Red Hat Reports Third Quarter Results for Fiscal Year 2018

RALEIGH, N.C. -
  • Third quarter total revenue of $748 million, up 22% year-over-year, or 20% in constant currency

  • Third quarter Application Development-related and other emerging technology subscription revenue of $162 million, up 44% year-over-year, or 42% in constant currency

  • Quarter-end deferred revenue balance of $2.11 billion, up 23% year-over-year

  • Third quarter operating cash flow of $160 million, up 18% year-over-year and year-to-date operating cash flow of $561 million, up 21% year-over-year

 

Red Hat, Inc. (NYSE: RHT), the world's leading provider of open source solutions, today announced financial results for the third quarter of fiscal year 2018 ended November 30, 2017.

“We again delivered over 20% year-over-year growth in both subscription revenue and total revenue due to strong customer demand for hybrid cloud technologies, including our core technologies, container platforms and solutions that enable and manage multiple cloud and private cloud environments," stated Jim Whitehurst, President and Chief Executive Officer of Red Hat. "Our growing strategic position within enterprise IT organizations is evidenced by the strong cross selling of our broad portfolio of technologies, which led to 30% year-over-year growth in deals over $1 million and over 40% growth in Application Development-related and other emerging technology subscription revenue."

"In the third quarter, strong execution contributed to a powerful combination of 22% total revenue growth, 47% GAAP operating income growth, 25% non-GAAP operating income growth, and 18% operating cash flow growth," stated Eric Shander, Executive Vice President and Chief Financial Officer of Red Hat. "Based on our third quarter results, we anticipate exiting the fiscal year with an annualized run-rate of approximately $3 billion for total revenue."

Revenue: Total revenue for the quarter was $748 million, up 22% in USD year-over-year, or 20% measured in constant currency. Constant currency references in this release are detailed in the tables below. Subscription revenue for the quarter was $657 million, up 21% in USD year-over-year, or 19% measured in constant currency. Subscription revenue in the quarter was 88% of total revenue.

Subscription Revenue Breakout: Subscription revenue from Infrastructure-related offerings for the quarter was $495 million, an increase of 15% in USD year-over-year, or 14% measured in constant currency. Subscription revenue from Application Development-related and other emerging technology offerings for the quarter was $162 million, an increase of 44% in USD year-over-year, or 42% measured in constant currency.

Operating Income: GAAP operating income for the quarter was $118 million, up 47% year-over-year. After adjusting for non-cash share-based compensation expense, amortization of intangible assets, and transaction costs related to business combinations, non-GAAP operating income for the third quarter was $179 million, up 25% year-over-year. For the third quarter, GAAP operating margin was 15.8% and non-GAAP operating margin was 23.9%. Non-GAAP references in this release are detailed in the tables below.

Net Income: GAAP net income for the quarter was $101 million, or $0.54 per diluted share, compared with $68 million, or $0.37 per diluted share, in the year-ago quarter.

After adjusting for non-cash share-based compensation expense, amortization of intangible assets, transaction costs related to business combinations and non-cash interest expense related to the debt discount, non-GAAP net income for the quarter was $133 million, or $0.73 per diluted share, as compared to $111 million, or $0.61 per diluted share, in the year-ago quarter. Non-GAAP diluted weighted average shares outstanding excludes dilution that is expected to be offset by our convertible note hedge transactions.

Cash: Operating cash flow was $160 million for the third quarter, an increase of 18% on a year-over-year basis. Total cash, cash equivalents and investments as of November 30, 2017 was $2.32 billion after repurchasing approximately $100 million, or 838 thousand shares, of common stock in the third quarter. The remaining balance in the current repurchase authorization as of November 30, 2017 was approximately $399 million.

Deferred revenue: At the end of the third quarter, the company’s total deferred revenue balance was $2.11 billion, an increase of 23% year-over-year. The full year impact to total deferred revenue from changes in foreign exchange rates was $69 million year-over-year. On a constant currency basis, total deferred revenue would have been up 19% year-over-year.

Outlook: Red Hat’s outlook assumes current business conditions and current foreign currency exchange rates.

For the full year:

  • Revenue is expected to be approximately $2.906 billion to $2.911 billion in USD.

  • GAAP operating margin is expected to be approximately 16.1% and non-GAAP operating margin is expected to be approximately 23.9%.

