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Keeping an eye on Red Hat’s deferred revenue
Matthew Aslett, June 25, 2009 @ 10:13 am ETDennis Byron is right to point out some “seeds of rain in the forecast” in Red Hat’s first-quarter financial results.
On the face of it, Red Hat is performing very well despite current conditions, and in the first quarter recorded net income of $18.5m on revenue up 11% to $174m. As Dennis notes, however, deferred revenue grew by only 4% in the quarter, and “the key number for Red Hat, because of its subscription revenue model, is deferred revenue”.
Dennis also notes that “one quarter does not make for good comparisons”, which is why I have been keeping track of Red Hat’s financial performance, including deferred revenue growth, for some time.
As can be seen from the chart below, deferred revenue growth was actually better in the most recent two quarters (8% and 4%) than in the prior two quarters (1% and 2%).
This could have an impact on Red Hat’s future revenue growth, although it is worth noting that a previous decline in the rate of deferred revenue growth – in the first two quarters of 2008 – was short-lived, and had no discernible impact on the company’s revenue growth.
Comments (2) Categories: Software
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