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Red Hat sees revenue up in second quarter

Revenue grows 15% to $322.6m for quarter to end of August

Red Hat saw double digit growth in revenue, says Whitehurst.
Red Hat saw double digit growth in revenue, says Whitehurst.

Red Hat has announced its Q2 2013 results, with revenue up 15% to $322.6 million, although operating income was down 5% year-on-year to $50 million.

The company reported strong growth in subscription revenues, up 17% to $278.8 million, accounting for 86% of total revenue.

Services and training revenue growth was just 2% year-on-year, in part due to a greater amount of services being provided by channel partners rather than Red Hat itself.

"Our double-digit growth was driven by demand for Red Hat's open source technologies that are key to creating innovation, scale and flexibility in our customers' data centers and their businesses," stated Jim Whitehurst, president and CEO of Red Hat. "At Red Hat, we firmly believe in the strength of community-powered innovation. In early September, we were pleased to be recognized by Forbes, Inc. on its list of the World's Most Innovative Companies. We are also proud that our customers who have built mission-critical systems on Red Hat technologies are also reflected on the Forbes list of innovative companies."

At quarter end, the company's total deferred revenue balance was $944.4 million, an increase of 16% on a year-over-year basis. Total cash, cash equivalents and investments as of August 31, 2012 was $1.36 billion.

"On a constant currency basis, subscription revenue grew 22% year-over-year while total revenue grew 20%. Our business model and offerings continue to appeal to customers despite the global economic malaise," said Charlie Peters, executive vice president and chief financial officer of Red Hat. "This quarter marked a significant ramp-up in investments in our nascent storage business, with the launch in late June of Red Hat Storage Server 2.0. Furthermore, we announced two small technology acquisitions in the middleware space to further round out our offerings, which decreased the quarter's EPS by approximately $0.01 per share due to one-time closing costs."

Red Hat said that its efforts to grow its channel were paying off, with Q2 sales distribution mix of 66% sales from the channel and 34% from direct sales.

In terms of technology, Red Hat said it was seeing significant interest in its storage offerings, and experienced continued strong growth in middleware.