They were slower to decide on new contracts and some projects were also delayed, the company with its operational headquarters in Nuremberg said on Thursday. After a weak development in the third financial quarter, the company is now assuming fewer contracts for the year as a whole. This caused the stock, which had already been shaken in the past few months, to fall again.
The paper, which is listed on the SDAX, slipped by 31 percent via XETRA in the morning to EUR 12.60. It also marked a record low. At the beginning of the year, the share had reached its record high of EUR 43.60. SUSE has been listed on the stock exchange since May 2021 and currently has a market value of around EUR 2.1 billion.
The results were weak, both in terms of orders and operating profit, wrote Goldman Sachs analyst Mohammed Moawalla. According to him, the emerging division with newer software technologies for the cloud in particular caused disappointment. Although sales were better than expected, the weakness in order values will also be reflected in sales in the coming periods. Varun Rajwanshi from JPMorgan took a similar view: Market expectations for business in the coming year are now likely to fall.
According to the company, the current economic situation is particularly burdening the business with up-and-coming software products. SUSE had actually calculated strong growth here with newer technologies. In the traditional core business, especially with Linux operating systems, the effect is not quite as pronounced because there is a smaller proportion of new business. “We are working to address the challenges facing our business,” said CEO Melissa Di Donato. The company has developed a robust plan to develop the business of the acquired company Rancher, which deals primarily with offerings around the Kubernetes technology used in cloud applications.
Adjusted for currency effects, Di Donato only assumes a currency-adjusted increase in the annual contract value for core products of around 10 percent for the year as a whole (end of October). Previously, an increase in the mid-teens percentage range was targeted. In the division with up-and-coming software products, the management is still expecting an increase of around 20 percent instead of the previous 50 percent. On the other hand, SUSE confirmed the outlook for sales and operating margin, and the medium-term prospects should also remain in place.
In the fiscal third quarter (ending July), total contract value for the next 12 months declined 4 percent, helped by the strong dollar. Adjusted for exchange rates, the contract volume fell by one percent. The amount of the contracts describes how much business can be expected in the next twelve months.
Revenue adjusted for special items, meanwhile, grew 13 percent year over year to $171.2 million in the quarter. Before interest, taxes, depreciation and amortization and adjusted for special items, SUSE earned $65.1 million, 18 percent more than a year earlier. The bottom line was that the company was able to reduce its net loss to $12.9 million from $30.3 million a year ago.
SUSE mainly does its business with adapted versions of the open source operating system Linux in companies and data centers. The company earns, among other things, from the support of the applications. The newer, so-called emerging division deals primarily with technologies related to cloud applications, and SUSE took over the company Rancher for this purpose.
/men/stk
NUREMBERG (dpa-AFX)
Leverage must be between 2 and 20
No data
More news about SUSE SA
Image sources: monticello / Shutterstock.com