Red Hat is in the pink: Cracks $3bn revenue run rate as subs take off
CEO Jim Whitehurst damns Docker with faint praise, as you would after buying CoreOS
Red Hat’s posted a strong end to its 2018 financial, crossed the US$3bn-a-year-run-rate barrier and reported growth in its key products.
The company reported Q4 2018 revenue of US$772 million, up 23 per cent year on year. There was a net loss of $12.6m, but also a one-off $123m charge related to the USA’s new tax laws so the red ink’s not a sign of bleeding. For the full year the company brought in $2.9bn, up 21 per cent year-over-year.
Full fiscal year subscription revenue hit $2.6 billion, up 21 per cent year-over-year,
CEO Jim Whitehurst was especially pleased that the company has unbilled deals of $775m still to hit the balance sheet, plus $2.6bn of deferred revenue.
Whitehurst predicted happy days ahead as organisations move to Linux for their cloud-native applications, with Windows and UNIX the losers. He also said he’s super-happy that Red Hat has bet big on Kubernetes, because “I don't see Docker in many of the deals that we are involved in.”
And he would say that, wouldn’t he, given Red Hat just splashed $250m on CoreOS.
There may be more to Whitehurst’s remarks than self-promotion, however, as he said Red Hat’s OpenShift container platform accounted for two of its ten biggest deals in Q4. Another pair of the top 10 were OpenStack and Whitehurst said Red Hat Enterprise Linux was a component of recent big deals rather than the reason Red Hat was considered. More container tech is almost certainly therefore no bad thing for the company. Indeed, Whitehurst pointed out that Red Hat now has 650 OpenShift customers and added “hundreds” in FY 2018, which he contrasted to soon-to-IPO Pivotal Software’s 44 new customers and 300-plus total users of Cloud Foundry.
Whitehurst also revealed that Red Hat is seeing interest in OpenStack beyond the telecommunications industry, with “nine of our top 10 OpenStack deals in Q4” in other industries. Telcos are still keen on the stack, and Red Hat claimed ”50 material network function virtualization wins with telcos through the course of the year” and Whitehurst said many of those will turn into bigger business because many of the the purchases were made “in anticipation of 5G.”
The company’s guidance for Q1 of FY 2019 is for revenue of $800m to $810m. ®