RED HAT REPORTS FOURTH QUARTER RESULTS

Red Hat, Inc. (Nasdaq: RHAT), the leading provider of open source solutions for Internet infrastructure, today reported revenue of $13.1 million for the fourth quarter ended February 29, 2000, a 39% increase over revenue of $9.4 million for the fourth quarter last year. Revenue for the fourth quarter was 24% higher than third quarter revenue of $10.5 million. Results for the quarter and the year are consolidated for the acquisitions of Cygnus Solutions and Hell's Kitchen Systems, Inc., both of which were completed in January, 2000.

Adjusting for non-cash charges and one-time acquisition expenses, the Company reported a net loss for the fourth quarter of fiscal 2000 of $5.6 million, or $0.04 per share. Before these adjustments, the net loss was $24.6 million, or $0.17 per share, compared with a net loss of $1.2 million, or $0.03 per share, for the fourth quarter of fiscal 1999.

Revenue for the year ended February 29, 2000 was $42.4 million, a 28% increase compared to revenue of $33.0 million for fiscal 1999. Adjusting for non-cash charges and one-time acquisition expenses, the Company reported a net loss for fiscal 2000 of $19.2 million, or $0.19 per share. Before these adjustments, the net loss for the year was $39.9 million, or $0.40 per share, compared with a net loss of $5.8 million, or $0.12 per share, for fiscal 1999.

Commenting on the results, Matthew Szulik, president and CEO of Red Hat, Inc., said, "Demand for Red Hat products and services is strong in ISPs, Web hosting companies and manufacturers of Internet devices. Post the consolidation of our recent acquisitions, Red Hat is in position to accelerate revenue and margin growth on a global basis."

Highlights of the fourth quarter include: