 14% growth, driven by continued demand for our subscription-based products and services.
Net Retention Rate (NRR) remained strong at 108%, reflecting that customers continue to renew their subscriptions with SUSE and are willing to pay a higher price or purchase a more-expansive product selection.
Both metrics include NeuVector's contribution since acquisition in October 2021.
ARR and NRR are reported three months in arrears as a significant portion of the revenues are invoiced retrospectively.
Costs
SUSE's Adjusted Gross Profit margin was 92% in Q3, in line with the prior year.
Sales, Marketing and Operations costs increased by 15% to \$45.0 million in Q3, driven by continued investments in sales people and marketing which focused on pipeline generation and qualification.
Research and Development costs increased by 7% to \$27.1 million, driven by investments in engineering and product management, with significant funding directed to our container management (Emerging) products.
General and Administrative costs increased by 5% to \$20.7 million, driven by headcount investments to meet the demands of a growing organization and being a listed entity, and an adverse realized foreign exchange movement.
Profitability
| 3 Months ended 31 July 2022 Actual FX USD \$M |
3 Months ended 31 July 2021 Actual FX USD &M |
Year on Year Movement % Actual FX |
9 Months ended 31 July 2022 Actual FX USD &M |
9 Months ended 31 July 2021 Actual FX USD SM |
Year on Year Movement % Actual FX |
|
|---|---|---|---|---|---|---|
| Adjusted EBITDA | 65.1 | 55.2 | 18% | 176.0 | 164.1 | 7% |
| Adjusted EBITDA Margin | 38% | 37% | 36% | 39% | ||
| Change in deferred revenue | (18.9) | 8.8 | n.m. | 39.2 | 62.4 | (37)% |
| Adjusted Cash EBITDA | 46.2 | 65.0 | (29)% | 215.2 | 226.5 | (5)% |
| Adjusted Cash EBITDA Margin | 27% | 43% | 44% | 54% |
Adjusted EBITDA grew 18% to \$65.1 million in Q3, as SUSE's revenue growth was further enhanced by strong cost control and a positive impact from foreign exchange movements, resulting in margin expansion of one percentage point versus the prior year.
Change in deferred revenue was negative \$18.9 million, down from positive \$9.8 million in the prior year, driven by higher revenue recognition and lower ACV in the quarter.
The decrease in Change in Deferred Revenue more than offset the increase in EBITDA, leading to Adjusted Cash EBITDA of \$46.2 million, down 29%.
Cash Flow
| 3 Months ended |
3 Months ended |
Year on Year |
9 Months ended |
9 Months ended |
Year on Year |
|
|---|---|---|---|---|---|---|
| 31 July 2022 | 31 July 2021 | Movement | 31 July 2022 | 31 July 2021 | Movement | |
| Actual FX | Actual FX | % | Actual FX | Actual FX | % | |
| USD SM | USD SM | Actual FX | USD &M | USD SM | Actual FX | |
| Adjusted Cash EBITDA | 46.2 | 65.0 | (29)% | 215.2 | 226.5 | (5)% |
| Gross Capital Expenditure | (2.5) | (1.3) | 92% | (7.2) | (2.1) | 243% |
| Change in core working capital | 27.2 | (14.2) | n.m | (27.2) | (41.8) | (35)% |
| IFRS 15 | (5.3) | (8.3) | (36)% | (18.6) | (25.6) | (27)% |
| IFRS 16 | (1.9) | (1.8) | 6% | (5.7) | (5.4) | 6% |
| Cash Taxes | (2.2) | (0.4) | 450% | (12.7) | (4.4) | 189% |
| Rancher pro-forma uFCF | 0.0 | 0.0 | 0.0 | (1.8 ) | n.m | |
| Adjusted uFCF | 61.5 | 39.0 | 58% | 143.8 | 145.4 | (1)% |
| Adj uFCF Conv from Adj EBITDA | 94% | 71% | 82% | 89% |
Adjusted Unlevered Free Cash Flow was up 58% to \$61.5 million in the quarter. This reflects a working capital inflow and lower IFRS 15 cash adjustment in the quarter, which in turn reflects lower commissions paid. These drivers were partially offset by lower Adjusted Cash EBITDA, higher cash tax driven by timing of tax filings and anticipated higher payments in multiple regions, and an increase in gross capex due to investment in a data center move.
Cash conversion was 94% for the quarter.
Leverage
| As at | As at | Year on Year |
|
|---|---|---|---|
| 31 July 2022 | 31 July 2021 | ||
| Actual FX | Actual FX | Movement % | |
| USD \$M | USD \$M | Actual FX | |
| 604.1 | 653.1 | 8 % |
|
| 266.9 | 255.3 | 5 % |
|
| 2.3 | 2.6 | 12% | |
Net Debt at the end of the third quarter was \$604.1 million, a reduction of \$50 million versus the prior quarter, driven by our strong cash flow.
