RALEIGH, N.C.--(BUSINESS WIRE)--Red Hat, Inc. (NYSE: RHT), the world's leading provider of open source solutions, today announced financial results for its fiscal fourth quarter and fiscal year ended February 29, 2016.
“Enterprises increasingly adopting hybrid cloud infrastructures and open source technologies drove our strong results. The fourth quarter marked our 56th consecutive quarter of revenue growth, contributing to Red Hat’s first fiscal year crossing $2 billion in total revenue,” stated Jim Whitehurst, President and Chief Executive Officer of Red Hat. “Customers are demanding technologies that modernize the development, deployment and life-cycle management of applications across hybrid cloud environments. Many are relying on Red Hat to provide both the infrastructure and the application development platforms to run their enterprise applications consistently and reliably across physical, virtual, private cloud and public cloud environments.”
“The fourth quarter was a strong close to the year as our results exceeded our guidance. We maintained a high level of execution throughout the fiscal year which contributed to greater than 20% constant currency revenue growth in each quarter. This performance also drove a record backlog of $2.13 billion in U.S. dollars, up 15% year-over-year, and provides us meaningful visibility into future revenue,” stated Frank Calderoni, Executive Vice President, Operations and Chief Financial Officer of Red Hat. “Our business momentum also drove record annual cash flow of $716 million, up 15% and representing the 5th straight year of operating cash flow margin of approximately 35%.”
Revenue: Total revenue for the quarter was $544 million, up 17% in U.S. dollars year-over-year, or 21% measured in constant currency. Constant currency references in this release are detailed in the tables below. Subscription revenue for the quarter was $480 million, up 18% in U.S. dollars year-over-year, or 22% measured in constant currency. Subscription revenue in the quarter was 88% of total revenue.
Full fiscal year 2016 total revenue was $2.05 billion, up 15% in U.S. dollars year-over-year, or 21% measured in constant currency. Subscription revenue for the full fiscal year was $1.80 billion, up 16% in U.S. dollars year-over-year, or 22% measured in constant currency. Subscription revenue in the full fiscal year was 88% of total revenue.
Subscription Revenue Breakout: Subscription revenue from Infrastructure-related offerings for the quarter was $391 million, an increase of 15% in U.S. dollars year-over-year and 18% measured in constant currency. Subscription revenue from Application Development-related and other emerging technologies offerings for the quarter was $89 million, an increase of 38% in U.S. dollars year-over-year and 43% measured in constant currency.
Full fiscal year subscription revenue from Infrastructure-related offerings was $1.48 billion, an increase of 12% in U.S. dollars year-over-year and 18% measured in constant currency. Full fiscal year subscription revenue from Application Development-related and other emerging technologies offerings was $323 million, an increase of 37% in U.S. dollars year-over-year and 46% measured in constant currency.
Operating Income: GAAP operating income for the quarter was $72 million, up 6% year-over-year. After adjusting for non-cash share-based compensation expense, amortization of intangible assets and transaction costs related to business combinations, non-GAAP operating income for the fourth quarter was $124 million, up 13% year-over-year. Non-GAAP references in this release are detailed in the tables below. For the fourth quarter, GAAP operating margin was 13.2% and non-GAAP operating margin was 22.9%.
Full fiscal year GAAP operating income was $288 million, up 15% year-over-year. After adjusting for non-cash share-based compensation expense, amortization of intangible assets and transaction costs related to business combinations, non-GAAP operating income for the full fiscal year was $484 million, up 16% year-over-year. Full fiscal year GAAP operating margin was 14.0% and non-GAAP operating margin was 23.6%.
Net Income: GAAP net income for the quarter was $53 million, or $0.29 per diluted share, compared with $48 million, or $0.26 per diluted share, in the year-ago quarter. After adjusting for non-cash share-based compensation expense, amortization of intangible assets, transaction costs related to business combinations, and non-cash interest expense related to the convertible debt discount, non-GAAP net income for the quarter was $97 million, or $0.52 per diluted share, as compared to $81 million, or $0.43 per diluted share, in the year-ago quarter. Non-GAAP diluted weighted average shares outstanding excludes any dilution resulting from the convertible notes because any potential dilution is expected to be offset by our convertible note hedge transactions. Fourth quarter GAAP EPS included an approximately $0.02 benefit while non-GAAP EPS included an approximately $0.04 benefit associated with a discrete tax item recorded in the quarter.
