Red Hat Closing In On $2 Billion In Its Fourth Quarter

Charles Babcock | Information Week | December 28, 2015

Red Hat finishes 2015 on a strong financial note, with OpenShift 3.1 positioned as its next-generation cloud application development platform. Red Hat reported its third quarter 2016 results Nov. 30, and largely contrary to expectations, it's still going strong. Advances in cloud computing, VMware's strong virtualization product line, the Cloud Foundry open source development platform, and Amazon and other cloud computing services were all supposed to be sapping Red Hat's strength.

On the contrary, as long as Red Hat remains at the core of the enterprise data center with its Red Hat Enterprise Linux operating system, it will remain a viable competitor to VMware, the open source development platform Cloud Foundry, and proprietary clouds. This is something that's not commonly understood about Red Hat and one reason its stock price, after limping through 2015 (with a low of $67 in August), closed Dec. 23 at $83.99, up over 22% since then.  For all of Red Hat's earning power, its stock has been in the doldrums, as if competitive threats were overwhelming it. If it were about to succumb, it would not be finishing the year this strong.

The announcement for the quarter ended Nov. 30 revealed a revenue increase of 15%, to $524 million, over the third quarter of a year ago. Net income was $47 million, compared to $48 million a year ago. Subscriptions now make up 87% of all of Red Hat's revenue, up 14%; these subscriptions give it a highly stable and predictable revenue base. There's $1.4 billion in the pipeline, thanks to multi-year subscriptions...



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