-
First quarter revenue of $265 million, up 27% year-over-year
-
First quarter GAAP EPS of $0.17, up 42% year-over-year; non-GAAP
EPS of $0.24, up 33% year-over-year
-
First quarter deferred revenue of $786, up 26% year-over-year
-
First quarter operating cash flow of $90 million, up 49%
year-over-year
RALEIGH, N.C.--(BUSINESS WIRE)--
Red Hat, Inc. (NYSE: RHT), the world's leading provider of open source
solutions, today announced financial results for its fiscal year 2012
first quarter ended May 31, 2011.
Total revenue for the quarter was $264.7 million, an increase of 27%
from the year ago quarter. Subscription revenue for the quarter was
$225.5 million, up 26% year-over-year.
"Red Hat has begun fiscal year 2012 with a strong first quarter
including year-over-year billings growth of 28% that contributed to
revenue and profitability that exceeded the high-end of our
expectations," stated Jim Whitehurst, President and Chief Executive
Officer of Red Hat. "We believe there is a fundamental shift in IT
spending, in which cloud computing and virtualization have become key
strategic priorities. We believe that Red Hat is well positioned to
capitalize on this growing demand as enterprise customers look to Red
Hat when upgrading and modernizing their IT infrastructure."
GAAP operating income for the first quarter was $45.4 million, or a
17.1% operating margin. After adjusting for stock compensation and
amortization expenses as detailed in the tables below, non-GAAP
operating income for the first quarter was $66.5 million, up 28%
year-over-year. Non-GAAP operating margin was 25.1%, up 30 basis points
from the year ago quarter.
Net income for the quarter was $32.5 million, or $0.17 per diluted
share, compared with $24.1 million, or $0.12 per diluted share, in the
year ago quarter. After adjusting for stock compensation and
amortization expenses as detailed in the tables below, non-GAAP net
income for the quarter was $47.0 million, or $0.24 per diluted share, as
compared to $35.6 million, or $0.18 per diluted share, in the year ago
quarter.
Operating cash flow was $90.2 million for the first quarter, as compared
to $60.6 million in the year ago quarter. At quarter end, the company's
total deferred revenue balance was $786.0 million, an increase of 26% on
a year-over-year basis. Total cash, cash equivalents and investments as
of May 31, 2011 was $1.27 billion.
"Strong sales execution, focused spending and good collections drove 49%
growth in operating cash flow year-over-year," stated Charlie Peters,
Executive Vice President and Chief Financial Officer of Red Hat. "Red
Hat grew first quarter non-GAAP operating income by 28% year-over-year
even as we ramped up marketing spending for the Red Hat Summit and
product launches, and continued investments in R&D to enable further
broadening of our product portfolio. We introduced innovative new cloud
technologies such as OpenShift, our PaaS offering, and CloudForms, our
IaaS offering. In addition, we enhanced our core products, including the
release of Red Hat Enterprise Linux 6.1 and strengthened our
partnerships with the launch of Open Virtualization Alliance."
Additional information on Red Hat's reported results, including a
reconciliation of the non-GAAP adjusted results, are included in the
financial tables below. A live webcast of Red Hat's results will begin
at 5:00 pm ET today and can be accessed by the general public at Red
Hat's investor relations website at http://investors.redhat.com.
A replay of the webcast will be available shortly after the live event
has ended.
About Red Hat, Inc.
Red Hat, the world's leading provider of open source solutions and an
S&P 500 company, is headquartered in Raleigh, NC with over 70 offices
spanning the globe. CIOs ranked Red Hat as one of the top vendors
delivering value in Enterprise Software for seven consecutive years in
the CIO Insight Magazine Vendor Value survey. Red Hat provides
high-quality, affordable technology with its operating system platform,
Red Hat Enterprise Linux, together with virtualization, applications,
management and Services Oriented Architecture (SOA) solutions, including
Red Hat Enterprise Virtualization and JBoss Enterprise Middleware. Red
Hat also offers support, training and consulting services to its
customers worldwide. Learn more: http://www.redhat.com.
