RHT
$80.83
Red Hat
$.67
.84%
Earnings Details
2nd Quarter August 2016
Wednesday, September 21, 2016 4:15:01 PM
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Summary

Red Hat Beats

Red Hat (RHT) reported 2nd Quarter August 2016 earnings of $0.56 per share on revenue of $599.8 million. The consensus earnings estimate was $0.54 per share on revenue of $590.8 million. The Earnings Whisper number was $0.55 per share. Revenue grew 19.0% on a year-over-year basis.

The company said it expects third quarter earnings of approximately $0.58 per share on revenue of $613.0 million to $623.0 million. The current consensus earnings estimate is $0.57 per share on revenue of $612.6 million for the quarter ending November 30, 2016. The company also said it now expects fiscal 2017 earnings of $2.23 to $2.25 per share on revenue of $2.415 billion to $2.435 billion. The company's previous guidance was earnings of $2.19 to $2.23 per share and continues to expect revenue of $2.38 billion to $2.42 billion and the current consensus earnings estimate is $2.21per share on revenue of $2.40 billion for the year ending February 28, 2017.

Red Hat Inc is a provider of open source software solutions, using a community-powered approach to develop and offer reliable and high-performing operating system, middleware, virtualization, storage and cloud technologies.

Results
Reported Earnings
$0.56
Earnings Whisper
$0.55
Consensus Estimate
$0.54
Reported Revenue
$599.8 Mil
Revenue Estimate
$590.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Red Hat Reports Second Quarter Results for Fiscal Year 2017

Second quarter total subscription revenue of $531 million, up 20% year-over-year

Second quarter GAAP EPS of $0.32 and non-GAAP EPS of $0.55, up 14% and 17% year-over-year, respectively

--Total deferred revenue balance of $1.68 billion, up 19% year-over-year

Red Hat, Inc. (RHT), the world’s leading provider of open source solutions, today announced financial results for the second quarter of fiscal year 2017 ended August 31, 2016.

"Red Hat’s second quarter revenue results were highlighted by 18% in year-over-year growth for our Infrastructure offerings combined with 33% in year-over-year growth for our Application development and other emerging technologies," said Jim Whitehurst, President and Chief Executive Officer of Red Hat. "Digital transformation and hybrid cloud computing are changing how applications are built, deployed, and managed. As organizations adopt agile application development technologies such as Linux containers, they are able to rely on Red Hat as their strategic partner to modernize their infrastructure and application development platforms."

"In the second quarter, we continued to benefit from solid demand and strong overall execution," stated Frank Calderoni, Executive Vice President, Operations and Chief Financial Officer of Red Hat. "We continued to close a record number of deals over $1 million in our second quarter, which are up more than 60% year over year. This further demonstrates our customers’ commitment to Red Hat and the broad demand for our expanding technology portfolio as enterprises embrace digital transformation and the hybrid cloud."

Revenue: Total revenue for the quarter was $600 million, up 19% in U.S. dollars year-over-year, or 18% measured in constant currency. Constant currency references in this release are detailed in the tables below. Subscription revenue for the quarter was $531 million, up 20% in U.S. dollars year-over-year, or 19% measured in constant currency. Subscription revenue in the quarter was 89% of total revenue.

Subscription Revenue Breakout: Subscription revenue from Infrastructure-related offerings for the quarter was $427 million, an increase of 18% in U.S. dollars year-over-year and 17% measured in constant currency. Subscription revenue from Application development-related and other emerging technologies offerings for the quarter was $104 million, an increase of 33% in U.S. dollars year-over-year and 32% measured in constant currency.

Operating Income: GAAP operating income for the quarter was $82 million, up 7% year-over-year. After adjusting for non-cash share-based compensation expense, amortization of intangible assets, and transaction costs related to business combinations, non-GAAP operating income for the second quarter was $137 million, up 11% year-over-year. Non-GAAP references in this release are detailed in the tables below. For the second quarter, GAAP operating margin was 13.7% and non-GAAP operating margin was 22.8%.

