Red Hat Reports First Quarter Results


United States, June 25, 2008

• Revenue of $156.6 Million, up 32% Year-over-Year • Operating Income Increased 33% Year-over-Year • Operating Cash Flow Increased by 60% Year-over-Year

Red Hat, Inc. (NYSE: RHT), the world's leading provider of open source solutions, today announced financial results for its fiscal year 2009 first quarter ended May 31, 2008.

The first quarter was a solid start to the fiscal year, stated Jim Whitehurst, President and Chief Executive Officer of Red Hat. With our recognized value advantage and award winning technology solutions, we continued to see top enterprise customers expand Red Hat deployments and new customers migrate to our solutions.

Total revenue for the quarter was $156.6 million, an increase of 32% from the year ago quarter and 11% from the prior quarter. Subscription revenue for the quarter was $130.7 million, up 27% year-over-year and 7% sequentially.

Net income for the quarter was $17.3 million, or $0.08 per diluted share, compared with $16.2 million, or $0.08 per diluted share, in the year ago quarter. Non-GAAP adjusted net income for the quarter was $37.0 million, or $0.18 per diluted share, after adjusting for stock compensation and tax expense as detailed in the tables below. This compares to non-GAAP adjusted net income of $33.7 million, or $0.16 per diluted share in the year ago quarter.

Operating cash flow totaled $63.4 million, compared to $39.7 million from the year ago quarter and $54.5 million from the prior quarter. At quarter end, the company's total deferred revenue balance was $491.8 million, an increase of 36% on a year-over-year basis and 4% sequentially. Total cash, cash equivalents and investments as of May 31, 2008 were $1.35 billion.
Other highlights include the following:

• Red Hat launched major releases of its flagship products; Red Hat Network Satellite 5.1, Red Hat Enterprise Linux 5.2, and JBoss Operations Network 2.0. Also Red Hat released Fedora 9 to the open source community.

• Red Hat's middleware business continued to gain momentum in the quarter. JBoss middleware solutions were positioned in the Leadership quadrant of Gartner Inc.'s Magic Quadrant for Enterprise Application Servers for a third consecutive year. JBoss also received high marks in a survey of application development professionals published by Forrester Research on April 25, 2008 Application Server Quality: Review Your Assumptions.

• Red Hat was named the #1 IT vendor in Japan by IT workers surveyed in the Nikkei Access' April 2008 study for the second consecutive year.
Our execution this quarter enabled us to deliver a combination of strong revenue, operating income and cash flow growth, stated Charlie Peters, Executive Vice President and Chief Financial Officer of Red Hat. We achieved these results while continuing to invest in our infrastructure and technologies to enable future growth.

Additional information on Red Hat's reported results, including a reconciliation of the non-GAAP adjusted results, are included in the financial tables. See link:

About Red Hat, Inc.

Red Hat, the world's leading open source solutions provider, is headquartered in Raleigh, NC with over 55 offices spanning the globe. CIOs have ranked Red Hat first for value in Enterprise Software for four consecutive years in the CIO Insight Magazine Vendor Value survey. Red Hat provides high-quality, affordable technology with its operating system platform, Red Hat Enterprise Linux, together with applications, management and Services Oriented Architecture (SOA) solutions, including the JBoss Enterprise Middleware Suite. Red Hat also offers support, training and consulting services to its customers worldwide. Learn more:

Forward-Looking Statements

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