Editor’s note: Elizabeth A. Hedstrom Henlin, an Enterprise Software Analyst with Technology Business Research, offers her analysis of Red Hat’s latest financials, which were released Wednesday evening.
HAMPTON, N.H. - Red Hat (NYSE: RHT) will realize its growth ambitions by taking “land and expand” beyond sales and into development and partnerships
By templating its community-led approach to development into other areas of corporate strategy, Red Hat will sustain double-digit revenue growth across CY13 and into CY14.
The company’s revenue performance for CY2Q13 – 15% year-to-year growth in total revenue, nearly 16% year-to-year growth in subscription revenue – underscores the importance of Red Hat’s revenue model and install base to long-term growth.
TBR maintains that as customers seek to manage, consolidate, and orchestrate heterogeneous environments, Red Hat has the ability to meet targeted business needs in multiple segments.
Recent acquisitions – including Gluster and ManageIQ – have added material assets to Red Hat’s growing portfolio, allowing Red Hat to establish a presence in new markets that adjoin core Linux and middleware strengths and then monetize over time.
Red Hat executives’ confirmation of top account renewals (reported full renewals in top 100 accounts across CY12 and top 25 accounts in CY 2Q13) and the increasing inclusion of not only middleware but CloudForms as part of those renewals illustrates Red Hat’s install base belief in the company’s growth and ability to integrate newer offerings into existing deployments without disruption.
The depth with which Red Hat has integrated its diverse portfolio will increase Red Hat’s appeal to current and prospective partners, particularly those that engage in open-source development. In particular, we see OpenStack as a critical forum for Red Hat to demonstrate cloud capabilities and ability to contribute to development communities that lie to an extent outside Red Hat core strengths in middleware and Linux.
We believe Red Hat’s track record of supporting open-source efforts has and will continue to translate well to partners evaluating contributing vendors within OpenStack as potential ecosystem allies for the long-term. Partners will also play a critical role in expanding the footprint of Red Hat’s storage business – and we see Red Hat well positioned to disrupt data center sales across the second half of CY13 with its software offering in a manner that by the end of CY14 will resemble hypervisors’ impact on server sales and customer deployments.
(C) TBR