Net Income: GAAP net income for the quarter was $59 million, or $0.32 per diluted share, compared with $51 million, or $0.28 per diluted share, in the year-ago quarter. After adjusting for non-cash share-based compensation expense, amortization of intangible assets, transaction costs related to business combinations, and non-cash interest expense related to the debt discount, non-GAAP net income for the quarter was $101 million, or $0.55 per diluted share, as compared to $88 million, or $0.47 per diluted share, in the year-ago quarter. Non-GAAP diluted weighted average shares outstanding excludes any dilution resulting from the convertible notes because any potential dilution is expected to be offset by our convertible note hedge transactions.

Cash: Operating cash flow was $97 million for the second quarter, a decrease of 21% on a year-over-year basis. Total cash, cash equivalents and investments as of August 31, 2016 was $2.0 billion after repurchasing approximately $127 million, or approximately 1.8 million shares, of common stock in the second quarter. The remaining balance in the current repurchase authorization as of August 31, 2016 was approximately $901 million.

Deferred revenue: At the end of the second quarter, the company’s total deferred revenue balance was $1.68 billion, an increase of 19% year-over-year. The full year positive impact to total deferred revenue from changes in foreign exchange rates was $22 million year-over-year. On a constant currency basis, total deferred revenue would have been up 17% year-over-year.

Outlook: Red Hat’s outlook assumes current business conditions and current foreign currency exchange rates.

For the full year:

Revenue guidance is expected to be $2.415 billion to $2.435 billion in U.S. dollars.

GAAP operating margin is expected to be approximately 13.8% and non-GAAP operating margin is expected to be approximately 23.0%.

Fully-diluted GAAP earnings per share (EPS) is expected to be approximately $1.35 to $1.37 per share. Fully-diluted non-GAAP EPS is expected to be approximately $2.23 to $2.25 per share. Both GAAP and non-GAAP EPS assume a $1 million to $2 million per quarter forecast for other income. Both GAAP and non-GAAP EPS also assume an estimated annual effective tax rate of 27% before discrete tax items and 184 million fully-diluted shares outstanding.

Operating cash flow guidance range is expected to be approximately $800 million to $820 million.

For the third quarter:

-- Revenue guidance is $613 million to $623 million.

GAAP operating margin is expected to be approximately 13.4% and non-GAAP operating margin is expected to be approximately 23.3%.

Fully-diluted GAAP EPS is expected to be approximately $0.34 per share. Fully-diluted non-GAAP EPS is expected to be approximately $0.58 per share. Both GAAP and non-GAAP EPS assume a $1 million to $2 million forecast for other income. Both GAAP and non-GAAP EPS also assume an estimated annual effective tax rate of 27% before discrete tax items and 184 million fully-diluted shares outstanding.

GAAP to non-GAAP reconciliation:

Full year non-GAAP operating margin guidance is derived by subtracting the estimated full year impact of non-cash share-based compensation expense of approximately $190 million, amortization of intangible assets of approximately $32 million, and transaction costs related to business combinations of $2 million. Estimated full year impacts of share-based compensation expense, amortization of intangible assets, and transaction costs related to business combinations have increased from the prior quarter primarily due to business combinations. Full year fully-diluted non-GAAP EPS guidance is derived by subtracting the expenses listed in the previous sentence and the full year impact of non-cash interest expense related to the debt discount of approximately $19 million and an estimated annual effective tax rate of 27% before discrete tax items. Additionally, full year fully-diluted non-GAAP EPS excludes approximately $15 million of discrete tax benefits related to share-based compensation that are included in full year fully-diluted GAAP EPS.

Third quarter non-GAAP operating margin guidance is derived by subtracting the estimated impact of non-cash share-based compensation expense of approximately $53 million and amortization of intangible assets of approximately $8 million. Third quarter fully-diluted non-GAAP EPS guidance is derived by subtracting the expenses listed in the previous sentence and non-cash interest expense related to the debt discount of approximately $5 million and an estimated annual effective tax rate of 27% before discrete tax items. Additionally, third quarter fully-diluted non-GAAP EPS excludes approximately $5 million of discrete tax benefits related to share-based compensation that are included in third quarter fully-diluted GAAP EPS.