Full fiscal year GAAP net income was $199 million, or $1.07 per diluted share, compared with $180 million, or $0.95 per diluted share, in the prior fiscal year. After adjusting for non-cash share-based compensation expense, amortization of intangible assets, transaction costs related to business combinations, and non-cash interest expense related to the convertible debt discount, non-GAAP net income for the full fiscal year was $355 million, or $1.91 per diluted share, as compared to $303 million, or $1.60 per diluted share, in the prior fiscal year.
Cash: Operating cash flow was $247 million for the fourth quarter, an increase of 14% on a year-over-year basis. Operating cash flow for the full fiscal year was $716, an increase of 15% compared to the prior fiscal year.
Total cash, cash equivalents and investments as of February 29, 2016 was $2.0 billion after repurchasing approximately $114 million, or approximately 1.6 million shares, of common stock in the fourth quarter. After repurchasing approximately $263 million, or approximately 3.5 million shares, of common stock for the full fiscal year, the remaining balance in the current repurchase authorization as of February 29, 2016 was approximately $237 million.
Deferred revenue and backlog: Total backlog for fiscal year 2016 was in excess of $2.13 billion, up 15% year-over-year. We define total backlog as the value of non-cancellable subscription and service agreements, including total deferred revenue, which is billed, plus the value of non-cancellable subscription and service agreements to be billed in the future not reflected in our financial statements. At the end of the fiscal year, the company’s total deferred revenue balance was $1.72 billion, an increase of 16% year-over-year. The full year negative impact to total deferred revenue from changes in foreign exchange rates was $21 million year-over-year. On a constant currency basis, total deferred revenue would have been up 18% year-over-year. The portion of total backlog to be billed in the future not reflected in our financial statements was in excess of $410 million as of February 29, 2016, compared with the ending balance in excess of $380 million reported for fiscal year 2015. The portion of total backlog to be billed during fiscal year 2017 was in excess of $275 million as of February 29, 2016, compared with in excess of $230 million for the fiscal year ending February 28, 2015.
Outlook: Red Hat’s outlook assumes current business conditions and foreign currency exchange rates. For the full year:
- Revenue guidance is expected to be $2.380 billion to $2.420 billion in U.S. dollars.
- Full year GAAP operating margin is expected to be approximately 14.4% and non-GAAP operating margin is expected to be approximately 23.2%.
- Full year fully-diluted GAAP earnings per share (EPS) is expected to be approximately $1.30 to $1.34 per share. Full year fully-diluted non-GAAP EPS is expected to be approximately $2.22 to $2.26 per share. Both GAAP and non-GAAP EPS assume a $1 million to $2 million per quarter forecast for other income, a 27% annual effective tax rate and 184 million fully-diluted shares outstanding.
- Operating cash flow guidance range is expected to be approximately $800 million to $820 million.
For the first quarter:
- Revenue guidance is $558 million to $566 million.
- GAAP operating margin is expected to be approximately 13.2% and non-GAAP operating margin is expected to be approximately 22.0%.
- Fully-diluted GAAP EPS is expected to be approximately $0.28 per share. Fully-diluted non-GAAP EPS is expected to be approximately $0.50.
GAAP to non-GAAP reconciliation:
Full year non-GAAP operating margin guidance is derived by subtracting the estimated full year impact of non-cash share-based compensation expense of approximately $180 million and amortization of intangible assets of approximately $29 million. Full year fully-diluted non-GAAP EPS guidance is derived by subtracting the expenses listed in the previous sentence and the full year impact of non-cash interest expense related to the convertible debt discount of approximately $19 million.
First quarter non-GAAP operating margin guidance is derived by subtracting the estimated impact of non-cash share-based compensation expense of approximately $41 million and amortization of intangible assets of approximately $8 million. First quarter fully-diluted non-GAAP EPS guidance is derived by subtracting the expenses listed in the previous sentence and non-cash interest expense related to the convertible debt discount of approximately $5 million.
