Red Hat global preferences

Press release

RED HAT CONTINUES TO ACCELERATE REVENUE, TO $27 MILLION, ACHIEVING BREAK EVEN PER SHARE IN FOURTH QUARTER

- Fiscal Year completed with 100% revenue growth, gross margin of 57%, and cash and investments balance of $303 million -

Raleigh, NC

Red Hat, Inc. (Nasdaq:RHAT), the leader in developing, deploying and managing open source solutions, today reported revenue of $27 million for the fourth quarter ended February 28, 2001, an increase of 106% versus the $13.1 million reported for the fourth quarter of fiscal 2000 and an increase of 20% over the third quarter of fiscal 2001.



The company reported an adjusted net loss of $600,000, or break even per share, for the fourth quarter of fiscal 2001, compared to an adjusted net loss of $5.6 million, or $0.04 per share, for the fourth quarter of fiscal 2000. On a reported basis, the net loss was $24.2 million, or $0.14 per share, compared with a net loss of $24.6 million, or $0.17 per share in fiscal 2000.



The company also completed its fiscal year 2001, with revenues of $84 million, compared to $42 million in fiscal 2000, a 100% increase. The adjusted net loss for fiscal 2001 was $5.9 million or $0.03 per share, compared to $19 million or $0.19 per share for fiscal 2000.



"Red Hat expanded its sources of revenue by introducing strategic solutions to our global customers, which contributed to our strong operating results", commented Matthew Szulik, President and CEO of Red Hat. "Our management team has continued to accomplish the operational and financial goals stated a year ago".

 



Highlights for the fourth quarter include:



CUSTOMER WINS / MAJOR DEALS



Nortel is implementing Open Source Java solutions for the Power PC architecture for deployment in Nortel products.



Deutsche Telekom is focusing Red Hat Linux on web-based applications



Lufthansa Airplus is using Red Hat Linux in business travel management and ePayment and customer care solutions



Dresdner Bank is implementing Red Hat Linux on web servers for internal use, in its department servers, and as a development platform



Symbol Technologies, which has more than 50% world market share in key and pen-based mobile computing, is working with Red Hat to deploy wireless devices based on Red Hat Embedded Linux



Mentor Graphics is using the Red Hat GNUPro tools across multiple operation systems for the development and deployment of their software products



Morpho Technologies is working with Red Hat to deploy GNUPro tools and Red Hat software technologies for Morpho's semiconductor processor platforms



Hitachi continues to work with Red Hat to deploy Red Hat GNUPro and Embedded Linux for Hitachi SH processors that are used in all types of embedded applications



GE Corporate Research is migrating their development workstations to Linux, replacing Sun Solaris platforms



LSI Logic is porting its SCSI products to Red Hat Linux, and working with Red Hat to allow LSI a faster time to market for Linux-based products



Ubicom Joined forces with Red Hat to support Device Networking Designers;



Red Hat GNUPro Development Environment will run on Ubicom IP2000 internet

processors.



Red Hat announced that Daiei Information Systems of Japan has chosen Red Hat to provide a comprehensive system of end-to-end open source solutions for the company and its subsidiaries and customers.



Announced that Rymic Systems has chosen Red Hat's uClinux as the operating system for a prototypical vehicle monitoring device soon to be tested by the United States Army. The embedded device will be incorporated in the Bradley fighting vehicles, heavy expanded mobility tactical trucks and humvees.



Keio University will build a large-scale campus network server system using Red Hat Linux 7 and IBM Netfinity 4500R server, from Japan IBM Corporation. This server network system will also adopt the new IBM eServer xSeries network servers from IBM Japan.



ACQUISITIONS



Acquired Planning Technologies Inc, and Atlanta professional consulting service company, for $47 million in stock, adding to Red Hat's global capabilities for end-to-end open source solutions.

Acquired Akopia of Reston, Virginia, integrating Akopia's popular Interchange e-commerce platform into Red Hat's solutions portfolio, which now includes Interchange, the Stronghold Secure Web Server, and CCVS e-commerce payment system for a comprehensive e-commerce solution stack.



MANAGEMENT



Hired James Neiser, Ph. D, as the Chief Marketing Officer. Most recently Neiser was the VP of WW Channel and Customer Set Marketing in IBM Software, and also served in a variety of executive marketing positions while at IBM. Dr. Neiser brings over 19 years of marketing experience from a variety of software companies.



Red Hat appointed Selby Wellman to board of directors. Wellman brings to Red Hat more than 30 years of experience in management, marketing and engineering at leading technology corporations. He joined the board from Cisco Systems, where he served most recently as senior vice president and general manager of the InterWorks Business Division. Wellman also served as senior vice president of business units in San Jose, Calif, and senior executive for corporate marketing while at Cisco.



About Red Hat, Inc.



Red Hat is the leader in developing, deploying and managing solutions built on the benefits of an open source platform. These solutions include an open source product platform for devices to mainframes, a complete end to end set of Professional Services, and the Red Hat Network as the Internet-based backbone for deployment and management of the products and services. Red Hat's open source platform includes the award-winning Red Hat Linux operating system platform, the Interchange e-Commerce platform, Stronghold Secure Web Server, Credit Card

Verification software, High Availability Server, GNU-based developer toolkit for embedded development, and embedded run-time Linux, eCOS, and RedBoot solutions.



Red Hat backs up their open source offerings with end-to-end services that include Red Hat Professional Consulting focused on multiplatfom infrastructure and engineering services, Red Hat Engineering services for software development and porting of the operating system and for

embedded platforms and devices, Red Hat Enterprise support services for installation services and web and telephone support, and Red Hat Learning services for Linux certification (RHCE) and courses for Apache, Embedded systems, Advanced Developer, and e-Commerce. Red Hat Network provides Red Hat's unique managed services capability to deploy and manage open source products, services, support and management information on-line in real-time to more cost effectively and reliably maintain open source based solutions.



FORWARD-LOOKING STATEMENTS



Forward-looking statements in this press release are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that statements in this press release that are not strictly historical statements, including, without limitation, management's plans and objectives for future operations, and management's assessment of market factors, constitute forward-looking statements which involve risks and uncertainties. These risks and uncertainties include, without limitation, Red Hat's ability to effectively integrate

the operations of Planning Technologies; Red Hat's ability to retain Planning Technologies' traditional customers; Planning Technologies' inexperience in offering professional consulting services to Linux customers; Red Hat's lack of experience in managing a large, geographically dispersed, professional services organization; reliance upon strategic relationships, management of growth, the possibility of undetected software errors, the risks of economic downturns generally, and in Red Hat's industry specifically, the risks associated with competition and competitive pricing pressures, the viability of the Internet, and other risks detailed in Red Hat's filings with the Securities and Exchange Commission, copies of which may be accessed through the SEC's Web site at http://www.sec.gov

About Red Hat

Red Hat is the world’s leading provider of open source software solutions, using a community-powered approach to reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training, and consulting services. As the connective hub in a global network of enterprises, partners, and open source communities, Red Hat helps create relevant, innovative technologies that liberate resources for growth and prepare customers for the future of IT. Learn more at http://www.redhat.com.

Forward-looking statements

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; the effects of industry consolidation; the ability of the Company to compete effectively; the integration of acquisitions and the ability to market successfully acquired technologies and products; uncertainty and adverse results in litigation and related settlements; 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 and political conditions, governmental and public policy changes and the impact of natural disasters such as earthquakes and floods. 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 this press release.