Red Hat Reports Fiscal Fourth Quarter and Year End Results

Raleigh

United States, March 23, 2004

87,000 new subscriptions, $32 million in cash flow from operations, and 68% sequential growth in deferred revenue highlight the quarter

Revenue for the fourth quarter of fiscal 2004 was $37.0 million, a sequential increase of 11% compared to $33.1 million in the third quarter of fiscal 2004, and a year-over-year increase of 43%.

For the fourth quarter of fiscal 2004, the company reported net income of $5.0 million, or $0.03 per share. This compares to a net income of $4.1 million, or $0.02 per share, in the prior quarter, and break-even results in the same quarter a year ago.

The company generated $32.2 million, or $0.17 per share, in positive cash flow from operations during the fourth quarter, and a total of $61 million, or $0.33 per share, in positive cash flow from operations for the fiscal year ended February 29, 2004. The company ended the year with a cash balance of $941 million, an increase of $649 million as compared to the balance at the end of the prior fiscal year.

In the fourth quarter of fiscal 2004, the company increased its deferred revenue balance to $70.8 million, a sequential increase of $28.6 million, or 68%, as compared to the third quarter of fiscal 2004.

Highlights for the fourth quarter include:

  • Fourth quarter sales of subscriptions for Red Hat Enterprise Linux technologies increased by 87,000 new subscriptions, comprised of 61,000 subscriptions sold into the enterprise IT market and 26,000 subscriptions sold into the HPC and hosting markets.
  • Renewal rates for sales of Red Hat Enterprise Linux remained strong at approximately 90%.
  • Gross margins increased to record levels, with blended gross margins at 76% and gross margins of Enterprise subscription technologies at 91%.
  • Operating profit, before stock-based compensation, increased to $4.6 million, or 12% of total revenue.

For the fiscal year ended February 29, 2004, the company reported revenues of $126.1 million, an increase of 39% as compared to fiscal 2003 revenues of $90.9 million. The company reported net income of $14 million for fiscal 2004, or $0.08 per share, compared to a net loss of $6.6 million, or a loss of $0.04 per share, for fiscal 2003. For the fiscal year ended on February 29, 2004, the company reported over 160,000 cumulative sales of Red Hat Enterprise Linux technologies.

"For Red Hat, fiscal 2004 was a year marked by great execution, as we delivered strong growth in revenues, cash flows, and profitability", stated Kevin Thompson, Executive Vice President and Chief Financial Officer. "The growth rate in the adoption of Red Hat Enterprise Linux has exceeded our expectations to date and we are positive on the outlook for fiscal 2005".

See the earnings tables.

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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