Red Hat Reports Fiscal First Quarter Results

Raleigh

United States, June 17, 2003

GAAP Net Income of $1.5 million and $0.01 per share, record $5.5 million in operating cash flows, and 36% increase in deferred revenues highlight the quarter

In the first quarter of fiscal 2004, Red Hat achieved revenue of $27.2 million, a sequential increase of 5% compared to $25.9 million in the fourth quarter of fiscal 2003, and a year-over-year increase of 39%.

For the first quarter of fiscal 2004, the company achieved net income of $1.5 million, or $0.01 per share. This compares to a net loss of $273,000, or break-even per share, in the prior quarter, and a net loss of $4.6 million, or $0.03 per share, in the same quarter a year ago.

The company generated $5.5 million in positive cash flows from operations during the first quarter, which represents its fourth consecutive quarter of positive cash flows from operations. The company ended the first quarter with a cash and investments balance of $300 million, a sequential increase of $7.7 million and a year-over-year increase of $13.5 million.

For the first quarter of fiscal 2004, the company increased its deferred revenue balance to $24.1 million, an increase of $6.3 million, or 36% as compared to the fourth quarter of fiscal 2003, and an increase of $14.8 million or 159% as compared to the same prior year quarter.

The company reported a net operating loss of $1.1 million, compared to a net operating loss of $2.4 million in the prior quarter and a net operating loss of $7.2 million in the first quarter of the prior year.

Highlights for the first quarter include:
  • First quarter sales of annual subscriptions for the Red Hat Enterprise Linux family of technologies increased sequentially by 2,000, or 10%, to 23,500 subscriptions.

  • Subscription revenues from Enterprise Technologies grew 14% sequentially and 104% year-over-year.

  • Blended gross margins remained strong at 68%, while gross margins of Enterprise subscription technologies, including retail revenues, also remained strong at 82%.

  • Continued scaling of the business model, as the sequential reduction in the company's operating loss of $1.3 million equated to the sequential increase in revenues.

"Red Hat continues to show strong operating performance, including solid growth in cash flows, deferred revenues, and net income, which translates into continued leverage of our business model", stated Kevin Thompson, Executive Vice President and Chief Financial Officer.


About Red Hat, Inc.

Red Hat, the world's leading open source and Linux provider, is headquartered in Raleigh, NC with satellite offices spanning the globe. Red Hat is leading Linux and open source solutions into the mainstream by making high quality, low cost technology accessible. Red Hat provides operating system software along with middleware, applications and management solutions. Red Hat also offers support, training and consulting services to its customers worldwide and through top-tier partnerships. Red Hat's open source strategy offers customers a long term plan for building infrastructures that are based on and leverage open source technologies with focus on security and ease of management. Learn more: http://www.redhat.com

Forward-Looking Statements

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