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Red Hat Growing Million Dollar OpenStack Deals

By Sean Michael Kerner (Send Email)
Posted September 22, 2016

Red Hat is continue to grow its business, with more million-dollar deals than ever before and a growing OpenStack cloud business.

Red Hat reported its second quarter fiscal 2017 earnings on September 21, with revenue coming in at $600 Red Hatmillion, for a 19 percent year-over-year gain. Net income was reported at $59 million, which is an increase from the $51 million reported during the second quarter of Red Hat's fiscal 2016.

Looking forward, Red Hat provided third quarter guidance revenue to be in the range of $613 million to $623 million.

"Our growth was driven in part by expanding our footprint with customers as we closed a record number of deals over $1 million, up approximately 60 percent year-over-year," Red Hat CEO Jim Whitehurst said during his company's earnings call.

Cross Selling Red Hat Products a Key Driver of Growth

While Red Hat Enterprise Linux remains the flagship product, cross selling across multiple Red Hat product categories is a key driver of growth.

According to Red Hat CFO Frank Calderoni over 70 percent of the top 30 deals in the quarter included one or more components from a group of Application Development and emerging technologies offerings. He also noted that Financial services and government were Red Hat's top verticals in second quarter.

"Seven of the top 30 deals had OpenStack in there, nine had RHEV," Whitehurst said. "We had three OpenStack deals alone that were over $1 million. So I think we're seeing really, really, really good traction there."

Whitehurst is also optimistic about the competitive positioning of Linux in the cloud as opposed to on-premises workloads.

"If you look purely on premises, roughly half the workloads run on Windows," Whitehurst said.

Whitehurst commented that as soon as organizations start to think about a hybrid cloud world, with workloads that might run on premises or they might run on cloud, that is going to be a good thing for Linux.

"So the hybrid cloud model and the fact that public clouds are starting to take share of workloads is actually a tailwind for our business," Whitehurst said.

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

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