SUSE Adjusted EBITDA (SUSE & Rancher Pro Forma) 55.2 50.4 10% 164.1 137.8 19% Movement in contract liabilities 9.8 (15.0) nm 62.4 12.7 nm Adjusted Cash EBITDA (SUSE & Rancher Pro Forma) 65.0 35.4 84% 226.5 150.5 50% IFRS 15 (8.3) (6.5) 28% (25.6) (15.8) 62% IFRS 16 (1.8) (2.2) -18% (5.4) (8.5) -36% Change in core working capital (14.2) 8.8 nm (41.8) 13.5 nm Gross capital expenditure (1.3) (0.8) 63% (2.1) (1.8) 17% Tax expense (0.4) (1.6) -75% (4.4) (5.0) -12% Other adjustments - Rancher Pro Forma 0.0 (2.2) -100% (1.8) (6.4) -72% Adjusted Unlevered Free Cash Flow 39.0 30.9 145.4 126.5
Note: The Pro Forma Rancher adjustment is 1 month in YTD 2021, and for the full periods in 2020 Q3 and YTD.
APPENDIX 3 Supplementary Information
Adjusted Profit Before Tax
USD USD millions Q3 Q3 Growth Q3 YTD Q3 YTD Growth
2021 2020 % 2021 2020 %
Adj Revenue 151.0 125.3 21% 421.9 365.7 15%
Adj EBITDA 55.2 50.4 10% 164.1 137.8 19%
Depreciation - PPE 1.1 1.6 -31% 3.4 3.4 0%
Depreciation - Right of Use Assets 1.5 1.9 -21% 4.6 7.8 -41%
Net Finance Costs 8.1 5.8 40% 38.1 46.1 -17%
Adj Profit Before Tax 44.5 41.1 8% 118.0 80.5 47%
Adj Profit Before Tax % 29% 33% 28% 22% ACV - By Route to Market
USD USD millions Q3 Q3 Growth Q3 YTD (3mR) Q3 YTD Growth
2021 2020 % 2021 2020 %
ACV by RTM
End User 97.8 66.2 48% 301.2 233.5 29%
IHV 21.2 19.7 8% 64.4 59.5 8%
Total 119.0 85.9 39% 365.6 293.0 25% ACV - By Region
USD USD millions Q3 Q3 Growth Q3 YTD (3mR) Q3 YTD Growth
2021 2020 % 2021 2020 %
Europe, Middle East and Africa 39.9 29.3 36% 160.7 136.8 17%
North America 56.8 40.8 39% 143.5 109.9 31%
Asia Pacific and Japan 9.0 7.2 25% 26.1 20.4 28%
Greater China 10.0 5.9 69% 26.4 19.9 33%
Latin America 3.3 2.7 22% 8.9 6.0 48%
Total 119.0 85.9 39% 365.6 293.0 25% APPENDIX 4 Comparable Data for Prior Periods
2020 2021
USD USD millions Q1 Q2 Q3 Q4 Q1 Q2 Q3
ACV by Sol's Core 95.1 90.3 74.9 84.7 111.3 94.6 101.5
Emerging 13.4 8.3 11.0 13.0 26.3 14.4 17.5
Total 108.5 98.6 85.9 97.7 137.6 109.0 119.0
Adj Revenue Core 106.1 115.0 114.5 122.2 118.6 121.4 133.2
Emerging 8.8 10.5 10.8 11.2 15.5 15.4 17.8
Total 114.9 125.5 125.3 133.4 134.1 136.8 151.0
Cost of sales 7.1 7.5 7.6 8.4 8.1 10.5 11.6
Gross Profit 107.8 118.0 117.7 125.0 126.0 126.3 139.4
% Margin 94% 94% 94% 94% 94% 92% 92%
Sales, Marketing & Operations 35.4 34.1 32.9 42.5 31.5 35.9 39.0
Research & Development 20.3 20.1 20.3 22.2 22.0 22.4 25.4
General & Administrative 14.5 14.0 14.1 24.5 11.8 19.8 19.8
Total operating expenses 70.2 68.2 67.3 89.2 65.3 78.1 84.2
Adj EBITDA 37.6 49.8 50.4 35.8 60.7 48.2 55.2
Adj EBITDA Margin 33% 40% 40% 27% 45% 35% 37%
Change in deferred revenue 18.3 9.4 (15.0) (7.0) 46.4 6.2 9.8
Adj Cash EBITDA 55.9 59.2 35.4 28.8 107.1 54.4 65.0
% Margin 49% 47% 28% 22% 80% 40% 43% Note: The Q3/Q4 20 Adjusted AEBITDA has been revised since the publication of the pro forma history on the Company website. This represents a phasing adjustment, reducing Cash AEBITDA by USD3.9m in Q3 20, and increasing Cash AEBITDA Q4 '20 by USD3.9m.
