The Raleigh, North Carolina-based company recorded revenue of $41.6m in the quarter ended May 31, 2004, which was slightly below analyst expectations but a substantial increase over the $27.2m earned in the same quarter last year.
Net income for the quarter was $10.7m, up from $1.5m in the same quarter last year thanks to that increased revenue. Operating expenses were $28.3m, up from $19.5m a year ago.
The company recorded 98,000 subscriptions to Red Hat Enterprise Linux in the quarter, up 13% on the previous quarter. Of that, 75,000 subscriptions were from the enterprise IT market, compared to 61,000 in the fourth quarter, and a further 23,000 from the high-performance computing and hosting markets.
The company is expecting a further rise in subscriptions in the second quarter with between 85,000 and 89,000 new enterprise IT subscriptions. Chairman and CEO Matthew Szulik pointed to the government market as an engine for growth, highlighting a $29m contract signed by the Defense Information Systems Agency with Red Hat reseller DLT Solutions during the quarter.
Szulik also put a $17m price tag on the recent seven-year deal signed by Titan Corp to supply the Administrative Office of the United States Courts with a Red Hat Enterprise Linux-based data protection system.
Red Hat’s big product launch during the first quarter was its Red Hat Desktop product for enterprise desktop computing, and Szulik also confirmed that German insurance firm LVM is proceeding with a project to migrate 8,400 of its in-house-developed Linux desktops to Red Hat Desktop over the next six months to serve field sales and internal employees.
Szulik said there are other smaller pilots going on as users take advantage of PC migration cycles to consider their options on the desktop. The pipeline is growing on a global basis, he said, adding that Red Hat saw in excess of 150,000 client unit opportunities.
All the trends that we see in our business indicate that the momentum behind the adoption of Linux as a primary computing within the enterprise continues to accelerate, said Thompson.
Red Hat announced last week that the first-quarter revenue presentation would be Thompson’s last as he is to retire to pursue other interests. Szulik underlined his confidence in the company’s growth prospects in discussing Red Hat’s requirements for Thompson’s successor, who the company expects to be in place in time for the second quarter conference call.
Szulik said Red Hat is looking for a CFO with experience of at least a $750m company and with strong experience of mergers and acquisitions. Red Hat’s latest annual revenue was just $126.1m, although it does have $964.5m in cash and investments to fund further growth.
