Red Hat Boasts 20% Gain In 2Q EarningsStrong renewals, new project spending, expansion, and cross-selling credited for rise in revenue over 2009.
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Open source developer Red Hat credited strong renewals in its top accounts, new project spending, expansion, and cross-selling for its strong second-quarter revenue and income performance.
The company's total revenue for the quarter was $219.8 million, an increase of 20% year-over-year. Subscription revenue for the quarter was $186.2 million, up 19% compared with the same period in 2009. In fact, the quarter represented Red Hat's best billings growth rate in two years, said Jim Whitehurst, president and CEO of the Raleigh, N.C.-based company.
"During the quarter, we introduced our Cloud Foundations portfolio in an effort to help our customers take advantage of the benefits from cloud computing in an open and cost effective way. Our flexible cloud stack will enable customers to run enterprise applications across physical servers, virtual platforms, private clouds, and multiple public clouds," he said in a statement. "We are beginning to see solid interest in our cloud and virtualization initiatives as well as some early deal activity, including our first private cloud management deal over a million dollars."
For the quarter, Red Hat's generally accepted accounting principles (GAAP) operating income for the second quarter was $34.1 million, up 24% year-over-year. After adjusting for stock compensation and amortization expenses, non-GAAP operating income for the second quarter was $54.3 million, up 25% compared with the second quarter of 2009.
Net income for the quarter was $23.7 million, or $0.12 per diluted share, compared with $28.9 million, or $0.15 per diluted share, in the year-ago quarter, which included a one-time tax benefit of $7.3 million, or approximately $0.04 per diluted share. Non-GAAP net income for the quarter was $36.8 million, or $0.19 per diluted share, after adjusting for stock compensation and amortization expenses vs. $39.4 million, or $0.20 per diluted share, in the year-ago quarter, which also included the one-time tax benefit of $7.3 million, or approximately $0.04 per diluted share.
Operating cash flow totaled $64.3 million, as compared to $62.0 million a year ago. At quarter end, the company's total deferred revenue balance was $649.6 million, an increase of 12% year-over-year. Total cash, cash equivalents, and investments as of August 31, 2010 were $1.05 billion, Red Hat said.
"Our revenue and operating income growth continued this quarter with strong double-digit gains in both, despite the foreign currency head wind," said Charlie Peters, Red Hat's executive VP and CFO, in a statement. "Our performance was broad based with strong results across all geographic regions and routes to market. It is clear that our value proposition is resonating with customers."
In the first quarter of 2010, Red Hat's revenue grew 20%, reaching $209.1 million. Likewise, subscription revenue increased one-fifth, hitting $179.1 million.