Forward-Looking Statements
Certain statements contained in this press release may constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements
provide current expectations of future events based on certain
assumptions and include any statement that does not directly relate to
any historical or current fact. Actual results may differ materially
from those indicated by such forward-looking statements as a result of
various important factors, including: risks related to delays or
reductions in information technology spending, the effects of industry
consolidation, uncertainty and adverse results in litigation and related
settlements, the integration of acquisitions and the ability to market
successfully acquired technologies and products; the ability of the
Company to effectively compete; the inability to adequately protect
Company intellectual property and the potential for infringement or
breach of license claims of or relating to third party intellectual
property; the ability to deliver and stimulate demand for new products
and technological innovations on a timely basis; risks related to data
and information security vulnerabilities; ineffective management of, and
control over, the Company's growth and international operations;
fluctuations in exchange rates; and changes in and a dependence on key
personnel, as well as other factors contained in our most recent Annual
Report on Form 10-K (copies of which may be accessed through the
Securities and Exchange Commission's website at http://www.sec.gov),
including those found therein under the captions "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results
of Operations". In addition to these factors, actual future performance,
outcomes, and results may differ materially because of more general
factors including (without limitation) general industry and market
conditions and growth rates, economic and political conditions,
governmental and public policy changes and the impact of natural
disasters such as the earthquakes and related events in Japan. The
forward-looking statements included in this press release represent the
Company's views as of the date of this press release and these views
could change. However, while the Company may elect to update these
forward-looking statements at some point in the future, the Company
specifically disclaims any obligation to do so. These forward-looking
statements should not be relied upon as representing the Company's views
as of any date subsequent to the date of the press release.
LINUX is a trademark of Linus Torvalds. and
JBoss are registered trademarks of and its subsidiaries in the US and
other countries.
|
RED HAT, INC.
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(Unaudited)
|
|
(In thousands - except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
May 31,
|
|
May 31,
|
|
|
|
2011
|
|
2010
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Subscriptions
|
|
$225,533
|
|
$179,076
|
|
Training and services
|
|
39,213
|
|
30,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total subscription, training and services revenue
|
|
264,746
|
|
209,144
|
|
|
|
|
|
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Subscriptions
|
|
15,239
|
|
12,664
|
|
Training and services
|
|
27,208
|
|
20,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of subscription, training and services revenue
|
|
42,447
|
|
33,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross profit
|
|
222,299
|
|
175,906
|
|
|
|
|
|
|
|
Operating expense:
|
|
|
|
|
|
Sales and marketing
|
|
97,325
|
|
74,564
|
|
Research and development
|
|
48,288
|
|
40,658
|
|
General and administrative
|
|
31,327
|
|
26,445
|
|
|
|
|
|
|
|
Total operating expense
|
|
176,940
|
|
141,667
|
|
|
|
|
|
|
|
Income from operations
|
|
45,359
|
|
34,239
|
|
Interest income
|
|
1,936
|
|
1,663
|
|
Other income (expense), net
|
|
(266)
|
|
1,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for income taxes
|
|
47,029
|
|
37,032
|
|
Provision for income taxes
|
|
14,579
|
|
12,961
|
|
|
|
|
|
|
|
Net income
|
|
$32,450
|
|
$24,071
|
|
|
|
|
|
|
|
Net income-diluted
|
|
$32,450
|
|
$24,071
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
Basic
|
|
$0.17
|
|
$0.13
|
|
Diluted
|
|
$0.17
|
|
$0.12
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
Basic
|
|
193,155
|
|
187,926
|
|
Diluted
|
|
196,287
|
|
193,266
|
|
RED HAT, INC.
