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Red Hat Tops Its Records

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Linux

Red Hat on Thursday announced record revenue and profits for its fourth quarter and its 2005 fiscal year, which ended Feb. 28.

The Raleigh, N.C., company's total revenue for fiscal year 2005 jumped to $196.5 million, an increase of 58 percent from 2004. For the fourth quarter of 2005, the revenue was $57.5 million. This was a year-over-year increase of 56 percent and a third to fourth quarter leap of 13 percent.

The bulk of Red Hat Inc.'s increase came from continued growth in its enterprise subscription revenue. This rose to $45.4 million in the fourth quarter of fiscal year 2005, an increase of 92 percent on a year-over-year basis and an increase of 19 percent on a sequential basis. For the full fiscal year 2005, enterprise subscription revenue was $147.4 million, or a 120 percent year-over-year increase.

"It appears that Red Hat's business strategy of focusing on the higher-margin, higher-revenue portion of the Linux market is getting some traction. Their revenues appear strong because of this focus," said Dan Kusnetzky, vice president of system software at IDC.

It's not just Red Hat, though. IBM's and HP's support of Linux, George Weiss, a Gartner Group vice president said, also have had a significant part to play in Red Hat's gains and Sun's losses. "Linux is becoming seen as a long-term, enterprise Unix strategy, and Red Hat is benefiting."

"We are very pleased with the strong momentum of the Linux marketplace, and our business in particular," Charlie Peters, Red Hat's chief financial officer, said in a statement.

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