  • Fully diluted GAAP earnings per share (EPS) is expected to be approximately $2.02 per share, assuming 184 million fully diluted shares outstanding. Fully diluted non-GAAP EPS is expected to be approximately $2.88 per share, assuming 181 million fully diluted shares outstanding. Both GAAP and non-GAAP EPS assume a $2 million per quarter forecast for other income and an estimated annual effective tax rate of approximately 27% before discrete tax items. This outlook includes a one-time gain on a strategic investment which benefits GAAP and non-GAAP EPS by $0.05.

  • Operating cash flow is expected to be approximately $900 million to $910 million.

For the fourth quarter:

  • Revenue is expected to be approximately $758 million to $763 million.

  • GAAP operating margin is expected to be approximately 16.7% and non-GAAP operating margin is expected to be approximately 24.6%.

  • Fully diluted GAAP EPS is expected to be approximately $0.54 per share, assuming 186 million fully diluted shares outstanding. Fully diluted non-GAAP EPS is expected to be approximately $0.81 per share, assuming 182 million fully diluted shares outstanding. Both GAAP and non-GAAP EPS assume a $2 million forecast for other income and an estimated annual effective tax rate of 27% before discrete tax items. This outlook includes a one-time gain on a strategic investment which benefits GAAP and non-GAAP EPS by $0.05.

GAAP to non-GAAP reconciliation:

Full year non-GAAP operating margin guidance is derived by subtracting the estimated full year impact of non-cash share-based compensation expense of approximately $195 million, amortization of intangible assets of approximately $30 million and transaction costs related to business combinations of approximately $1.3 million. Full year fully diluted non-GAAP EPS guidance is derived by subtracting the expenses listed in the previous sentence and the full year impact of non-cash interest expense related to the debt discount of approximately $20 million and an estimated annual effective tax rate of approximately 27% before discrete tax items. Additionally, full year fully diluted non-GAAP EPS excludes approximately $30 million of discrete tax benefits related to share-based compensation that are included in full year fully diluted GAAP EPS. Full year fully diluted non-GAAP EPS excludes approximately 3 million diluted shares related to the convertible notes which are expected to be offset by our convertible note hedge transactions.

Fourth quarter non-GAAP operating margin guidance is derived by subtracting the estimated impact of non-cash share-based compensation expense of approximately $52 million and amortization of intangible assets of approximately $8 million. Fourth quarter fully diluted non-GAAP EPS guidance is derived by subtracting the expenses listed in the previous sentence and non-cash interest expense related to the debt discount of approximately $5 million and an estimated annual effective tax rate of 27% before discrete tax items. Additionally, fourth quarter fully diluted non-GAAP EPS excludes approximately $1 million of discrete tax benefits related to share-based compensation that are included in fourth quarter fully diluted GAAP EPS. Fourth quarter fully diluted non-GAAP EPS excludes approximately 4 million diluted shares related to the convertible notes which are expected to be offset by our convertible note hedge transactions.

Webcast and Website Information

A live webcast of Red Hat's results will begin at 5:00 pm ET today. The webcast, in addition to a copy of our prepared remarks and slides containing financial highlights and supplemental metrics, 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. Additional information on Red Hat's reported results, including a reconciliation of the non-GAAP adjusted results, are included in the financial tables below.

###

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RED HAT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands - except per share amounts)

Three Months Ended

 

Nine Months Ended

 

November 30,

 

November 30,

 

November 30,

 

November 30,

 

2017

 

2016

 

2017

 

2016

Revenue:

 

 

 

 

 

 

 

Subscriptions

$

656,832

 

 

$

543,318

 

 

$

1,890,902

 

 

$

1,576,192

 

Training and services

91,146

 

 

71,942

 

 

257,227

 

 

206,771

 

Total subscription and training and services revenue

747,978

 

 

615,260

 

 

2,148,129

 

 

1,782,963

 

 

 

 

 

 

 

 

 

Cost of revenue:

 

 

 

 

 

 

 

Subscriptions

47,277

 

 

40,660

 

 

137,234

 

 

116,882

 

Training and services

64,482

 

 

49,793

 

 

181,938

 

 

145,289

 

Total cost of subscription and training and services revenue

111,759

 

 

90,453

 

 

319,172

 

 

262,171

 

 

 

 

 

 

 

 

 

Gross profit

636,219

 

 

524,807

 

 

1,828,957

 

 

1,520,792

 

