Maybe Red Hat executives should consider writing “The Art of the BIG Deal.”
CEO Jim Whitehurst on Wednesday cited a series of big deals ($1 million or more) as key drivers in the Hatters’ quarterly Street beat.
So what’s going on? The Hatters are driving more “wallet shares” among clients, explains CFO Frank Calderoni.
“Our growth was driven in part by expanding our footprint with customers as we closed a record number of deals over $1 million, up approximately 60% year-over-year,” Whitehurst noted.
Calderoni, who was lured away from Cisco to become the Hatters’ CFO a year ago, spent a few minutes later down in the weeds a bit to break down the big deal flow.
“Looking sequentially at our top 30 largest deals metric, all of the deals were $1 million or more and five of those deals were in excess of $5 million. Cross selling was strong, with over 70% of the top 30 deals including one or more components from one group of Application Development and emerging technologies offerings,” Calderoni explained.
“Financial services and government were our top verticals in Q2. Within our top 25 renewal business, we renewed 23 of the top 25 deals that we were expecting. The total subscription value of these top 25 renewals was approximately 105% of the prior value.”
Before any analyst could ask questions since Calderoni was still delivering his overview, he talked about the two non-renewals in which a project was killed and another client implemented its own Linux solution yet kept Red Hat for other business.
“One of the two deals that did not renew was related to a government agency project that was canceled. This agency continues to rely on Red Hat technologies, including a six-figure deal that closed in the quarter,” he explained, according to the transcript of the call provided by news website SeekingAlpha.
“The second deal that did not renew was lost to an on-premise legacy Linux distribution. We are still engaged with this customer in other areas of their business. And as with a few times in the past this has happened, we are optimistic that we can win back the lost portion over time as a result of our award winning service and innovation.”
Red Hat added another two deals to replace the lost ones to its top 25, and Calderoni noted the changes led to total renewals that “were approximately 115% higher than the prior year value.”
He then referenced growing “wallet share.”
“Given the growth in $1 million deals this quarter, we are clearly driving larger wallet share by taking a number of six-figure deals and expanding them to $1 million plus renewals,” he explained.
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Read the full transcript at:
http://seekingalpha.com/article/4007719-red-hats-rht-ceo-jim-whitehurst-q2-2017-results-earnings-call-transcript?part=single
