Red Hat Inc. (RHT, Financial) filed Quarterly Report for the period ended 2011-11-30.
Red Hat Inc. has a market cap of $8.3 billion; its shares were traded at around $43.04 with a P/E ratio of 53.8 and P/S ratio of 9.13. Red Hat Inc. had an annual average earning growth of 20.2% over the past 5 years.
Sales and marketing expense consists primarily of salaries and other related costs for sales and marketing personnel, sales commissions, travel, public relations and marketing materials and trade shows. Sales and marketing expense increased by 26.3% or $22.4 million to $107.6 million for the three months ended November 30, 2011 from $85.1 million for the three months ended November 30, 2010. This increase was primarily due to a $17.0 million increase in selling costs, which includes $13.9 million of additional compensation expense, which was primarily attributable to the expansion of our sales force during the current fiscal year. The remaining increase relates to marketing costs, which grew $5.4 million or 29.7% for the three months ended November 30, 2011 as compared to the three months ended November 30, 2010. The increase in marketing costs includes $3.4 million of additional compensation expense and incremental advertising expense of $1.3 million. Sales and marketing expense increased as a percentage of revenue to 37.1% for the three months ended November 30, 2011 from 36.1% for the three months ended November 30, 2010 as we continue to invest in our sales and marketing functions to expand the breadth of our global sales coverage and depth of our product sales coverage.
Cost of training and services revenue increased by 21.3% or $15.0 million to $85.4 million for the nine months ended November 30, 2011 from $70.4 million for the nine months ended November 30, 2010. The cost to deliver training increased 2.3% or $0.6 million to $24.7 million for the nine months ended November 30, 2011 as compared to $24.1 million for the nine months ended November 30, 2010. Costs to deliver our training decreased as a percentage of training revenue to 62.3% for the nine months ended November 30, 2011 from 71.7% for the nine months ended November 30, 2010 due to better utilization of both instructors and class room space as we transition from an on-site, employee-based, fixed-cost delivery model to a third-party, variable-cost delivery model. Costs to deliver our services revenue increased by 30.9% or $14.4 million and primarily relate to additional compensation and travel expenses of $9.8 million associated with additions to our staff. Use of outside contractors increased costs $1.3 million for the nine months ended November 30, 2011 as compared to the same period ended November 30, 2010. The remaining increase in costs to deliver our engineering and professional services relates to process and technology infrastructure investments we continue to make to enhance the delivery of our services. Total costs to deliver training and services as a percentage of training and services revenue decreased to 67.9% for the nine months ended November 30, 2011 from 70.2% for the nine months ended November 30, 2010.
Sales and marketing expense increased by 27.4% or $65.5 million to $304.6 million for the nine months ended November 30, 2011 from $239.1 million for the nine months ended November 30, 2010. This increase was primarily due to a $51.8 million increase in selling costs, which includes $45.1 million of additional compensation expense, which was primarily attributable to the expansion of our sales force during the current fiscal year. The remaining increase relates to marketing costs, which grew $13.6 million or 27.1% for the nine months ended November 30, 2011 as compared to the nine months ended November 30, 2010. The increase in marketing costs includes $8.7 million of additional compensation expense and incremental advertising expense of $2.2 million. Sales and marketing expense increased as a percentage of revenue to 36.4% for the nine months ended November 30, 2011 from 36.0% for the nine months ended November 30, 2010 as we continue to invest in our sales and marketing function to expand the breadth of our global sales coverage and depth of our product sales coverage.
General and administrative expense increased by 9.5% or $8.0 million to $92.3 million for the nine months ended November 30, 2011 from $84.3 million for the nine months ended November 30, 2010. The increase in general and administrative expenses results from increased compensation expense of $7.5 million, outside professional service fees, primarily related to data processing systems upgrades, which increased $4.2 million, costs related to technology infrastructure enhancements which increased $2.1 million and additional allowances for bad debts of $0.8 million. These increases in general and administrative costs were partially offset by litigation related expenses which were $6.4 million lower for the nine months ended November 30, 2011 as compared to the nine months ended November 30, 2010. Primarily as a result of reduced litigation costs, general and administrative expense decreased as a percentage of revenue to 11.0% for the nine months ended November 30, 2011 from 12.7% for the nine months ended November 30, 2010.
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Red Hat Inc. has a market cap of $8.3 billion; its shares were traded at around $43.04 with a P/E ratio of 53.8 and P/S ratio of 9.13. Red Hat Inc. had an annual average earning growth of 20.2% over the past 5 years.