 

 

 

 

 

 

 

 

Operating expense:

 

 

 

 

 

 

 

Sales and marketing

308,388

 

 

267,080

 

 

883,395

 

 

763,583

 

Research and development

145,580

 

 

122,469

 

 

424,552

 

 

358,750

 

General and administrative

63,838

 

 

54,485

 

 

180,430

 

 

160,439

 

Total operating expense

517,806

 

 

444,034

 

 

1,488,377

 

 

1,282,772

 

 

 

 

 

 

 

 

 

Income from operations

118,413

 

 

80,773

 

 

340,580

 

 

238,020

 

Interest income

4,864

 

 

3,346

 

 

13,469

 

 

10,167

 

Interest expense

6,180

 

 

6,009

 

 

18,346

 

 

17,820

 

Other income (expense), net

(1,187

)

 

(1,392

)

 

(3,033

)

 

(1,860

)

 

 

 

 

 

 

 

 

Income before provision for income taxes

115,910

 

 

76,718

 

 

332,670

 

 

228,507

 

Provision for income taxes

14,604

 

 

8,775

 

 

61,315

 

 

40,607

 

Net income

$

101,306

 

 

$

67,943

 

 

$

271,355

 

 

$

187,900

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.57

 

 

$

0.38

 

 

$

1.53

 

 

$

1.04

 

Diluted

$

0.54

 

 

$

0.37

 

 

$

1.48

 

 

$

1.02

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

177,063

 

 

179,233

 

 

177,188

 

 

180,245

 

Diluted

186,160

 

 

182,682

 

 

183,397

 

 

183,453

 

 

RED HAT, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

November 30, 2017

 

February 28, 2017 (1)

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,331,172

 

 

$

1,090,808

 

Investments in debt securities, short-term

384,717

 

 

369,983

 

Accounts receivable, net

531,509

 

 

634,821

 

Prepaid expenses

216,036

 

 

200,609

 

Other current assets

41,276

 

 

19,481

 

Total current assets

2,504,710

 

 

2,315,702

 

 

 

 

 

Property and equipment, net

201,807

 

 

189,629

 

Goodwill

1,120,957

 

 

1,040,709

 

Identifiable intangibles, net

151,450

 

 

137,767

 

Investments in debt securities, long-term

605,284

 

 

672,440

 

Deferred tax assets, net

108,235

 

 

104,833

 

Other assets, net

67,041

 

 

74,105

 

Total assets

$

4,759,484

 

 

$

4,535,185

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

$

341,596

 

 

$

376,957

 

Deferred revenue, short-term

1,482,428

 

 

1,512,762

 

Other current obligations

1,022

 

 

1,354

 

Total current liabilities

1,825,046

 

 

1,891,073

 

 

 

 

 

Deferred revenue, long-term

623,150

 

 

557,194

 

Convertible notes

762,367

 

 

745,633

 

Other long-term obligations

115,781

 

 

93,965

 

Stockholders’ equity:

 

 

 

Common stock

24

 

 

24

 

Additional paid-in capital

2,350,740

 

 

2,294,462

 

Retained earnings

1,624,346

 

 

1,352,991

 

Treasury stock, at cost

(2,506,075

)

 

(2,311,805

)

Accumulated other comprehensive loss

(35,895

)

 

(88,352

)

Total stockholders’ equity

1,433,140

 

 

1,247,320

 

Total liabilities and stockholders’ equity

$

4,759,484

 

 

$

4,535,185

 

 

 

 

 

(1) Derived from audited financial statements

 

 

 

 

RED HAT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

Three Months Ended

 

Nine Months Ended

 

November 30,

 

November 30,

 

November 30,

 

November 30,

 

2017

 

2016

 

2017

 

2016

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

101,306

 

 

$

67,943

 

 

$

271,355

 

 

$

187,900

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

25,588

 

 

21,870

 

 

71,541

 

 

63,732

 

Amortization of debt discount and transaction costs

5,630

 

 

5,453

 

 

16,740

 

 

16,211

 

Share-based compensation expense

52,318

 

 

54,741

 

 

142,983

 

 

141,373

 

Deferred income taxes

273

 

 

13,818

 

 

7,831

 

 

6,199

 

Net amortization of bond premium on debt securities available for sale

2,113

 

 

3,120

 

 

6,988

 

 

9,954

 

Other

(214

)

 

986

 

 

