The Raleigh, North Carolina-based company reported net income of $1.5m on revenue up 39% to $27.2m for the first quarter ended May 31, 2003, compared to a net loss of $4.6m on revenue of $19.5m in the same quarter last year.

The greatest revenue growth came from Red Hat’s enterprise software subscription revenue stream, which rose 103.8% to $12.3m from $6.0m in the same quarter last year.

The enterprise services business rose 15.6% to $9.0m, from $7.8m last year. The company’s retail business, meanwhile, rose by 24.4% to $4.5m, from $3.6m last year.

Enterprise software and services accounted for 75.8% of the company’s revenue in the first quarter, up from 70.9% last year, indicating the still increasing importance of the enterprise business market to Linux distributors.

Increasingly Red Hat is competing for sales opportunities in corporate data centers involving 64-bit hardware and 32-bit multi-node Linux clusters, said the company’s chairman and CEO, Matthew Szulik. Our growing enterprise success continues to come at the expense of Unix in the enterprise market space.

This is the sort of comment that will no doubt draw the attention of The SCO Group Inc, which has alleged that code from its Unix System V code base has been illegally copied into Linux. Having recently expanded the scale of its lawsuit against IBM Corp, it has been suggested that Linux distributors Red Hat and SuSE Linux AG could be next on SCO’s hit list.

Red Hat took the opportunity of its earnings conference call to once again deny any impropriety.

Red Hat is not party to any lawsuit pertaining to Unix source code, said the company’s SVP and general counsel, Mark Webbink. We take intellectual property issues very seriously. We are constantly reviewing available open source technology to determine its origin and whether it is protected by intellectual property.

He continued: No one has ever contacted Red Hat asserting that Red Hat needs a license to use Unix intellectual property. Red Hat remains confident that it has the right to distribute Red Hat Linux solutions, and that the current noise in the market place will have no significant impact on either our business or the momentum behind the adoption of Linux as a primary computing platform.

Based on that momentum, the company’s SVP and chief financial officer, Kevin Thompson, said that Red Hat is expecting sequential and year-on-year growth in its second quarter, which he described as historically the most difficult.

For the quarter ending August 31, 2003, Red Hat is expecting total revenue of between $28m and $28.5m (which equates to year-on-year growth of between 32% and 34%), with enterprise technology subscription revenue between $14m and $14.2m, and enterprise technology services revenue between $10m and $10.3m.

Source: Computerwire