Red Hat, provider of open source solutions to the enterprise, today announced financial results for the first quarter of its fiscal 2007 year. Total revenue for the quarter was $84.0 million, an increase of 38% from the year ago quarter and 7% from the prior quarter. Subscription revenue was $71.5 million, up 45% year-over-year and 7% sequentially.

The company reported operating income of $12.6 million for the quarter, including $7.6 million of non-cash stock compensation expense related to the implementation of FAS123R. FAS123R, which requires the expensing of non-cash stock option grants and other equity awards, was not applicable in prior quarters. GAAP net income for the quarter was $13.8 million, or $0.07 per share, at an estimated annual effective GAAP tax rate of 37% of pre-tax income. However, the company continues to anticipate an actual cash tax rate of approximately 5% of pre-tax income for the foreseeable future.

At quarter end, the company's total deferred revenue balance was $254.7 million, an increase of 61% on a year-over-year basis and 14% sequentially.

"The first fiscal quarter marks a great start to an exciting year for Red Hat," stated Charlie Peters, Executive Vice President and Chief Financial Officer. "In particular, we continued to deliver rapid top-line growth and market share gains. While profitability comparisons to prior periods' results are skewed as a result of the implementation of FAS123R and a higher non-cash tax rate, the company's core operations continue to improve in efficiency as evidenced by our growing cash flow. Furthermore, the actual cash that we have to invest back into the business to drive growth is not affected by the accounting treatment."

Peters added, "The international expansion and acquisitions closed since our last earnings report provide for new opportunities in key international geographies such as India and South America and improve our ability to capitalize on growing open source adoption beyond the operating system. Equally important, we are confident that we have the proper team in place to execute successfully on these initiatives."