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RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)--March 27, 2000--Red Hat, Inc. (Nasdaq: RHAT), the leading provider of open source solutions for Internet infrastructure, today reported revenue of $13.1 million for the fourth quarter ended February 29, 2000, a 39% increase over revenue of $9.4 million for the fourth quarter last year.
Revenue for the fourth quarter was 24% higher than third quarter revenue of $10.5 million. Results for the quarter and the year are consolidated for the acquisitions of Cygnus Solutions and Hell's Kitchen Systems, Inc., both of which were completed in January, 2000.
Adjusting for non-cash charges and one-time acquisition expenses, the Company reported a net loss for the fourth quarter of fiscal 2000 of $5.6 million, or $0.04 per share. Before these adjustments, the net loss was $24.6 million, or $0.17 per share, compared with a net loss of $1.2 million, or $0.03 per share, for the fourth quarter of fiscal 1999.
Revenue for the year ended February 29, 2000 was $42.4 million, a 28% increase compared to revenue of $33.0 million for fiscal 1999. Adjusting for non-cash charges and one-time acquisition expenses, the Company reported a net loss for fiscal 2000 of $19.2 million, or $0.19 per share. Before these adjustments, the net loss for the year was $39.9 million, or $0.40 per share, compared with a net loss of $5.8 million, or $0.12 per share, for fiscal 1999.
Commenting on the results, Matthew Szulik, president and CEO of Red Hat, Inc., said, "Demand for Red Hat products and services is strong in ISPs, Web hosting companies and manufacturers of Internet devices. Post the consolidation of our recent acquisitions, Red Hat is in position to accelerate revenue and margin growth on a global basis." -0- *T
Highlights of the fourth quarter include:
About Red Hat
Founded in 1994, Red Hat (NASDAQ:RHAT), the leader in open source solutions for Internet infrastructure, delivers the benefits of open source to computing devices ranging from small embedded appliances to workstations and servers. Red Hat plies its technological leadership to create open source solutions for Internet infrastructure and post-PC environments, offers services backed by the best understanding of open source and the most comprehensive resources, delivers the brand of a widely trusted open source leader and corporate partner, and persists in an indelible commitment to the virtues of open source to lead a revolution in the computing industry. Red Hat is based in Durham, N.C. and has offices worldwide. Visit Red Hat on the Web at www.redhat.com.
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, statements regarding current or future financial performance, management's plans and objectives for future operations, product plans and performance, management's assessment of market factors, and statements regarding the strategy and plans of the Company and its strategic partners, constitute forward-looking statements. These forward-looking statements are not guarantees of the Company's future performance and are subject to a number of risks and uncertainties that could cause the Company's actual results in the future materially to differ from the forward-looking statements. These risks and uncertainties include, without limitation, challenges associated with the Company's domestic and international expansion, shifting to a subscription-based model of product offerings, the difficulty of integrating newly-acquired companies, the possible failure to realize the beneficial synergies expected from such acquisitions, the Company's ability to attract new enterprise customers and to meet their needs by expanding and enhancing its service offerings, the need to continually enhance the Company's Web site and the ability to generate significant revenue from it, the Company's ability to enter into new and retain existing strategic alliances with technology leaders, the continuing need for an increasing number of Linux-based enterprise applications, the Company's dependence upon an open source business model, reliance upon independent enforceability of the GNU General Public License and other licenses under which the Company's products are developed and licensed, the risks of economic downturns generally, and in the Company's industry specifically, the risks associated with competition and competitive pricing pressures, the viability of the Internet, and other risks detailed in the Company'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.
RED HAT, INC.