Webcast and Website Information

A live webcast of Red Hat’s results will begin at 5:00 pm ET today. The webcast, in addition to a copy of our prepared remarks and slides containing financial highlights and supplemental metrics, can be accessed by the general public at Red Hat’s investor relations website at http://investors.redhat.com. A replay of the webcast will be available shortly after the live event has ended. Additional information on Red Hat’s reported results, including a reconciliation of the non-GAAP adjusted results, are included in the financial tables below.

About Red Hat, Inc.

Red Hat is the world’s leading provider of open source software solutions, using a community-powered approach to provide 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. Learn more at http://www.redhat.com.

Forward-Looking Statements

Certain statements contained in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: risks related to the ability of the Company to compete effectively; the ability to deliver and stimulate demand for new products and technological innovations on a timely basis; delays or reductions in information technology spending; the integration of acquisitions and the ability to market successfully acquired technologies and products; fluctuations in exchange rates; the effects of industry consolidation; uncertainty and adverse results in litigation and related settlements; the inability to adequately protect Company intellectual property and the potential for infringement or breach of license claims of or relating to third party intellectual property; risks related to data and information security vulnerabilities; the ability to meet financial and operations changes encountered in our international operations; ineffective management of, and control over, the Company’s growth and international operations; and changes in and a dependence on key personnel, as well as other factors contained in our most recent Quarterly Report on Form 10-Q (copies of which may be accessed through the Securities and Exchange Commission’s website at http://www.sec.gov), including those found therein under the captions "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations". In addition to these factors, actual future performance, outcomes, and results may differ materially because of more general factors including (without limitation) general industry and market conditions and growth rates, economic and political conditions, governmental and public policy changes and the impact of natural disasters such as earthquakes and floods. The forward-looking statements included in this press release represent the Company’s views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date of this press release.

Red Hat and the Shadowman logo are trademarks or registered trademarks of Red Hat, Inc. or its subsidiaries in the U.S. and other countries. Linux(R) is the registered trademark of Linus Torvalds in the U.S. and other countries.

RED HAT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands - except per share amounts)
Three Months Ended
Six Months Ended
August 31,
August 31,
August 31,
August 31,
2016
2015
2016
2015
Revenue:
Subscriptions
$ 531,209
$ 441,526
$ 1,032,874
$ 866,319
Training and services
68,596
62,622
134,829
118,830
Total subscription, training and services revenue
599,805
504,148
1,167,703
985,149
Cost of revenue:
Subscriptions
39,678
30,996
76,222
60,843
Training and services
47,993
44,968
95,496
86,519
Total cost of subscription, training and services revenue
87,671
75,964
171,718
147,362
Total gross profit
512,134
428,184
995,985
837,787
Operating expense:
Sales and marketing
253,255
205,101
496,503
403,973
Research and development
121,265
102,488
236,281
199,919
General and administrative
55,730
44,125
105,954
86,496
Total operating expense
430,250
351,714
838,738
690,388
Income from operations
81,884
76,470
157,247
147,399
Interest income
3,392
2,895
6,821
5,611
Interest expense
5,925
5,733
11,811
11,448
Other income (expense), net
84
(1,245 )
(468 )
(1,448 )
Income before provision for income taxes
79,435
72,387
151,789
140,114
Provision for income taxes (1)
20,663
20,992
31,832
40,633
Net income
$
58,772
$
51,395
$
119,957
$
99,481
Net income per share:
Basic
$
0.33
$
0.28
$
0.66
$
0.54
Diluted
$
0.32
$
0.28
$
0.65
$
0.53
Weighted average shares outstanding:
Basic
180,322
183,179
180,745
183,155
Diluted
183,346
186,750
183,750
186,493

(1) Provision for income taxes for the three and six months ended August 31, 2016 includes the impact of early adoption of ASU 2016-09. ASU 2016-09 requires that the amendment related to accounting for income taxes be adopted on a prospective basis. Accordingly, the provision for income taxes for the three and six months ended August 31, 2015 has not been adjusted. The provision for income taxes for the three and six months ended August 31, 2016 includes the effect of discrete tax benefits of $1.0 million and $8.9 million, respectively, related to excess tax benefits from share-based compensation.

