Red Hat Announces Fourth Quarter and Fiscal Year 2015 Results
Red Hat, Inc. has announced financial results for its fiscal fourth quarter and fiscal year ended February 28, 2015.
Total revenue for the quarter was $464 million, an increase of 16% in U.S. dollars from the year ago quarter, or 22% measured in constant currency. Constant currency references in this release are as detailed in the tables below. Subscription revenue for the quarter was $405 million, up 15% in U.S. dollars year-over-year, or 21% measured in constant currency. For the full fiscal year, total revenue was $1.79 billion, up 17% in U.S. dollars year-over-year, or 19% measured in constant currency, and subscription revenue was $1.56 billion, up 17% in U.S. dollars year-over-year, or 19% measured in constant currency.
"Red Hat delivered strong fourth quarter results that were highlighted by subscription revenue and total revenue that both grew over 20% year-over-year on a constant currency basis. We continued to experience strong demand for our open, hybrid cloud technologies, as evidenced by increased cross-selling in our top 30 deals which were all over $2 million for the first time,” stated Jim Whitehurst, President and Chief Executive Officer of Red Hat. “Customers value the consistency and flexibility as they run their applications using Red Hat solutions across a variety of deployment models, including public and private clouds, to modernize and transform their IT infrastructure. We believe that our strategic position as a trusted provider of infrastructure and our execution this past year have positioned us for strong constant currency revenue growth in the next fiscal year.”
GAAP operating income for the fourth quarter and the full fiscal year was $68 million and $250 million, respectively. GAAP operating margin was 14.6% in the fourth quarter and 14.0% for the full year. After adjusting for stock compensation, amortization expenses, certain facility exit costs, transaction costs related to business combinations, and non-cash interest expense related to convertible debt as detailed in the tables below, non-GAAP operating income for the quarter was $111 million, or a 23.8% operating margin. Full year non-GAAP operating income was $416 million and full year non-GAAP operating margin was 23.3%.
GAAP net income for the fourth quarter was $48 million, or $0.26 per diluted share, compared with $48 million, or $0.26 per diluted share, for the prior quarter and $45 million, or $0.24 per diluted share, in the year ago quarter. Non-GAAP adjusted net income for the fourth quarter was $81 million, or $0.43 per diluted share, after adjusting for stock compensation, amortization expenses, transaction costs related to business combinations and non-cash interest expense related to convertible debt as detailed in the tables below. This compares to non-GAAP adjusted net income of $79 million, or $0.42 per diluted share in the prior quarter, and $75 million, or $0.39 per diluted share in the year ago quarter.
For the full year, GAAP net income was $180 million or $0.95 per diluted share, compared with $178 million or $0.93 per diluted share in the prior year. After adjusting for stock compensation, amortization expenses, certain facility exit costs, transaction costs related to business combinations, and non-cash interest expense related to convertible debt as detailed in the tables below, non-GAAP adjusted net income for the year was $303 million or $1.60 per diluted share, compared to $285 million or $1.49 per diluted share for the previous fiscal year. For fiscal year 2015, Red Hat fully diluted shares outstanding were approximately 189.2 million for the full fiscal year, lower by 2.8 million shares due in part to the repurchase of approximately 8.4 million shares, or approximately $535 million of common stock during the year.
Operating cash flow totaled $217 million for the fourth quarter and $623 million for the full year. Cash and investments at February 28, 2015 totaled $1.81 billion.
“Our strong fourth quarter marked the 52nd consecutive quarter of revenue growth and we exited the fiscal year with a record total backlog over $1.86 billion, up 19% year-over-year,” stated Charlie Peters, Executive Vice President and Chief Financial Officer of Red Hat. “We are pleased to have delivered mid-teens growth across revenue, non-GAAP operating income and cash flow despite significant foreign exchange volatility during fiscal 2015. By focusing on the needs of our customers, our team of global associates achieved remarkable success across the company for the quarter and the year.”
Total backlog for fiscal year 2015 was in excess of $1.86 billion, up 19% year-over-year. We define total backlog as the value of non-cancellable subscription and service contracts, including total deferred revenue, which is billed, plus the value of customer contracts 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 $1.48 billion, an increase of 15% on a year-over-year basis and 14% sequentially. The portion of total backlog to be billed in the future not reflected in our financial statements was in excess of $380 million as of February 28, 2015, compared with the ending balance in excess of $270 million reported for fiscal year 2014. The portion of the total backlog to be billed in the next twelve months not reflected in our financial statements was in excess of $230 million as of February 28, 2015, compared with in excess of $190 million for the fiscal year ending February 28, 2014.
The billings proxy, which we define as total revenue plus the change in deferred revenue as reflected on the Consolidated Statement of Cash Flows, was $2.07 billion for fiscal year 2015 compared with $1.74 billion for the prior fiscal year, an increase of 19%. For the four-fiscal-quarter period ended February 28, 2015, our rolling average quarterly billings proxy increased $83 million, or 19%, to $518 million from $435 million for the four-fiscal-quarter period ended February 28, 2014.