1,318

 

 

549

 

Changes in operating assets and liabilities, net of effects of acquisitions:

 

 

 

 

 

 

 

Accounts receivable

(113,898

)

 

(73,149

)

 

111,899

 

 

86,496

 

Prepaid expenses

(6,756

)

 

(18,897

)

 

(26,026

)

 

(19,387

)

Accounts payable and accrued expenses

35,559

 

 

(4,413

)

 

(17,771

)

 

(14,836

)

Deferred revenue

57,275

 

 

64,181

 

 

(29,017

)

 

(8,865

)

Other

1,113

 

 

706

 

 

3,234

 

 

(3,868

)

Net cash provided by operating activities

160,307

 

 

136,359

 

 

561,075

 

 

465,458

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchase of investment in debt securities available for sale

(26,580

)

 

(118,152

)

 

(285,773

)

 

(415,796

)

Proceeds from maturities of investment in debt securities available for sale

130,941

 

 

108,722

 

 

348,285

 

 

378,264

 

Proceeds from sales of investment in debt securities available for sale

5,293

 

 

5,037

 

 

19,617

 

 

30,205

 

Acquisition of businesses, net of cash acquired

 

 

 

 

(83,965

)

 

(28,667

)

Purchase of developed software and other intangible assets

(3,426

)

 

(2,323

)

 

(12,871

)

 

(8,712

)

Purchase of property and equipment

(16,587

)

 

(17,244

)

 

(68,268

)

 

(50,436

)

Other

84

 

 

(92

)

 

(105

)

 

(203

)

Net cash provided by (used in) investing activities

89,725

 

 

(24,052

)

 

(83,080

)

 

(95,345

)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from exercise of common stock options

711

 

 

1,205

 

 

4,541

 

 

3,273

 

Proceeds from employee stock purchase program

10,575

 

 

7,155

 

 

33,288

 

 

7,155

 

Payments related to net settlement of share-based compensation awards

(37,807

)

 

(25,769

)

 

(86,230

)

 

(63,245

)

Purchase of treasury stock

(100,000

)

 

(125,318

)

 

(237,002

)

 

(319,182

)

Payments on other borrowings

(346

)

 

(462

)

 

(1,207

)

 

(1,368

)

Other

(6

)

 

(84

)

 

(6

)

 

829

 

Net cash used in financing activities

(126,873

)

 

(143,273

)

 

(286,616

)

 

(372,538

)

 

 

 

 

 

 

 

 

Effect of foreign currency exchange rates on cash and cash equivalents

(2,295

)

 

(22,925

)

 

48,985

 

 

(8,675

)

Net increase (decrease) in cash and cash equivalents

120,864

 

 

(53,891

)

 

240,364

 

 

(11,100

)

Cash and cash equivalents at beginning of the period

1,210,308

 

 

970,569

 

 

1,090,808

 

 

927,778

 

Cash and cash equivalents at end of the period

$

1,331,172

 

 

$

916,678

 

 

$

1,331,172

 

 

$

916,678

 

 

RED HAT, INC.

RECONCILIATION OF CERTAIN GAAP RESULTS TO NON-GAAP ADJUSTED RESULTS

(Unaudited)

(In thousands - except per share amounts)

Three Months Ended

 

Nine Months Ended

 

November 30,

 

November 30,

 

November 30,

 

November 30,

 

2017

 

2016

 

2017

 

2016

 

 

 

 

 

 

 

 

Reconciliation items included in Consolidated Statements of Operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash share-based compensation expense:

 

 

 

 

 

 

 

Cost of revenue

$

4,199

 

 

$

4,037

 

 

$

12,408

 

 

$

12,396

 

Sales and marketing

23,278

 

 

26,624

 

 

64,708

 

 

65,426

 

Research and development

14,937

 

 

13,814

 

 

42,603

 

 

38,785

 

General and administrative

9,904

 

 

10,266

 

 

23,264

 

 

24,766

 

Total share-based compensation expense

$

52,318

 

 

$

54,741

 

 

$

142,983

 

 

$

141,373

 

 

 

 

 

 

 

 

 

Amortization of intangible assets expense:

 

 

 

 

 

 

 

Cost of revenue

$

4,329

 

 

$

4,234

 

 

$

12,491

 

 

$

11,702

 

Sales and marketing

1,592

 

 

1,695

 

 

4,634

 

 

