Linux vendor Red Hat is continuing to grow its business beyond just providing Linux for servers. Red Hat reported its third quarter fiscal 2015 earning on December 18, showing just how important the company's broad product offering has become to its continued financial success.
For the quarter, revenue was reported at $456 million, for a 15 percent year-over-year gain. Net income however fell from $52 million in the third quarter of 2014 to $48 million in the third quarter of Red Hat's fiscal 2015 year.
Looking forward, Red Hat provided fourth quarter fiscal 2015 guidance for revenue to be approximately $456 million to $459 million.
Among the primary metrics that Red Hat repeats in its quarterly earnings calls are its renewal rates and the sizes of its top deals. Jim Whitehurst, President and CEO of Red Hat, said that Red Hat successfully renewed all 25 of the company's top 25 deals during the quarter.
"We also had 12 deals that were in excess of $5 million, a record for us in any quarter, and three of these deals were greater than $10 million, a record for us in the third quarter," Whitehurst said. "Cross selling was strong with 55 percent of the deals including one or more components from our application development in emerging technologies which includes Middleware, OpenStack, OpenShift CloudForms and storage."
Cross selling is an element of Red Hat's financial success that Whitehurst emphasized. He noted that approximately one third of the top 30 deals contained five or more Red Hat Technologies.
One area of specific opportunity for Red Hat is with its OpenStack solutions. Whitehurst said that OpenStack is now at a mature point where organizations are putting the open-source OpenStack cloud platform into production.
"So three of our top 30 deal included an OpenStack component," Whitehurst said. "We have one deal actually that was not in the top 30 that was a seven figure deal, so over a million, that was entirely OpenStack."
Containers in RHEL and in OpenShift
Whitehurst is also optimistic about the opportunity for containers, both as part of Red Hat Enterprise Linux and in OpenShift. For containers, Red Hat supports them running on a full Red Hat Enterprise Linux (RHEL) platform as well as the optimized Red Hat Enterprise Atomic Host product.
"One of our big long-term customers actually is running full RHEL and running Docker on full RHEL," Whitehurst said. "And another very large customer is rolling that on Atomic alone, so we see there’s still different points of view about how people run containers."
Red Hat is also working on expanding its container delivery solutions with an upcoming version of the OpenShift PaaS. The new OpenShift development will include Docker Container and Google Kubernetes support.
"OpenShift v3 which will GA next year does include RHEL Atomic in Docker and Kubernetes," Whitehurst said.