|
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
May 31,
|
|
February 28,
|
|
|
|
2011
|
|
2011
|
|
|
|
(Unaudited)
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$710,223
|
|
$642,630
|
|
Investments in debt and equity securities
|
|
200,258
|
|
217,970
|
|
Accounts receivable, net
|
|
154,939
|
|
184,741
|
|
Deferred tax assets, net
|
|
75,192
|
|
75,720
|
|
Prepaid expenses
|
|
66,607
|
|
62,364
|
|
Other current assets
|
|
1,016
|
|
1,133
|
|
|
|
|
|
|
|
Total current assets
|
|
1,208,235
|
|
1,184,558
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
77,754
|
|
75,558
|
|
Goodwill
|
|
465,563
|
|
463,673
|
|
Identifiable intangibles, net
|
|
106,461
|
|
109,932
|
|
Investments in debt securities
|
|
356,260
|
|
331,791
|
|
Other assets, net
|
|
33,568
|
|
33,810
|
|
|
|
|
|
|
|
Total assets
|
|
$2,247,841
|
|
$2,199,322
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$16,357
|
|
$16,285
|
|
Accrued expenses
|
|
85,052
|
|
90,229
|
|
Deferred revenue
|
|
584,348
|
|
572,637
|
|
Other current obligations
|
|
340
|
|
650
|
|
|
|
|
|
|
|
Total current liabilities
|
|
686,097
|
|
679,801
|
|
|
|
|
|
|
|
Deferred lease credits
|
|
5,113
|
|
5,215
|
|
Long term deferred revenue
|
|
201,693
|
|
199,617
|
|
Other long term obligations
|
|
24,435
|
|
23,990
|
|
Stockholders' equity:
|
|
|
|
|
|
Common stock
|
|
22
|
|
22
|
|
Additional paid-in capital
|
|
1,633,083
|
|
1,610,238
|
|
Retained earnings
|
|
277,500
|
|
245,050
|
|
Treasury stock, at cost
|
|
(581,738)
|
|
(562,792)
|
|
Accumulated other comprehensive (loss) income
|
1,636
|
|
(1,819)
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
1,330,503
|
|
1,290,699
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$2,247,841
|
|
$2,199,322
|
|
RED HAT, INC.
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
May 31,
|
|
May 31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income
|
|
$32,450
|
|
$24,071
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
12,739
|
|
11,722
|
|
Share-based compensation expense
|
|
16,187
|
|
13,174
|
|
Deferred income taxes
|
|
11,055
|
|
8,352
|
|
Excess tax benefits from share-based payment arrangements
|
|
(8,560)
|
|
(11,007)
|
|
Gain on sale of available-for-sale equity securities
|
|
(644)
|
|
(516)
|
|
Other
|
|
567
|
|
(203)
|
|
Changes in operating assets and liabilities net of effects of
acquisitions:
|
|
|
|
|
|
Accounts receivable
|
|
32,042
|
|
19,525
|
|
Prepaid expenses
|
|
(3,293)
|
|
(591)
|
|
Accounts payable
|
|
(90)
|
|
(5,069)
|
|
Accrued expenses
|
|
(3,849)
|
|
1,540
|
|
Deferred revenue
|
|
1,270
|
|
(1,058)
|
|
Other
|
|
338
|
|
704
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
90,212
|
|
60,644
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchase of available-for-sale debt securities
|
|
(180,850)
|
|
(110,343)
|
|
Proceeds from sales and maturities of available-for-sale debt
securities
|
|
172,583
|
|
198,318
|
|
Proceeds from sales of available-for-sale equity securities
|
|
665
|
|
548
|
|
Purchase of developed technologies and other intangible assets
|
|
(2,543)
|
|
(1,621)
|
|
Purchase of property and equipment
|
|
(8,657)
|
|
(6,722)
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
(18,802)
|
|
80,180
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Excess tax benefits from share-based payment arrangements
|
|
8,560
|
|
11,007
|
|
Proceeds from exercise of common stock options
|
|
5,043
|
|
37,688
|
|
Purchase of treasury stock
|
|
(18,946)
|
|
(74,362)
|
|
Payments related to net settlement of employee share-based
compensation awards
|
|
(9,033)
|
|
(7,055)
|
|
Payments on other borrowings
|
|
(594)
|
|
(877)
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
(14,970)
|
|
(33,599)
|
|
|
|
|
|
|
|
Effect of foreign currency exchange rates on cash and cash
equivalents
|
|
11,153
|
|
(16,973)
|
|
Net increase in cash and cash equivalents
|
|
67,593
|
|
90,252
|
|
Cash and cash equivalents at beginning of the period
|
|
642,630
|
|
388,118
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$710,223
|
|
$478,370
|
|
RED HAT, INC.
