Red Hat Executive Insights: Slow Billing Growth, The Asian Market

On Wednesday, Red Hat, Inc. (NYSE:RHT) reported its first quarter earnings and discussed the following topics in its earnings conference call. Take a look.

Slow Billing Growth:

Adam Holt – Morgan Stanley: My first question I guess is for either one of you. If you look at the adjusted billings growth rate understanding that you are at the beginning of the year, it’s still at the lower end of what we have seen for the last several quarters from a year-on-year growth perspective. Was there anything in the quarter that was different than you expected from a demand perspective or did you see anything from a linearity perspective that was different than you were looking for?

A Closer Look: Red Hat Earnings Cheat Sheet>>

Jim Whitehurst – President and CEO: On kind of a linearity perspective this is fairly typical, this was a 25-25-50 kind of a split by month. So nothing there, and as I said in my remarks the only areas, our training was slightly less than expected but apart from that it was a very solid quarter. Really good deal metrics and all the rest.

Charlie Peters – EVP and CFO: Adam just to reiterate as we have talked about before we don’t manage the billings, it’s not a necessarily relevant number to us. And we hit our plan on the measures we use internally which are around bookings. So we felt good about the quarter and are certainly on plan.

Adam Holt – Morgan Stanley: If I could just ask a quick follow-up on the product mix, could you give us a little bit more flavor how the JBoss suite compared to the core business and whether or not you saw any impact from cluster to the top line in the quarter? That’s it for me thank you.

Charlie Peters – EVP and CFO: As I mentioned in the top 30 deal metrics, we had a really good middleware showing, 40% of the top 30 deals had a middleware component and three of them were standalone middleware deals. As far as Red Hat storage goes, there is no significant revenue from that yet and you are going to hear more about that this coming week at the Red Hat Conference.

Jim Whitehurst – President and CEO: Just to reiterate, the core Red Hat storage product has not (indiscernible), so it’s too early to have affected revenue.

The Asian Market:

Edward Maguire – CLSA: I was wondering if you could discuss the impact that you are seeing at least on the ground from the investments you made some of the emerging markets, I notices that Asia was 20% of your revenue this quarter and if you could just comment there has been some concern about conditions on the ground in Asia as well.

Jim Whitehurst – President and CEO: If you look back historically, what you will see in our Q1 is the – our Asian contribution to our total geographic split typically is about 20% each Q1 in the last three years. Because of the Chinese New Year and golden week what is normally a fourth quarter for them is generally a little bit weaker because of holiday times and one of their better quarter is typically Q1, so we had good performance I think in particular a good performance out of Japan and Australia and New Zealand.