RESEARCH TRIANGLE PARK, N.C.–June 19, 2001–
Red Hat, Inc. the leader in developing, deploying and managing open
source solutions, today reported revenue of $25.6 million for the
first quarter ended May 31, 2001, an increase of 18% versus the
$21.7 million reported for the first quarter of fiscal 2001 and a
decrease of 5% over the fourth quarter of fiscal 2001.
The company reported an adjusted net income of $600,000, or
break even per share, for the first quarter of fiscal 2002,
compared to an adjusted net loss of $3.7 million, or $0.02 per
share, for the first quarter of fiscal 2001. On a reported basis,
the net loss was $27.6 million, or $0.16 per share, compared with a
net loss of $17.4 million, or $0.11 per share in the first quarter
of fiscal 2001.
“In an increasingly difficult IT environment, Red Hat delivered
a profit and generated positive cash flows for the first time,”
commented Matthew Szulik, President and CEO of Red Hat. “Companies
continue to migrate their platforms to Red Hat Linux and to adopt
Open Source solutions for mission critical applications.”
Highlights for the first quarter include:
CUSTOMER WINS / MAJOR DEALS
- Red Hat is providing technical support and Native GNUPro tools
across multiple OS platforms to Adobe. - Red Hat is providing support for Lucent deployment of
applications using GNUPro tool suite on many embedded platforms
used extensively throughout Lucent’s Wide Area Network Switching
Products. - A contract with Vitesse Semiconductor provides Open Source
assembler for next generation Denali chip. - Closed contract with Scan Logic to provide Linux platform
solutions for Cypress’ newest USB chip used extensively in MP3,
PDA, peripherals and telecom devices. - Completed contract with NEC that provides optimization of
GNUPro technology and ultimately Linux for NEC high performance
embedded MIPS processor devices. - Red Hat is providing Horizon P.C.S. with network and workflow
assessment for Network Engineering Operations. - Red Hat signed an agreement with Nortel to provide support and
services for their technical workstations used to develop the
software that runs their switches and routers. Formerly Nortel
relied on proprietary Unix systems. Now Linux combined with Red Hat
services provides the same performance and service level at a lower
total cost. - Red Hat successfully handed off the final production version of
the Ericsson Webscreen, Ericsson’s first mobile Internet Appliance
designed in collaboration with Red Hat and using Red Hat
Linux. - Contract signed with BP Oil for support renewal for POS rollout
to 2,500 petrol stations across Europe. - Bauhaus AG, a big DIY retail chain in Europe, set up an Oracle
database server environment based on Red Hat Linux in their 125
stores. - Thrifty Car Rentals has chosen Red Hat Linux to run a mission
critical system, including database configuration and reporting
systems. - Red Hat will port GNUPro Development Tools to Altera’s
Excalibur Products. - NHL.com has enhanced its infrastructure by using IBM Linux
Systems running Red Hat Linux 7. - In May, Red Hat signed a significant development agreement with
ETRI, the national technology research institute of Korea, to
cooperatively develop reference platforms for several classes of
Post-PC consumer electronics devices. ETRI selected Red Hat because
of their leadership in Linux and GNU development tools and
especially their leadership in technology and standards for
embedded Linux. Through this relationship, Red Hat will further
advance the capabilities of Linux as a superior alternative to
proprietary embedded offerings and will reinforce their vision of
delivering embedded-to-enterprise capabilities. - Acxiom has selected Red Hat as a one of its strategic
technology suppliers for IA-32, IA-64 and IBM zSeries platforms.
Acxiom is using Red Hat Linux as a means to decrease cost and
improve performance of some of their most important enterprise
applications. - Joint account wins with Dell include:
--BEA Systems
--Thomson Financial
--AT&T
--Duke Energy
--SAIC
--Avery Dennison
--Veritas Software
--Columbia University
--Cornell University
--UCLA
--George Washington University
--Rutgers University
MANAGEMENT
- Hired Paul Cormier, as the Vice President of Engineering. Paul
comes to Red Hat with extensive experience delivering technology to
enterprise organizations, including vast knowledge relating to the
development of scalable, mission-critical security solutions. Prior
to Red Hat, Paul served as Senior Vice President of research and
development at BindView. Educated in Massachusetts, Paul received
his Bachelor of Science degree from Fitchburg State College,
majoring in Business Management and Computer Science. He also holds
a Master of Science in Software Development and Management from
Rochester Institute of Technology.
About Red Hat, Inc.
Red Hat is the leader in developing, deploying and managing
solutions built on the benefits of an open source platform. These
solutions include an open source product platform that provides the
only common, globally available and award-winning Linux operating
system from mainframes to embedded devices, in addition to an
e-Commerce platform, Database, Secure Web Server, High Availability
Server, embedded Linux, eCos, and GNU-based developer toolkit for
embedded devices. Red Hat backs up their open source offerings with
end-to-end Red Hat Professional Services that include Professional
Consulting, Engineering services, Enterprise Support services and
Learning services. This is all brought together with Red Hat
Network as the Internet-based backbone for deployment and
management of products and services for Linux-based
infrastructures.