As a result, our leverage ratio, calculated as the Net Debt divided by the last 12 months Adjusted Cash EBITDA, was 2.3x, flat versus the prior quarter and well within our commitment to keep leverage below 3.5x.
ESG
Environmental, Social and Governance (ESG) is at the heart of our business and sustainable growth, and we continue to make progress toward our targets.
After the quarter end, we received our sustainability rating with EcoVadis, one of our commitments for the year. We secured a silver medal for our ESG practices, placing us among the top 25% of the rated companies.
Given the long-term nature of our ESG focus, we will provide a full ESG update in our half year and annual statements from now on.
Outlook
SUSE reaffirms full year 2022 guidance for Adjusted Revenue and Adjusted EBITDA margin, prior to FX impacts.
The current macro-economic environment continues to particularly impact our Emerging business with slower purchase decision making for new contracts and some customer project delays. This effect is less marked in our Core business where a smaller proportion of our business is new, given the strong existing subscription base. In our Emerging business, while Rancher renewals remain strong, potential new Rancher customers are more willing to run unsupported with the free version for longer as their focus on costs has intensified. Coupled with higher churn in our work force earlier in the year, these factors have impacted Emerging growth.
We now expect Core ACV growth around 10% and Emerging ACV growth around 20% in 2022, both prior to FX impacts.
We also expect Adjusted Unlevered Free Cash Flow conversion over 80% in 2022, prior to FX impacts, primarily reflecting the lower ACV.
FX rate movements, particularly the stronger U.S. dollar, are reducing reported ACV, Adjusted Unlevered Free Cash Flow, and, to a lesser degree, Adjusted Revenue. Our reported Adjusted EBITDA margin is supported by a small positive FX impact.
Medium-term guidance is unchanged, reflecting the growth outlook in the markets and SUSE's competitive position. We expect to build steadily toward these performance levels over the coming years, subject to market and macro-economic developments.
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. We specialize in Business-critical Linux, Enterprise Container Management and Edge solutions, and collaborate with partners and communities to empower our 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 agility to tackle innovation challenges today and the freedom to evolve their strategy and solutions tomorrow. The company is headquartered in Luxembourg and employs more than 2,000 people globally. SUSE is listed in the regulated market (Prime Standard) of the Frankfurt Stock Exchange.
For more information, visit www.suse.com.
Contacts Investors: Media:
Jonathan Atack Christopher Deifuß Investor Relations, SUSE Kekst CNC Phone: +44 7741 136 019 Phone: +49 162 2059754
Matt Jones Investor Relations, SUSE Phone: +44 7809 690 336 Email: [email protected]
Email: [email protected] Email: [email protected]
Webcast Details
Melissa Di Donato (CEO) and Andy Myers (CFO) will host an analyst and investor conference call at 2:00 PM CET / 1:00 PM BST on September 22, 2022, to discuss the results.
If you would like to dial in and ask questions during the conference and have not pre-registered, please call +49 162 2059754 or email [email protected] for dial-in details.
The audio webcast can be followed in listen-only mode using this link: https://www.webcasteqs.com/suse20220922
A replay will be available on the Investor Relations website. The accompanying presentation also can be downloaded from the Investor Relations website.
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.
Financial Calendar
| Date | Event |
|---|---|
| January 19, 2023 | Release of Q4 FY22 results and FY22 Annual Report |
| March 16, 2023 | Release of Q1 FY23 results |
APPENDIX 1 Statutory Financials
IFRS Income Statement
| 3 Months ended 31 July 2022 Actual FX USD \$M |