RED HAT, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
ASSETS
August 31,
February 29,
2016
2016 (1)
Current assets:
Cash and cash equivalents
$
970,569
$
927,778
Investments in debt and equity securities
365,128
281,142
Accounts receivable, net
359,893
509,715
Prepaid expenses
149,226
150,877
Other current assets
3,404
2,921
Total current assets
1,848,220
1,872,433
Property and equipment, net
172,312
166,886
Goodwill
1,053,872
1,027,277
Identifiable intangibles, net
142,794
146,071
Investments in debt securities
706,948
786,470
Deferred tax assets, net
122,131
111,456
Other assets, net
54,479
44,506
Total assets
$
4,100,756
$
4,155,099
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses
$
273,568
$
284,802
Deferred revenue
1,233,762
1,272,908
Other current obligations
1,950
1,467
Total current liabilities
1,509,280
1,559,177
Convertible notes
734,700
723,942
Long term deferred revenue
446,890
449,636
Other long term obligations
91,490
87,912
Stockholders’ equity:
Common stock
24
23
Additional paid-in capital
2,215,856
2,162,264
Retained earnings
1,219,246
1,099,738
Treasury stock, at cost
(2,047,008 )
(1,853,144 )
Accumulated other comprehensive loss
(69,722 )
(74,449 )
Total stockholders’ equity
1,318,396
1,334,432
Total liabilities and stockholders’ equity
$
4,100,756
$
4,155,099
(1) Derived from audited financial statements
RED HAT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended
Six Months Ended
August 31,
August 31,
August 31,
August 31,
2016
2015
2016
2015
Cash flows from operating activities:
Net income
$
58,772
$
51,395
$
119,957
$
99,481
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
21,160
18,538
41,862
37,085
Share-based compensation expense
45,357
40,537
86,632
77,059
Deferred income taxes
(5,467 )
(3,843 )
(7,619 )
(1,929 )
Excess tax benefits from share-based payment arrangements
1,185
2,812
9,135
9,231
Net amortization of bond premium on available-for-sale debt
3,294
3,139
6,834
5,736
securities
Accretion of debt discount and amortization of debt issuance costs
5,393
5,222
10,758
10,417
Other
328
1,078
(437 )
1,908
Changes in operating assets and liabilities net of effects of
acquisitions:
Accounts receivable
(30,684 )
(17,908 )
159,645
161,479
Prepaid expenses
8,883
13,077
(490 )
12,651
Accounts payable and accrued expenses
18,578
34,415
(19,558 )
(17,932 )
Deferred revenue
(26,953 )
(25,017 )
(73,046 )
(56,579 )
Other
(3,044 )
(356 )
(4,574 )
(340 )
Net cash provided by operating activities
96,802
123,089
329,099
338,267
Cash flows from investing activities:
Purchase of available-for-sale debt securities
(163,043 )
(196,613 )
(297,644 )
(602,824 )
Proceeds from sales and maturities of available-for-sale debt
177,528
170,617
294,710
353,200
securities
Acquisition of businesses, net of cash acquired
(28,667 )
(1,700 )
(28,667 )
(1,700 )
Purchase of other intangible assets
(3,521 )
(2,068 )
(6,389 )
(5,997 )
Purchase of property and equipment
(15,539 )
(10,277 )
(33,192 )
(20,973 )
Other
-
(1,159 )
(111 )
(3,158 )
Net cash used in investing activities
(33,242 )
(41,200 )
(71,293 )
(281,452 )
Cash flows from financing activities:
Proceeds from exercise of common stock options
689
480
2,068
2,589
Purchase of treasury stock
(127,386 )
(70,079 )
(193,864 )
(70,079 )
Payments related to net settlement of employee share-based
(6,398 )
(7,726 )
(37,477 )
(32,937 )
