Free 7-day Trial
All Articles and Columns »

Red Hat Inc. Reports Operating Results (10-Q)

January 08, 2013 | About:
insider

10qk

18 followers
Red Hat Inc. (RHT) filed Quarterly Report for the period ended 2012-11-30.

Red Hat, Inc. has a market cap of $10.49 billion; its shares were traded at around $54.47 with a P/E ratio of 60.7 and P/S ratio of 8.4. Red Hat, Inc. had an annual average earning growth of 24.6% over the past 5 years.

Highlight of Business Operations:

Training revenue includes fees paid by our customers for delivery of educational materials and instruction. Services revenue includes fees received from customers for consulting services regarding our offerings, deployment of Red Hat enterprise technologies and for delivery of added functionality to Red Hat enterprise technologies for our major customers and OEM partners. Total training and services revenue increased by 13.6% or $5.9 million to $49.4 million for the three months ended November 30, 2012 from $43.5 million for the three months ended November 30, 2011. Training revenue increased 8.2% or $1.1 million, as some enterprises increased overall spending on discretionary items such as training despite the current economic environment. Our services revenue increased by 16.2% or $4.8 million as a result of an increase in consulting engagements driven by increased demand for our open source solutions. Combined training and services revenue decreased as a percentage of total revenue to 14.4% for the three months ended November 30, 2012 from 15.0% for the three months ended November 30, 2011.

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 24.4% or $26.2 million to $133.8 million for the three months ended November 30, 2012 from $107.6 million for the three months ended November 30, 2011. This increase was primarily due to a $15.9 million increase in selling costs, which includes $11.5 million of additional employee compensation expense attributable to the expansion of our sales force from the prior year and $1.4 million and $1.0 million related to professional services and travel, respectively. The remaining increase relates to marketing costs, which grew $10.3 million or 43.0% for the three months ended November 30, 2012 as compared to the three months ended November 30, 2011. The increase in marketing costs includes $4.4 million and $4.1 million related to increased headcount and advertising expense, respectively, to support our expanding marketing efforts. Sales and marketing expense increased as a percentage of revenue to 38.9% for the three months ended November 30, 2012 from 37.1% for the three months ended November 30, 2011 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.

Cost of training and services revenue increased by 4.3% or $3.7 million to $89.1 million for the nine months ended November 30, 2012 from $85.4 million for the nine months ended November 30, 2011. The cost to deliver training decreased 13.8% or $3.4 million to $21.3 million for the nine months ended November 30, 2012 as compared to $24.7 million for the nine months ended November 30, 2011. Costs to deliver our training decreased as a percentage of training revenue to 53.4% for the nine months ended November 30, 2012 from 62.3% for the nine months ended November 30, 2011 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 variable-cost delivery model with a global training partner that provides training services on our behalf. Costs to deliver our services revenue increased by 11.6% or $7.1 million due primarily to additional compensation and travel expenses associated with additions to our staff. Total costs to deliver training and services as a percentage of training and services revenue decreased to 65.8% for the nine months ended November 30, 2012 from 67.9% for the nine months ended November 30, 2011.

Sales and marketing expense increased by 24.2% or $73.6 million to $378.2 million for the nine months ended November 30, 2012 from $304.6 million for the nine months ended November 30, 2011. This increase was partially attributable to a $45.3 million increase in selling costs, which includes $29.6 million of additional compensation expense, which was due to the expansion of our sales force during the current fiscal year. The remaining increase relates to marketing costs, which grew $28.3 million or 43.9% for the nine months ended November 30, 2012 as compared to the nine months ended November 30, 2011. The increase in marketing costs includes $12.2 million of additional compensation expense and incremental advertising expense of $9.4 million. Sales and marketing expense increased as a percentage of revenue to 38.6% for the nine months ended November 30, 2012 from 36.4% for the nine months ended November 30, 2011 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 19.0% or $17.6 million to $109.8 million for the nine months ended November 30, 2012 from $92.3 million for the nine months ended November 30, 2011. The increase in general and administrative expenses results from increased compensation expense of $7.4 million, outside professional service fees, primarily related to data processing systems upgrades, which increased $5.9 million, hardware and facility infrastructure upgrades of $2.0 million and incremental leasehold depreciation expense of $2.5 million associated with our exit from one of our facilities in Raleigh, NC. These increases in general and administrative costs were partially offset by litigation related expenses which were $2.5 million lower for the nine months ended November 30, 2012 as compared to the nine months ended November 30, 2011. General and administrative expense increased as a percentage of revenue to 11.2% for the nine months ended November 30, 2012 from 11.0% for the nine months ended November 30, 2011.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide