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Red Hat Q1 Earnings Call Transcript
Author: 123jump.com Staff
123jump.com
Last Update: 1:16 AM ET July 02 2009

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Red Hat first quarter rose 11% to $174 million with subscription revenue going up by 14%. Net income rose marginally to $18.5 million. Earnings per share were 15 cents as against 12 cents a year ago.


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Todd Raker – Deutsche Bank

Thanks guys. I just want to follow up on JBoss growth. Clearly you guys are starting to hit some tougher comps here, and if we look out from a longer-term perspective, how should we be thinking about the growth profile of JBoss versus the core business with a two to three year time horizon. Do you expect the growth profile to be maturely higher than the core business or should we start of it as about coming in line with the core business?

Jim Whitehurst

It’s still very early in its development by years versus what we’re, Red Hat Enterprise Linux is. So fundamentally it should grow faster and we’ll expect it to go faster than the core RHEL business. That said, it also is probably, it’s certainly more impacted by the economy than would be RHEL and for the simple standpoint of doing a migration from an expensive proprietary application server to JBoss saves a lot of money but there is often a large integration cost up front and so if you have a quarterly budget you’re trying to hit, migrating doesn’t necessarily work. If you’re looking at an annual budget or over the next couple of years, then it’s a significant savings to move to JBoss. So depending on how the economic environment goes, and the amount of CapEx dollars companies have to spend, will determine JBoss’ relative growth rate. But no matter what, we would expect it to be faster.

Todd Raker – Deutsche Bank

Okay thanks guys.

Tom McCallum

Next question please.

Operator

Your next question comes from the line of David Bayer of Cantor Fitzgerald. Your line is now open.

David Bayer – Cantor Fitzgerald

Congratulations on a fine quarter in a tough environment. I will not continue to pursue my original question which had to do with Sun and Oracle also but I would ask you to clarify a little bit, on the shorter contract lengths, does that imply anything about the overall pipelines or is it just more people being more conservative with what budgets they do have.

Charlie Peters

I appreciate the question. I’d like to clarify it. The pipelines remain strong. It’s more indicative of just the nature of the deals that closed in that particular quarter. As I said we’ve already seen some deals in Q2, in this month, that will change that statistic at least so far this quarter and I don’t necessarily believe that what we saw in Q1 is a trend. It was just Q1.

David Bayer – Cantor Fitzgerald

Right, thank you.

Operator

Your next question comes from the line of Trip Chowdhry of Global Equities Research. Your line is now open.

Trip Chowdhry – Global Equities Research

Thank you and again congratulations on a good quarter in a tough environment. Two questions, first is regarding the success of open source companies and here I am talking about Sugar CRM which had a lot of momentum, a lot of noise, and today its struggling quite a bit and I was trying to understand what is the reason that you as a company are doing very well and probably you’re the only open source software company which is buckling that trend. Any key data points you can suggest like when we look at the open source companies, what should we be looking at in terms of financial end market success and then I’ve a follow up question.
Charlie Peters
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