The Raleigh, North Carolina-based company held a surprisingly subdued conference call to announce the results last week, although the fact that it also reduced its revenue forecast for the fiscal year due to currency fluctuations might explain that.
We feel good about the quarter, we feel good about the pipeline, we feel good about the product mix, and we feel good about the overall tone of the business, said Red Hat CEO Matthew Szulik. But if you look at current exchange rates, in particular the Euro and the Yen… you’ll see a substantial change over the last 120 days.
Based on the strengthening dollar and other currency issues, the company lowered its forecast for its fiscal year 2006 to between $265m and $275m, slightly below analyst predictions of $276m, but still a substantial increase over revenue of $196.5m in full-year 2005. The company maintained its earnings per share estimate of between $0.28 and $0.32.
On the plus side, Szulik talked up the role of Red Hat partners IBM Corp, Hewlett-Packard Co, and Dell Inc for helping it to grow profit, revenue, and subscriptions in the first quarter.
Executive vice president and CFO Charlie Peters, said 60% of the company’s revenue came from indirect sales in the quarter, up from 56% in the previous quarter, and pushing the company towards its target of 70% indirect sales.
Szulik said the company signed over 15,000 new customers during the quarter, helping to account for 190,000 new and renewed Red Hat subscriptions. That pushed subscription revenue up 61.1% to $49.2m from $30.7m the previous year.
Net income of $12.4m was up from $10.9m the previous year, while total revenue rose to $60.8m from $41.8m. Looking ahead to the second quarter, Peters predicted revenue between $64m and $65m, a year-over-year increase of between 38.2% and 40.4%.