5,515

 

Research and development

34

 

 

34

 

 

103

 

 

103

 

General and administrative

2,084

 

 

1,690

 

 

6,137

 

 

5,291

 

Total amortization of intangible assets expense

$

8,039

 

 

$

7,653

 

 

$

23,365

 

 

$

22,611

 

 

 

 

 

 

 

 

 

Total non-cash interest expense related to the debt discount

$

4,936

 

 

$

4,800

 

 

$

14,693

 

 

$

14,284

 

 

 

 

 

 

 

 

 

Transaction costs related to business combinations

$

(52

)

 

$

 

 

$

1,310

 

 

$

1,789

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP results to non-GAAP adjusted results:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income

$

101,306

 

 

$

67,943

 

 

$

271,355

 

 

$

187,900

 

GAAP provision for income taxes

14,604

 

 

8,775

 

 

61,315

 

 

40,607

 

GAAP income before provision for income taxes

$

115,910

 

 

$

76,718

 

 

$

332,670

 

 

$

228,507

 

 

 

 

 

 

 

 

 

Add: Non-cash share-based compensation expense

52,318

 

 

54,741

 

 

142,983

 

 

141,373

 

Add: Amortization of intangible assets expense

8,039

 

 

7,653

 

 

23,365

 

 

22,611

 

Add: Non-cash interest expense related to the debt discount

4,936

 

 

4,800

 

 

14,693

 

 

14,284

 

Add: Transaction costs related to business combinations

(52

)

 

 

 

1,310

 

 

1,789

 

Non-GAAP adjusted income before provision for income taxes

$

181,151

 

 

$

143,912

 

 

$

515,021

 

 

$

408,564

 

Non-GAAP provision for income taxes (1)

48,075

 

 

33,160

 

 

141,980

 

 

104,405

 

Non-GAAP adjusted net income (basic and diluted)

$

133,076

 

 

$

110,752

 

 

$

373,041

 

 

$

304,159

 

 

 

 

 

 

 

 

 

Non-GAAP adjusted diluted weighted average shares outstanding:

 

 

 

 

 

 

GAAP diluted weighted average shares outstanding

186,160

 

 

182,682

 

 

183,397

 

 

183,453

 

Dilution offset from convertible note hedge transactions

(4,109

)

 

(514

)

 

(2,928

)

 

(228

)

Non-GAAP diluted weighted average shares outstanding

182,051

 

 

182,168

 

 

180,469

 

 

183,225

 

 

 

 

 

 

 

 

 

Non-GAAP adjusted net income per share:

 

 

 

 

 

 

 

Basic

$

0.75

 

 

$

0.62

 

 

$

2.11

 

 

$

1.69

 

Diluted

$

0.73

 

 

$

0.61

 

 

$

2.07

 

 

$

1.66

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

November 30,

 

November 30,

 

November 30,

 

November 30,

 

2017

 

2016

 

2017

 

2016

(1) Non-GAAP provision for income taxes:

 

 

 

 

 

 

 

Non-GAAP adjusted income before provision for income taxes

$

181,151

 

 

$

143,912

 

 

$

515,021

 

 

$

408,564

 

GAAP estimated annual effective tax rate

26.0

%

 

27.0

%

 

27.0

%

 

27.0

%

Provision for income taxes on non-GAAP adjusted income before discrete tax benefits

$

46,908

 

 

$

38,856

 

 

$

139,056

 

 

$

110,312

 

Discrete tax expense (benefit), excluding discrete benefits related to share-based compensation

1,167

 

 

(5,696

)

 

2,924

 

 

(5,907

)

Provision for income taxes on non-GAAP adjusted income, excluding discrete tax benefits related to share-based compensation

$

48,075

 

 

$

33,160

 

 

$

141,980

 

 

$

104,405

 

 

 

 

 

 

 

 

 

GAAP gross profit

$

636,219

 

 

$

524,807

 

 

$

1,828,957

 

 

$

1,520,792

 

Add: Non-cash share-based compensation expense

4,199

 

 

4,037

 

 

12,408

 

 

12,396

 

Add: Amortization of intangible assets expense

4,329

 

 

4,234

 

 

12,491

 

 

11,702

 

Non-GAAP gross profit

$

644,747

 

 

$

533,078

 

 

$

1,853,856

 

 

$

1,544,890

 

 

 

 

 

 

 

 

 

