Red Hat yesterday said its sale rose 55 per cent during its third quarter of fiscal 2005, reaching $50.9m from the year-ago total, $32.8m. Q3's sales were ten per cent higher than Q2's.

The bulk of Red Hat's sales came through its Linux OS subscription services, which yielded $39.2m in the three months to 30 November 2004 - up 80 per cent on Q3 FY2004 and 12 per cent over the previous quarter.

Enterprise subscription gross margins remained strong at 91 per cent; overall gross margins were 80 per cent. No wonder, then, that Red Hat's CFO, Charlie Peters, felt able to say: "We believe that our results reflect continued improvements and validation of our subscription model."

Red Hat said it increased its deferred revenue tally to $121.4m, up 22 per cent on the previous quarter and 170 per cent higher than Q3 FY2004.

The company's net income for the period came to $10.8m (six cents a share), up 155 per cent on the $4.3m it reported this time last year, but was eight per cent down on Q2's $11.8m (six cents a share). However, last quarter's net income was boosted through a $0.6m tax gain. Q2's income before tax totalled $11.2m; Q3's figure was $11.3m.

Red Hat generated $29.7m in cash during the quarter, taking its cash and investments tally to $979m. ®

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