Red Hat reported financial results for its fiscal year 2010 third quarter, showing revenues up 18 percent.
For its third quarter ended November 30, 2009, Red Hat reported revenues of $194.3 million, up 18 percent over the same period a year ago and beating expectations. Meanwhile, the open source software company reported that subscription revenue for the quarter was $164.4 million, up 21 percent from last year.
"Continued solid execution drove another quarter of strong results for Red Hat. Our double digit growth in the current economic environment was driven by our compelling value proposition and outstanding service," said Jim Whitehurst, president and CEO of Red Hat, in a statement. "Our customer focus has clearly differentiated us from the competition. Red Hat was recently ranked as number one among software vendors by IT executives for the fifth time in six years in the Ziff Davis CIO Insight Study, with the highest marks for reliability and value. We also continued to introduce new products, including the November release of RHEV [the Red Hat Enterprise Virtualization management solution] that advances our position in server virtualization and cloud computing. RHEV provides customers the choice of a high-value, low cost, open management solution that was not previously available in the $2 billion virtualization market."
In a call with analysts regarding Red Hat's earnings, Whitehurst noted that the third quarter results were "above the high end of our guidance." Added Whitehurst: "Throughout this economic downturn we've continued to deliver solid results because our value proposition to customers has proven to be superior to that of our competitors."
Whitehurst also said Red Hat's strategic focus on the data center has paid off with successes in key areas such as the recently announced RHEV and Red Hat's cloud initiatives. Whitehurst said Red Hat entered into a major cloud deal with "a major movie studio," a six-figure deal with an application vendor utilizing Red Hat Enterprise Linux as the foundation for a Software-as-a-Service solution, and a deal with NTT in Japan to deliver a beta version of a public cloud project for the telecommunications giant.
"Strong bookings, particularly in North America, led to strong billings and greater than 20 percent growth in subscription revenue and deferred revenue, as well as further improvement of non-GAAP operating margins," said Charlie Peters, executive vice president and chief financial officer of Red Hat, in a statement. "This type of consistent performance, combined with our strong balance sheet, led to our third debt rating upgrade in 20 months by Standard and Poor's rating agency."
On the analyst call, Peters said Red Hat signed 14 deals worth more than $1 million and one deal worth more than $5 million during the quarter.