Red Hat Third Quarter Revenue Leaps 112% to $22.4 Million

Global adoption being driven by Red Hat solutions On track to achieve profitability



Gross margin was 60% for the third quarter fiscal 2001, versus 58% reported in the second quarter fiscal 2001and 41.5% in the third quarter fiscal 2000.

The Company reported an adjusted net loss of $900,000, or $0.01 per share, for the third quarter of fiscal 2001, compared to an adjusted net loss of $5.4 million, or $0.04 per share, for the third quarter of fiscal 2000. On a reported basis, the net loss was $21.4 million, or $0.13 per share, compared with a net loss of $6.3 million, or $0.05 per share.

"We are seeing increasingly strong demand for Red Hat leadership solutions," commented Matthew Szulik, President and CEO of Red Hat. "Solid results are being driven by customers consolidating their UNIX technologies to Red Hat Linux, increased demand from device manufacturers, and continued execution of a solid business model."

Highlights for the third quarter include:

Products and Services

  • Launched Red Hat Network, a powerful Internet-based service to develop, deploy, and manage multiple software platforms. Red Hat Network can significantly reduce costs, and allow for real time, rapid innovation and faster time to market. With the combination of Red Hat Network services and the ability to design and deploy complete embedded Linux platforms, Red Hat has become the first Open Source total solution provider for internet appliances.

  • Launched Red Hat Linux 7, which provides enhanced security, new ease-of-use features, optimized software for higher-end Intel chips and increased 3D support. Fast adoption and dozens of new enterprise-ready applications, have enabled Linux to extend its lead as the most powerful and widely used open source server environment.

  • Implemented advanced training programs for Embedded Systems, IA-64, and Apache/Stronghold.

  • Unveiled two new technical advances, RedBoot and EL/IX, which improve productivity and time-to-market for developers and manufacturers of solutions for devices and appliances.


Customer Wins

  • Won a $1 million contract to port development tools to the Samsung Calm RISC line of low-power processors.

  • Square D Company chose Red Hat to design next generation, Internet-based power management solutions built on Red Hat Embedded Linux.

  • Delphi Automotive is working with Red Hat to deploy Red Hat operating system technologies in Delphi automotive applications.

  • Altera is working with Red Hat to deploy GNUPro tools and Red Hat software technologies for Altera's Nios, PPC, MIPS, and ARM platforms.

  • EMC is expanding its product line to support Red Hat Linux.

  • IBM continues to grow its relationship with Red Hat, through back end support for IBM Personal Systems Group and porting Red Hat Linux to the re-branded line of eServer platforms.

  • NEC and Red Hat are working to provide Red Hat software technologies to strategic customers.



  • Formed a partnership with NetSilicon to deliver open source products and services that accelerate time-to-market of Ethernet and Internet-attached devices. The two companies have already developed the first product from the partnership, the Net+Lxä, a development platform for Internet Appliances.

  • Created an alliance with Interactive Objects, Inc. to enable the development of a family of new digital audio playback devices based on the Radio digital audio OS and platform. This alliance is an important part of Red Hat's strategy to extend its services to new verticals.

  • Formed a partnership with North Carolina State University, a continuation of the Red Hat University Program announced in June, to standardize their College of Engineering academic computing environment on open source technologies.

  • Compaq announced the availability of its ProLiant servers pre installed with Red Hat Linux.



  • Entered into an alliance with Clover Technologies Pvt Limited, an established Indian software house, to open Red Hat India Pvt Limited, giving Red Hat entry into another leading software development country.

  • Formed a strategic alliance with Australian e-security specialist eSec Limited whereby Red Hat will provide engineering and technical support services to back eSec's proven security expertise, creating an enterprise ready solution.

  • Red Hat Linux 7 represents 40% of all Linux sales in Japan, gaining the largest share, according to BCN market survey report "BCN Market View."



  • Named Kevin Thompson Chief Financial Officer. Thompson has more than 13 years experience managing operations, financial transactions such as debt and equity offerings, and mergers and acquisitions through his position as a partner at PricewaterhouseCoopers LLP.


  • Closed acquisition of C2Net Software, Inc., developer of the popular Apache-based Stronghold secure web server, for approximately $42.8 million in common stock, providing additional security to Red Hat's expanding product offering.

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

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, 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.

LINUX is a trademark of Linus Torvalds. RED HAT is a registered trademark of Red Hat, Inc. All other names and trademarks are the property of their respective owners.

  • 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.

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