Red Hat, Inc., the world's leading provider of open source solutions, announced financial results for its fiscal fourth quarter and fiscal year ended February 28, 2013.
• Fourth quarter revenue of $348 million, up 17% year-over-year; full fiscal year revenue of $1.33 billion, up 17% year-over-year
• Fourth quarter subscription revenue of $303 million, up 19% year-over-year; full fiscal year subscription revenue of $1.15 billion, up 19% year-over-year
• Fourth quarter operating cash flow of $137 million, up 7% year-over-year; full fiscal year operating cash flow of $465 million, up 19% year-over-year
• Year-end deferred revenue balance exceeds a billion dollars, up 15% year-over-year
Total revenue for the quarter was $348 million, an increase of 17% in U.S. dollars from the year ago quarter, or 18% measured in constant currency. Constant currency references in this release are as detailed in the tables below. Subscription revenue for the quarter was $303 million, up 19% in U.S. dollars year-over-year, or 20% measured in constant currency. For the full fiscal year 2013, total revenue was $1.33 billion, up 17% in U.S. dollars year-over-year, or 20% measured in constant currency, and subscription revenue was $1.15 billion, up 19% in U.S. dollars year-over-year, or 22% measured in constant currency.
“For FY13, the growth drivers in our business remained intact, driving record annual revenue, billings proxy and total backlog up 17%, 14% and over 19% year-over-year, respectively. Within total backlog, the value of customer contracts to be billed in the future and not reflected in our financial statements increased to over $280 million, or up over 40%, as customers increased their commitments to Red Hat technologies in the data center,” stated Jim Whitehurst, President and Chief Executive Officer of Red Hat. “We continued to see momentum with large deals in Q4, closing a record number of deals in excess of $5 million and $10 million. We now provide solutions to over 90% of Fortune 500 companies as well as tens of thousands of smaller companies.New customer additions coupled with renewing and up-selling our existing customer base enabled us to exceed the billion dollar milestone in both subscription revenue and deferred revenues for the first time.”
GAAP operating income for the fourth quarter and the full fiscal year 2013 was $50 million and $201 million, respectively. GAAP operating margin was 14.4% in the fourth quarter and 15.1% for the full year. After adjusting for stock compensation, amortization expenses and certain facility exit costs, as detailed in the tables below, non-GAAP operating income for the quarter was $84 million, or a 24.0% operating margin. Full year non-GAAP operating income was $326 million and full year non-GAAP operating margin was 24.6%.
GAAP net income for the fourth quarter was $43 million, or $0.22 per diluted share, compared with $35 million, or $0.18 per diluted share, for the prior quarter and $36 million, or $0.18 per diluted share, in the year ago quarter. Non-GAAP adjusted net income for the fourth quarter was $70 million, or $0.36 per diluted share, after adjusting for stock compensation and amortization expenses, as detailed in the tables below. This compares to non-GAAP adjusted net income of $57 million, or $0.29 per diluted share in the prior quarter, and $57 million, or $0.29 per diluted share in the year ago quarter. Both the GAAP and non-GAAP results for the fiscal 2013 fourth quarter benefited by approximately $0.03 per share as a result of the retroactive reinstatement in January 2013 of the U.S. research tax credit.
For the full year, GAAP net income was $150 million or $0.77 per diluted share, compared with $147 million or $0.75 per diluted share in the prior year After adjusting for stock compensation, amortization expenses and certain facility exit costs, as detailed in the tables below, non-GAAP adjusted net income for the year was $240 million or $1.23 per diluted share, compared to $216 million or $1.10 per diluted share for the previous fiscal year.
Operating cash flow totaled $137 million for the fourth quarter and $465 million for the full year. At the end of the fiscal year, the company’s total deferred revenue balance was $1.09 billion, an increase of 15% on a year-over-year basis and 10% sequentially. Cash and investments at February 28, 2013 totaled $1.32 billion after repurchasing approximately 687 thousand shares of common stock in the fourth quarter for approximately $36 million. For fiscal year 2013, Red Hat repurchased approximately 2.3 million shares, or approximately $121 million of common stock.
“During fiscal year 2013, we invested aggressively in new product areas such as storage, cloud computing, management and big data through new internal initiatives and three acquisitions in the second half of the fiscal year. Despite these investments, we generated over 9% year-over-year growth in non-GAAP operating income and 19% full year operating cash flow growth” stated Charlie Peters, Executive Vice President and Chief Financial Officer of Red Hat. “These investments enhance our strategic position in the data center and increase our addressable market.”
The billings proxy, which we define as total revenue plus the change in deferred revenue as reflected on the Consolidated Statement of Cash Flows, was $1.49 billion for the fiscal year 2013 compared with $1.31 billion for the prior fiscal year, an increase of 14%. Total backlog for fiscal year 2013 was in excess of $1.37 billion or up over 19% year-over-year. We define total backlog as the value of non-cancellable subscription and service contracts, including total deferred revenue, which is billed, plus the value of customer contracts to be billed in the future not reflected in our financial statements. The portion of total backlog to be billed in the future not reflected in our financial statements was in excess of $280 million as of February 28, 2013, compared with in excess of $200 million for the fiscal year ending February 29, 2012, up over 40% year-over-year.
About Red Hat, Inc.
Red Hat (redhat.com) is the world's leading provider of open source software solutions, using a community-powered approach to reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training, and consulting services. As a connective hub in a global network of enterprises, partners, and open source communities, Red Hat helps create relevant, innovative technologies that liberate resources for growth and prepare customers for the future of IT.
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