Red Hat revenue jumps 17% in first quarter [The News & Observer (Raleigh, N.C.) :: ]
(News & Observer (Raleigh, NC) Via Acquire Media NewsEdge) June 18--Open source software giant Red Hat reported a 17 percent surge in first-quarter revenue as the Raleigh software company broke sales records and upped its annual revenue forecast by $30 million.
Red Hat officials told analysts they're investing aggressively in product marketing and technology summits at a time that Red Hat customers in the finance, telecom and other sectors are willing to spend heavily on cloud-based technology to run their complex businesses.
Investors didn't seem to mind that the push to capture more global customers took a 6.6 percent bite out of Red Hat's profits, dropping first-quarter income to $37.7 million from $40.4 million in the first quarter a year ago.
"The investors actually like that," said Charlie Peters, Red Hat's chief financial officer, in a phone interview. "We're investing heavily in the business because we see an opportunity to grow even faster and now is the time to act."
Red Had has already logged two acquisitions in 2014, including one announced Wednesday, and is approaching its annual record of three acquisitions in one year, set two years ago. Peters said the company has $1.4 billion in cash to finance acquisitions and buybacks of its own stock.
Red Hat, a homegrown technology business with 6,300 employees at more than 80 locations worldwide, has bought about a dozen startups, one of the surest ways to stay ahead of competitors and to make it harder to be gobbled up by a bigger rival.
The company reported that first-quarter revenue increased to $423.7 million as its marketing budget and other operating expenses soared 23 percent to $308.3 million.
This was the company's first time in which the top 30 sales deals it logged in the first quarter were all over $1 million, Peters said. Several deals exceeded $5 million and one broke the $10 million barrier, he said, as major corporations free up their budgets to accelerate their switch from legacy systems and proprietary technologies.
Red Hat also said Wednesday that it will acquire eNovance, a French open source cloud computing company, for about $95 million in cash and stock.
Red Hat is paying 50 million euros in cash and 20 million euros in stock for eNovance. The deal is expected to close this month.
eNovance has more than 150 customers, including Alcatel-Lucent, Cisco and Ericsson. The company has offices in Paris, Montreal and Bangalore, India. Most of its 110 employees are based in Montreal and Paris.
Red Hat and eNovance have collaborated on projects. Last year, they partnered to deploy Red Hat's Enterprise Linux OpenStack Platform, which allows businesses to build their own private computing clouds, rather than depending on remote servers operated by third parties.
Red Hat's core business is designing open-source software that is available for free. The company makes its money by charging customers for maintenance, support and related services, such as training and consulting.
Its software is used by more than 90 percent of the Fortune 500 companies.
Red Hat has about 900 workers at its downtown Raleigh headquarters.
The company's shares closed Wednesday at $53.10, up 67 cents.
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