Consolidated Statements of Operations
Three
months ended Year ended
February 29, February 29,
------------------------------------------
2000 1999 2000 1999
(Unaudited) (Unaudited)
Revenue
Subscription 7,500,468 5,764,841 23,960,187 22,102,923
Services 4,969,881 3,676,725 17,160,678 10,928,759
Web 637,754 - 1,306,638 -
---------- --------- ---------- ----------
Total revenue 13,108,103 9,441,566 42,427,503 33,031,682
---------- --------- ---------- ----------
Cost of revenue
Subscription 4,083,039 2,150,660 13,069,831 6,655,685
Services 2,742,704 1,592,651 9,071,079 6,059,904
Web 69,502 - 696,259 -
---------- ---------- ---------- ----------
Total cost of revenue 6,895,245 3,743,311 22,837,169 12,715,589
---------- --------- ---------- ----------
Gross profit 6,212,858 5,698,255 19,590,334 20,316,093
---------- --------- ---------- ----------
Operating expense
Sales and marketing 7,283,506 3,581,483 22,476,272 11,098,616
Research and
development 3,346,302 1,962,081 11,173,672 8,363,087
General and
administrative 3,467,912 1,041,802 9,088,508 5,732,225
Amortization of
goodwill and
intangibles 3,069,068 - 3,074,307 -
Stock-based
compensation 3,385,216 207,760 5,052,998 227,261
Mergers,
acquisitions
and other 12,513,434 - 12,637,321 -
---------- --------- ---------- ----------
Total
operating expense 33,065,438 6,793,126 63,503,078 25,421,189
---------- --------- ---------- ----------
Loss from
operations (26,852,580) (1,094,871)(43,912,744) (5,105,096)
Other income
(expense), net 2,296,445 (2,619) 4,364,703 39,367
----------- --------- ---------- ----------
Loss before
income taxes (24,556,135) (1,097,490)(39,548,041) (5,065,729)
Provision for
income taxes 53,344 126,882 294,325 722,216
----------- --------- ---------- ----------
Net loss (24,609,479) (1,224,372)(39,842,366) (5,787,945)
----------- --------- ---------- ----------
Accretion on
mandatorily redeemable
preferred stock - 23,614 82,473 39,356
Net loss available
to common
stockholders (24,609,479) (1,247,986)(39,924,839) (5,827,301)
=========== ========== =========== ==========
Net loss per
common share
Basic (0.1689) (0.0259) (0.3968) (0.1224)
Diluted (0.1689) (0.0259) (0.3968) (0.1224)
Weighted average common
shares outstanding
Basic 145,694,248 48,209,616 100,610,498 47,628,096
Diluted 145,694,248 48,209,616 100,610,498 47,628,096
RED HAT, INC.
Consolidated Balance Sheets
February 29, February 28,
2000 1999
Assets
Current assets:
Cash and cash equivalents $242,426,032 $19,485,586
Short-term investments 27,460,222 2,037,992
Accounts receivable, net 8,907,897 5,895,173
Inventory 488,977 345,630
Prepaid expenses 1,732,973 812,665
Other current assets 142,000 -
------------ ------------
Total current assets 281,158,101 28,577,046
Property and equipment, net 7,909,103 3,921,798
Goodwill and intangibles, net 58,361,518 -
Long-term investments 72,354,212 -
Other assets 4,765,859 232,379
------------ ------------
Total assets $424,548,793 $32,731,223
Liabilities and
stockholders' equity
Current liabilities:
Accounts payable 10,774,546 2,584,489
Royalties payable 115,117 144,074
Accrued expenses 8,585,019 3,209,080
Deferred revenue 11,030,337 6,096,465
Short-term notes payable - 1,509,936
Current portion of capital
lease obligations 366,062 139,112
------------ ------------
Total current liabilities 30,871,081 13,683,156
Capital lease obligations 230,516 482,796
Long-term notes payable - 916,667
Commitments and contingencies -
Mandatorily redeemable
preferred stock
Series A - 1,992,184
Series B - 6,919,644
Series C - 3,195,591
Series B Cygnus - 6,252,000
Stockholders' equity (deficit):
Preferred stock - 7,728,094
Common stock 15,334 4,887
Additional paid-in capital 477,781,234 5,265,667
Shareholder receivables (66,899) (2,857,355)
Deferred compensation (35,159,127) (1,188,155)
Accumulated other
comprehensive income (515,868) -
Accumulated deficit (48,607,478) (9,663,953)
------------ ------------
Total stockholders'
equity (deficit) 393,447,196 (710,815)
------------ ------------
Total liabilities and
stockholders' equity 424,548,793 32,731,223
============ ============
CONTACT: Red Hat, Inc.
Hal Covert, Chief Financial Officer
919/547-0012 x215
hcovert@redhat.com
or
INVESTOR CONTACT:
Lippert/Heilshorn & Associates
John Heilshorn/Jody Burfening
212/838-3777
john@lhai.com/jody@lhai.com
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