3 Months ended 31 July 2021 Actual FX USD SM |
Year on Year Movement % |
9 Months ended 31 July 2022 Actual FX USD \$M |
9 Months ended 31 July 2021 Actual FX USD \$M |
Year on Year Movement % |
|
|---|---|---|---|---|---|---|
| Revenue | 170.1 | 148.0 | 15% | 483.4 | 407.7 | 19% |
| Cost of sales | (13.4) | (12.1) | 11% | (38.8) | (32.0) | 21% |
| Gross profit | 156.7 | 135.9 | 15% | 444.6 | 375.7 | 18% |
| Operating expenses | (116.0) | (126.1) | (8)% | (336.8) | (437.9) | (23)% |
| Amortization of intangible assets | (35.1) | (37.7) | (7)% | (107.5) | (111.1) | (3)% |
| Depreciation - PPE | (0.9) | (1.1) | (18)% | (2.8) | (3.4) | (18)% |
| Depreciation - Right of Use Assets | (1.7) | (1.5) | 13% | (5.9) | (4.6) | 28% |
| Operating loss | 3.0 | (30.5) | n.m. | (8.4) | (181.3) | (95)% |
| Net finance costs | (9.1) | (8.1) | 12% | (30.7) | (38.1) | (19)% |
| Share of losses on associate | (0.3) | (0.5) | (40)% | (1.7) | (1.6) | 6% |
| Loss before tax | (6.4) | (39.1) | (84)% | (40.8) | (221.0) | (82)% |
| Taxation | (6.5) | 8.8 | n.m. | 1.4 | 51.0 | (97)% |
| Loss for the period | (12.9) | (30.3) | 57)% | (39.4) | (170.0) | (77)% |
Interim Condensed Consolidated Statement of Comprehensive Income (unaudited)
For the nine months ended 31 July 2022
| Nine months ended 31 July 2022 | Nine months ended 31 July 2021 | |||||
|---|---|---|---|---|---|---|
| Separately | Separately | |||||
| Income statement: | reported | reported | ||||
| Headline | items | Total | Headline | items | Total | |
| US\$'000 | US\$'000 | US\$'000 | US\$'000 | US\$'000 | US\$'000 | |
| Revenue | 483,409 | - | 483.409 | 407,730 | - | 407,730 |
| Cost of sales | (38,751) | - | (38,751) | (32,024) | - | (32,024) |
| Gross profit | 444,658 | - | 444,658 | 375,706 | - | 375,706 |
| Selling and distribution costs | (136,914) | - | (136,914) | (107,831) | - | (107,831) |
| Research and development costs | (86,075) | - | (86,075) | (73,441) | - | (73,441) |
| Administrative expenses | (114,378) | - | (114,378) | (243,060) | (14,061) | (257,121) |
| Reversal of impairment loss on trade receivables | 531 | - | 531 | 433 | - | 433 |
| Operating profit/(loss) before depreciation and amortization | 107,822 | - | 107,822 | (48,193) | (14,061) | (62,254) |
| Amortization of intangible assets | (107,568) | - | (107,568) | (111,063) | - | (111,063) |
| Depreciation – Property, plant and equipment | (2,760) | - | (2,760) | (3,365) | - | (3,365) |
| Depreciation/impairment – Right of use assets | (5,888) | - | (5,888) | (4,632) | - | (4,632) |
| Operating loss | (8,394) | - | (8,394) | (167,253) | (14,061) | (181,314) |
| Finance costs | (30,949) | - | (30,949) | (38,086) | - | (38,086) |
| Finance income | 268 | - | 268 | 8 | - | 8 |
| Net finance costs | (30,681) | - | (30,681) | (38,078) | (14,061) | (38,078) |
| Share of losses of associate | (1,745) | - | (1,745) | (1,582) | - | (1,582) |
| Loss before tax | (40,820) | - | (40,820) | (206,913) | (14,061) | (220,974) |
| Taxation | 1,419 | - | 1,419 | 48,553 | 2,393 | 50,946 |
| Loss for the period | (39,401) | - | (39,401) | (158,360) | (11,668) | (170,028) |
| Attributable to: | ||||||
| Equity shareholders of the parent | (39,401) | - | (39,401) | (158,360) | (11,668) | (170,028) |
| Non-controlling interests | - | - | - | - | - | - |
| Loss for the period | (39,401) | - | (39,401) | (158,360) | (11,668) | (170,028) |
| Basic and diluted loss per share (1) | (0.2) | (3.1) |
(1)For the nine months ended 31 July 2022 and 31 July 2021, 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)
| Nine months ended 31 July 2022 | Nine months ended 31 July 2021 | |||||
|---|---|---|---|---|---|---|
| Separately reported |
Separately reported |
|||||
| Headline US\$'000 |
items US\$'000 |
Total US\$'000 |
Headline US\$'000 |
items US\$'000 |
Total US\$'000 |
|
| Loss for the period | (39,401) | - | (39,401) | (158,360) | (11,668) | (170,028) |
| Other comprehensive income: | ||||||
| Items not to be reclassified to income statement: | ||||||
