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It's far from easy selling enterprise software today. But some companies are finding ways to grow. Just look at Red Hat (NYSE: RHT), which is a leader in open source solutions.
The company's applications, which help to reduce costs and increase productivity, have shown lots of resilience during the recession. For example, according to Red Hat's latest earnings report, the top 25 deals that were up for renewal got renewed. Actually, theses customers increased the commitments by 120%.
Quarterly profits went from $17.3 million, or $0.08 per share to $18.5 million, or $0.10 per share over the past year. Revenues increased 11% to $174 million.
While Red Hat has continued to be frugal with its expenses, the company still is making key investments in R&D. Some of the key new products include the Red Hat Enterprise Virtualization offering (which is in beta) and JBoss Open Choice (for middleware).
Also, Red Hat is getting lots of traction from the mega trend towards cloud computing. After all, the company's products are often used for building such infrastructures. In fact, a key customer is Amazon.com's (NASDAQ: AMZN) web services division.
Going forward, Red Hat projects Q2 earnings of $0.14 to $0.15 per share, with revenues of $178 million to $180 million.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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