These statements are forward-looking and actual results may differ materially. Refer to the Forward-Looking Statements below for information on certain factors that could cause our actual results to differ materially.
Webcast and Website Information
A live webcast of Red Hat's results will begin at 5:00 pm ET today. The webcast, in addition to a copy of our prepared remarks and slides containing financial highlights and supplemental metrics, can be accessed by the general public at Red Hat's investor relations website at http://investors.redhat.com. A replay of the webcast will be available shortly after the live event has ended. Additional information on Red Hat's reported results, including a reconciliation of the non-GAAP adjusted results, are included in the financial tables below.
About Red Hat, Inc.
Red Hat is the world's leading provider of open source software solutions, using a community-powered approach to reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training, and consulting services. As a connective hub in a global network of enterprises, partners, and open source communities, Red Hat helps create relevant, innovative technologies that liberate resources for growth and prepare customers for the future of IT. Learn more at http://www.redhat.com.
Forward-Looking Statements
Certain statements contained in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: risks related to the ability of the Company to compete effectively; the ability to deliver and stimulate demand for new products and technological innovations on a timely basis; delays or reductions in information technology spending; the effects of industry consolidation; the integration of acquisitions and the ability to market successfully acquired technologies and products; uncertainty and adverse results in litigation and related settlements; the inability to adequately protect Company intellectual property and the potential for infringement or breach of license claims of or relating to third party intellectual property; risks related to data and information security vulnerabilities; ineffective management of, and control over, the Company's growth and international operations; fluctuations in exchange rates; and changes in and a dependence on key personnel, as well as other factors contained in our most recent Quarterly Report on Form 10-Q (copies of which may be accessed through the Securities and Exchange Commission's website at http://www.sec.gov), including those found therein under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." In addition to these factors, actual future performance, outcomes, and results may differ materially because of more general factors including (without limitation) general industry and market conditions and growth rates, economic and political conditions, governmental and public policy changes and the impact of natural disasters such as earthquakes and floods. The forward-looking statements included in this press release represent the Company's views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this press release.
Red Hat, Red Hat Enterprise Linux, the Shadowman logo, and JBoss are trademarks of Red Hat, Inc., registered in the U.S. and other countries. Linux is the registered trademark of Linus Torvalds in the U.S. and other countries.
| RED HAT, INC. | ||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| (In thousands - except per share amounts) | ||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||
| February 29, | February 28, | February 29, | February 28, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 (1) | |||||||||||||||
| Revenue: | ||||||||||||||||||
| Subscriptions | $479,642 | $405,073 | $1,803,449 | $1,561,234 | ||||||||||||||
| Training and services | 63,860 | 58,869 | 248,781 | 228,255 | ||||||||||||||
| Total subscription, training and services revenue | 543,502 | 463,942 | 2,052,230 | 1,789,489 | ||||||||||||||
| Cost of revenue: | ||||||||||||||||||
| Subscriptions | 33,575 | 28,731 | 126,663 | 112,856 | ||||||||||||||
