Red Hat Reports Its Best Results Yet

By Peter Galli  |  Posted 2003-09-18 Print this article Print

Red Hat reported that its second quarter financial results were the strongest since its inception as a listed company.

Open source and Linux provider Red Hat Inc. on Thursday reported its financial results for the second quarter of its fiscal year, which executives said were the strongest since its inception as a listed company. CEO Matt Szulik told the media and analysts via a teleconference that the company reported a significant rise in net operating profit to $240,000 in the quarter under review from a net operating loss of $1.1 million in the prior quarter and of $4.7 million in the second quarter of the previous year.
Net income for the quarter more than doubled to $3.3 million, or $0.02 a share, compared with the $1.5 million posted the previous quarter and a net loss of $1.9 million in the same quarter a year ago.
Revenue rose 6 percent in the quarter to $28.8 million from last quarters $27.2 million, and was up 36 percent year-over-year. "We generated $10.4 million, or $0.06 per share, in positive cash flow from operations during the second quarter, which represents an 89 percent increase from the first quarter and our fifth consecutive quarter of positive cash flow from operations," Szulik said. "We ended the second quarter with a cash and investment balance of $307 million. That is an increase of $7 million and a year-over-year increase of $18 million." Kevin Thompson, Red Hats chief financial officer, said sales of annual subscriptions for Red Hat Enterprise Linux technologies grew by 10 percent, or 2,300, to about 26,000, with some 1,700 of these being new Red Hat Enterprise Linux customers. Subscription revenues from enterprise technologies grew 21 percent quarter-on-quarter and 123 percent year-over-year. Renewal rates for the second quarter remained strong at 90 percent, Thompson said, adding that the company expects "a reasonable renewal rate of 75 percent going forward. Our strong quarterly operating results reflect the strong demand for standards-based Red Hat Enterprise Linux solutions in the enterprise," he said. Red Hat Chief Operating Officer Tim Buckley said many of the companys Red Hat Linux customers are upgrading to Enterprise Linux or have indicated that they will. Red Hat is also growing its federal government business and adding new customers in key vertical sectors. Regarding the legal issues swirling around Linux, Thompson said the purpose of Red Hats legal filing is to put all the issues on the table. "We are able to continue to grow our business despite all the noise. But to say it has not affected us would not be accurate; we continue to spend a lot of time with customers around this. Those who are sitting on the fence are using this as an excuse to continue to sit there," Thompson said.Discuss this in the eWeek forum.
Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at


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