Highlight of Business Operations:
Income from operations by geography. Operating income as a percentage of revenue generated by our geographic segments for the three months ended November 30, 2011 was as follows: Americas25.3%, EMEA28.5% and APAC22.7%. For the three months ended November 30, 2010, income from operations as a percentage of revenue generated by our geographic segments was as follows: Americas21.2%, EMEA29.0% and APAC17.9%. These geographic operating margins exclude the impact of share-based compensation expense which is recognized at a world-wide consolidated level. Operating margin for the Americas increased to 25.3% for the three months ended November 30, 2011 from 21.2% primarily as a result of reduced litigation related expenses, as described above, for litigation that arose in the Americas. Operating margin for EMEA decreased to 28.5% for the three months ended November 30, 2011 from 29.0% as a result of both a product mix shift from subscriptions to services and investments made to expand our sales force within the region. Operating margin for APAC increased to 22.7% for the three months ended November 30, 2011 from 17.9% as a result of both a product mix shift to subscriptions and a decrease in operating expenses relative to sales as the region continues to scale and leverage its selling and general and administrative functions.Sales and marketing expense consists primarily of salaries and other related costs for sales and marketing personnel, sales commissions, travel, public relations and marketing materials and trade shows. Sales and marketing expense increased by 26.3% or $22.4 million to $107.6 million for the three months ended November 30, 2011 from $85.1 million for the three months ended November 30, 2010. This increase was primarily due to a $17.0 million increase in selling costs, which includes $13.9 million of additional compensation expense, which was primarily attributable to the expansion of our sales force during the current fiscal year. The remaining increase relates to marketing costs, which grew $5.4 million or 29.7% for the three months ended November 30, 2011 as compared to the three months ended November 30, 2010. The increase in marketing costs includes $3.4 million of additional compensation expense and incremental advertising expense of $1.3 million. Sales and marketing expense increased as a percentage of revenue to 37.1% for the three months ended November 30, 2011 from 36.1% for the three months ended November 30, 2010 as we continue to invest in our sales and marketing functions to expand the breadth of our global sales coverage and depth of our product sales coverage.
Cost of training and services revenue increased by 21.3% or $15.0 million to $85.4 million for the nine months ended November 30, 2011 from $70.4 million for the nine months ended November 30, 2010. The cost to deliver training increased 2.3% or $0.6 million to $24.7 million for the nine months ended November 30, 2011 as compared to $24.1 million for the nine months ended November 30, 2010. Costs to deliver our training decreased as a percentage of training revenue to 62.3% for the nine months ended November 30, 2011 from 71.7% for the nine months ended November 30, 2010 due to better utilization of both instructors and class room space as we transition from an on-site, employee-based, fixed-cost delivery model to a third-party, variable-cost delivery model. Costs to deliver our services revenue increased by 30.9% or $14.4 million and primarily relate to additional compensation and travel expenses of $9.8 million associated with additions to our staff. Use of outside contractors increased costs $1.3 million for the nine months ended November 30, 2011 as compared to the same period ended November 30, 2010. The remaining increase in costs to deliver our engineering and professional services relates to process and technology infrastructure investments we continue to make to enhance the delivery of our services. Total costs to deliver training and services as a percentage of training and services revenue decreased to 67.9% for the nine months ended November 30, 2011 from 70.2% for the nine months ended November 30, 2010.
Sales and marketing expense increased by 27.4% or $65.5 million to $304.6 million for the nine months ended November 30, 2011 from $239.1 million for the nine months ended November 30, 2010. This increase was primarily due to a $51.8 million increase in selling costs, which includes $45.1 million of additional compensation expense, which was primarily attributable to the expansion of our sales force during the current fiscal year. The remaining increase relates to marketing costs, which grew $13.6 million or 27.1% for the nine months ended November 30, 2011 as compared to the nine months ended November 30, 2010. The increase in marketing costs includes $8.7 million of additional compensation expense and incremental advertising expense of $2.2 million. Sales and marketing expense increased as a percentage of revenue to 36.4% for the nine months ended November 30, 2011 from 36.0% for the nine months ended November 30, 2010 as we continue to invest in our sales and marketing function to expand the breadth of our global sales coverage and depth of our product sales coverage.
General and administrative expense increased by 9.5% or $8.0 million to $92.3 million for the nine months ended November 30, 2011 from $84.3 million for the nine months ended November 30, 2010. The increase in general and administrative expenses results from increased compensation expense of $7.5 million, outside professional service fees, primarily related to data processing systems upgrades, which increased $4.2 million, costs related to technology infrastructure enhancements which increased $2.1 million and additional allowances for bad debts of $0.8 million. These increases in general and administrative costs were partially offset by litigation related expenses which were $6.4 million lower for the nine months ended November 30, 2011 as compared to the nine months ended November 30, 2010. Primarily as a result of reduced litigation costs, general and administrative expense decreased as a percentage of revenue to 11.0% for the nine months ended November 30, 2011 from 12.7% for the nine months ended November 30, 2010.
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