| Training and services | 47,645 | 41,487 | 182,966 | 160,343 | ||||||||||||||
| Total cost of subscription, training and services revenue | 81,220 | 70,218 | 309,629 | 273,199 | ||||||||||||||
| Total gross profit | 462,282 | 393,724 | 1,742,601 | 1,516,290 | ||||||||||||||
| Operating expense: | ||||||||||||||||||
| Sales and marketing | 229,193 | 189,811 | 848,950 | 728,387 | ||||||||||||||
| Research and development | 108,498 | 92,038 | 413,322 | 367,856 | ||||||||||||||
| General and administrative | 52,819 | 44,267 | 192,281 | 170,053 | ||||||||||||||
| Total operating expense | 390,510 | 326,116 | 1,454,553 | 1,266,296 | ||||||||||||||
| Income from operations | 71,772 | 67,608 | 288,048 | 249,994 | ||||||||||||||
| Interest income | 3,189 | 2,288 | 11,673 | 8,336 | ||||||||||||||
| Interest expense | 5,856 | 5,803 | 23,121 | 9,394 | ||||||||||||||
| Other income (expense), net | (337) | 4,784 | (1,735) | 6,562 | ||||||||||||||
| Income before provision for income taxes | 68,768 | 68,877 | 274,865 | 255,498 | ||||||||||||||
| Provision for income taxes | 15,732 | 21,177 | 75,500 | 75,297 | ||||||||||||||
| Net income | $53,036 | $47,700 | $199,365 | $180,201 | ||||||||||||||
| Net income per share: | ||||||||||||||||||
| Basic | $0.29 | $0.26 | $1.09 | $0.97 | ||||||||||||||
| Diluted | $0.29 | $0.26 | $1.07 | $0.95 | ||||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||
| Basic | 182,099 | 183,459 | 182,817 | 186,529 | ||||||||||||||
| Diluted | 184,888 | 186,307 | 186,119 | 189,246 | ||||||||||||||
| (1) Derived from audited financial statements | ||||||||||||||||||
| RED HAT, INC. | |||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||
| (unaudited) | |||||||||||
| (In thousands) | |||||||||||
| ASSETS | |||||||||||
| February 29, | February 28, | ||||||||||
| 2016 | 2015 (1) | ||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $927,778 | $1,047,473 | |||||||||
| Investments in debt and equity securities | 281,142 | 215,254 | |||||||||
| Accounts receivable, net | 509,715 | 468,021 | |||||||||
| Prepaid expenses | 150,877 | 150,715 | |||||||||
| Other current assets | 2,921 | 1,980 | |||||||||
| Total current assets | 1,872,433 | 1,883,443 | |||||||||
| Property and equipment, net | 166,886 | 172,151 | |||||||||
| Goodwill | 1,027,277 | 927,060 | |||||||||
| Identifiable intangibles, net | 146,071 | 134,276 | |||||||||
| Investments in debt securities | 786,470 | 546,016 | |||||||||
| Deferred tax assets, net | 111,456 | 98,892 | |||||||||
| Other assets, net | 44,506 | 22,731 | |||||||||
| Total assets | $4,155,099 | $3,784,569 | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued expenses | $284,802 | $237,733 | |||||||||
| Deferred revenue | 1,272,908 | 1,095,115 | |||||||||
| Other current obligations | 1,467 | 1,185 | |||||||||
| Total current liabilities | 1,559,177 | 1,334,033 | |||||||||
| Convertible notes | 723,942 | 702,939 | |||||||||
| Long term deferred revenue | 449,636 | 387,213 | |||||||||
| Other long term obligations | 87,912 | 72,046 | |||||||||
| Stockholders' equity: | |||||||||||
| Common stock | 23 | 23 | |||||||||
| Additional paid-in capital | 2,162,264 | 1,963,851 | |||||||||
| Retained earnings | 1,099,738 | 900,373 | |||||||||
| Treasury stock, at cost | (1,853,144) | (1,515,288) | |||||||||
| Accumulated other comprehensive loss | (74,449) | (60,621) | |||||||||
| Total stockholders' equity | 1,334,432 | 1,288,338 | |||||||||
| Total liabilities and stockholders' equity | $4,155,099 | $3,784,569 | |||||||||
| (1) Derived from audited financial statements | |||||||||||
|
RED HAT, INC. |
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|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||||||||
|
(Unaudited) |
||||||||||||||||
|
(In thousands) |
||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| February 29, | February 28, | February 29, | February 28, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 (1) | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net income | $53,036 | $47,700 | $199,365 | $180,201 | ||||||||||||