| Remeasurement of defined benefit pension schemes | 2,304 | - | 2,304 | 1,068 | - | 1,068 |
| Related tax impact | (706) | - | (706) | (288) | - | (288) |
| Items that may be reclassified to income statement: | ||||||
| Currency translation differences | 48,671 | - | 48,671 | (12,000) | - | (12,000) |
| Cash flow hedge – changes in fair value | (49) | - | (49) | (610) | - | (610) |
| Cash flow hedge – reclassified to income statement | 4,386 | - | 4,386 | 6,702 | - | 6,702 |
| Related tax impact | (1,003) | - | (1,003) | (1,495) | - | (1,495) |
| Other comprehensive income/(loss) for the period | 53,603 | - | 53,603 | (6,623) | - | (6,623) |
| Total comprehensive income/(loss) for the period | 14,202 | - | 14,202 | (164,983) | (11,668) | (176,651) |
| Attributable to: | ||||||
| Equity shareholders of the parent | 14,202 | - | 14,202 | (164,983) | (11,668) | (176,651) |
| Non-controlling interests | - | - | - | - | - | - |
| Total comprehensive income/(loss) for the period | 14,202 | - | 14,202 | (164,983) | (11,668) | (176,651) |
Interim Condensed Consolidated Statement of Financial Position (unaudited)
As at 31 July 2022
| As at | As at | |
|---|---|---|
| 31 July 2022 | 31 October 2021 | |
| US\$'000 | US\$'000 | |
| Non-current assets | ||
| Goodwill | 2,686,319 | 2,685,751 |
| Intangible assets | 426,369 | 537,056 |
| Property, plant and equipment | 11,772 | 8,157 |
| Right of use assets | 19,610 | 14,415 |
| Investment in associate | 12,296 | 14,041 |
| Derivative asset | - | 6 |
| Long-term pension assets | 595 | 648 |
| Other receivables | 8,269 | 7,899 |
| Deferred tax assets | 194,300 | 190,010 |
| Contract related assets | 73,321 | 55,510 |
| 3,432,851 | 3,513,493 | |
| Current assets | ||
| Trade and other receivables | 128,036 | 138,038 |
| Current tax receivables | 1,663 | 1,663 |
| Cash and cash equivalents | 140,535 | 61,061 |
| Contract related assets | 29,902 | 28,865 |
| 300,136 | 229,627 | |
| Total assets | 3,732,987 | 3,743,120 |
| Current liabilities | ||
| Trade and other payables | 87,267 | 129,656 |
| Borrowings | 3,600 | 3,600 |
| Lease liabilities | 6,306 | 6,012 |
| Provisions | 2,629 | 4,866 |
| Current tax liabilities | 4,419 | 11,510 |
| Deferred income – contract liabilities | 349,036 | 329,611 |
| 453,257 | 485,255 | |
| Non-current liabilities | ||
| Borrowings | 703,140 | 742,148 |
| Lease liabilities | 15,799 | 10,708 |
| Provisions | 762 | 1,024 |
| Non-current tax liabilities | 7,439 | 7,439 |
| Deferred tax liabilities | 105,831 | 107,073 |
| Retirement benefit obligations | 3,188 | 6,552 |
| Deferred income – contract liabilities | 201,782 | 178,175 |
| Derivative liabilities | - | 5,182 |
| Other payables | 4,553 | 13,554 |
| 1,042,494 | 1,071,855 | |
| Total liabilities | 1,495,751 | 1,557,110 |
| Net Assets | 2,237,236 | 2,188,010 |
| Equity | ||
| Share capital | 16,929 | 16,903 |
| Share premium | 2,522,985 | 2,523,011 |
| Retained losses | (394,676) | (355,870) |
| Other reserves | 58,193 | 21,169 |
| Cash flow hedging reserve | - | (4,337) |
| Foreign currency translation reserve | 33,805 | (14,866) |
| Total equity | 2,237,236 | 2,186,010 |
Interim Condensed Consolidated Statement of Changes in Equity (unaudited)
| Share capital US\$'000 |
Share premium US\$'000 |
Retained losses US\$'000 |
Other reserve US\$'000 |
Cash flow hedging reserve US\$'000 |
Foreign currency translation reserve US\$'000 |
Total equity 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 Other comprehensive income for the period |
- - |
- - |
(39,401) 595 |
- - |
- 4,337 |
- 48,671 |
(39,401) 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 Equity settled share-based payments |
26 - |
(26) - |
- - |
- 37,024 |
- - |
- - |
- 37,024 |
| Total transactions with owners | - | - | - | 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 Changes in Equity (unaudited)
| Cash flow | Foreign currency |
||||||
|---|---|---|---|---|---|---|---|
| Share | Share | Retained | Other | hedging | translation | Total | |
| capital | premium | losses | reserve | reserve | reserve | equity | |
