Red Hat Annual Meeting of Stockholders August 16, Welcome!

Transcription

1 Red Hat Annual Meeting of Stockholders August 16, 2007 Welcome!

2 Certain Legal Matters: Forward-Looking Statements Any statements in this program, whether in our slides, spoken words or otherwise, about future expectations, plans and prospects for the Company, including statements containing the words "believes," "anticipates," "plans," "expects," "will," projects, or intends and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the ability of the Company to effectively compete; the inability to adequately protect Company intellectual property and the potential for infringement or breach of license claims of or relating to third party intellectual property; risks related to data and information security vulnerabilities; risks related to the integration of acquisitions; ineffective management of, and control over, the Company's growth and international operations; adverse results in litigation; the dependence on key personnel as well as other factors contained in our most recent Quarterly Report on Form 10-Q (copies of which may be accessed through the the Securities and Exchange Commission's website at including those found therein under the captions Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations. In addition, the forward-looking statements included in this program represent the Company's views as of today's date, August 16, 2007, and these views could change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to today, August 16, Copies of the slides for today's presentation, including a reconciliation of GAAP results to non-gaap adjusted results, can also be obtained from Red Hat's investor relations website at

3 Red Hat Annual Meeting of Stockholders Agenda August 16, 2007 Introductory Statement Welcome and Introductions Presentation of Notice of Meeting and Affidavit of Mailing Report on Quorum; Call to Order Approval of Minutes for 2006 Annual Meeting of Stockholders Statement of Business Matters Before Annual Meeting and Voting Procedures Voting and Discussion Collection of Ballots and Tabulation; Video Presentation Voting Report; Declaration of Results Adjournment of Formal Business Management Presentations Questions and Answers

4 FY2007 In Review Charlie Peters, Executive Vice President & CFO

5 Annual Revenue In millions Total Revenue Subscription Training & Service $400.6 $278.3 $196.5 $341.2 $124.7 $82.4 $151.1 $230.4 $42.3 $45.3 $47.9 $59.4 FY2004 FY2005 FY2006 FY2007

6 Operating Income In millions NonGAAP Operating Inc Stock Option Expense GAAP Operating Inc $82.3 $30.0 $58.1 $52.3 $2.9 $26.9 FY2004 FY2005 FY2006 FY2007* *Non GAAP Operating Income includes $30.0 million of incremental FAS123R stock option expense; see Appendix 2 for reconciliation between GAAP and Non GAAP figures.

7 Net Income In millions Non GAAP (b) $113.6 Non GAAP (a) $77.9 $45.4 $13.7 FY2004 FY2005 FY2006(a) FY2007(b) (a) Includes incremental tax expense of $1.8 million to adjust to a 5% cash tax rate. GAAP Net Income FY2006 = $79.7 million. (b) Excludes incremental $30.0 million stock-based compensation expense resulting from adoption of FAS 123R and excludes $23.7 million of tax expense to adjust to a 5% cash tax rate. GAAP Net Income FY2007 = $59.9 million; see Appendix 1 for reconciliation of non-gaap to GAAP amounts.

8 Deferred Revenue In millions Future Earnings Power $338.6 Total Def Rev Short Term Long Term $223.5 $249.6 $137.3 $162.9 $73.7 $109.4 $62.8 $89.0 $60.6 $10.9 $27.9 FY2004 FY2005 FY2006 FY2007

9 Operating Cash Flow In millions NonGAAP CFFO Excess Tax Benefit GAAP CFFO $217.5 $16.0 $1.2 billion in Cash & Investments at 2/28/07 Drivers: Strong net income Deferred revenue growth $186.6 $201.6 Uses: $61.6 $ * Geographic acquisitions in Brazil, Argentina, India, Czech Republic Technology acquisitions JBoss Key capital investments *Non-GAAP operating cash flow includes $16 million excess tax benefits from share based compensation; see Appendix 1 for reconciliation.

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11 RED HAT, INC. NON CASH SHARE BASED COMPENSATION & RECONCILIATION OF GAAP RESULTS TO NON GAAP ADJUSTED RESULTS (Unaudited) (In thousands except per share amounts) Non cash share based compensation expense included in Consolidated Statements of Operations: Year Ended Feb 28, Feb 28, Cost of revenue $2,216 $ Sales and marketing 9, Research and development 7, General and administration 13,979 3,885 Total stock based compensation expense $32,434 $4,106 Reconciliation of GAAP Results to non GAAP adjusted Results (for prior year comparison purposes only) Year Ended Feb 28, Feb 28, GAAP Net income $59,907 $79,685 GAAP Provision (benefit) for income taxes 29,656 2,331 GAAP Income before provision for income taxes $89,563 $82,016 Add: Share based compensation per FAS 123R (fiscal 2007 only) 32,434 4,106 Deduct: Intrinsic value of stock options per APB No. 25 (2,471) (4,106) Incremental non cash share based compensation expense 29,963 0 Non GAAP adjusted income before provision for income taxes $119,526 $82,016 Non GAAP cash provision for income taxes $5,976 $4,101 Non GAAP adjusted net income $113,550 $77,915 Non GAAP adjusted net income diluted $119,117 $83,556 Non GAAP adjusted net income per share: Basic $0.60 $0.44 Diluted $0.54 $0.40 Non GAAP diluted net income per share computation: Non GAAP adjusted net income $113,550 $77,915 Interest expense on convertible debentures, net of related 5% cash tax effects 2,708 2,737 Amortization of debt issuance costs, net of related 5% cash tax effects 2,859 2,904 Non GAAP adjusted net income diluted $119,117 $83,556 Reconciliation of GAAP cash flow from operating activities to non GAAP adjusted cash flow from operating activities (for prior year comparison purposes only) Year Ended Feb 28, Feb 28, GAAP Net cash provided by operating activities $201,556 $186,552 Add: Excess tax benefits from share based payment arrangements 15,988 0 Non GAAP Net cash provided by operating activities $217,544 $186,552

12 Appendix 2 RED HAT, INC. RECONCILIATION OF GAAP RESULTS TO NON GAAP ADJUSTED RESULTS (Unaudited) (In thousands except per share amounts) Reconciliation of GAAP Results to non GAAP adjusted Results (for prior year comparison purposes only) Year Ended Feb 28, Feb 28, GAAP operating income $52,289 $58,082 Add: Share based compensation per FAS 123R (FY07 only) 32,434 4,106 Deduct: Intrinsic value of stock options per APB No. 25 (2,471) (4,106) Incremental non cash share based compensation expense 29,963 Non GAAP adjusted operating income $82,252 $58,082