|
|
RECONCILIATION OF CERTAIN GAAP RESULTS TO NON-GAAP ADJUSTED
RESULTS
|
|
(Unaudited)
|
|
(In thousands - except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non cash share-based compensation expense included in Consolidated
Statements of Operations:
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
May 31,
|
|
May 31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
Cost of revenue
|
|
$1,790
|
|
$1,191
|
|
Sales and marketing
|
|
5,571
|
|
3,776
|
|
Research and development
|
|
4,193
|
|
3,355
|
|
General and administration
|
|
4,633
|
|
4,852
|
|
Total share-based compensation expense
|
|
$16,187
|
|
$13,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets expense included in Consolidated
Statements of Operations:
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
May 31,
|
|
May 31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
Cost of revenue
|
|
$979
|
|
$704
|
|
Sales and marketing
|
|
1,959
|
|
2,086
|
|
Research and development
|
|
1,157
|
|
925
|
|
General and administration
|
|
846
|
|
822
|
|
Total amortization of intangible assets expense
|
|
$4,941
|
|
$4,537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
May 31,
|
|
May 31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
GAAP net income
|
|
$32,450
|
|
$24,071
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
14,579
|
|
12,961
|
|
|
|
|
|
|
|
GAAP income before provision for income taxes
|
|
$47,029
|
|
$37,032
|
|
|
|
|
|
|
|
Add: Non-cash share-based compensation expense
|
|
16,187
|
|
13,174
|
|
Add: Amortization of intangible assets
|
|
4,941
|
|
4,537
|
|
|
|
|
|
|
|
Non-GAAP adjusted income before provision for income taxes
|
|
$68,157
|
|
$54,743
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
21,129
|
|
19,160
|
|
|
|
|
|
|
|
Non-GAAP adjusted net income
|
|
$47,028
|
|
$35,583
|
|
|
|
|
|
|
|
Non-GAAP adjusted net income-diluted
|
|
$47,028
|
|
$35,583
|
|
|
|
|
|
|
|
Non-GAAP adjusted net income per share:
|
|
|
|
|
|
Basic
|
|
$0.24
|
|
$0.19
|
|
Diluted
|
|
$0.24
|
|
$0.18
|
|
RED HAT, INC.
|
|
RECONCILIATION OF CERTAIN GAAP RESULTS TO NON-GAAP ADJUSTED
RESULTS
|
|
(Unaudited)
|
|
(In thousands - except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP results to non-GAAP adjusted results
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
May 31,
|
|
May 31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
GAAP gross profit
|
|
$222,299
|
|
$175,906
|
|
|
|
|
|
|
|
Add: Non-cash share-based compensation expense
|
|
1,790
|
|
1,191
|
|
Add: Amortization of intangible assets
|
|
979
|
|
704
|
|
|
|
|
|
|
|
Non-GAAP gross profit
|
|
$225,068
|
|
$177,801
|
|
|
|
|
|
|
|
Non-GAAP gross margin
|
|
85.0%
|
|
85.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
May 31,
|
|
May 31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
GAAP operating expenses
|
|
$176,940
|
|
$141,667
|
|
|
|
|
|
|
|
Deduct: Non-cash share-based compensation expense
|
|
(14,397)
|
|
(11,983)
|
|
Deduct: Amortization of intangible assets
|
|
(3,962)
|
|
(3,833)
|
|
|
|
|
|
|
|
Non-GAAP adjusted operating expenses
|
|
$158,581
|
|
$125,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
May 31,
|
|
May 31,
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
GAAP operating income
|
|
$45,359
|
|
$34,239
|
|
|
|
|
|
|
|
Add: Non-cash share-based compensation expense
|
|
16,187
|
|
13,174
|
|
Add: Amortization of intangible assets
|
|
4,941
|
|
4,537
|
|
|
|
|
|
|
|
Non-GAAP adjusted operating income
|
|
$66,487
|
|
$51,950
|
|
|
|
|
|
|
|
Non-GAAP adjusted operating margin
|
|
25.1%
|
|
24.8%
|
Red Hat, Inc.
Media Contact:
Kara
Schiltz, 919-301-3002
kschiltz@redhat.com
or
Investor
Relations:
Tom McCallum, 919-754-4630
tmccallum@redhat.com
Source: Red Hat, Inc.
News Provided by Acquire Media