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Red Hat Reports First Quarter Results
RaleighUnited States, June 22, 2010
Revenue of $209 million, up 20% from prior year GAAP EPS of $0.12, non-GAAP EPS of $0.18, both up 20% from the prior year Repurchased 2.5 million shares of common stock
Red Hat, Inc. (NYSE: RHT), the world's leading provider of open source solutions, today announced financial results for its fiscal year 2011 first quarter ended May 31, 2010.
"We had a strong start to our fiscal year with 20% organic revenue growth and 28% non-GAAP operating income growth," stated Jim Whitehurst, President and Chief Executive Officer of Red Hat. "We executed well and achieved a significant increase in the number of large deals booked year-over- year, including several with an initial consulting component which we believe is a positive indicator of new project spending and future subscription billings."
GAAP operating income for the first quarter was $34.2 million, or a 16.4% operating margin. After adjusting for stock compensation and amortization expenses as detailed in the tables below, non-GAAP operating income for the first quarter was $52.0 million, up 28% year-over-year. Non-GAAP operating margin was 24.8%, up 140 basis points from the year ago quarter.
Net income for the quarter was $24.1 million, or $0.12 per diluted share, compared with $18.5 million, or $0.10 per diluted share, in the year ago quarter. Non-GAAP net income for the quarter was $35.6 million, or $0.18 per diluted share, after adjusting for stock compensation and amortization expenses as detailed in the tables below, as compared to $28.7 million, or $0.15 per diluted share, in the year ago quarter.
Operating cash flow totaled $60.6 million, as compared to $61.2 million in the year ago quarter. At quarter end, the company's total deferred revenue balance was $625.6 million, an increase of 10% on a year-over-year basis. Total cash, cash equivalents and investments as of May 31, 2010 was $967.8 million.
"Our business was strong with healthy subscription renewals, large deals, continued progress in our "free to paid" initiative and strong growth in our services business. We continued to invest in our growth, in both engineering and sales, and it is paying off. Despite significant foreign currency volatility, both revenue and deferred revenue experienced double digit growth in U.S. dollars year-over-year," stated Charlie Peters, Executive Vice President and Chief Financial Officer of Red Hat. "Our balance sheet remains strong, allowing us to repurchase over $74 million of our common shares, returning additional value to shareholders."
Additional information on Red Hat's reported results, including a reconciliation of the non-GAAP adjusted results, are included in the financial tables below. A live webcast of Red Hat's results will begin at 5:00 pm ET today and can be accessed by the general public at Red Hat's investor relations website at http://investors.redhat.com. A replay of the webcast will be available shortly after the live event has ended.
About Red Hat, Inc.
Red Hat, the world's leading provider of open source solutions and an S&P 500 company, is headquartered in Raleigh, NC, with over 65 offices spanning the globe. CIOs ranked Red Hat as one of the top vendors delivering value in Enterprise Software for six 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 virtualization, applications, management and Services Oriented Architecture (SOA) solutions, including Red Hat Enterprise Virtualization and JBoss Enterprise Middleware. Red Hat also offers support, training and consulting services to its customers worldwide. Learn more: http://www.redhat.com.
Certain statements contained in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: risks related to delays or reductions in information technology spending, uncertainty and adverse results in litigation and related settlements, the integration of acquisitions and the ability to market successfully acquired technologies and products; the ability of the Company to effectively compete; the inability to adequately protect Company intellectual property and the potential for infringement or breach of license claims of or relating to third party intellectual property; the ability to deliver and stimulate demand for new products and technological innovations on a timely basis; risks related to data and information security vulnerabilities; ineffective management of, and control over, the Company's growth and international operations; fluctuations in exchange rates; and changes in and a dependence on key personnel, as well as other factors contained in our most recent Quarterly Report on Form 10-Q (copies of which may be accessed through the Securities and Exchange Commission's website at http://www.sec.gov), including those found therein under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations". In addition to these factors, actual future performance, outcomes, and results may differ materially because of more general factors including (without limitation) general industry and market conditions and growth rates, economic conditions, and governmental and public policy changes. The forward-looking statements included in this press release represent the Company's views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of the press release.
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