Red Hats Gross Income Grows, Net Disappoints

By Steven Vaughan-Nichols  |  Posted 2007-03-30 Print this article Print

Red Hat did a great deal more business in its latest quarter, but its net-income drop disappointed analysts and the market.

Red Hat Inc. reported its financial results today for its fourth fiscal quarter and full fiscal year, both of which ended Feb. 28. While total revenue was up, the market was disappointed at the report that net income for the quarter fell about 25 percent year-over-year. Specifically, Q4 net income dropped from $28.75 million (13 cents per share) in 2006 to $21.5 million (10 cents per share) in 2007. Total revenue for the quarter was $111.1 million, an increase of 41 percent year-over-year and up 5 percent from the prior quarter. Subscription revenue was $95.9 million, up 44 percent year-over-year and 8 percent sequentially. For the full year, total revenue was $400.6 million, an increase of 44 percent over fiscal 2006 revenue, and subscription revenue was $341.2 million, up 48 percent from the prior year.
Non-GAAP (generally accepted accounting principles) adjusted net income for the quarter was $32.7 million, or 15 cents per diluted share, after adjusting for stock compensation and tax expense. This compares to non-GAAP adjusted net income of $29.6 million, or 14 cents per diluted share, in the prior quarter.
The Thomson financial analyst survey, though, had predicted GAAP earnings of 15 cents a share, on $113 million in revenue. As a result, Red Hats stock dropped slightly both before and after the bell. For the full year, net income was $59.9 million (29 cents per diluted share), compared with $79.7 million (41 cents) in the prior year. Non-GAAP adjusted net income for the year was $113.6 million (54 cents), compared to $77.9 million (40 cents) the year before. Read the full story on Red Hats Gross Income Grows, Net Disappoints
Steven J. Vaughan-Nichols is editor at large for Ziff Davis Enterprise. Prior to becoming a technology journalist, Vaughan-Nichols worked at NASA and the Department of Defense on numerous major technological projects. Since then, he's focused on covering the technology and business issues that make a real difference to the people in the industry.

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