Jim Whitehurst is one happy CEO, and the top executive at Red Hat (NYSE: RHT) has multiple reasons for smiling as the Raleigh-based open source software and solutions provider topped $2 billion in revenue for the first time.

A big revenue driver is “cloud computing,” as Whitehurst explained to Wall Street analysts in a conference call Tuesday evening.

He stressed four cloud aspects:

  • Physical
  • Virtual
  • Public
  • Private

“[I]nvestors have asked whether the public cloud is a positive driver for Red Hat. We firmly believe that it will be a hybrid cloud world, where applications will run across four – all four footprints; physical, virtual, public cloud, and private cloud,” Whitehurst told the analysts after Red Hat posted a 56th consecutive quarter of growth.

“Furthermore, we are providing technologies that enable choice and consistencies across all four environments and we enhanced this value with application development technologies, storage and management.

“The public cloud specifically acts as a channel for us and it is part of the value we bring to customers. Beyond the expansion of our relationships with cloud providers and high growth revenue results, let me share with you some customer data from our largest public cloud partner.”

He then cited what in his view are the key reasons.

“First, as a channel partner, this public cloud has been a great resource for us to reach new customers, including small and medium-sized businesses. We see approximately half the revenue from this public cloud comes from usage totaling less than $5,000 per customer in a quarter. This group most likely includes small and medium-sized businesses, test and development environments, business divisions and start-up companies.

“Second, the public cloud enables our existing customers’ additional choice on where to run their workloads. The other approximately half of the revenue with this cloud vendor comes from existing customers. We matched this data with the on-premise purchasing patterns of subscriptions for these existing customers. What we found was that this group of customers has continued to expand their on-premise subscriptions purchases, while they are also rapidly utilizing the public cloud environment for additional RHEL [Red Hat Enterprise Linux] workloads. This reinforces our view that it will be a hybrid cloud world and that Red Hat can continue to expand our wallet share as we provide choice and consistency to customers across all four footprints.”

Whitehurst noted multiple areas of growth but came back again to “cloud” as being an essential growth driver.

“[W]e achieved higher rates of revenue growth across our Infrastructure, Application Development, and Emerging Technologies during fiscal 2016, which represents strong sales growth across all four footprints,” he explained.

“Within the Application Development & Emerging Technologies are our fast growing OpenStack private cloud, OpenShift PaaS, and CloudForms cloud management product lines. We made significant progress this past year expanding our position in this part of the hybrid cloud environment and driving faster adoption.”

News website SeekingAlpha provided a transcript of the earnings call. Read the full report at:

http://seekingalpha.com/article/3960377-red-hats-rht-ceo-james-whitehurst-q4-2016-results-earnings-call-transcript?part=single