Non-GAAP gross margin

86.2

%

 

86.6

%

 

86.3

%

 

86.6

%

 

 

 

 

 

 

 

 

GAAP operating expenses

$

517,806

 

 

$

444,034

 

 

$

1,488,377

 

 

$

1,282,772

 

Deduct: Non-cash share-based compensation expense

(48,119

)

 

(50,704

)

 

(130,575

)

 

(128,977

)

Deduct: Amortization of intangible assets expense

(3,710

)

 

(3,419

)

 

(10,874

)

 

(10,909

)

Deduct: Transaction costs related to business combinations

52

 

 

 

 

(1,310

)

 

(1,789

)

Non-GAAP adjusted operating expenses

$

466,029

 

 

$

389,911

 

 

$

1,345,618

 

 

$

1,141,097

 

 

 

 

 

 

 

 

 

GAAP operating income

$

118,413

 

 

$

80,773

 

 

$

340,580

 

 

$

238,020

 

Add: Non-cash share-based compensation expense

52,318

 

 

54,741

 

 

142,983

 

 

141,373

 

Add: Amortization of intangible assets expense

8,039

 

 

7,653

 

 

23,365

 

 

22,611

 

Add: Transaction costs related to business combinations

(52

)

 

 

 

1,310

 

 

1,789

 

Non-GAAP adjusted operating income

$

178,718

 

 

$

143,167

 

 

$

508,238

 

 

$

403,793

 

 

 

 

 

 

 

 

 

Non-GAAP adjusted operating margin

23.9

%

 

23.3

%

 

23.7

%

 

22.6

%

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

November 30,

 

November 30,

 

Year-Over-Year

 

2017

 

2016

 

Growth Rate

Subscription and services revenue:

 

 

 

 

 

GAAP subscription revenue by offering type:

 

 

 

 

 

Infrastructure-related offerings

$

494,974

 

 

$

431,142

 

 

14.8%

Adjustment for currency impact

(5,477

)

 

 

 

 

Non-GAAP Infrastructure-related subscription revenue on a constant currency basis

$

489,497

 

 

$

431,142

 

 

13.5%

 

 

 

 

 

 

Application Development-related and other emerging technology offerings

$

161,858

 

 

$

112,176

 

 

44.3%

Adjustment for currency impact

(2,652

)

 

 

 

 

Non-GAAP Application Development-related and other emerging technology subscription revenue on a constant currency basis

$

159,206

 

 

$

112,176

 

 

41.9%

 

 

 

 

 

 

GAAP subscription revenue

$

656,832

 

 

$

543,318

 

 

20.9%

Adjustment for currency impact

(8,129

)

 

 

 

 

Non-GAAP subscription revenue on a constant currency basis

$

648,703

 

 

$

543,318

 

 

19.4%

 

 

 

 

 

 

GAAP training and services revenue

$

91,146

 

 

$

71,942

 

 

26.7%

Adjustment for currency impact

(1,433

)

 

 

 

 

Non-GAAP training and services revenue on a constant currency basis

$

89,713

 

 

$

71,942

 

 

24.7%

 

 

 

 

 

 

GAAP total subscription and training and services revenue

$

747,978

 

 

$

615,260

 

 

21.6%

Adjustment for currency impact

(9,562

)

 

 

 

 

 

Non-GAAP total subscription and training and services revenue on a constant currency basis

$

738,416

 

 

$

615,260

 

 

20.0%

 

 

 

 

 

 

 

Nine Months Ended

 

November 30,

 

November 30,

 

Year-Over-Year

 

2017

 

2016

 

Growth Rate

GAAP subscription revenue by offering type:

 

 

 

 

 

Infrastructure-related offerings

$

1,440,383

 

 

$

1,261,359

 

 

14.2%

Adjustment for currency impact

(3,599

)

 

 

 

 

Non-GAAP Infrastructure-related subscription revenue on a constant currency basis

$

1,436,784

 

 

$

1,261,359

 

 

13.9%

 

 

 

 

 

 

Application Development-related and other emerging technology offerings

$

450,519

 

 

$

314,833

 

 

43.1%

Adjustment for currency impact

(2,491

)

 

 

 

 

Non-GAAP Application Development-related and other emerging technology subscription revenue on a constant currency basis

$

448,028

 

 

$

314,833

 

 

42.3%

 

 

 

 

 

 

