​Editor’s note: Red Hat’s latest earnings report on Wednesday demonstrates the broadening reach of the Hatters’ open-source based wealth of products such as “cloud” computing enablement and with new offerings helping boost revenue for the 52nd consecutive quarter. Technology Business Research Analyst Andrew Smith provides an in-depth analysis.

HAMPTON, N.H. – Red Hat’s (NYSE: RHT) 4Q15 revenue for the period ending February 28 2015 increased a reported 16% from the year ago quarter to $464 million.

This marks the 52nd consecutive quarter of revenue growth for the vendor. Subscription revenue reached $405 million, up 15% year-over-year.

Red Hat’s operating margin was 14.6%, which remained relatively flat both year-over-year and sequentially. During earnings, the vendor continued to defend aggressive investments in its emerging products and services, such as OpenStack, OpenShift, and its cloud management and software defined storage portfolios.

These investments and further acquisition activity will continue to erode Red Hat’s operating margin, but the vendor remains confident in its strategy to promote product development and monetization for hyper-growth, emerging technology products. Emerging technology products grew a reported 38% year-to-year in 1Q15, and the vendor noted during the earnings call that 80% of its largest deals during the quarter included emerging technology components.

The vendor further elaborated by mentioning that of its top 30 deals, all of which in excess of $10M, 10 contained OpenStack, 7 contained OpenShift, and 5 contained storage. Red Hat further illustrated its portfolio traction by highlight renewal rates for the quarter, noting it renewed all 100 of its top expiring contracts for approximately 115% of their annualized value, a testament to the success of their product development strategies and ability to expand customer engagement.

TBR believes as customers continue to invest in Red Hat as their primary middleware and OS provider, they are will adopt adjacent storage and cloud products from the vendor, resulting in continued success for the vendor’s cloud, software and services portfolios as they provide natural extensions from Red Hat’s core portfolio. TBR believes Red Hat will continue to cultivate opportunities to cross-sell emerging technology products for cloud and mobility, generating increasingly high-value relationships with customers.

Red Hat looks to build off record quarterly revenue by targeting high-growth opportunities for cloud and mobility

The March announcement of Red Hat’s new “vision” to help Enterprise IT deploy mobility solutions via its mobile capabilities, including those recently acquired from FeedHenry, underscores the vendor’s desire to extend its leadership in the enterprise mobility solutions since entering the market in late 2014. Red Hat detailed some of the mobile product enhancements it has released since then, including deployment of FeedHenry technology as a mobile service on OpenShift, and the release of enhancements for mobile Application Lifecycle Management and collaboration.

Moving forward, Red Hat plans to expand deployment options for the FeedHenry platform and is also eyeing enhanced integration with Red Hat’s middleware products and services. TBR believes mobility solutions will become increasingly important to Red Hat as it looks to sustain double-digit year-to-year revenue growth throughout 2015. The vendor’s late entry into the market puts it behind competitors by default, but the acquisition of FeedHenry and quick implementation of associated products, particularly within Red Hat’s more established middleware portfolio, will help drive additional opportunity for cross sales and adoption moving forward.

Red Hat also continues to show leadership within the open source cloud community through its OpenStack ecosystem involvement and OpenShift PaaS solution. In March the vendor announced the launch of a new cloud innovation practice aimed to better deploy and monetize technology from the acquired Ceph and Inktank portfolios.

The Red Hat Cloud Innovation Practice will assist companies with more quickly on-ramping cloud solutions by providing technology and services including reference architectures, agile methodology consulting, training, and support. TBR believes Red Hat’s innovation practice will certainly help the vendor monetize and deploy more technology from the Ceph and Inktank portfolios; however the vendor will continue to face OpenShift adoption challenges from competitors such as Cloud Foundry. The development of Red Hat’s Cloud Innovation Practice will contribute to Red Hat software adoption within cloud deployments, but the vendor may find itself leaving OpenShift opportunities on the table due to customer preference for competing platforms based on Cloud Foundry. To minimize this threat, Red Hat promotes the enhanced application integration capabilities OpenShift allows via RHEL and Linux, as well as the additional value OpenShift provides through continued integration and deployment of JBoss services, such as messaging.

A flurry of product enhancements, releases, and partnerships during early 2015 illustrate Red Hat’s desire to expand its emerging technology and cloud reach

In February Red Hat releases Enterprise Linux OpenStack Platform 6, with updates to the platform’s networking, virtualization, and integration capabilities and interfacing with OpenStack clouds. In February the vendor launched Red Hat Enterprise Virtualization 3.5 with updates for virtualization of OpenStack, cloud enabled workloads, enhanced disaster recovery capabilities, and increased workload performance and scalability.

On March 5th Red Hat also released RHEL 7.1 and RHEL 7 Atomic Host, an operating system optimized for running applications with Linux containers. This flurry of product releases at the beginning of the calendar year will serve to bolster the vendor’s core product portfolio as it pursues adjacent opportunities for growth via cloud and mobility.

To that end, Red Hat announced several complimentary partner developments in 1Q15. In February Red Hat announced that its ARM Partner Early Access Program now includes more than 35 member companies, ranging from vendors, OEMs and ISVs. The ARM partner program was launched in 2014 with the goal of delivering a singular operating platform to support multiple systems designed on the ARM architecture.

The partnership provides Red Hat with a firm position to continue influencing the adoption of open source, Linux-based enterprise solutions deployed on ARM-based ecosystems, such as HP’s Moonshot servers. In early March, Red Hat also announced a partnership with Docker to deliver Linux containers based on Docker technology.

(C) TBR