Rancher Parent SUSE Announces IPO

SUSE, an enterprise Linux software supplier and the parent company of Rancher, a Futuriom 40 company, is going public on the Frankfurt Exchange in Germany. The offering is expected to take place this quarter (Q2 2021). The goal will be to reduce debt and permit SUSE to grow its products and make more acquisitions.

That goal to acquire reflects the success SUSE has had with Rancher, which offers an open-source-based hosted service that manages all aspects of Kubernetes clusters for cloud-native applications. Rancher operates in hybrid and multi-cloud environments.

In July 2020, SUSE spent a reported $600 million for six-year-old Rancher, and Rancher quickly became a linchpin in SUSE’s strategy. SUSE now describes its market approach as comprised of two product lines — the SUSE Linux Enterprise Server and associated products, and container management and storage solutions from Rancher.

Rancher’s On a Roll

Rancher’s earned its new status with SUSE. In 2020, the SUSE Rancher products scored a net customer retention rate of 125% (SUSE’s other products scored 109%). Despite its newly merged status, the former startup also contributed roughly 12% to the $503 million in annual revenue SUSE recorded for the 12 months ended October 31, 2020.

Rancher now claims Johnson & Johnson, USbancorp, Siemens, and the USDA among its customers. And though part of SUSE, it continues to operate as a separate entity, with its own website and headquarters in Cupertino, Calif. SUSE is based in Nürnberg, Germany, but has dozens of offices worldwide.

Despite its success, Rancher is facing more competition than ever as enterprises turn to microservices-based cloud applications. Platform9, VMware (VMW), and Futuriom 40’s Weaveworks are emerging, along with many others, to challenge the SUSE subsidiary. If going public can improve SUSE’s position in terms of adding expertise and technology to expand products and services, the IPO could work in Rancher's favor.

Terms of the SUSE IPO

To “float” shares for the IPO, SUSE will issue about $500 million in new shares. EQT AB, a Swedish investment company and owner of SUSE, will sell an unspecified number of shares as well. The public offering in Germany will be accompanied by private placements in some other, also unspecified, countries. After the IPO, EQT AB will remain the largest shareholder in SUSE.

“Today marks the beginning of our next chapter,” said Melissa Di Donato, CEO of SUSE, in a prepared statement. “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. “

SUSE/Rancher’s upcoming IPO is the latest in a string of major events for Futuriom 40 firms. In March, identity-management software company Auth0 was acquired by Okta (OKTA) in an all-stock transaction valued at $6.5 billion. Predictive security company Darktrace is also going public, and its debut in the U.K. is imminent.

It’s safe to assume there will be more news to come.