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Red Hat marks 60th consecutive quarter of revenue growth with latest financial results

By Ashton Young
Wed 29 Mar 2017
FYI, this story is more than a year old

Red hat today announced financial results for its fourth quarter and fiscal year ended 28 February 2017.

Here are some of the highlights:

  • Fourth quarter total revenue of $629 million, up 16 percent year-over-year; full fiscal year total revenue of $2.4 billion, up 18%= percent year-over-year
  • Fourth quarter subscription revenue of $560 million, up 17 percent year-over-year; full fiscal year subscription revenue of $2.1 billion, up 18 percent year-over-year
  • Fourth quarter Application development-related and other emerging technology subscription revenue of $125 million, up 40 percent year-over-year; full fiscal year Application development-related and other emerging technology subscription revenue of $439 million, up 36 percent year-over-year
  • Year-end deferred revenue balance of $2.1 billion, up 20 percent year-over-year

Red Hat chief executive officer, Jim Whitehurst says they closed the year with an exceptional performance.

“The fourth quarter marked our 60th consecutive quarter of revenue growth, and we crossed the $2 billion milestone in subscription revenue and total deferred revenue for the fiscal year,” says Whitehurst.

“As customers embrace digital transformation, they are turning to Red Hat as a strategic partner to deliver solutions that can help them realise the benefits of these initiatives. Enterprises and service providers are increasingly adopting hybrid cloud infrastructures and open source technologies, which is fueling our growth and positioning Red Hat for the long-term.”

Acting chief financial officer at Red Hat, Eric Shander says their strategic position with customers is evidenced by the continued growth in large commitments to Red Hat.

“The number of deals greater than $1 million in fiscal 2017 grew by over 30% annually, and we closed a record number of deals over $20 million, including our first-ever deal of approximately $100 million in the fourth quarter,” says Shander.

“This performance also drove a record backlog of $2.7 billion in U.S. dollars, up 28 percent year-over-year which contributes to our fiscal year 2018 revenue outlook of 13 percent to 14 percent growth and should help drive expanded GAAP operating margin of 15.2 percent and non-GAAP operating margin of 23.6 percent.”

And the outlook for the year ahead? Red Hat’s outlook assumes current business condition and current foreign currency exchange rates.

For the full year:

  • Revenue is expected to be $2.720 billion to $2.760 billion in U.S. dollars. 
  • GAAP operating margin is expected to be approximately 15.2% and non-GAAP operating margin is expected to be approximately 23.6%. 
  • Fully diluted GAAP earnings per share (EPS) is expected to be approximately $1.69 to $1.73 per share, assuming 181 million fully diluted shares outstanding. Fully diluted non-GAAP EPS is expected to be approximately $2.60 to $2.64 per share, assuming 180 million fully diluted shares outstanding. Both GAAP and non-GAAP EPS assume a $2 million per quarter forecast for other income and an estimated annual effective tax rate of 28% before discrete tax items.
  • Operating cash flow is expected to be approximately $850 million to $870 million.
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