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

October 08, 2010 | About:

Red Hat Inc. (NYSE:RHT) filed Quarterly Report for the period ended 2010-08-31.

Red Hat Inc. has a market cap of $7.21 billion; its shares were traded at around $38.17 with a P/E ratio of 69.4 and P/S ratio of 9.7. Red Hat Inc. had an annual average earning growth of 22.7% over the past 5 years.RHT is in the portfolios of Columbia Wanger of Columbia Wanger Asset Management, Steven Cohen of SAC Capital Advisors, Bruce Kovner of Caxton Associates, Paul Tudor Jones of The Tudor Group, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

Revenue. For the three months ended August 31, 2010, total revenue increased 19.7% or $36.1 million to $219.8 million from $183.6 million for the three months ended August 31, 2009. Subscription revenue increased 19.1% or $29.9 million, driven primarily by additional subscriptions related to our principal RHEL technologies, which continue to gain broader market acceptance in mission-critical areas of computing, and our expansion of sales channels and geographic footprint. The increase is, in part, a result of the continued migration of enterprises in industries such as telecommunications, government and financial services to our open source platform from a proprietary Unix platform. Training and services revenue increased 22.7% or $6.2 million for the three months ended August 31, 2010 as compared to the same period ended August 31, 2009. The increase is driven primarily by an improving economic environment in which enterprises are increasing discretionary spending in areas such as IT training and consulting.

Deferred Revenue. Our deferred revenue, current and long-term, balance at August 31, 2010 was $649.6 million. Because of our subscription model and revenue recognition policies, deferred revenue improves predictability of future revenue. Deferred revenue at August 31, 2010 increased $3.8 million or 0.6% as compared to the balance at February 28, 2010 of $645.9 million. As a result of changes in foreign currency exchange rates, our deferred revenue balance at August 31, 2010 was $8.6 million lower than what it would have been if spot exchange rates on that date were the same as at February 28, 2010.

Revenue by geography. We operate our business in three geographic regions: the Americas (U.S., Latin America and Canada); EMEA (Europe, Middle East and Africa); and Asia Pacific (principally Japan, Singapore, India, Australia, South Korea and China). In the three months ended August 31, 2010, approximately $93.4 million or 42.5% of our revenue was generated outside the United States compared to approximately $78.1 million or 42.5% for the three months ended August 31, 2009. Our international operations are expected to continue to grow as our international sales force and channels become more mature and as we enter new locations or expand our presence in existing locations. As of August 31, 2010, we had offices in more than 65 locations throughout the world.

totaled $64.3 million, primarily as a result of the increase in subscription revenue and billings during the same period. Additionally, employees exercise of stock options generated $18.0 million of cash proceeds for the three months ended August 31, 2010.

Using the average foreign currency exchange rates from the second quarter of our prior fiscal year ended February 28, 2010, our revenue and operating expenses from non-U.S. operations for the three months ended August 31, 2010 would have been higher than we reported using the average exchange rates for the second quarter of our current fiscal year ending February 28, 2011 by approximately $3.0 million and $1.4 million, respectively, which would have resulted in income from operations being higher by $1.6 million.

these deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. As of August 31, 2010, the deferred tax asset balance was $88.1 million, of which $6.0 million was offset by a valuation allowance. We continue to maintain a valuation allowance against our deferred tax assets with respect to certain foreign net operating loss (NOL) carryforwards.

Read the The complete Report

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