Red Hat says its huge investment ($100 million-plus, according tor reports) in Durham startup Ansible last fall is already paying big dividends, says Red Hat’s CEO.
And the Hatters’ CFO spells out how acquisitions impact bottom line.
Both CEO Jim Whitehurst and CFO Frank Calderoni discussed Ansible during a conference call Wednesday to discuss the Red Hat’s latest quarterly financials. Revenue was up 18 percent year-over-year, and Ansible played a role in that.
Red Hat also announced another acquisition – 3Scale – although financial terms were not disclosed.
Ansible brought automation technology to Red Hat, and Whitehurst praised the Durham-based crew following a question from analyst Greg Moskowitz.
“Oh, I think without a doubt it is well above what our initial expectation,” Whitehurst said, according to a transcript provided by financial news site SeekingAlpha.
“Ansible’s really hit an inflection point and it is really taking off. If you look at Google web search trends, if you look at the open source used in adoption, we talked to customers and we are seeing a tremendous amount of interest around Ansible.
“It certainly well beyond what we initially expected at the acquisition. Now again it’s still early days but it’s I would say that it’s far exceeded our expectations at this point.”
Calderoni, meanwhile, was asked about how he accounted for investments such as Ansible and 3Scale within Red Hat’s “investment portfolio,” as he described it.
“We have needs within the company related to a lot of the emerging technologies that’s what hinting to start to see that ramp both from an engineering and then also from a go-to-market perspective. The opportunity we feel is there,” he explained.
“The investment required especially when you have lead time that can go from 12 to 24 months as far as working with customers. We feel the investment to make in those areas is extremely critical for us to drive the growth that Jim referred to earlier that we are looking forward to. Not only this year but as in the next several years.
“And so we are also kind of putting that in perspective of trying to make sure that we can balance it as it relate to margin. We know that investors are always interested and looking at operating margin and how that performing. So it is difficult when we want to also look at an acquisition especially in the near term. And not to say that we expect this to be dilutive forever.”
Calderoni then brought up Ansible again.
“Jim talked about Ansible and how strong we feel about the performance so far. So as these acquisitions start to show some traction especially as part of Red Hat, we expect them to start to drive not only upside but also improvement in the bottom line.”
Read the full transcript at: