Red Hat in a Race to $1 Billion, Subscription Services Swell in Second Quarter

Paul Lilly

A shaky economy didn't stop Red Hat from raking in the cash during its second quarter ended August 31, 2011, and may have actually contributed to the open source software maker's explosive growth. Red Hat reported more than $281 million in total revenue for Q2, up 28 percent from one year prior. Give most of the credit to subscription revenue, which also ballooned 28 percent year-over-year to $238.3 million.

Red Hat President and CEO Jim Whitehurst credited the company's better-than-expected performance to a "combination of strong sales execution and customer demand." He also noted that this represents four straight quarters of revenue growth for Red Hat.

"We continued to win and strengthen relationships with enterprise customers who partner with Red Hat to reduce costs while modernizing their IT infrastructure to enable applications to run on bare metal, virtualization, and in the cloud," Whitehurst said in a statement. "Based on the strong first half results, we believe Red Hat remains well positioned to finish fiscal 2012 as the first billion dollar open source software vendor ."

We bolded that last comment for emphasis because it would represent a significant achievement, both for Red Hat and for the open source ideology in general. For businesses looking to cut back spending, open source software provides a compelling alternative to pricey software solutions from Microsoft.

"In a tight economy, people are looking to save money," Whitehurst told The Street . "We have been able to do quite well selling value in an uncertain economy."

The fact that Red Hat is in position to become a billion dollar open source software vendor is remarkable, even if Red Hat ultimately falls a bit short. Wondering how Red Hat makes so much money doing what it does? Check out this interview Mr. Whitehurst gave WRAL Techwire back in 2009.

Image Credit: Red Hat

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