Open source vendor sees 11% rev rise
Open source software vendor Red Hat has posted better than expected results for quarter one of fiscal year 2010. The firm turned over revenue of $174.4m, an 11% rise over the year ago quarter.
Net income was also up for the quarter – up to $18.5m from $17.3m for the same period a year ago. The figures were boosted by a 14% year on year rise in subscription revenue to $148.8m.
“We are pleased to report better than expected revenue and EPS results in Q1,” said Jim Whitehurst, president and CEO of Red Hat. “Red Hat’s growth is driven in part by our ability to help enterprise customers save money in a challenging IT spending environment. Our open source solutions drive new capabilities, efficiencies and functionality into the mission critical infrastructure of our customers.”
Operating cash flow stood at $61.2m compared to £63.4m last year. Total cash, cash equivalents and investments as of May 31, 2009 were $884.5m.
“While we remain focused on managing discretionary costs and improving efficiencies, we also continue to invest in growth opportunities in middleware, virtualisation and cloud computing,” said Charlie Peters, Executive VP and CFO of Red Hat.
“These efforts combined with solid top line growth contributed to non-GAAP operating income growth of 19% year-over-year and healthy cash flow. In the quarter, we repurchased $47m of common stock while strengthening our balance sheet with a 5% sequential increase in cash and investments,” Peters said. “On a year-over-year basis, we have reduced our diluted shares outstanding by approximately 11%.”
Red Hat confirmed during a conference call that its top 25 contracts that were up for renewal all renewed in deals that are worth 20% more to the company.
It seems that Red Hat’s open source approach is appealing to customers during the recession – proprietary software suppliers such as Microsoft and Oracle have both reported dips in revenue in recent times.