Red Hat Rolling in Riches: Fool by Numbers

By Anders Bylund – Updated Apr 5, 2017 at 5:34PM

Fast facts the Fool way.

On Sept. 25, Linux developer and distributor Red Hat (NYSE:RHT) released second-quarter 2008 earnings for the period ending Aug. 31, 2007.

Red Hat's top 25 customers all renewed their software and support contracts this quarter, and they increased their average order size by 22%. That list of major customers includes IBM (NYSE:IBM),Stock Advisor pick Priceline.com (NASDAQ:PCLN), and Nokia (NYSE:NOK).
The Board of Directors just authorized management to repurchase as much as $250 million of common stock, and to buy back $75 million of the Convertible Senior Debentures that make up its long-term debt balance. The company hasn't paid back any debt in two years, and it bought back shares for $67 million in the same time period.
The Linux market is heating up, and you can follow the action at Red Hat, Novell (NASDAQ:NOVL), and Oracle (NASDAQ:ORCL) over in our Motley Fool CAPS investor community. It's now, it's wow, and how!

(Figures in thousands, except per-share data)

Income Statement Highlights

	Q2 2008	Q2 2007	Change
Sales	$127,270	$99,673	27.7%
Net Profit	$18,157	$11,047	64.4%
EPS	$0.08	$0.05	60%
Diluted Shares	221,688	219,940	0.8%

Get back to basics with the income statement.

Margin Checkup

	Q2 2008	Q2 2007	Change*
Gross Margin	84.2%	83.5%	0.7
Operating Margin	14%	9.5%	4.5
Net Margin	14.3%	11.1%	3.2

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q2 2008	Q2 2007	Change
Cash + ST Invest.	$878,383	$837,956	4.8%
Accounts Rec.	$89,125	$70,346	26.7%

Liabilities	Q2 2008	Q2 2007	Change
Accounts Payable	$10,085	$7,642	32%
Long-Term Debt	$570,000	$570,000	0%

The balance sheet reflects the company's health.

Cash Flow Highlights

	Q2 2008	Q2 2007	Change
Cash From Ops.	$49,201	$43,884	12.1%
Capital Expenditures	$8,375	$5,107	64%
Free Cash Flow	$40,826	$38,777	5.3%
Owner Earnings	$18,001	$12,694	41.8%

Free cash flow is a Fool's best friend.

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About the Author

Anders Bylund is a contributing Motley Fool media and technology analyst covering semiconductors, cloud computing, internet infrastructure, quantum computing, and streaming media. Previously, Anders was a systems administrator for Nielsen Technology and CSX, gaining hands-on experience with enterprise-class systems. He was also a freelance writer for Ars Technica, TIME, USA Today, CNN, WIRED, and AOL's Daily Finance. He holds a bachelor’s degree in English and a master’s degree in library and information sciences from Florida State University. He believes in coyotes and time as an abstract.

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