Red Hat, Inc. (Nasdaq:RHAT), the global leader in Linux and open source solutions, today reported an adjusted net income of $1,300,000, or $0.01 per share, excluding amortization of goodwill and stock based compensation and restructuring charges, for the third quarter of fiscal 2002, compared to an adjusted net loss of $100,000, or break even per share, for the second quarter of fiscal 2002.
The company reported revenue of $21.5 million for the third quarter ended November 30, 2001, an increase of 2% over the second quarter of fiscal 2002.
On a GAAP basis, the company reported a net loss of $15 million, or $0.09 per share, compared with a net loss of $55.3 million, or $0.33 per share in the second quarter fiscal 2002.
For the last nine months ended on November 30, 2001, the company reported revenues of $68.2 million, a decrease of 10% over the same period in year 2000. In terms of earnings, for the last nine months ended on November 30, 2001, the company reported an adjusted net income of $1,800,000, or $0.01 per share, compared to an adjusted net loss of $10,000,000, or $0.06 per share, for the last nine months of last year. On a GAAP basis, the company reported a net loss of $97.9 million - or $0.58 per share - for the last nine months ended on November 30, 2001, compared to a net loss of $62.5 million - or $0.38 per share - for the last nine months of last year.
"Significant growth of Enterprise Subscription and Open Source Services revenues are validating the acceptance of Red Hat Linux as an Enterprise Computing Platform and Red Hat's ability to monetize the adoption of Red Hat Linux by the Large Enterprise", stated Kevin Thompson, Executive Vice President and Chief Financial Officer.
RED HAT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Excludes amortization of goodwill and intangibles, stock-based compensation, merger, acquisition and other costs, and restructuring charges) (In thousands - except per share amounts) Three Months Ended Nine Months Ended November 30, August 31, November 30, November 30, 2001 2001 2001 2000 (Unaudited) (Unaudited) Subscription and services revenue: Subscription: Enterprise $ 9,447 $ 8,422 $ 27,591 $ 26,771 Embedded 1,443 1,573 4,648 6,938 Total subscription revenue 10,890 9,995 32,239 33,709 Services: Network consulting 2,370 3,682 11,248 18,702 Embedded development services 2,889 3,489 11,076 14,180 Open source services 5,327 3,959 13,641 9,041 Total services revenue 10,586 11,130 35,965 41,923 Total subscription and services revenue 21,476 21,125 68,204 75,632 Cost of subscription and services revenue: Subscription: Enterprise 2,081 2,326 7,063 9,667 Embedded 145 146 665 1,412 Total cost of subscription revenue 2,226 2,472 7,728 11,079 Services: Network consulting 1,923 2,049 7,084 12,314 Embedded development services 1,738 1,251 5,355 8,228 Open source services 2,628 2,226 7,477 4,627 Total cost of services revenue 6,289 5,526 19,916 25,169 Total cost of subscription and services revenue 8,515 7,998 27,644 36,248 Gross profit on subscription and services revenue 12,961 13,127 40,560 39,384 Hardware resale, net - - - 131 Operating expense: Sales and marketing 8,019 9,329 28,032 37,221 Research and development 3,717 4,213 12,227 11,935 General and administrative 3,412 3,662 10,445 16,553 Total operating expense 15,148 17,204 50,704 65,709 Loss from operations (2,187) (4,077) (10,144) (26,194) Other interest income (expense), net 3,514 3,984 11,979 16,168 Net Income (loss) $ 1,327 $ (93) $ 1,835 $ (10,026) Net Income (loss) per common share: Basic $0.01 ($0.00) $0.01 ($0.06) Diluted $0.01 ($0.00) $0.01 ($0.06) Weighted average shares outstanding: Basic 169,242 169,968 169,405 163,515 Diluted 169,242 169,968 169,405 163,515 RED HAT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands - except per share amounts) Three Months Ended Nine Months Ended November 30, August 31, November 30, November 30, 2001 2001 2001 2000 (Unaudited) (Unaudited) Subscription and services revenue: Subscription: Enterprise $ 9,447 $ 8,422 $ 27,591 $ 26,771 Embedded 1,443 1,573 4,648 6,938 Total subscription revenue 10,890 9,995 32,239 33,709 Services: Network consulting 2,370 3,682 11,248 18,702 Embedded development services 2,889 3,489 11,076 14,180 Open source services 5,327 3,959 13,641 9,041 Total services revenue 10,586 11,130 35,965 41,923 Total subscription and services revenue 21,476 21,125 68,204 75,632 Cost of subscription and services revenue: Subscription: Enterprise 2,081 2,326 7,063 9,667 Embedded 145 146 665 1,412 Total cost of subscription revenue 2,226 2,472 7,728 11,079 Services: Network consulting 1,923 2,049 7,084 12,314 Embedded development services 1,738 1,251 5,355 8,228 Open source services 2,628 2,226 7,477 4,627 Total cost of services revenue 6,289 5,526 19,916 25,169 Total cost of subscription and services revenue 8,515 7,998 27,644 36,248 Gross profit on subscription and services revenue 12,961 13,127 40,560 39,384 Hardware resale, net - - - 131 Operating expense: Sales and marketing 8,019 9,329 28,032 37,221 Research and development 3,717 4,213 12,227 11,935 General and administrative 3,412 3,662 10,445 16,553 Amortization of goodwill and intangibles 12,468 14,911 44,707 33,617 Stock-based compensation 1,506 3,171 8,353 11,938 Merger, acquisition and other - - 7,156 6,914 Restructuring charges 2,409 37,175 39,584 - Total operating expense 31,531 72,461 150,504 118,178 Loss from operations (18,570) (59,334) (109,944) (78,663) Other interest income (expense), net 3,514 3,984 11,979 16,168 Net Income (loss) $ (15,056) $ (55,350) $ (97,965) $ (62,495) Net Income (loss) per common share: Basic ($0.09) ($0.33) ($0.58) ($0.38) Diluted ($0.09) ($0.33) ($0.58) ($0.38) Weighted average shares outstanding: Basic 169,242 169,968 169,405 163,515 Diluted 169,242 169,968 169,405 163,515 RED HAT, INC. CONSOLIDATED BALANCE SHEETS (In thousands) ASSETS November, 30 February 28, 2001 2001 Assets: Cash and investments in debt and equity securities $ 291,634 $ 302,681 Accounts receivable, net 15,127 21,826 Subcontractor receivable 567 3,441 Costs and estimated earnings in excess of billings 5,155 3,378 Inventory 1,060 740 Prepaid expenses and other assets 7,443 11,197 Property and equipment, net 16,296 14,591 Goodwill and intangibles, net 70,100 147,397 Total assets $ 407,382 $ 505,251 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts payable $ 8,038 $ 9,681 Accrued expenses 8,419 15,916 Deferred revenue 9,773 12,151 Other short-term liabilities 11,200 3,221 Total liabilities 37,430 40,969 Commitments and contingencies - - Stockholders' equity: Noncontrolling interest in subsidiary 86 - Preferred stock - - Common stock 17 17 Additional paid-in capital 627,945 643,712 Deferred compensation (9,785) (36,051) Accumulated deficit (241,554) (143,589) Treasury stock, at cost (6,672) - Accumulated other comprehensive income (loss) (85) 193 Total stockholders' equity 369,952 464,282 Total liabilities and stockholders' equity $ 407,382 $ 505,251
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, 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.
