Red Hat revenues are red hot

The Linux leader reports a 95 percent increase in first quarter sales. Company executives say Red Hat's on track to turn a profit by 2001
Written by Larry Dignan, Contributor

Red Hat nearly doubled its first quarter sales from a year ago and reported a smaller-than-expected loss.

After market close Thursday, Linux ringleader Red Hat reported a first quarter operating loss of $2.5m (£1.65m), or two cents a share. That loss figure adjusts for non-cash, merger, acquisition and other expenses. In the same quarter a year ago, Red Hat reported an operating loss of $3.8m, or eight cents a share.

Earnings tracking firm First Call predicted a loss of four cents a share in the quarter.

Including merger, non-cash and other items, Red Hat reported a loss of $14.9m, or ten cents a share. Revenue was up $16m in the quarter, up 95 percent compared to $8.2m a year ago, and up 22 percent from fourth quarter sales of $13.1m.

Subscription revenue accounted for $8.5m of Red Hat's sales tally, followed by services ($6.26m) and Web sales ($1.23m).

Gross margins improved to 54 percent for the quarter ending 31 May.

In a statement, CEO Matthew Szulik said the company is executing well and working toward its goal to double revenue and become profitable in calendar 2001. On Red Hat's fourth quarter conference call, officials projected the company would be profitable by the end of 2002. First Call had projected Red Hat to break even in the November quarter of 2002.

During the first quarter, Red Hat announced a slew of deals and strategic alliances. It closed the acquisition of Bluecurve, unveiled a marketplace featuring vendors such as Dell, Compaq, IBM, Oracle, Rackspace.com and Zonetrader.com. Red Hat Linux also gained traction via partnerships with IBM, Dell and Intel.

At the end of the first quarter, Red Hat had about $106m in cash and cash equivalents. Red Hat competes with VA Linux and Caldera Systems.

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