Red Hat Moves Into the Black

Open-Source Software and Linux provider Red Hat Inc. posted its first quarterly profit ever in its third fiscal-2002 quarter as enterprise demand for its Red Hat Linux Advanced Server and other products continued to outpace expectations.

The Raleigh, N.C., company last week reported net income of $305,000 for the quarter ended Nov. 30, up from a loss of $15.1 million in the same quarter last year. Red Hat also reported a 21 percent rise in revenue, to $24.3 million, in the quarter.

“We have also generated our second consecutive quarter of positive cash flow from operations, which was about $1 million in the third quarter, an increase of 74 percent, or $400,000, compared to … the second quarter,” said Kevin Thompson, Red Hats chief financial officer, in a teleconference presenting the results.

Matt Szulik, Red Hats chairman, president and CEO, said the companys Unix-to-Linux migration campaign, announced last year, continues to deliver. This was reflected in Advanced Server sales, which were up in the quarter, Szulik said. “Enterprise sales now account for 92 percent of our revenue, up from 78 percent a year ago, and we gained 1,000 new Advanced Server customers in the third quarter,” Szulik said.

Some 55 percent of Red Hats enterprise revenue came from software subscriptions, with 45 percent from services. This was a shift from the 49 percent revenue reported from subscriptions and 51 percent from services in the second quarter, Szulik said.