| US\$'000 | US\$'000 | US\$'000 | US\$'000 | US\$'000 | US\$'000 | US\$'000 | |
| As at 1 November 2020 | 14 | 1,604,251 | (130,824) | 3,200 | (12,798) | (16,498) | 1,447,345 |
| Loss for the period | - | - | (170,028) | - | - | - | (170,028) |
| Other comprehensive (expense)/income for the period | - | - | (715) | - | 6,092 | (12,000) | (6,623) |
| Total comprehensive (expense)/income for the period | - | - | (170,743) | - | 6,092 | (12,000) | (176,651) |
| Transactions recorded in equity: | |||||||
| Cancellation of nominal value | 126 | (126) | - | - | - | - | - |
| Contribution of share capital and share premium | 16,690 | 220,428 | - | - | - | - | 237,118 |
| Proceeds from Initial Public Offering | - | 669,451 | - | - | - | - | 669,451 |
| IPO transaction costs | - | - | (32,769) | - | - | - | (32,769) |
| Equity settled share-based payments | - | - | - | 9,249 | - | - | 9,249 |
| Total transactions with owners | 16,816 | 889,753 | (32,769) | 9,249 | - | - | 883,049 |
| As at 31 July 2021 | 16,830 | 2,494,004 | (334,336) | 12,449 | (6,706) | (28,498) | 2,153,743 |
Interim Condensed Consolidated Statement of Cash Flows (unaudited)
| Nine months ended | Nine months ended | ||
|---|---|---|---|
| 31 July 2022 | 31 July 2021 | ||
| US\$'000 | US\$'000 | ||
| Loss for the period | (39,401) | (170,028) | |
| Net finance costs | 30,681 | 38,078 | |
| Taxation | (1,419) | (50,946) | |
| Share of losses of associate | 1,745 | 1,582 | |
| Operating loss for the period | (8,394) | (181,314) | |
| Addback: | |||
| Depreciation – Property, plant and equipment | 2,760 | 3,365 | |
| Depreciation/impairment – Right of use assets | 5,888 | 4,632 | |
| Amortization of intangible assets | 107,568 | 111,063 | |
| Amortization of contract related assets | 10,733 | 6,370 | |
| Share based payments expense | 37,771 | 166,099 | |
| Restructuring charges | - | 1,407 | |
| Foreign exchange movements | 13,340 | 10,004 | |
| Impairment credit on trade receivables | (531) | (433) | |
| Movements: | |||
| Movements in trade receivables | 11,104 | (17,216) | |
| Movements in other receivables | (839) | (476) | |
| Movements in trade payables | (5,505) | (1,421) | |
| Movements in other payables | (43,857) | (11,455) | |
| Movement in other pensions | (494) | (121) | |
| Movements in provisions | (2,499) | (4,506) | |
| Movements in contract related assets | (29,294) | (32,791) | |
| Contract assets - fair value haircut | (286) | - | |
| Movements in contract liabilities | 39,238 | 59,701 | |
| Contract liabilities - fair value haircut | 4,290 | 10,455 | |
| Settlement of share-based payments | (198) | (112,686) | |
| Cash generated from operations | 140,795 | 10,677 | |
| Interest paid | (23,069) | (40,470) | |
| Interest received | 8 | 8 | |
| Tax paid | (12,655) | (4,434) | |
| Net cash inflow/(outflow) from operating activities | 105,079 | (34,219) | |
| Cash flow (used in)/generated from investing activities | |||
| Purchase of property, plant and equipment | (7,151) | (2,095) | |
| Purchase and development of intangible assets | (957) | (3,201) | |
| Acquisition of a business, net of cash | (2,545) | (489,432) | |
| Proceeds from IPO, net of underwriting costs | - | 659,409 | |
| Net cash (outflow)/inflow from investing activities | (10,653) | 164,681 | |
| Net cash inflow before financing activities | 94,426 | 130,462 |
Interim Condensed Consolidated Statement of Cash Flows (unaudited)
For the nine months ended 31 July 2022
| Nine months ended 31 July 2022 US\$'000 |
Nine months ended 31 July 2021 US\$'000 |
|
|---|---|---|
| Cash flows used in financing activities | ||
| Proceeds from contribution of share premium | - | 135,338 |
| Proceeds from bank borrowings | - | 300,000 |
| Payment of arrangement fees | - | (3,764) |
| Repayment of bank borrowings | (2,700) | (513,062) |
| Payment of interest rate swap premia | (4,386) | (6,702) |
| Lease payments | (5,675) | (3,680) |
| Loan repaid by intermediary parent undertaking | - | 1,500 |