compensation awards
Payments on other borrowings
(463 )
(385 )
(906 )
(737 )
Other
415
-
914
-
Net cash used in financing activities
(133,143 )
(77,710 )
(229,265 )
(101,164 )
Effect of foreign currency exchange rates on cash and cash
8,587
(3,494 )
14,250
(11,517 )
equivalents
Net increase (decrease) in cash and cash equivalents
(60,996 )
685
42,791
(55,866 )
Cash and cash equivalents at beginning of the period
1,031,565
990,922
927,778
1,047,473
Cash and cash equivalents at end of period
$
970,569
$
991,607
$
970,569
$
991,607
RED HAT, INC.
RECONCILIATION OF CERTAIN GAAP RESULTS TO NON-GAAP ADJUSTED
RESULTS
(Unaudited)
(In thousands - except per share amounts)
Non cash share-based compensation expense included in Consolidated
Statements of Operations:
Three Months Ended
Six Months Ended
August 31,
August 31,
August 31,
August 31,
2016
2015
2016
2015
Cost of revenue
$
4,054
$
4,151
$
8,359
$
7,877
Sales and marketing
20,361
16,782
38,802
32,194
Research and development
12,969
12,022
24,971
22,897
General and administration
7,973
7,582
14,500
14,091
Total share-based compensation expense
$
45,357
$
40,537
$
86,632
$
77,059
Amortization of intangible assets expense included in Consolidated
Statements of Operations:
Three Months Ended
Six Months Ended
August 31,
August 31,
August 31,
August 31,
2016
2015
2016
2015
Cost of revenue
$
3,846
$
2,618
$
7,468
$
5,192
Sales and marketing
1,905
2,010
3,821
4,014
Research and development
34
292
69
542
General and administration
1,848
1,160
3,601
2,212
Total amortization of intangible assets expense
$
7,633
$
6,080
$
14,959
$
11,960
Non-cash interest expense related to the debt discount included in
Consolidated Statements of Operations:
Three Months Ended
Six Months Ended
August 31,
August 31,
August 31,
August 31,
2016
2015
2016
2015
Total non-cash interest expense related to the debt discount
$
4,753
$
4,620
$
9,484
$
9,219
Transaction costs related to business combinations included in
Consolidated Statements of Operations:
Three Months Ended
Six Months Ended
August 31,
August 31,
August 31,
August 31,
2016
2015
2016
2015
Transaction costs related to business combinations
$
1,789
$
51
$
1,789
$
51
Three Months Ended
Six Months Ended
August 31,
August 31,
August 31,
August 31,
2016
2015
2016
2015
GAAP net income
$
58,772
$
51,395
$ 119,957
$
99,481
GAAP provision for income taxes
20,663
20,992
31,832
40,633
GAAP income before provision for income taxes
$
79,435
$
72,387
$ 151,789
$ 140,114
Add: Non-cash share-based compensation expense
45,357
40,537
86,632
77,059
Add: Amortization of intangible assets
7,633
6,080
14,959
11,960
Add: Non-cash interest expense related to the debt discount
4,753
4,620
9,484
9,219
Add: Transaction costs related to business combinations
1,789
51
1,789
51
Non-GAAP adjusted income before provision for income taxes
$ 138,967
$ 123,675
$ 264,653
$ 238,403
Non-GAAP provision for income taxes (1)
37,739
35,866
71,245
69,137
Non-GAAP adjusted net income (basic and diluted)
$ 101,228
$
87,809
$ 193,408
$ 169,266
Non-GAAP adjusted diluted weighted average shares outstanding:
GAAP diluted weighted average shares outstanding
183,346
186,750
183,750
186,493
Dilution offset from convertible note hedge transactions
(195 )
(585 )
(82 )
(329 )
Non-GAAP diluted weighted average shares outstanding
183,151
186,165
183,668
186,164
Non-GAAP adjusted net income per share:
