Letter to Shareholders

Dear Red Hat Stockholder:

I am pleased to report that the fourth quarter of fiscal 2018 marked our 64th consecutive quarter of revenue growth and was Red Hat’s first fiscal quarter to exceed $3 billion in annualized revenue run-rate. The fourth quarter capped-off a fiscal year of solid growth across a number of financial metrics and demonstrated execution of our hybrid cloud strategy. Demand remained strong for hybrid cloud technologies. Red Hat is one of the key beneficiaries based on the breadth and depth of our solutions portfolio that delivers significant business value to our customers.

Multi-product adoption and expansion across our portfolio helped drive annual subscription revenue growth of 21% in U.S. dollars. Subscription revenue from our Infrastructure-related offerings, which include our core Red Hat Enterprise Linux subscriptions, grew 15% in U.S. dollars; while our Application Development-related and other emerging technology offerings, which include our middleware and cloud technologies, grew 42% in U.S. dollars. Our Application Development-related and other emerging technology offerings made up 24% of subscription revenue.

Our customers continued to deploy our technologies to enable digital transformation and hybrid cloud environments. We believe that the next era of technology will be driven by container-based applications that span multi-cloud and hybrid cloud environments and that Kubernetes, containers and Linux will be the foundation of this transformation. We aim to extend our strategic position as a trusted vendor for our customers as they look to modernize their data centers and adopt Red Hat technologies to build, deploy and manage cloud-native applications.

In March 2018 Red Hat celebrated our 25th year as a company and we have grown to approximately 12,000 associates around the globe who are focused on extending our strategic position to deliver further growth next year and beyond. Thank you for your continued support as we enable our customers to build next generation IT infrastructure and applications using Red Hat’s technologies.