by Swapnil Bhartiya

Red Hat expected to rake in $2.4 billion in revenue this year

Sep 23, 2016
Cloud ComputingLinuxOpen Source

Subscriptions remain the primary money earner for this open source company.rn

The king of Linux, Red Hat, continues its growth as a leading Linux vendor that’s betting big on the cloud. Yesterday, the company announced financial results for its second quarter of fiscal year 2017 ended August 31, 2016.

The company generated $600 million in revenue for the quarter, a 19 percent year-over-year increase. Red Hat is often credited with creating a business model around Linux and Open Source: a subscription based service and support model.

Subscription revenue for the quarter was $531 million, which accounts for 89% of total revenue. It was a 20% year-over-year increase. Based on these numbers we can safely assume that Red Hat will be generating revenues around $2.415 billion in this fiscal year. That makes Red Hat the most successful pure open source company to date.

In an interview with, Jim Whitehurst, President and CEO of Red Hat said, “Our goal is to help our partners and customers modernize their infrastructure and application development platforms. Looking at the quarter, our infrastructure offerings saw 18% year-over-year growth, and our application development and other emerging technologies saw 33% year-over-year growth. As more organizations turn to cloud, whether it be public, private, or hybrid cloud, we’re in a great position to help them manage across those environments. We’ll continue to look for areas that enable us to do this.”

The GAAP net income for the quarter was $59 million, or $0.32 per diluted share, compared with $51 million, or $0.28 per diluted share, in the year-ago quarter.

RHEL, or Linux, remains at the core of Red Hat’s empire and rightly so. Red Hat competitors like Mirantis often criticize the company for being too tied around Linux. But the fact is, modern IT infrastructure and new technologies are running on Linux; Docker containers are Linux. OpenStack runs on Linux. Now even Microsoft uses Linux to build operating systems for Azure networking switch. Red Hat is keeping their roots in Linux and reaching out to the clouds!