SUSE, the EQT-owned open source company has filed its ITF (Intention to Float) ahead of a planned listing on the Frankfurt Exchange later in the year.
Rumours of an IPO first surfaced at the end of last year but, until now, the company has been silent on any details. The ITF sets out a plan to increase capital through a new share issue and to sell shares owned by the selling shareholder to create further liquidity.
Specialising in Linux enterprise operating systems, container management and storage, as well as Edge software solutions, SUSE supports and drives the digital transformation of its customers which include nine out of 10 of the world’s largest retailers, all five of the world’s largest technology firms, and 13 out of 13 of the world’s largest pharmaceutical firms.
Founded in 1992 and headquartered in Nuremburg, Germany, SUSE was the first company to introduce enterprise capabilities to the Linux open source operating system. Today, its offering is grouped into two open source software product categories – the SUSE Linux Enterprise product family, which comprises its core Linux operating system offering, and the SUSE Rancher product family (following the acquisition of Rancher announced in December 2020 and completed earlier this year), which comprises its container management and storage offering.
The SUSE Linux Enterprise Server operating system is an enterprise-grade, secure, and adaptable operating system that is trusted by more than 60 percent of the Fortune Global 500 across all industries and geographies. SUSE’s container management platform ‘SUSE Rancher’ has been downloaded over 100 million times since its introduction into the market, making it one of the industry’s most widely adopted solutions for managing Kubernetes containers across any environment.
SUSE was only acquired by EQT three years ago following its sale by Micro Focus – even by most PE-backed standards, this is a rapid move from private to public ownership. So, what is driving the move towards an IPO?
There are three big factors at play here: firstly, virtually all enterprise tech is hot at the moment and PE houses and investors have a huge pot of ‘dry powder’ to invest in software businesses that are not weighed down by legacy technology. SUSE is ‘literally’ at the cutting edge of modern cloud architecture with its Kubernetes containerisation platform and Edge workload solutions – this is the battle ground in the hyper-competitive multi-cloud era that all serious ENSW players will be fighting over soon.
Secondly, and allied to the first point, SUSE’s solutions are based on open source technologies which are likely to play an increasingly important role in the way solutions, platforms and applications work in the future. Are enterprises fed up with being held to ransom by proprietary software vendors? Not enough to turn their backs on them completely but certainly enough not to build their entire future IT landscape around. Digital transformation has opened up a world of new possibilities for the how, why, and where applications and workloads are managed. Smart enterprise leaders are moving more and more towards a clean core with innovation at the edge and SUSE provides this while being underpinned by the industry standard Linux enterprise technologies.
The third factor is their CEO. Melissa Di Donato is a first time leader who has never worked in open source before. If you met her, you would understand why these factors are no barrier to success. Over the last two years Di Donato has successfully re-energised the company, negotiated and managed the acquisition of Rancher Labs and overseen revenue growth to in excess of $500m, with particularly strong acceleration in average contract value – meaning they are winning more and more higher value customers.
Di Donato is fiercely ambitious and highly motivated and it’s no surprise to me at all that she will be leading SUSE into public ownership where it will have greater financial flexibility to take on IBM and Red Hat in the extremely competitive and lucrative hybrid cloud open source battleground.
Financial sensitivities prevent SUSE from making direct comment, however the firm did provide a canned statement from their CEO as follows:
“It is incredible to see how far SUSE has come over the past three decades, growing to be a leading global open source innovator trusted by many of the largest companies in the world. It also exhibits an exceptional financial profile with a unique combination of fast-growing recurring revenues at scale as well as attractive profitability and cash generation. Today marks the beginning of our next chapter. The planned IPO will give us the strategic and financial flexibility to secure our independence for the long term, maintain our absolute commitment to our open source DNA and strong sustainability vision, and continue to support our customers’ digital transformations. As we stand at the intersection of open source innovation and enterprise IT, what matters most to SUSE is giving customers the power to innovate everywhere.”