Thursday, 23 June 2016 09:28

Red Hat earnings on track as it buys API management firm


Red Hat, the world's biggest open source company, is on track to equal and improve on last year's US$2 billion revenue, with a first quarter that saw its coffers swell by US$568 million.

But its stock fell on Wednesday US time, following the announcement that its purchase of API management company 3scale would add about US$3 million to its operating expenses for this quarter. For the full year that figure would be US$7 million.

Last year, the company earned revenue of US$2.05 billion, with the take for the first quarter being US$481 million.

The company's financial year runs from March to February and the figures released on Wednesday were for the quarter that ended on 31 May.

The earnings represented a rise of 18% year-on-year as measured in constant currency. Of the total, subscription revenue, which represented 88% of the total, was US$502 million, an increase of 18% year-on-year.

A total of US$403 million came from infrastructure, an increase of 14%, and US$98 million was from application development, an increase of 39%.

The company recorded profit of US$92 million for the quarter, compared to US$81 million in the corresponding quarter for the previous year, a rise of 13.2%.

The company did not disclose how much it would pay for 3scale.

The purchase will add to its portfolio of middleware. Last year, Red Hat bought the automation and DevOps company Ansible.

The company said that by adding 3scale to its existing portfolio, including Red Hat JBoss Middleware, Red Hat OpenShift and Red Hat Mobile Application Platform, it was "increasing its ability to manage the API economy with simplified cloud integration and microservices-based architectures".

The announcement said 3scale and Red Hat had begun working together in early 2015 to build a platform for API-based development.

"The joint solution combined the 3scale API Management Platform with technologies from Red Hat JBoss Middleware, Red Hat OpenShift and Red Hat Mobile Application Platform to provide an API-centric development, deployment, and management offering designed to accelerate application time-to-market," it said.

"Red Hat JBoss Middleware customers will benefit from the hybrid-cloud capabilities from 3scale for modern architectures. Mobile application development, in particular, is highly API-centric and 3scale's platform, combined with the Red Hat Mobile Application Platform, can lead to development and management simplicity at massive scales.

In a third announcement, Red Hat said it would buy back up to US$1 billion of its stock periodically. This will replace the previous US$500 million repurchase programme that will end on 30 June.

The company said about US$329 million was used under the previous program up to 22 June.


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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.



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