| Adjustments to reconcile net income to net cash provided by | ||||||||||||||||
| operating activities: | ||||||||||||||||
| Depreciation and amortization | 19,144 | 19,149 | 76,088 | 76,263 | ||||||||||||
| Share-based compensation expense | 45,768 | 36,290 | 166,234 | 135,232 | ||||||||||||
| Deferred income taxes | (17,585) | 20,392 | (13,673) | 23,517 | ||||||||||||
| Net amortization of bond premium on available-for-sale debt securities | 3,378 | 2,349 | 12,169 | 9,314 | ||||||||||||
| Accretion of debt discount and amortization of debt issuance costs | 5,306 | 5,142 | 21,003 | 8,227 | ||||||||||||
| Other | 1,657 | (2,947) | 4,418 | (3,474) | ||||||||||||
| Changes in operating assets and liabilities net of effects of acquisitions: | ||||||||||||||||
| Accounts receivable | (112,919) | (123,850) | (48,404) | (121,536) | ||||||||||||
| Prepaid expenses | (28,104) | (27,239) | (24,486) | (40,741) | ||||||||||||
| Accounts payable and accrued expenses | 58,484 | 14,865 | 62,438 | 71,040 | ||||||||||||
| Deferred revenue | 220,410 | 224,738 | 260,495 | 282,693 | ||||||||||||
| Other | (1,122) | 795 | 445 | 2,059 | ||||||||||||
| Net cash provided by operating activities | 247,453 | 217,384 | 716,092 | 622,795 | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Purchase of available-for-sale debt securities | (199,367) | (107,482) | (982,935) | (568,551) | ||||||||||||
| Proceeds from sales and maturities of available-for-sale debt securities | 66,491 | 77,048 | 655,622 | 580,158 | ||||||||||||
| Acquisition of businesses, net of cash acquired | 252 | - | (126,459) | (296,121) | ||||||||||||
| Purchase of other intangible assets | (5,870) | (2,212) | (13,964) | (6,123) | ||||||||||||
| Purchase of property and equipment | (12,095) | (10,563) | (41,553) | (45,648) | ||||||||||||
| Other | 430 | 8,365 | (2,819) | 11,282 | ||||||||||||
| Net cash used in investing activities | (150,159) | (34,844) | (512,108) | (325,003) | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Excess tax benefits from share-based payment arrangements | 2,244 | 710 | 20,231 | 5,607 | ||||||||||||
| Proceeds from exercise of common stock options | 284 | 1,280 | 3,596 | 2,434 | ||||||||||||
| Purchase of treasury stock | (114,392) | - | (262,643) | (535,062) | ||||||||||||
| Payments related to net settlement of employee share-based compensation awards | (6,091) | (4,148) | (66,907) | (43,462) | ||||||||||||
| Proceeds from issuance of convertible notes, net of issuance costs | - | (625) | - | 789,769 | ||||||||||||
| Purchase of convertible note hedges | - | - | - | (148,040) | ||||||||||||
| Proceeds from issuance of warrants | - | - | - | 79,776 | ||||||||||||
| Payments on other borrowings | (491) | (390) | (1,843) | (2,782) | ||||||||||||
| Net cash provided by (used in) financing activities | (118,446) | (3,173) | (307,566) | 148,240 | ||||||||||||
| Effect of foreign currency exchange rates on cash and cash equivalents | 6,893 | (15,883) | (16,113) | (45,301) | ||||||||||||
| Net increase (decrease) in cash and cash equivalents | (14,259) | 163,484 | (119,695) | 400,731 | ||||||||||||
| Cash and cash equivalents at beginning of the period | 942,037 | 883,989 | 1,047,473 | 646,742 | ||||||||||||
| Cash and cash equivalents at end of period | $927,778 | $1,047,473 | $927,778 | $1,047,473 | ||||||||||||
| (1) Derived from audited financial statements | ||||||||||||||||
| RED HAT, INC. | ||||||||||||||||
| RECONCILIATION OF CERTAIN GAAP RESULTS TO NON-GAAP ADJUSTED RESULTS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (In thousands - except per share amounts) | ||||||||||||||||
| Non cash share-based compensation expense included in Consolidated Statements of Operations: | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| February 29, | February 28, | February 29, | February 28, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Cost of revenue | $3,946 | $3,569 | $15,898 | $14,027 | ||||||||||||
