SUSE announced its results for the third quarter of financial year 2021, which ended July 31, 2021. The company continued to see strong growth in Q3 with ACV growing across all business areas, most notably in the Emerging business where SUSE Rancher continues to gain traction. In the End User routes to market (RTM), the cloud service providers (CSPs), particularly the hyperscalers, contributed to strong growth.
All geographical regions also contributed to the growth.
According to the company, Core ACV grew by 36% year on year to $101.5 million for the quarter. This strong performance was driven by delivery of expected renewals and upselling within the End User and CSP RTMs and supported by two retrospective consumption contracts. This included a number of important multiyear renewals which contributed significantly to ACV growth and deferred revenue. The IHV RTM grew by 8% year on year, having seen a 2% decline in the previous quarter, as embedded sales increased significantly, offsetting continued weakness in IHV driven by hardware supply chain delays.
One particular Embedded win of note in Q3 was with a large U.S.-based Systems Integrator, where we have up-sold an existing $5.4 million ACV deal with an ACV renewal of $7.8 million. This includes expansion of additional workloads, and it also displaces competitor OS footprints within the account. Secured with this win is a binding commitment of recurring ACV over the next five years with a monetary value of $56 million. This win underscores the resiliency and mission criticality of SUSE’s business model.
Core ACV Growth for the year to date was 18%, which is in line with our guidance for the year.
Emerging ACV grew 59%, delivering $17.5 million in the quarter as SUSE Rancher continued to perform well with a number of notable deals including several net new logos wins from incumbent suppliers and our first airline customer. The strongest growth in Emerging was in North America, with several large renewals in the Financial Services and Technology industries.
Core revenue growth of 16% in the quarter was powered by increased sales in the CSP channels, including the hyperscalers, and in the North America and EMEA regions. Growth was more modest in the independent hardware vendor (IHV) partner RTM where several large partners saw weaker sales, although the embedded customers did relatively well.
Emerging Revenue grew by 65% to $17.8 million as SUSE Rancher grew its sales and extended its presence in IHV and CSP channels.
“This is a strong quarter for SUSE,” said Melissa Di Donato, SUSE CEO. “We continue to deliver upon our commitments, delivering strong results in our business across all segments and rolling out game-changing innovation that will drive further growth. The momentum of our business is proof that the foundation of SUSE is built for our future success.”