| Net cash outflow from financing activities | (12,761) | (90,370) |
| Net increase in cash and cash equivalents | 81,665 | 40,092 |
| Foreign exchange movements | (2,191) | (12) |
Cash and cash equivalents at beginning of period 61,061 94,933 Cash and cash equivalents at end of period 140,535 135,013
| 19 |
|---|
APPENDIX 2 Reconciliation from IFRS to Adjusted Pro Forma Figures
IFRS Revenue to Adjusted Revenue
| 3 Months ended 31 July 2022 Actual FX USD \$M |
3 Months ended 31 July 2021 Actual FX USD \$M |
Year on Year Movement % Actual FX |
9 Months ended 31 July 2022 Actual FX USD SM |
9 Months ended 31 July 2021 Actual FX USD \$M |
Year on Year Movement % Actual FX |
|
|---|---|---|---|---|---|---|
| Revenue - IFRS | 170.1 | 148.0 | 15% | 483.4 | 407.7 | 19% |
| Adjustments | ||||||
| Contract liability haircut amortized | 1.1 | 3.0 | (63)% | 4.1 | 10.5 | (61)% |
| Pro-Forma Rancher | 0.0 | 0.0 | 0.0 | 3.7 | n.m | |
| Adjusted Revenue | 171.2 | 151.0 | 13% | 487.5 | 421.9 | 16% |
IFRS Operating Profit/Loss to Adjusted EBITDA
| 3 Months ended 31 July 2022 Actual FX USD SM |
3 Months ended 31 July 2021 Actual FX USD \$M |
Year on Year Movement % Actual FX |
9 Months ended 31 July 2022 Actual FX USD SM |
9 Months ended 31 July 2021 Actual FX USD \$M |
Year on Year Movement % Actual FX |
|
|---|---|---|---|---|---|---|
| Operating profit/(loss) - IFRS | 3.0 | (30.5) | n.m. | (8.4) | (181.3) | (95)% |
| Adjustments | ||||||
| Depreciation and Amortization | 37.7 | 40.3 | (6)% | 116.2 | 119.1 | (2)% |
| Separately reported items | 0.0 | 4.9 | n.m | 0.0 | 14.1 | n.m |
| Contract liability haircut amortized | 1.1 | 3.0 | (63)% | 4.1 | 10.5 | (61)% |
| Non-recurring items | 5.3 | 5.0 | 6% | 14.4 | 18.3 | (21)% |
| Share-based payments - charge | 15.2 | 18.3 | (17)% | 37.8 | 166.1 | (77)% |
| Share-based payments - ER taxes | 0.0 | 1.2 | n.m | 0.9 | 7.0 | (87)% |
| Foreign exchange - unrealized | 2.8 | 13.0 | (78)% | 11.0 | 12.1 | (9)% |
| Adjusted EBITDA - Non pro-forma | 65.1 | 55.2 | 18% | 176.0 | 165.9 | 6% |
| Pro-forma Rancher | 0.0 | 0.0 | n.m | 0.0 | (1.8) | n.m |
| Adjusted EBITDA - pro-forma | 65.1 | 55.2 | 18% | 176.0 | 164.1 | 7% |
Adjusted Deferred Revenue to IFRS Deferred Revenue
| 3 Months ended 31 July 2022 Actual FX USD SM |
3 Months ended 31 July 2021 Actual FX USD SM |
Year on Year Movement % |
9 Months ended 31 July 2022 Actual FX USD SM |
9 Months ended 31 July 2021 Actual FX USD \$M |
Year on Year Movement % |
|
|---|---|---|---|---|---|---|
| Movement in deferred revenue: Pro-forma | 18.9 | (9.8) | n.m. | (39.2) | (62.4) | (37)% |
| Pro-forma Rancher | 0.0 | 0.0 | 0% | 0.0 | 27 | (100)% |
| Movement in deferred revenue: Non Pro-forma | 18.9 | (9.8) | n.m. | (39.2) | (59.7) | (34)% |
| Adjustments: | ||||||
| Deferred revenue haircut amortized | (1.1) | (3.0) | (63)% | (4.1) | (10.5) | (61)% |
| Movement in deferred revenue - IFRS | 17.8 | (12.8) | (239)% | (43.3) | (70.2) | (38)% |
IFRS Net Cash Inflow/(Outflow) from Operating Activities to Adjusted uFCF
| 3 Months ended 31 July 2022 Actual FX |
3 Months ended 31 July 2021 Actual FX |
Year on Year Movement % |
9 Months ended 31 July 2022 Actual FX |
9 Months ended 31 July 2021 Actual FX |
Year on Year Movement % |
|
|---|---|---|---|---|---|---|
| USD \$M | USD \$M | Actual FX | USD \$M | USD \$M | Actual FX | |
| Net cash inflow/(outflow) from operating activities Interest paid |
54.0 8.0 |
(86.0) 11.7 |
n.m. (32)% |
105.1 23.1 |
(34.2) 40.5 |
n.m. (43)% |
| Tax paid | 2.2 | 0.4 | 439% | 12.7 | 4.4 | 188% |
| Cash generated from/(used in) operations | 64.2 | (73.9) | n.m. | 140.9 | 10.7 | 1216% |
| Addbacks - non cash items | (62.1) | (76.9) | (19)% | (181.6) | (313.0) | (42)% |
| Movements - other working capital | (27.7) | 4.8 | n.m. | 39.0 | 30.6 | 27% |
| Movement in other pensions | (0.0) | 0.2 | n.m. | 0.5 | 0.1 | 394% |
| Movements in provisions | 0.5 | 1.4 | (66)% | 2.5 | 4.5 | (44)% |
| Movements in contract related assets | 9.0 | 11.0 | (18)% | 29.3 | 32.8 | (11)% |
