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PR: Red Hat Reports Fiscal First Quarter Results

Jun 17, 2004, 20:30 (5 Talkback[s])

Red Hat, Inc. today announced financial results for the first quarter ended May 31, 2004.

Revenue for the first quarter of fiscal 2005 was $41.6 million, a sequential increase of 13% compared to $37.0 million in the fourth quarter of fiscal 2004, and a year-over-year increase of 53%.

For the first quarter of fiscal 2005, the company reported net income of $10.7 million, or $0.05 per share. This represents an increase of 113% over net income of $5.0 million, or $0.03 per share, in the prior quarter, and an increase of 603% over net income in the same quarter a year ago.

The company generated $30.1 million, or $0.16 per share, in positive cash flow from operations during the first quarter. The company ended the quarter with a cash and investments balance of $964.4 million.

In the first quarter of fiscal 2005, the company increased its deferred revenue balance to $86.1 million, a sequential increase of $15.2 million, or 21%, as compared to the fourth quarter of fiscal 2004.

Highlights for the first quarter include:

Sales of subscriptions to Red Hat Enterprise Linux continued to outpace the growth rate of the Intel-based server market, reaching 98,000 subscriptions in the first quarter, a sequential increase of 13%. This is comprised of 75,000 subscriptions sold into the enterprise IT market and 23,000 subscriptions sold into the HPC and hosting markets.

Renewal rates for subscriptions sold to Red Hat Enterprise Linux in prior years remained strong at approximately 85%.

Gross margins increased to record levels, with blended gross margins at 80% and gross margins of Enterprise subscription technologies at 93%.

Operating profit, excluding stock-based compensation, increased to $6.5 million, or 16% of total revenue. This represents a sequential increase of 43% on an adjusted basis and 93% on a GAAP basis, as compared to the fourth quarter of fiscal 2004.

"Red Hat continued to show consistent execution in the first quarter of fiscal 2005, as evidenced by a strong sequential growth in subscription volumes, gross margins, and operating margins", stated Kevin Thompson, Executive Vice President and Chief Financial Officer. "Cash flow from operations once again remained strong, representing 72% of total revenues in the quarter."

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