On June 27, open-source software pioneer Red Hat
- The sales growth is inspiring, but remember that some of it comes from the JBoss middleware platform that Red Hat acquired in early June 2006. This marks the last quarter where that deal will affect top-line growth in any meaningful way. Red Hat declined to break out the quarterly revenue from that segment, but it's widely assumed to be around $7 million to $8 million per quarter.
- The sales and marketing budget grew faster than revenue at 51%, and development costs ballooned even more quickly, at 57%. Not that I mind investment in those items necessarily, but there's your explanation for the weakest quarterly operating margin since November 2003.
- On the other hand, net interest income outweighed tax expenses, so net income came in higher than the operating take. It's nice to have a strong balance sheet like that.
- But guys, what's up with the share dilution, especially given that generous cash balance? It would only have cost you about $150 million to counteract the dilutive effects of options grants over the past year and keep the share count stable.
(Figures in thousands, except per-share data)
Income Statement Highlights
|
Q1 2008 |
Q1 2007 |
Change |
|
|---|---|---|---|
|
Sales |
$118,873 |
$84,002 |
41.5% |
|
Net Profit |
$16,221 |
$13,753 |
17.9% |
|
EPS |
$0.07 |
$0.06 |
16.7% |
|
Diluted Shares |
221,407 |
214,325 |
3.3% |
Get back to basics with the income statement.
Margin Checkup
|
Q1 2008 |
Q1 2007 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
84.6% |
84% |
0.7 |
|
Operating Margin |
12.6% |
15% |
(2.4) |
|
Net Margin |
13.7% |
16.4% |
(2.7) |
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
Q1 2008 |
Q1 2007 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$837,458 |
$932,300 |
(10.2%) |
|
Accounts Rec. |
$92,412 |
$65,361 |
41.4% |
|
Inventory |
$0 |
$0 |
N/A |
|
Liabilities |
Q1 2008 |
Q1 2007 |
Change |
|---|---|---|---|
|
Accounts Payable |
$7,958 |
$6,661 |
19.5% |
|
Long-Term Debt |
$570,000 |
$570,000 |
0% |
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Q1 2008 |
Q1 2007 |
Change |
|
|---|---|---|---|
|
Cash From Ops. |
$39,725 |
$52,373 |
(24.1%) |
|
Capital Expenditures |
$6,407 |
$3,878 |
65.2% |
|
Free Cash Flow |
$33,318 |
$48,495 |
(31.3%) |
|
$17,048 |
$14,219 |
19.9% |
Free cash flow is a Fool's best friend.
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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.
At the time of publication, Anders Bylund had no position in any company mentioned. He likes bolts of lightning, heavy metal thunder, and this story. Fool rules are here.