Basic
$
0.56
$
0.48
$
1.07
$
0.92
Diluted
$
0.55
$
0.47
$
1.05
$
0.91
(1) Non-GAAP provision for income taxes:
Non-GAAP adjusted income before provision for income taxes
$ 138,967
$ 123,675
$ 264,653
$ 238,403
GAAP estimated annual effective tax rate
27.0 %
29.0 %
27.0 %
29.0 %
Provision for income taxes on Non-GAAP adjusted net income before
$
37,521
$
35,866
$
71,456
$
69,137
discrete tax benefits
Discrete tax expense (benefit), excluding discrete benefits related
218
-
(211 )
-
to share-based compensation
Provision for income taxes on Non-GAAP adjusted net income excluding
$
37,739
$
35,866
$
71,245
$
69,137
discrete benefits related to share-based compensation
RED HAT, INC.
RECONCILIATION OF CERTAIN GAAP RESULTS TO NON-GAAP ADJUSTED
RESULTS
(Unaudited)
(In thousands)
Reconciliation of GAAP results to non-GAAP adjusted results
Three Months Ended
Six Months Ended
August 31,
August 31,
August 31,
August 31,
2016
2015
2016
2015
GAAP gross profit
$
512,134
$ 428,184
$
995,985
$ 837,787
Add: Non-cash share-based compensation expense
4,054
4,151
8,359
7,877
Add: Amortization of intangible assets
3,846
2,618
7,468
5,192
Non-GAAP gross profit
$
520,034
$ 434,953
$ 1,011,812
$ 850,856
Non-GAAP gross margin
86.7 %
86.3 %
86.6 %
86.4 %
Three Months Ended
Six Months Ended
August 31,
August 31,
August 31,
August 31,
2016
2015
2016
2015
GAAP operating expenses
$
430,250
$ 351,714
$
838,738
$ 690,388
Deduct: Non-cash share-based compensation expense
(41,303 )
(36,386 )
(78,273 )
(69,182 )
Deduct: Amortization of intangible assets
(3,787 )
(3,462 )
(7,491 )
(6,768 )
Deduct: Transaction costs related to business combinations
(1,789 )
(51 )
(1,789 )
(51 )
Non-GAAP adjusted operating expenses
$
383,371
$ 311,815
$
751,185
$ 614,387
Three Months Ended
Six Months Ended
August 31,
August 31,
August 31,
August 31,
2016
2015
2016
2015
GAAP operating income
$
81,884
$
76,470
$
157,247
$ 147,399
Add: Non-cash share-based compensation expense
45,357
40,537
86,632
77,059
Add: Amortization of intangible assets
7,633
6,080
14,959
11,960
Add: Transaction costs related to business combinations
1,789
51
1,789
51
Non-GAAP adjusted operating income
$
136,663
$ 123,138
$
260,627
$ 236,469
Non-GAAP adjusted operating margin
22.8 %
24.4 %
22.3 %
24.0 %
Three Months Ended
August 31,
August 31,
Year-Over-Year
2016
2015
Growth Rate
GAAP subscription revenue by offering type
Infrastructure-related offerings
$
427,035
$ 362,926
17.7
%
Adjustment for currency impact
(3,824 )
-
Non-GAAP Infrastructure-related subscription revenue on a constant
$
423,211
$ 362,926
16.6
%
currency basis
Application development-related and other emerging technology
$
104,174
$
78,600
32.5
%
offerings
Adjustment for currency impact
(629 )
-
$
103,545
$
78,600
31.7
%
Non-GAAP Application development-related and other emerging
technology subscription revenue on a constant
currency basis
GAAP subscription revenue
531,209
441,526
20.3
%
Adjustment for currency impact
(4,453 )
-
Non-GAAP subscription revenue on a constant currency basis
$
526,756
$ 441,526
19.3
%
GAAP training and services revenue
$
68,596
$
62,622
9.5
%
Adjustment for currency impact
974
-
Non-GAAP training and services revenue on a constant currency basis
$
69,570
$
62,622
11.1
%
GAAP total subscription, training and services revenue
$
599,805
$ 504,148
19.0
%
Adjustment for currency impact
(3,479 )
-