| Sales and marketing | 19,703 | 15,408 | 69,089 | 55,203 | ||||||||||||
| Research and development | 12,511 | 10,426 | 48,466 | 38,517 | ||||||||||||
| General and administration | 9,608 | 6,887 | 32,781 | 27,485 | ||||||||||||
| Total share-based compensation expense | $45,768 | $36,290 | $166,234 | $135,232 | ||||||||||||
| Amortization of intangible assets expense included in Consolidated Statements of Operations: | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| February 29, | February 28, | February 29, | February 28, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Cost of revenue | $3,434 | $2,576 | $11,726 | $10,672 | ||||||||||||
| Sales and marketing | 1,730 | 2,305 | 8,075 | 7,838 | ||||||||||||
| Research and development | (13) | 250 | 842 | 2,417 | ||||||||||||
| General and administration | 1,711 | 1,484 | 5,160 | 5,958 | ||||||||||||
| Total amortization of intangible assets expense | $6,862 | $6,615 | $25,803 | $26,885 | ||||||||||||
|
Non-cash interest expense related to the debt discount included in Consolidated Statements of Operations: |
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| Three Months Ended | Twelve Months Ended | |||||||||||||||
| February 29, | February 28, | February 29, | February 28, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
|
Total non-cash interest expense related to the debt discount |
$4,686 | $4,556 | $18,570 | $7,292 | ||||||||||||
| Transaction costs related to business combinations included in Consolidated Statements of Operations: | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| February 29, | February 28, | February 29, | February 28, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Transaction costs related to business combinations | $40 | - | $3,884 | 4,001 | ||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| February 29, | February 28, | February 29, | February 28, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| GAAP net income | $53,036 | $47,700 | $199,365 | $180,201 | ||||||||||||
| Provision for income taxes | 15,732 | 21,177 | 75,500 | 75,297 | ||||||||||||
| GAAP income before provision for income taxes | $68,768 | $68,877 | $274,865 | $255,498 | ||||||||||||
| Add: Non-cash share-based compensation expense | 45,768 | 36,290 | 166,234 | 135,232 | ||||||||||||
| Add: Amortization of intangible assets | 6,862 | 6,615 | 25,803 | 26,885 | ||||||||||||
|
Add: Non-cash interest expense related to the debt discount |
4,686 | 4,556 | 18,570 | 7,292 | ||||||||||||
| Add: Transaction costs related to business combinations | 40 | - | 3,884 | 4,001 | ||||||||||||
| Non-GAAP adjusted income before provision for income taxes | $126,124 | $116,338 | $489,356 | $428,908 | ||||||||||||
| Provision for income taxes (1) | 29,094 | 35,754 | 134,431 | 126,399 | ||||||||||||
| Non-GAAP adjusted net income (basic and diluted) | $97,030 | $80,584 | $354,925 | $302,509 | ||||||||||||
| Non-GAAP adjusted diluted weighted average shares outstanding: | ||||||||||||||||
| GAAP diluted weighted average shares outstanding | 184,888 | 186,307 | 186,119 | 189,246 | ||||||||||||
| Dilution offset from convertible note hedge transactions | (67) | - | (282) | - | ||||||||||||
| Non-GAAP diluted weighted average shares outstanding | 184,821 | 186,307 | 185,837 | 189,246 | ||||||||||||
| Non-GAAP adjusted net income per share: | ||||||||||||||||
| Basic | $0.53 | $0.44 | $1.94 | $1.62 | ||||||||||||
| Diluted | $0.52 | $0.43 | $1.91 | $1.60 | ||||||||||||
| (1) Provision for income taxes: | ||||||||||||||||
| Non-GAAP adjusted net income before income tax provision | $126,124 | $116,338 | $489,356 | $428,908 | ||||||||||||
| Estimated annual effective tax rate | 23.1% | 30.7% | 27.5% | 29.5% | ||||||||||||
| Provision for income taxes on Non-GAAP adjusted net income | $29,094 | $35,754 | $134,431 | $126,399 | ||||||||||||
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RED HAT, INC. |
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RECONCILIATION OF CERTAIN GAAP RESULTS TO NON-GAAP ADJUSTED RESULTS |
