Enterprise revenues power Red Hat past $2bn barrier

Linux spinner claims hybrid cloud growth

Red Hat is in the enviable position of having become the first open-source firm to break the $2bn revenue barrier.

The Linux spinner has reported full-year revenue $2.05bn, an increase of 14 per cent from subscriptions, training and services. Net income was up 10 per cent to $199m.

For its fourth quarter Red Hat reported $543m in revenue – growing 17 per cent year on year – with net income of $53m, up 11 per cent on 2015.

The cost of doing business for Red Hat has also increased by 13 per cent for the year and 15 per cent quarter-on-quarter, to $309m and $81m respectively. Operating expenses for the year were up 14 per cent to $1.4bn and for the quarter up 19 per cent to $390m.

However, it’ll be the headline-grabbing $2bn milestone that’ll get the penguinistas chattering.

Red Hat was the first open-source firm to break the psychologically important – for software firms – $1bn barrier in its fiscal year 2011, announced in March 2012.

Red Hat has achieved its targets by focusing squarely on the enterprise and on the server, unlike its consumer and/or desktop-obsessed rivals, and other distros. Much of Red Hat’s business, however, comes from the familiar Linux server and, to an extent, the middleware: the challenge ahead lies in turning cloud to Red Hat’s advantage. Red Hat has promoted independent, vendor-neutral cloud with CloudForms – its Infrastructure as a Service – and Red Hat Enterprise Linux OpenStack Platform.

Cloud, particularly independent cloud, is a tough road in the world of AWS and Microsoft Azure, neither of which are open source, as Red Hat discovered with CloudForms. RHEL is, though, an option for Penguins on both.

Red Hat chief executive Jim Whitehurst claimed on Tuesday that Red Hat’s cloud technologies are “gaining traction”. He said enterprises are increasingly adopting hybrid cloud infrastructures and open source technologies, facts that drove Red Hat's strong results.

“Our revenue from private Infrastructure-as-a-Service, PaaS and cloud management technologies is growing at nearly twice as fast as our public cloud revenue did when it was at the same size,” Whitehurst told Wall Street investors. You can read the transcript on Seeking Alpha.

Whitehurst predicted Red Hat’s fiscal 2017 will be “another year of significant revenue growth with new customer adoption and further expansion with existing ones.” ®