Red Hat is headquartered in Research Triangle Park, N.C. and has
offices worldwide. Please visit Red Hat on the Web at www.redhat.com. For investor inquiries,
contact Gabriel Szulik at Red Hat, (919) 547-0012.
LINUX is a trademark of Linus Torvalds. RED HAT is a registered
trademark of Red Hat, Inc. All other names and trademarks are the
property of their respective owners.
FORWARD-LOOKING STATEMENTS
Forward-looking statements in this press release are made
pursuant to the safe harbor provisions of Section 21E of the
Securities Exchange Act of 1934. Investors are cautioned that
statements in this press release that are not strictly historical
statements, including, without limitation, management’s plans and
objectives for future operations, and management’s assessment of
market factors, constitute forward-looking statements which involve
risks and uncertainties. These risks and uncertainties include,
without limitation, reliance upon strategic relationships,
management of growth, the possibility of undetected software
errors, the risks of economic downturns generally, and in Red Hat’s
industry specifically, the risks associated with competition and
competitive pricing pressures, the viability of the Internet, and
other risks detailed in Red Hat’s filings with the Securities and
Exchange Commission, copies of which may be accessed through the
SEC’s Web site at http://www.sec.gov.
RED HAT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Excludes amortization of goodwill and intangibles, stock based
compensation, and merger and acquisition costs)
Three Months Ended
May 31, May 31,
2001 2000
Subscription and services revenue:
Subscription $ 11,353,991 $ 9,768,364
Services:
Network consulting 5,196,304 5,680,738
Embedded development services 4,697,325 4,241,916
Open source services 4,355,933 2,018,418
Total subscription and
services revenue 25,603,553 21,709,436
Cost of subscription and
services revenue:
Subscription 3,125,563 3,749,793
Services 8,005,907 7,092,774
Total cost of subscription
and services revenue 11,131,470 10,842,567
Gross profit on subscription
and services revenue 14,472,083 10,866,869
Hardware resale, net -- 88,223
Operating expense:
Sales and marketing 10,683,600 12,162,715
Research and development 4,296,781 3,271,184
General and administrative 3,370,706 4,666,427
Total operating expense 18,351,087 20,100,326
Loss from operations (3,879,004) (9,145,234)
Other interest income (expense), net 4,480,183 5,481,691
Loss before income taxes 601,179 (3,663,543)
Provision for income taxes 445 64,414
Net loss $ 600,734 $ (3,727,957)
Net loss per common share:
Basic $ 0.00 ($ 0.02)
Diluted $ 0.00 ($ 0.02)
Weighted average
shares outstanding:
Basic 169,002,929 159,463,590
Diluted 169,002,929 159,463,590
RED HAT, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
May 31, February 28,
2001 2001
Current assets:
Cash and cash equivalents $ 72,459,166 $ 85,212,830
Investments in debt and
equity securities 47,076,615 62,911,634
Accounts receivable, net 20,800,035 25,203,635
Subcontractor receivable 74,408 3,441,394
Inventory 1,357,792 739,960
Prepaid expenses and
other current assets 2,287,071 2,171,721
Total current assets 144,055,087 179,681,174
Property and equipment, net 15,776,131 14,591,510
Goodwill and intangibles, net 130,871,143 147,396,649
Investments in debt and
equity securities 175,051,633 154,556,684
Other assets, net 5,364,746 9,025,138
Total assets $ 471,118,740 $ 505,251,155
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,909,384 $ 9,681,174
Royalties payable 30,232 --
Accrued expenses 13,273,445 15,915,682
Deferred revenue 12,638,837 12,150,549
Short term payable -- 2,750,000
Current portion of
capital lease obligations 265,388 193,895
Total current liabilities 30,117,286 40,691,300
Capital lease obligations 227,488 277,338
Commitments and contingencies -- --
Stockholders' equity:
Noncontrolling interest in subsidiary 37,810 --
Preferred stock -- --
Common stock 16,983 16,849
Additional paid-in capital 627,414,567 643,712,385
Deferred compensation (15,438,815) (36,051,412)
Accumulated deficit (171,148,542) (143,588,767)
Accumulated other
comprehensive income (loss) (108,037) 193,462
Total stockholders' equity 440,773,966 464,282,517
Total liabilities and
stockholders' equity $ 471,118,740 $ 505,251,155
Contact:
Company Contact:
Red Hat, Inc.
Melissa London
(919) 547-0012
[email protected]
or
Investor Contact:
Gabriel Szulik
Investor Relations Manager
(919) 547-0012
[email protected]