| Movements in deferred revenue | 18.9 | (9.8) | n.m. | (39.2) | (59.7) | (34)% |
| Settlement of VSOP Scheme | 0.2 | 112.7 | (100)% | 0.2 | 112.7 | (100)% |
| Operating profit/(loss) per IFRS Statements | 3.0 | (30.5) | n.m. | (8.4) | (181.3) | (95)% |
| Depreciation and Amortization | 37.7 | 40.3 | (6)% | 116.2 | 119.1 | (2)% |
| EBITDA per IFRS Statements | 40.7 | 9.8 | 315% | 107.8 | (62.2) | n.m. |
| Separately reported items | 0.0 | 4.9 | n.m. | 0.0 | 14.1 | n.m. |
| Non-recurring items | 5.3 | 5.0 | 6% | 14.4 | 18.3 | (21)% |
| Share-based payments - charge | 15.2 | 18.3 | (17)% | 37.8 | 166.1 | (77)% |
| Share-based payments - ER taxes | 0.0 | 1.2 | n.m. | 0.9 | 7.0 | (87)% |
| Deferred revenue haircut | 1.1 | 3.0 | (63)% | 4.1 | 10.5 | (61)% |
| Foreign Exchange - Unrealized | 2.8 | 13.0 | (78)% | 11.0 | 12.1 | (9)% |
| Adjusted EBITDA | 65.1 | 55.2 | 18% | 176.0 | 165.9 | 6% |
| Rancher pro-forma Adjustment | 0.0 | 0.0 | n.m. | 0.0 | (1.8) | n.m. |
| Adjusted EBITDA (SUSE & Rancher pro-forma) | 65.1 | 55.2 | 18% | 176.0 | 164.1 | 7% |
| Movement in deferred revenue | (18.9) | 9.8 | n.m. | 39.2 | 62.4 | (37)% |
| Adjusted Cash EBITDA (SUSE & Rancher pro-forma) | 46.2 | 65.0 | (29)% | 215.2 | 226.5 | (5)% |
| IFRS 15 | (5.3) | (8.3) | (36)% | (18.6) | (25.6) | (27)% |
| IFRS 16 | (1.9) | (1.8) | 6% | (5.7) | (5.4) | 6% |
| Change in core working capital | 27.2 | (14.2) | n.m. | (27.2) | (41.8) | (35)% |
| Gross capital expenditure | (2.5) | (1.3) | 92% | (7.2) | (2.1) | 243% |
| Tax expense | (2.2) | (0.4) | 450% | (12.7) | (4.4) | 189% |
| Other adjustments - Rancher pro-forma | 0.0 | 0.0 | n.m | 0.0 | (1.8) | n.m |
| Adjusted Unlevered Free Cash Flow | 61.5 | 39.0 | 58% | 143.8 | 145.4 | (1)% |
APPENDIX 3 Comparable Data for Prior Periods
| 2021 | 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| USD \$M | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |
| ACV by Solution | Core | 111.3 | 94.6 | 101.5 | 98.7 | 119.9 | 113.6 | 93.2 |
| Emerging | 26.3 | 14.4 | 17.5 | 26.3 | 23.9 | 25.8 | 21.2 | |
| Total ACV | 137.6 | 109.0 | 119.0 | 125.0 | 143.8 | 139.4 | 114.4 | |
| Adjusted Revenue by Solution | Core | 118.6 | 121.4 | 133.2 | 133.4 | 130.2 | 133.9 | 142.9 |
| Emerging | 15.5 | 15.4 | 17.8 | 20.6 | 24.8 | 27.4 | 28.3 | |
| Total Adjusted Revenue | 134.1 | 136.8 | 151.0 | 154.0 | 155.0 | 161.3 | 171.2 | |
| Cost of Sales | 8.1 | 10.5 | 11.6 | 10.8 | 11.8 | 13.1 | 13.3 | |
| Adjusted Gross Profit | 126.0 | 126.3 | 139.4 | 143.2 | 143.2 | 148.2 | 157.9 | |
| Adjusted Gross Profit Margin | 94% | 92% | 92% | 93% | 92% | 92% | 92% | |
| Sales, Marketing & Operations | 31.5 | 35.9 | 39.0 | 45.7 | 43.0 | 46.3 | 45.0 | |
| Research & Development | 22.0 | 22.4 | 25.4 | 24.8 | 27.0 | 27.1 | 27.1 | |
| General & Administrative | 11.8 | 19.8 | 19.8 | 24.7 | 20.9 | 16.2 | 20.7 | |
| Total Operating Expenses | 65.3 | 78.1 | 84.2 | 95.2 | 90.9 | 89.6 | 92.8 | |
| Adjusted EBITDA | 60.7 | 48.2 | 55.2 | 48.0 | 52.3 | 58.6 | 65.1 | |
| Adjusted EBITDA Margin | 45% | 35% | 37% | 31% | 34% | 36% | 38% | |
| Change in deferred revenue | 46.4 | 6.2 | 9.8 | 3.7 | 40.8 | 17.3 | (18.9) | |
| Adjusted Cash EBITDA | 107.1 | 54.4 | 65.0 | 51.7 | 93.1 | 75.9 | 46.2 | |
| Adjusted Cash EBITDA Margin | 80% | 40% | 43% | 34% | 60% | 47% | 27% |
APPENDIX 4 Alternative Performance Measures (APM)
This document contains certain alternative performance measures (collectively, "APMs") including ACV, ARR, NRR, Adjusted Revenue, Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash EBITDA, Adjusted Cash EBITDA margin, Adjusted uFCF, Cash Conversion, and Net Debt and Leverage 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. APMs such as ACV, ARR, NRR, Adjusted Revenue, Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash EBITDA, Adjusted Cash EBITDA Margin, Adjusted uFCF, Cash Conversion, RPO and Net Debt and Leverage are not measurements of SUSE's performance or liquidity under IFRS, Luxembourg GAAP or German GAAP and should not be considered as alternatives to results for the period or any other performance measures derived in accordance with IFRS, Luxembourg GAAP, German GAAP or any other generally accepted accounting principles or as alternatives to cash flow from operating, investing or financing activities. SUSE has defined each of the following APMs as follows:
