Press Release — RESEARCH TRIANGLE PARK, N.C.–Dec. 18,
2001– Red Hat, Inc. (NASDAQ:RHAT)
, the global leader in Linux and open source solutions, today
reported an adjusted net income of $1,300,000, or $0.01 per share,
excluding amortization of goodwill and stock based compensation and
restructuring charges, for the third quarter of fiscal 2002,
compared to an adjusted net loss of $100,000, or break even per
share, for the second quarter of fiscal 2002.
The company reported revenue of $21.5 million for the third
quarter ended November 30, 2001, an increase of 2% over the second
quarter of fiscal 2002.
On a GAAP basis, the company reported a net loss of $15 million,
or $0.09 per share, compared with a net loss of $55.3 million, or
$0.33 per share in the second quarter fiscal 2002.
For the last nine months ended on November 30, 2001, the company
reported revenues of $68.2 million, a decrease of 10% over the same
period in year 2000. In terms of earnings, for the last nine months
ended on November 30, 2001, the company reported an adjusted net
income of $1,800,000, or $0.01 per share, compared to an adjusted
net loss of $10,000,000, or $0.06 per share, for the last nine
months of last year. On a GAAP basis, the company reported a net
loss of $97.9 million – or $0.58 per share – for the last nine
months ended on November 30, 2001, compared to a net loss of $62.5
million – or $0.38 per share – for the last nine months of last
year.
“Significant growth of Enterprise Subscription and Open Source
Services revenues are validating the acceptance of Red Hat Linux as
an Enterprise Computing Platform and Red Hat’s ability to monetize
the adoption of Red Hat Linux by the Large Enterprise”, stated
Kevin Thompson, Executive Vice President and Chief Financial
Officer.
About Red Hat, Inc.
Red Hat is the global leader in Linux and open source solutions.
Red Hat is headquartered in Research Triangle Park, N.C. and has
offices worldwide. For investor inquiries, contact Gabriel Szulik
at Red Hat, (919) 547-0012, x439. More information about Red Hat is
available at www.redhat.com.
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, merger, acquisition and other
costs, and restructuring charges)
(In thousands - except per share amounts)
Three Months Ended Nine Months Ended
November 30, August 31, November 30, November 30,
2001 2001 2001 2000
(Unaudited) (Unaudited)
Subscription and services revenue:
Subscription:
Enterprise $ 9,447 $ 8,422 $ 27,591 $ 26,771
Embedded 1,443 1,573 4,648 6,938
Total subscription
revenue 10,890 9,995 32,239 33,709
Services:
Network consulting 2,370 3,682 11,248 18,702
Embedded development
services 2,889 3,489 11,076 14,180
Open source services 5,327 3,959 13,641 9,041
Total services
revenue 10,586 11,130 35,965 41,923
Total subscription
and services
revenue 21,476 21,125 68,204 75,632
Cost of subscription and services revenue:
Subscription:
Enterprise 2,081 2,326 7,063 9,667
Embedded 145 146 665 1,412
Total cost of
subscription
revenue 2,226 2,472 7,728 11,079
Services:
Network consulting 1,923 2,049 7,084 12,314
Embedded development
services 1,738 1,251 5,355 8,228
Open source services 2,628 2,226 7,477 4,627
Total cost of
services revenue 6,289 5,526 19,916 25,169
Total cost of
subscription and
services revenue 8,515 7,998 27,644 36,248
Gross profit on
subscription and
services revenue 12,961 13,127 40,560 39,384
Hardware resale, net - - - 131
Operating expense:
Sales and marketing 8,019 9,329 28,032 37,221
Research and
development 3,717 4,213 12,227 11,935
General and
administrative 3,412 3,662 10,445 16,553
Total operating
expense 15,148 17,204 50,704 65,709