GAAP subscription revenue

$

1,890,902

 

 

$

1,576,192

 

 

20.0%

Adjustment for currency impact

(6,090

)

 

 

 

 

Non-GAAP subscription revenue on a constant currency basis

$

1,884,812

 

 

$

1,576,192

 

 

19.6%

 

 

 

 

 

 

GAAP training and services revenue

$

257,227

 

 

$

206,771

 

 

24.4%

Adjustment for currency impact

(996

)

 

 

 

 

Non-GAAP training and services revenue on a constant currency basis

$

256,231

 

 

$

206,771

 

 

23.9%

 

 

 

 

 

 

GAAP total subscription and training and services revenue

$

2,148,129

 

 

$

1,782,963

 

 

20.5%

Adjustment for currency impact

(7,086

)

 

 

 

 

Non-GAAP total subscription and training and services revenue on a constant currency basis

$

2,141,043

 

 

$

1,782,963

 

 

20.1%

 

RED HAT, INC.

SUPPLEMENTAL INFORMATION

(Unaudited)

(In thousands)

 

 

 

 

 

Change in deferred revenue balances:

 

 

 

 

 

Deferred Revenue

 

Current

 

Long-Term

 

Total

Balance at November 30, 2016

$

1,225,421

 

 

$

482,557

 

 

$

1,707,978

 

Constant currency change in deferred revenue

210,575

 

 

117,832

 

 

328,407

 

Impact from foreign currency translation

46,432

 

 

22,761

 

 

69,193

 

Balance at November 30, 2017

$

1,482,428

 

 

$

623,150

 

 

$

2,105,578

 

 

 

 

 

 

 

Year-over-year growth rate

21.0

%

 

29.1

%

 

23.3

%

Year-over-year growth rate on a constant currency basis

17.2

%

 

24.4

%

 

19.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue growth by geographical segment:

 

 

 

 

 

Americas

 

EMEA

 

APAC

 

Consolidated

Total revenue for the three months ended November 30, 2017

$

471,773

 

 

$

173,718

 

 

$

102,487

 

 

$

747,978

Adjustment for currency impact

(85

)

 

(11,478

)

 

2,001

 

 

(9,562

)

Total revenue on a constant currency basis for the three months ended November 30, 2017

$

471,688

 

 

$

162,240

 

 

$

104,488

 

 

$

738,416

 

 

 

 

 

 

 

 

 

Total revenue for the three months ended November 30, 2016

$

393,589

 

 

$

132,568

 

 

$

89,103

 

 

$

615,260

 

 

 

 

 

 

 

 

 

Year-over-year growth rate

19.9

%

 

31.0

%

 

15.0

%

 

21.6

%

Year-over-year growth rate on a constant currency basis

19.8

%

 

22.4

%

 

17.3

%

 

20.0

%

 

 

 

 

 

 

 

 

Total revenue for the nine months ended November 30, 2017

$

1,373,512

 

 

$

477,110

 

 

$

297,507

 

 

$

2,148,129

 

Adjustment for currency impact

(953

)

 

(10,758

)

 

4,625

 

 

(7,086

)

Total revenue on a constant currency basis for the nine months ended November 30, 2017

$

1,372,559

 

 

$

466,352

 

 

$

302,132

 

 

$

2,141,043

 

 

 

 

 

 

 

 

 

Total revenue for the nine months ended November 30, 2016

$

1,144,841

 

 

$

384,334

 

 

$

253,788

 

 

$

1,782,963

 

 

 

 

 

 

 

 

 

Year-over-year growth rate

20.0

%

 

24.1

%

 

17.2

%

 

20.5

%

Year-over-year growth rate on a constant currency basis

19.9

%

 

21.3

%

 

19.0

%

 

20.1

%

 

  • About Red Hat
  • Red Hat is the world's leading provider of open source software solutions, using a community-powered approach to provide reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training, and consulting services. As a 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 the ability of the Company to compete effectively; the ability to deliver and stimulate demand for new products and technological innovations on a timely basis; delays or reductions in information technology spending; the integration of acquisitions and the ability to market successfully acquired technologies and products; fluctuations in exchange rates; the effects of industry consolidation; 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; risks related to the security of our offerings and other data security vulnerabilities; changes in and a dependence on key personnel; the ability to meet financial and operational challenges encountered in our international operations; and ineffective management of, and control over, the Company's growth and international operations, 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.