Enterprise Linux specialist SUSE is growing strongly, its Q3 earnings showed, with the operating system specialist saying that “enterprise customers continue to sign multi-year contracts with up-front payment”.
SUSE flagged challenges – and a path towards – monetising its Kubernetes platform Rancher however (until its 2020 acquisition, arguably the last independent K8s distribution with any meaningful adoption in the market).
SUSE CEO saying she had "devised a robust plan" to develop the Rancher business -- Rancher lets users deploy production-grade Kubernetes clusters with centralised authentication, access control and observability.
“We have delivered strong revenue and profitability amid macro-economic and geopolitical uncertainty,” said Melissa Di Donato, CEO of SUSE – sold by Micro Focus to EQT Partners for $2.5 billion in 2018 then floated on the Frankfurt stock exchange in 2021 – as she reported group ARR of $639.6 million in Q3, up 14% on Sep 22.
The company is also looking to build on a new relationship with AWS designed to “support smoother migration of customers’ SAP landscapes to AWS”, including joint go-to-market across sales and marketing.
SUSE’s Rancher plans
SUSE bought Kubernetes management platform provider Rancher Labs for a reported $600 million in 2020.
Rancher’s architecture supports any CNCF-certified Kubernetes distribution including Google GKE, Amazon EKS, and Microsoft AKS. SUSE is facing some headwinds to monetising that open source acquisition, SUSE’s Q3 earning suggested, noting: “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”.
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“We have devised a robust plan to develop our Rancher business” Di Donato added, with SUSE saying in its business update that it was 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” it added.
SUSE AWS partnership
SUSE competes with Red Hat and others in adjacent spaces for a market spanning Enterprise Linux operating systems, Enterprise Container Management and Edge software solutions. It is looking to partner up more, recent releases suggest. A partnership with AWS, announced on September 8, 2022, was a case in point.
The comments came as SUSE looks to build on a new relationship with AWS designed to “support smoother migration of customers’ SAP landscapes to AWS”, including joint go-to-market across sales and marketing.
“SUSE Linux Enterprise Server for SAP Applications is a leading operating system platform for SAP solutions on Linux…” said Kelly Collins, global head of Cloud for SUSE at the time. “By deepening our collaboration with AWS and their top Global Systems Integrators, we are making a promise to our customers that we are committed to supporting their most mission-critical workloads being migrated and modernized on AWS.”
SUSE’s customers include 60% of the Fortune 500. It has 2,000 staff globally. Customers include Bosch, Daimler, Ericsson, Repsol, Ubisoft and others. Products like SUSE Enterprise Linux Server are often used by customers to power their core Infrastructure-as-a-Service workloads and its acquisition of Rancher has allowed it to take a bite out of the market for companies containerising workloads and orchestrating them on Kubernetes.
SUSE profit for the quarter was $36.8 million.