Loss from operations (2,187) (4,077) (10,144) (26,194)
Other interest income
(expense), net 3,514 3,984 11,979 16,168
Net Income (loss) $ 1,327 $ (93) $ 1,835 $ (10,026)
Net Income (loss) per common share:
Basic $0.01 ($0.00) $0.01 ($0.06)
Diluted $0.01 ($0.00) $0.01 ($0.06)
Weighted average shares outstanding:
Basic 169,242 169,968 169,405 163,515
Diluted 169,242 169,968 169,405 163,515
RED HAT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands - except per share amounts)
Three Months Ended Nine Months Ended
November 30, August 31, November 30, November 30,
2001 2001 2001 2000
(Unaudited) (Unaudited)
Subscription and
services revenue:
Subscription:
Enterprise $ 9,447 $ 8,422 $ 27,591 $ 26,771
Embedded 1,443 1,573 4,648 6,938
Total subscription
revenue 10,890 9,995 32,239 33,709
Services:
Network consulting 2,370 3,682 11,248 18,702
Embedded development
services 2,889 3,489 11,076 14,180
Open source services 5,327 3,959 13,641 9,041
Total services
revenue 10,586 11,130 35,965 41,923
Total subscription
and services
revenue 21,476 21,125 68,204 75,632
Cost of subscription and services revenue:
Subscription:
Enterprise 2,081 2,326 7,063 9,667
Embedded 145 146 665 1,412
Total cost of
subscription
revenue 2,226 2,472 7,728 11,079
Services:
Network consulting 1,923 2,049 7,084 12,314
Embedded development
services 1,738 1,251 5,355 8,228
Open source services 2,628 2,226 7,477 4,627
Total cost of
services revenue 6,289 5,526 19,916 25,169
Total cost of
subscription and
services revenue 8,515 7,998 27,644 36,248
Gross profit on
subscription and
services revenue 12,961 13,127 40,560 39,384
Hardware resale, net - - - 131
Operating expense:
Sales and marketing 8,019 9,329 28,032 37,221
Research and
development 3,717 4,213 12,227 11,935
General and
administrative 3,412 3,662 10,445 16,553
Amortization of
goodwill and
intangibles 12,468 14,911 44,707 33,617
Stock-based
compensation 1,506 3,171 8,353 11,938
Merger, acquisition
and other - - 7,156 6,914
Restructuring charges 2,409 37,175 39,584 -
Total operating
expense 31,531 72,461 150,504 118,178
Loss from operations (18,570) (59,334) (109,944) (78,663)
Other interest income
(expense), net 3,514 3,984 11,979 16,168
Net Income (loss) $ (15,056) $ (55,350) $ (97,965) $ (62,495)
Net Income (loss) per common share:
Basic ($0.09) ($0.33) ($0.58) ($0.38)
Diluted ($0.09) ($0.33) ($0.58) ($0.38)
Weighted average shares outstanding:
Basic 169,242 169,968 169,405 163,515
Diluted 169,242 169,968 169,405 163,515
RED HAT, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
November, 30 February 28,
2001 2001
Assets:
Cash and investments
in debt and equity securities $ 291,634 $ 302,681
Accounts receivable, net 15,127 21,826
Subcontractor receivable 567 3,441
Costs and estimated earnings
in excess of billings 5,155 3,378
Inventory 1,060 740
Prepaid expenses and other assets 7,443 11,197
Property and equipment, net 16,296 14,591
Goodwill and intangibles, net 70,100 147,397
Total assets $ 407,382 $ 505,251
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 8,038 $ 9,681
Accrued expenses 8,419 15,916
Deferred revenue 9,773 12,151
Other short-term liabilities 11,200 3,221
Total liabilities 37,430 40,969
Commitments and contingencies - -
Stockholders' equity:
Noncontrolling interest in subsidiary 86 -
Preferred stock - -
Common stock 17 17
Additional paid-in capital 627,945 643,712
Deferred compensation (9,785) (36,051)
Accumulated deficit (241,554) (143,589)
Treasury stock, at cost (6,672) -
Accumulated other comprehensive
income (loss) (85) 193
Total stockholders' equity 369,952 464,282
Total liabilities and
stockholders' equity $ 407,382 $ 505,251