conference date: September 25, 2007 @ 2:00 PM Pacific Time
for quarter ending: August 31, 2007 (2nd quarter fiscal 2008)
Overview: Continuing rapid growth.
Revenue was $127.3 million, up 7% sequentially and 28% from year-earlier.
Net income was $18.2 million, up 12% sequentially from $16.2 million and up 65% from $11 million year-earlier.
EPS was $0.09, up 12% sequentially from $0.08, and up 80% from $0.05 year-earlier.
Cash and equivalents ended at $1.3 billion.
Q3 revenues of $131-133 million with non-GAAP EPS around $0.18.
Customer acquisition improved.
Subscription revenue was $019.2 million, up 6% sequentially and 29% from year-earlier. Training revenue was $18.1 million.
Non-GAAP net income was $36.9 million or $0.17 per share. Non-GAAP operating cash flow was $63.7 million. $26.4 million operating income. Cost of revenue was $20.1 million. Operating expenses totaled $89.4 million. Other income was $14 million.
Deferred revenue ended at $377 million, up 33% from year-earlier.
85% gross margin.
Red Hat Developer Studio beta was released.
JBoss acquisition will take advantage of a new generation of program developers who love open source. Major sales wins in each quarter. Customers are replacing Unix with Red Hat Enterprise Linux and JBoss middleware. But JBoss growth rate has not yet met expectations.
Our virtualization software is better than VMWare's. Red Hat operating system certified by Russian government.
Marketing division is being reorganized.
"We are building the defining technology company for the 21st century."
Operational changes like automated sales and renewals will reduce costs and capture more customers. Trying to move renewals from 1 year to 3 year periods.
53% of bookings were from channel, 47% were from direct sales. Goal is to have partners handle 60% of business.
Intel virtualization? VPro virtualization for desktops was built around our model. We will continue to work with Intel.
JBoss color? JBoss has an excellent reputation as a platform and for customer services. Trying to get into customers' development process earlier in the cycle.
There was a substantial increase in the off-balance sheet backlog.
We are approaching our virtualization approach and are getting standing-room only audiences at presentations. Our approach is hypervisor independent. We do have a good relationship with VMWare and our softwares work well together, even though we are also competing. We see them mainly penetrating the Windows environment.
Macroenvironments? There is pressure on IT spend, sees budgets not being increased. Our financial services customers are very diverse, including georgraphically. We don't believe we have any exposure to the sub-prime mortgage market.
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