Red Hat Reports Second Quarter Re

• Revenue of US$164.4 Million, up 29 percent year-over-year
• Deferred Revenue of US$496.9 Million, up 32 percent year-over-year

MALAYSIA, 26 September 2008 – Red Hat, Inc. the world’s leading provider of open source solutions, has announced financial results for its fiscal year 2009 second quarter ended August 31, 2008.

“Our focused execution has delivered another quarter of solid growth and financial results,” stated Jim Whitehurst, President and Chief Executive Officer of Red Hat. “Also in Q2, we continued to execute on our virtualization strategy with our award winning RHEL platform as the solid, certified foundation. Our goal is for Red Hat to deliver a comprehensive virtualization solution from server to desktop which will enable our customers to deploy any application, anywhere, anytime.”

Total revenue for the quarter was US$164.4 million, an increase of 29 percent from the year ago quarter and 5 percent from the prior quarter. Subscription revenue for the quarter was US$135.7 million, up 24 percent year-over-year and 4 percent sequentially.

Net income for the quarter was US$21.1 million, or US$0.10 per diluted share, compared with US$18.2 million, or US$0.09 per diluted share, in the year ago quarter. Non-GAAP adjusted net income for the quarter was US$43.2 million, or US$0.20 per diluted share, after adjusting for stock compensation and tax expense as detailed in the tables below. This compares to non-GAAP adjusted net income of US$36.9 million, or US$0.17 per diluted share in the year ago quarter.

Operating cash flow totaled US$54.3 million, compared to US$49.2 million from the year ago quarter and US$63.4 million from the prior quarter. At quarter end, the company's total deferred revenue balance was US$496.9 million, an increase of 32 percent on a year-over-year basis and 1 percent sequentially. Total cash, cash equivalents and investments as of August 31, 2008 were US$1.4 billion.




Other highlights include the following:
• JBoss Enterprise Application Platform is now available along with Red Hat Enterprise Linux on the Amazon EC2 Cloud.
• Red Hat Enterprise Linux was named the 2008 Product of the Year by Channel Insider, in the Server Operating Systems category.
• Red Hat's annual customer and user event, the Red Hat Summit, was held in Boston this year to record attendance.
• In early September, Red Hat announced the acquisition of Qumranet, Inc. which is expected to accelerate the time to market to deliver an expanded virtualization solution portfolio to the rapidly growing virtualization market. This acquisition increases Red Hat's investment in and stewardship of core open source virtualization technology including KVM, the only hypervisor embedded in the Linux Kernel. The acquisition also establishes Red Hat in the nascent Virtual Desktop Infrastructure (VDI) market.

“Our performance this quarter demonstrated strong demand for our products and services, good execution, and the consistency of results afforded by our subscription business model,” stated Charlie Peters, Executive Vice President and Chief Financial Officer of Red Hat. “Key factors to our growth include the value message, the cost efficiencies of open source solutions and our world-class customer service.”