The growth story was democratized across business lines and geographies, though analysts question long-term sustainability.
SUSE, one of the largest independent open source vendors, bucked the global pandemic trend with a 14% Y-O-Y revenue increase in Q3. The catalysts for this growth included an 81% leap in cloud ACV (Annual Contract Value) bookings, 35% increase in high-value (>$1mn) customer deal, 50% jump in ACV bookings Y-O-Y for SUSE Linux Enterprise Server for SAP Applications and 25% and 21% increases in North America and APJ respectively in ACV bookings Y-O-Y. Incidentally this marks 14 consecutive quarters of Y-O-Y cloud ACV increase for SUSE.
Marquee customer wins in the quarter include Dell EMC and global measurement and automation technology provider Endress+Hauser. To further accelerate its power to innovate, SUSE opened a new engineering and innovation center in Sofia, Bulgaria, joining major SUSE development sites in Germany, Czechia, India and the United States. The organic growth complemented by the planned acquisition of Rancher Labs which is expected to significantly expand SUSE’S portfolio and share in the Kubernetes market.
SUSE also strengthened its leadership team in Q3 with executive appointments to support the company’s key growth objectives, including Chief Financial Officer Andy Myers and Chief Growth Officer Michael A. Riley, along with regional sales leads Jeff Lattomus, president, North America, and Phillip Miltiades, president, Asia Pacific and Japan.
“As the world works through the challenges of the current pandemic, SUSE continues to deliver value as a partner, community member and provider of transformational technology solutions,” said Melissa Di Donato, SUSE CEO. “Our ongoing growth reflects our dedication to customer satisfaction as well as SUSE’s strong business model and resilience as a company,” she adds.
Notwithstanding the growth and Di Donato’s vocal advocacy of SUSE staying true to the open source culture, analysts have their doubts on the long term viability of the model. While the industry is currently dominated by the indirect commercialization of open source, many believe that directly selling open-source technology is a strategy on the rise, and all set to become a significant trend.
SUSE’s business model is valid but a hybrid model that fuses proprietary IP and open source is exponentially scalable. And that take is a pretty common one to have in the investor-driven world of technology. For now though Di Donato is not deterred; instead she points out SUSE’s 9 years of continuous growth and almost 300% Y-O-Y growth in its application delivery subscription revenue to bolster her point of view.