Non-GAAP total subscription, training and services revenue on a
$
596,326
$ 504,148
18.3
%
constant currency basis
Six Months Ended
August 31,
August 31,
Year-Over-Year
2016
2015
Growth Rate
GAAP subscription revenue by offering type
Infrastructure-related offerings
$
830,216
$ 716,667
15.8
%
Adjustment for currency impact
(5,572 )
-
Non-GAAP Infrastructure-related subscription revenue on a constant
$
824,644
$ 716,667
15.1
%
currency basis
Application development-related and other emerging technology
$
202,658
$ 149,652
35.4
%
offerings
Adjustment for currency impact
(894 )
-
$
201,764
$ 149,652
34.8
%
Non-GAAP Application development-related and other emerging
technology subscription revenue on a constant
currency basis
GAAP subscription revenue
1,032,874
866,319
19.2
%
Adjustment for currency impact
(6,466 )
-
Non-GAAP subscription revenue on a constant currency basis
$ 1,026,408
$ 866,319
18.5
%
GAAP training and services revenue
$
134,829
$ 118,830
13.5
%
Adjustment for currency impact
1,577
-
Non-GAAP training and services revenue on a constant currency basis
$
136,406
$ 118,830
14.8
%
GAAP total subscription, training and services revenue
$ 1,167,703
$ 985,149
18.5
%
Adjustment for currency impact
(4,889 )
-
Non-GAAP total subscription, training and services revenue on a
$ 1,162,814
$ 985,149
18.0
%
constant currency basis
RED HAT, INC.
SUPPLEMENTAL INFORMATION
(Unaudited)
(In thousands)
Change in deferred revenue balances
Current
Long Term
Total Deferred
Deferred
Deferred
Revenue
Revenue
Revenue
Balance at August 31, 2015
$ 1,047,732
$ 365,708
$ 1,413,440
Constant currency change in deferred revenue (1)
169,269
75,469
244,738
Impact from foreign currency translation
16,761
5,713
22,474
Balance at August 31, 2016
$ 1,233,762
$ 446,890
$ 1,680,652
Year-over-year growth rate
17.8 %
22.2 %
18.9 %
Year-over-year growth rate on a constant currency basis
16.2 %
20.6 %
17.3 %
(1) Change in deferred revenue includes approximately $0.7 million
acquired as part of business combinations.
Revenue growth by geographical segment
Americas
EMEA
APAC
Consolidated
Total revenue for the three months ended August 31, 2016
$
385,529
$ 127,467
$
86,809
$
599,805
Adjustment for currency impact
2,997
(578 )
(5,898 )
(3,479 )
Total revenue on a constant currency basis for the three months
$
388,526
$ 126,889
$
80,911
$
596,326
ended August 31, 2016
Total revenue for the three months ended August 31, 2015
$
332,204
$ 108,454
$
63,490
$
504,148
Year-over-year growth rate
16.1 %
17.5 %
36.7 %
19.0 %
Year-over-year growth rate on a constant currency basis
17.0 %
17.0 %
27.4 %
18.3 %
Total revenue for the six months ended August 31, 2016
$
751,252
$ 251,766
$
164,685
$ 1,167,703
Adjustment for currency impact
6,248
(4,256 )
(6,881 )
(4,889 )
Total revenue on a constant currency basis for the six months ended
$
757,500
$ 247,510
$
157,804
$ 1,162,814
August 31, 2016
Total revenue for the six months ended August 31, 2015
$
654,037
$ 205,927
$
125,185
$
985,149
Year-over-year growth rate
14.9 %
22.3 %
31.6 %
18.5 %
Year-over-year growth rate on a constant currency basis
15.8 %
20.2 %
26.1 %
18.0 %

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SOURCE: Red Hat, Inc.

Media Contact:
Stephanie Wonderlick
Red Hat, Inc.
571-421-8169
swonderl@redhat.com
or
Investor Relations:
Tom McCallum
Red Hat, Inc.
919-754-4630
tmccallum@redhat.com