"Annual Contract Value" or "ACV": ACV represents the first 12 months monetary 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": ARR represents the sum of the monthly contractual value for subscriptions and recurring elements of contracts in a given period, multiplied by 12. ARR is calculated three months in arrears, given backdated royalties relating to IHV and Cloud, and hence reflects the customer base as of three months prior;
"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;
"Adjusted Revenue": Revenue as reported in the statutory accounts of the Group, adjusted for fair value adjustments;
"Adjusted Gross Profit": this APM represents Adjusted Revenue less operating costs adjusted for nonrecurring items;
"Adjusted Gross Profit Margin" expressed as a percentage, this APM represents Adjusted Gross Profit divided by Adjusted Revenue;
"Adjusted EBITDA": this APM represents earnings before net finance costs, share of loss of associate and tax, adjusted for depreciation and amortization, share-based payments, fair value adjustment to
deferred revenue, statutory 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 Cash EBITDA": this APM represents Adjusted EBITDA plus changes in contract liabilities in the related period and excludes the impact of contract liabilities – deferred revenue haircut;
"Adjusted Cash EBITDA Margin": expressed as a percentage, this APM represents Adjusted Cash EBITDA divided by Adjusted Revenue;
"Adjusted Profit before Tax" is Adjusted EBITDA (post IFRS 15 and 16), less D&A (excluding intangible amortization for Customer relationships, intellectual property and non-complete agreements) less net financial expense;
"Adjusted Profit after Tax" is Adjusted Profit before Tax less notional tax;
"Adjusted Earnings Per Share" represents Adjusted Profit after Tax less notional tax divided by the weighted average number of shares during the period;
"Adjusted Unlevered Free Cash Flow" or "Adjusted uFCF": this APM represents Adjusted Cash EBITDA less capital expenditure related cash outflow, working capital movements (excluding deferred revenue, which is factored into Adjusted Cash EBITDA, and non-recurring items), cash taxes and the reversal of non-cash accounting adjustments relating to IFRS 15 and IFRS 16;
"Cash Conversion": expressed as a percentage, this APM represents Adjusted uFCF divided by Adjusted EBITDA;
"Constant Currency": Constant Currency for ACV and costs, is calculated by re-stating the prior year period results to reflect exchange rates prevailing during the reported period. Constant currency for Adjusted revenue, is calculated by re-stating the in-period revenue generated in the prior period from the prior period ACV to reflect exchange rates prevailing during the reported period. No such restatement is needed for revenues in prior periods unwinding from deferred revenue, as these revenues are locked into US denominated values when the associated ACV was generated;
"Contractual Liabilities and Remaining Performance Obligations" or "RPO": RPO represents the unrecognized proportion of remaining performance obligations towards subscribers (e.g., the amount of revenue that has been invoiced, but not yet recognized as revenue) plus amounts for which binding irrevocable commitments have been received but have yet to be invoiced. Deferred Revenue is another term used for Contractual Liabilities;
"Leverage": Expressed as a multiple, Leverage is Net Debt divided by Adjusted Cash EBITDA; and
"Net Debt": This APM represents the sum of current and non-current interest bearing borrowings (net of un-amortized capitalized arrangement fees, gains or losses on loan modifications), current and noncurrent lease liabilities, less cash and cash equivalents.