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|
(Unaudited) |
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|
(In thousands - except per share amounts) |
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| Reconciliation of GAAP results to non-GAAP adjusted results | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| February 29, | February 28, | February 29, | February 28, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| GAAP gross profit | $462,282 | $393,724 | $1,742,601 | $1,516,290 | ||||||||||||
| Add: Non-cash share-based compensation expense | 3,946 | 3,569 | 15,898 | 14,027 | ||||||||||||
| Add: Amortization of intangible assets | 3,434 | 2,576 | 11,726 | 10,672 | ||||||||||||
| Non-GAAP gross profit | $469,662 | $399,869 | $1,770,225 | $1,540,989 | ||||||||||||
| Non-GAAP gross margin | 86.4% | 86.2% | 86.3% | 86.1% | ||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| February 29, | February 28, | February 29, | February 28, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| GAAP operating expenses | $390,510 | $326,116 | $1,454,553 | $1,266,296 | ||||||||||||
| Deduct: Non-cash share-based compensation expense | (41,822) | (32,721) | (150,336) | (121,205) | ||||||||||||
| Deduct: Amortization of intangible assets | (3,428) | (4,039) | (14,077) | (16,213) | ||||||||||||
| Deduct: Transaction costs related to business combinations | (40) | - | (3,884) | (4,001) | ||||||||||||
| Non-GAAP adjusted operating expenses | $345,220 | $289,356 | $1,286,256 | $1,124,877 | ||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| February 29, | February 28, | February 29, | February 28, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| GAAP operating income | $71,772 | $67,608 | $288,048 | $249,994 | ||||||||||||
| Add: Non-cash share-based compensation expense | 45,768 | 36,290 | 166,234 | 135,232 | ||||||||||||
| Add: Amortization of intangible assets | 6,862 | 6,615 | 25,803 | 26,885 | ||||||||||||
| Add: Transaction costs related to business combinations | 40 | - | 3,884 | 4,001 | ||||||||||||
| Non-GAAP adjusted operating income | $124,442 | $110,513 | $483,969 | $416,112 | ||||||||||||
| Non-GAAP adjusted operating margin | 22.9% | 23.8% | 23.6% | 23.3% | ||||||||||||
| Three Months Ended | ||||||||||||||||
| February 29, | February 28, | Year-Over-Year | ||||||||||||||
| 2016 | 2015 | Growth Rate | ||||||||||||||
| GAAP subscription revenue by offering type | ||||||||||||||||
| Infrastructure-related offerings | $390,706 | $340,778 | 14.7% | |||||||||||||
| Adjustment for currency impact | $10,497 | - | ||||||||||||||
| Non-GAAP Infrastructure-related subscription revenue on a constant currency basis | $401,203 | $340,778 | 17.7% | |||||||||||||
| Application development-related and other emerging technology offerings | $88,936 | $64,295 | 38.3% | |||||||||||||
| Adjustment for currency impact | 3,032 | - | ||||||||||||||
| Non-GAAP Application development-related and other emerging technology subscription revenue on a constant currency basis | $91,968 | $64,295 | 43.0% | |||||||||||||
| GAAP subscription revenue | 479,642 | 405,073 | 18.4% | |||||||||||||
| Adjustment for currency impact | 13,529 | - | ||||||||||||||
| Non-GAAP subscription revenue on a constant currency basis | $493,171 | $405,073 | 21.7% | |||||||||||||
| GAAP training and services revenue | $63,860 | $58,869 | 8.5% | |||||||||||||
| Adjustment for currency impact | 3,017 | - | ||||||||||||||
| Non-GAAP training and services revenue on a constant currency basis | $66,877 | $58,869 | 13.6% | |||||||||||||
| GAAP total subscription, training and services revenue | $543,502 | $463,942 | 17.1% | |||||||||||||
| Adjustment for currency impact | 16,546 | - | ||||||||||||||
| Non-GAAP total subscription, training and services revenue on a constant currency basis | $560,048 | $463,942 | 20.7% | |||||||||||||
| Twelve Months Ended | ||||||||||||||||
| February 29, | February 28, | Year-Over-Year | ||||||||||||||
