From: "Joe Barr" 


Jun 17, 2003,

Red Hat, Inc. today reported financial results for its first quarter of
fiscal year 2004. The company's fiscal first quarter ended on May 31, 2003.
These results are provided in full GAAP format.

In the first quarter of fiscal 2004, Red Hat achieved revenue of $27.2
million, a sequential increase of 5% compared to $25.9 million in the
fourth quarter of fiscal 2003, and a year-over-year increase of 39%.

For the first quarter of fiscal 2004, the company achieved net income of
$1.5 million, or $0.01 per share. This compares to a net loss of $273,000,
or break-even per share, in the prior quarter, and a net loss of $4.6
million, or $0.03 per share, in the same quarter a year ago.

The company reported a net operating loss of $1.1 million, compared to a
net operating loss of $2.4 million in the prior quarter and a net operating
loss of $7.2 million in the first quarter of the prior year.

Highlights for the first quarter include:

First quarter sales of annual subscriptions for the Red Hat Enterprise
Linux family of technologies increased sequentially by 2,000, or 10%, to
23,500 subscriptions.

Subscription revenues from Enterprise Technologies grew 14% sequentially
and 104% year-over-year.

Blended gross margins remained strong at 68%, while gross margins of
Enterprise subscription technologies, including retail revenues, also
remained strong at 82%.

Continued scaling of the business model, as the sequential reduction in the
company's operating loss of $1.3 million equated to the sequential increase
in revenues.

"Red Hat continues to show strong operating performance, including
solid growth in cash flows, deferred revenues, and net income, which
translates into continued leverage of our business model," stated
Kevin Thompson, Executive Vice President and Chief Financial Officer.

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