Red Hat Earnings Conference Call Highlights: 4Q Billings and Geographic Breakdown
Fourth Quarter Billings
Mark Murphy – Piper Jaffray asked: Charlie, just looking ahead to the February quarter. The billings growth year-over-year comparison gets tougher by about 11 points. I would think that additionally FX is going to turn into more of a headwind by a few additional points, and so all else equal, it would seem the billings growth should or could decelerate to somewhere under 20 percent just given the difficult comparison.
I know you don’t typically guide to a billings growth rate, but considering the volatility of the environment, I guess the unknown (ought to) come in Europe and also there could be a lack of clarity surrounding the hard disk drive availability out there on servers.
Do you have any inclination to guide us directionally one way or the other on what we should do for billings next quarter?
Charlie Peters – EVP and CFO: Somewhere in your comments you said that I don’t guide for billings and that’s true; I don’t guide for billings. I’d just reiterate what I said in response to cash.
The bookings pipeline is strong. There’s no doubt that currencies will be talked about a lot more by all companies now and it’s a factor everyone needs to consider – with all of you guys building your models and adjusting your models, I think, I would recommend that you do that as well.
But I would point you back.
We feel very good about the natural hedge we have on our business but our revenues, expenses are naturally hedged to a reasonable degree so that currency fluctuations do not have any significant impact on the net P&L.
Clearly, weakening foreign currencies will have an impact on revenue for all companies that have an offshore component. But beyond that, I don’t have any more specific guidance on billings for you.
Jim Whitehurst – President and CEO responded: Two quick comments. You had mentioned that the disk/RAM shortage.
At this point, we don’t see an impact of that. Recognize that the majority of our business is coming from servers, either blades or in racks. We haven’t seen any indication that we should see any change in our business due to that.
Second, just to emphasize, we don’t manage to billings at all. Billings is an accounting number that popped off of our income statement and balance sheet, right. We focus on bookings which is what business we’re bringing in the door.
That’s really what impacts our business going forward.
Geographic Breakdown of the Business
Richard Williams – Cross Research asked: Could you give us color on the geographic breakdown of business? What is the tone of the business like?
Charlie Peters – EVP and CFO responded: The geographic split for the quarter was 60 percent from the Americas, 24 percent from the EMEA and 16 percent from APAC. So, apart from the fact that we had some really large deals and the top 30 deal metrics you heard me talk about: 5 deals over $5 million and 27 in total over $1 million.
A number of those large deals where in the Americas which skewed a little bit towards the Americas, but it shouldn’t take away anything from the performance of the other regions. Every region did well, every region was in double-digit growth.
I would suspect EMEA was probably the region that is on most investors mind today. EMEA had a good performance and they are statistically at 24 percent, which is very consistent with where they have been for some time.