Red Hat Grows Linux Revenues, Displacing Unix and SUSE

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Red Hat reported its second quarter fiscal 2014 earnings late Monday, once again showing continued demand for the company’s Linux and open source technologies. Red Hat’s CEO used the call as an opportunity to detail the competitive landscape as well as identifying where business is coming from.

For the quarter, Red Hat reported revenue of $374 million, which is a 16 percent year-over-year increase. Net Income was reported at $41 million, or $0.21 per share up from $35 million, or $0.18 per share from the second quarter of fiscal 2013.

Looking forward, Red Hat provided guidance for third quarter revenue estimated to be approximately $381 million to $384 million.

Red Hat continues to power forward, in part thanks to the loyalty of its customer base. During his company’s earnings call late Monday, Red Hat CEO Jim Whitehurst said that all of Red Hat’s top 25 deals renewed in the second quarter at a total value of over 120 percent of the original value. He added that Red Hat’s SaaS customers were well represented in the top 25 deals.

“For example, Salesforce.com, which is a long-time customer of Red Hat, both expanded their relationship with us this quarter and at the same time, they signed a new, multi-year deal standardizing enterprise-wide on Red Hat Enterprise Linux,” Whitehurst said.

Red Hat’s Chief Financial Officer, Charlie Peters, provided even more insight into what Red Hat’s customers are buying. Peters said that the top 30 deals for second quarter were all over $1 million, with three deals were in excess of $5 million and one was over $10 million. Peters added that in 20 percent of the top 30 deals, Red Hat Enterprise Virtualization (RHEV) was a component.

Displacing Unix and SUSE

Growth for Red Hat is coming at a time when the market remains competitive across multiple sectors. For enterprise workloads, Red Hat’s CEO sees it now as a battle between Linux and Microsoft Windows.

“As enterprises are looking to deploy new workloads, obviously, the choice is Windows or Linux now, and we believe we’re winning a lot larger share of those,” Whitehurst said. “A lot of our share take isn’t directly from somebody ripping out a Windows server to put it in a Linux server, it’s more, as applications sunset, they’re more likely to have been on UNIX or Windows and are now more likely to move to Linux.”

In the enterprise Linux space, SUSE Linux has long been Red Hat’s primary competitor, though Whitehurst isn’t too worried about them. According to Whitehurst, even in larger deals where there is some SAP implementation, he is not seeing SUSE all that much.

“We’re often in there trying to displace them and we’ve done a really nice job, I think, over the last couple of years of displacing SUSE,” Whitehurst said. But in terms of SUSE in deals, we so rarely see them now. That’s kind of not really a factor in Europe or anywhere in the world right now.”

Sean Michael Kerner is a senior editor at Datamation and InternetNews.com. Follow him on Twitter @TechJournalist