Enterprise software maker SUSE SA today reported its second-quarter financial results, disclosing that its adjusted revenue grew 18% year-over-year, to $161.3 million.
The company also posted a significant profit increase during the three months ended April 30.
Germany-based SUSE provides a Linux distribution known as SUSE Server that is widely used in the enterprise. The operating system expands Linux’s core feature set with cybersecurity optimizations, as well as tools that simplify administrators’ day-to-day work. Tasks such as running software container applications can be done with less manual work.
SUSE also offers several specialized versions of its operating system. One version is optimized specifically to run SAP SE’s popular business applications, which large organizations use for key tasks such as supply chain management. Additionally, SUSE sells two editions of its operating systems that are designed to power devices deployed at the edge of the network.
SUSE has over the past few years expanded its focus beyond Linux. In 2020, the company reportedly spent more than $600 million to buy Rancher Labs Inc., a startup with a platform for managing Kubernetes environments. SUSE has since repackaged the startup’s technology into a new product known as SUSE Rancher.
Last year, the company further extended its container capabilities by acquiring NeuVector Inc. in a $130 million deal. NeuVector’s namesake software product, which is now known as SUSE NeuVector, finds vulnerabilities in container environments and blocks hacking attempts.
SUSE’s investments in new products contributed to its sales momentum during the second quarter. The company credited its 18% revenue growth during the quarter partly to the fact that annual contract value, a metric used by SUSE to measure sales, increased 34% in North America. The increase was attributed to strong demand for its SUSE Rancher container management platform and the versions of its Linux distribution that target connected devices.
The company’s annualized recurring revenue increased 15% year-over-year, to $619.1 million. Deferred revenue, a measure of future sales, grew from $6.2 million a year ago, to $17.3 million.
SUSE’s profit improved as well in the three months through April 30. The company reported adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, of $58.6 million, which represents a 22% year-over-year increase.
SUSE managed to achieve strong adjusted EBITDA growth even though its research and development costs, as well as sales, marketing and operations expenses, grew faster than its revenues. The increased spending was partly the result of the fact that the company grew its sales group during the first quarter to support revenue growth.
“Our strong Q2 performance demonstrates the momentum of our business and our ability to grow with existing customers while attracting new customers,” said SUSE Chief Executive Officer Melissa Di Donato (pictured). “With the new general managers and sales structure, we will continue to serve our customers and innovate with our product offerings.”
Going forward, SUSE expects that full-year financial results will be “broadly in line” with its previously provided guidance. SUSE added that it will explore opportunities to acquire companies in high-growth market segments adjacent to its existing focus areas.