APPENDIX 5 Alternative Performance Measures (APM)
This document contains certain alternative performance measures (collectively, "APMs") including ACV, ARR, NRR, ACV to Revenue Conversion, Adjusted Revenue, Adjusted EBITDA, Adjusted Cash EBITDA, Adjusted Cash EBITDA margin, Adjusted uFCF, Cash Conversion, and Net Debt that are not required by, or presented in accordance with, IFRS, Luxembourg GAAP or any other generally accepted accounting principles. Certain of these measures are derived from the IFRS accounts of the Company and others are derived from management reporting or the accounting or controlling systems of the Group.
SUSE presents APMs because they are used by management in monitoring, evaluating and managing its business, and management believes these measures provide an enhanced understanding of SUSE's underlying results and related trends. The definitions of the APMs may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should, therefore, not be considered in isolation or as a substitute for analysis of SUSE's operating results as reported under IFRS or Luxembourg GAAP. APMs such as ACV, ARR, NRR, ACV to Revenue Conversion, Adjusted Revenue, Adjusted EBITDA, Adjusted Cash EBITDA, Adjusted Cash EBITDA Margin, Adjusted uFCF, Cash Conversion, RPO and Net Debt are not measurements of SUSE's performance or liquidity under IFRS, Luxembourg GAAP or German GAAP and should not be considered as alternatives to results for the period or any other performance measures derived in accordance with IFRS, Luxembourg GAAP, German GAAP or any other generally accepted accounting principles or as alternatives to cash flow from operating, investing or financing activities.
SUSE has defined each of the following APMs as follows:
"Annual Contract Value" or "ACV": ACV represents the first 12 months monetary value of a contract. If total contract duration is less than 12 months, 100% of invoicing is included in ACV;
"ACV to Revenue Conversion": expressed as a percentage, this APM represents revenue in a given period expressed as a percentage of ACV generated over the same period. The conversion percentage is dependent on the duration and timing of new contracts in the period as well as the renewal timing of existing contracts for any given quarter or fiscal year;
"Annual Recurring Revenue" or "ARR": ARR represents the sum of the monthly contractual value for subscriptions and recurring elements of contracts in a given period, multiplied by 12. ARR for SUSE is calculated three months in arrears, given backdated royalties relating to IHV and Cloud, and hence reflects the customer base as of three months prior;
"Net Retention Rate" or "NRR": expressed as a percentage, NRR indicates the proportion of ARR that has been retained over the prior 12-month period, which is inclusive of up-sell, cross-sell, down-sell, churn and pricing. It excludes ARR from net new logo end-user customers. The NRR is calculated three months in arrears, aligned to the calculation of ARR;
"Adjusted Revenue": Revenue as reported in the statutory accounts of the Company, adjusted for fair value adjustments;
"Adjusted EBITDA": this APM represents earnings before net finance costs, share of loss of associate and tax, adjusted for depreciation and amortization, share based payments, fair value adjustment to deferred revenue, statutory separately reported items, specific non-recurring items and net unrealized foreign exchange (gains)/losses;
"Adjusted Cash EBITDA": this APM represents Adjusted EBITDA plus changes in contract liabilities in the related period and excludes the impact of contract liabilities - deferred revenue haircut;
"Adjusted Cash EBITDA Margin": expressed as a percentage, this APM represents Adjusted Cash EBITDA divided by Adjusted Revenue;
"Adjusted Unlevered Free Cash Flow" or "Adjusted uFCF": this APM represents Adjusted Cash EBITDA less capital expenditure related cash outflow, working capital movements (excluding deferred revenue, which is factored into Adjusted Cash EBITDA, and non-recurring items), cash taxes and the reversal of non-cash accounting adjustments relating to IFRS 15 and IFRS 16;
"Cash Conversion": expressed as a percentage, this APM represents Adjusted uFCF divided by Adjusted EBITDA;
"Adjusted PBT": is Adjusted EBITDA (post IFRS 15 and 16), less D&A (excluding intangible amortization) less net financial expense;
"Contractual Liabilities and Remaining Performance Obligations" or "RPO": RPO represents the unrecognized proportion of remaining performance obligations towards subscribers (e.g., the amount of revenue that has been invoiced, but not yet recognized as revenue) plus amounts for which binding irrevocable commitments have been received but have yet to be invoiced; and
"Net Debt": this APM represents the sum of non-current financial liabilities, non-current lease liabilities, current financial liabilities and current lease liabilities less cash and cash equivalents as of the respective balance sheet date (excluding capitalized debt arrangement fees (net of amortization) and gains on loan modifications).
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