| 2016 | 2015 | Growth Rate | ||||||||||||||
| GAAP subscription revenue by offering type | ||||||||||||||||
| Infrastructure-related offerings | $1,480,463 | $1,324,693 | 11.8% | |||||||||||||
| Adjustment for currency impact | $80,616 | - | ||||||||||||||
| Non-GAAP Infrastructure-related subscription revenue on a constant currency basis | $1,561,079 | $1,324,693 | 17.8% | |||||||||||||
| Application development-related and other emerging technology offerings | $322,986 | $236,541 | 36.5% | |||||||||||||
| Adjustment for currency impact | 21,714 | - | ||||||||||||||
|
Non-GAAP Application development-related and other emerging
technology subscription |
$344,700 | $236,541 | 45.7% | |||||||||||||
| GAAP subscription revenue | 1,803,449 | 1,561,234 | 15.5% | |||||||||||||
| Adjustment for currency impact | 102,330 | - | ||||||||||||||
| Non-GAAP subscription revenue on a constant currency basis | $1,905,779 | $1,561,234 | 22.1% | |||||||||||||
| GAAP training and services revenue | $248,781 | $228,255 | 9.0% | |||||||||||||
| Adjustment for currency impact | 18,460 | - | ||||||||||||||
| Non-GAAP training and services revenue on a constant currency basis | $267,241 | $228,255 | 17.1% | |||||||||||||
| GAAP total subscription, training and services revenue | $2,052,230 | $1,789,489 | 14.7% | |||||||||||||
| Adjustment for currency impact | 120,790 | - | ||||||||||||||
| Non-GAAP total subscription, training and services revenue on a constant currency basis | $2,173,020 | $1,789,489 | 21.4% | |||||||||||||
| RED HAT, INC. | |||||||||||||||||||||||
| Supplemental Information | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| (In thousands - except per share amounts) | |||||||||||||||||||||||
| Change in deferred revenue balances | |||||||||||||||||||||||
|
Current |
Long Term |
Total |
|||||||||||||||||||||
| Balance at February 28, 2015 | $1,095,115 | $387,213 | $1,482,328 | ||||||||||||||||||||
| Constant currency change in deferred revenue (1) | 191,232 | 69,615 | 260,847 | ||||||||||||||||||||
| Impact from foreign currency translation | (13,439) | (7,192) | (20,631) | ||||||||||||||||||||
| Balance at February 29, 2016 | $1,272,908 | $449,636 | $1,722,544 | ||||||||||||||||||||
| Year-over-year growth rate | 16.2% | 16.1% | 16.2% | ||||||||||||||||||||
| Year-over-year growth rate on a constant currency basis | 17.5% | 18.0% | 17.6% | ||||||||||||||||||||
| (1) Change in deferred revenue includes approximately $0.4 million acquired as part of business combinations. | |||||||||||||||||||||||
| Revenue growth by geographical segment | |||||||||||||||||||||||
| Americas | EMEA | APAC | Consolidated | ||||||||||||||||||||
|
Total revenue for the three months ended February 29, 2016 |
$357,940 | $115,468 | $70,094 | $543,502 | |||||||||||||||||||
| Adjustment for currency impact | 5,074 | 8,510 | 2,962 | 16,546 | |||||||||||||||||||
|
Total revenue on a constant currency basis for the three months |
$363,014 | $123,978 | $73,056 | $560,048 | |||||||||||||||||||
| Total revenue for the three months ended February 28, 2015 | $305,481 | $100,274 | $58,187 | $463,942 | |||||||||||||||||||
| Year-over-year growth rate | 17.2% | 15.2% | 20.5% | 17.1% | |||||||||||||||||||
| Year-over-year growth rate on a constant currency basis | 18.8% | 23.6% | 25.6% | 20.7% | |||||||||||||||||||
| Total revenue for the twelve months ended February 29, 2016 | $1,354,345 | $436,304 | $261,581 | $2,052,230 | |||||||||||||||||||
| Adjustment for currency impact | 16,743 | 75,887 | 28,160 | 120,790 | |||||||||||||||||||
|
Total revenue on a constant currency basis for the twelve months |
$1,371,088 | $512,191 | $289,741 | $2,173,020 | |||||||||||||||||||
| Total revenue for the twelve months ended February 28, 2015 | $1,144,237 | $410,299 | $234,953 | $1,789,489 | |||||||||||||||||||
| Year-over-year growth rate | 18.4% | 6.3% | 11.3% | 14.7% | |||||||||||||||||||
| Year-over-year growth rate on a constant currency basis | 19.8% | 24.8% | 23.3% | 21.4% | |||||||||||||||||||
