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Date: Thu, 15 Jun 2000 16:26:07 -0400
From: Brian Willinsky <bwillinsky@schwartz-pr.com>
To: <lwn@lwn.net>
Subject: Red Hat First Quarter Revenues Climbed 95% to $16 Million

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Hal Covert					John Heilshorn/Jody Burfening
Chief Financial Officer				Lippert/Heilshorn & Associates
Red Hat, Inc.					212-838-3777
919-547-0012 x215				john@lhai.com/jody@lhai.com


Continued Execution Towards Profitability with Significant Gross Margin

RESEARCH TRIANGLE PARK, North Carolina, June 15, 2000 -- Red Hat,
Inc. (Nasdaq: RHAT), the leader in open source Internet infrastructure
solutions, today reported revenue of $16.0 million for the first quarter
ended May 31, 2000, a 95% increase over revenue of $8.2 million for the
first quarter last year, and 22% higher than fourth quarter 1999 revenue of
$13.1 million. Gross margins increased to 54.0% for the quarter, a 6.6
percentage point improvement over the prior quarter.

Adjusting for non-cash, merger, acquisition and other expenses, the Company
reported a net loss for the first quarter of fiscal 2001 of $2.5 million,
or $0.02 per share, compared to an adjusted net loss for the first quarter
of fiscal 2000 of $3.8 million, or $0.08 per share.  On a reported basis,
the net loss was $14.9 million, or $0.10 per share, compared with a net
loss of $4.1 million, or $0.08 per share, for the first quarter of fiscal

Commenting on the results, Matthew Szulik, president and CEO of Red Hat,
Inc., said, "Q1 performance represents continued execution against our plan
to double revenue and become profitable in calendar 2001 while leveraging
our acquisitions to enter new markets and create new revenue streams."

Highlights for the first quarter include:

--Red Hat Linux 6.2 was named Network Magazine's Product of the Year and
received Computer Reseller News Editors' Choice Award; Red Hat was named to
Red Herring's Top 50 Public Companies

--Completed acquisition of Bluecurve, an e-server performance management
services company, for $33 million in stock.

--Unveiled the redhat.com Marketplace, a single, comprehensive Web
destination to learn about and purchase products for open source Internet
computing initiatives.  Participating vendors include Dell, Compaq, IBM,
Oracle, Rackspace.com and Zonetrader.com.

--Launched "What Can Red Hat Do for Me," a service which delivers users a
made-to- order report featuring the information, products and services that
are right for that customer's needs.

--Launched "Success Stories," which details the business needs, deployment
and cost savings of Red Hat Linux for Internet Infrastructure solutions.

--Launched the Red Hat E-Learning Curriculum, a collaboration with
DigitalThink, a leader in e-learning solutions, to extend Red Hat Linux
training and certification to the Web.

--Extended enterprise-level support to businesses of all sizes with a new
per-server support program, a subscription-based, 24x7 annual service that
has the flexibility to add systems at increasingly lower costs per system
as the number of servers or desktops grows.

--Extended the relationship with IBM. IBM is pre-loading Red Hat Linux 6.2
on its Netfinity servers for which Red Hat is providing level-three
support. Additionally, IBM is offering the Red Hat Certified Engineer
program at IBM training centers around the world.

--Expanded the partnership with Dell by collaborating on the development of
the Dell PowerApp.web appliance server, which is powered by the Red Hat
Linux 6.2 operating system. Red Hat is also providing support to Dell
customers for the PowerApp.web appliance server.

--Expanded the relationship with Compaq to provide bundled and pre-loaded
Red Hat Linux 6.2 on Compaq servers, AlphaStations and select Deskpro PC

--Released pre-production tools and software for the forthcoming Intel
Itanium processor platform targeting high-end servers and workstations.

--Launched eCos 1.3, the latest version of Red Hat's Open Source,
configurable, application-specific operating system for embedded
systems. eCos provides manufacturers of post-PC devices with the expertise
to bring networking applications to embedded devices.

--Distributing the Red Hat Embedded DevKit and support package, providing
software developers with everything needed to create embedded Linux
applications on a wide spectrum of pervasive computing platforms.

--Introduced the Enterprise Channel Partner Program for the largest
resellers and network and systems integrators that service some of the
world's most successful enterprise companies.

--Formed Red Hat Ventures, a venture funding and strategic business
relationships division to accelerate the breadth of tools, services and
technologies available to Red Hat customers.

About Red Hat

Founded in 1994, Red Hat (Nasdaq:RHAT), is the leading provider of open
source Internet infrastructure solutions, ranging from small embedded
devices to high availability clusters and Web serving.  Red Hat applies its
technological leadership to create open source solutions for Internet
infrastructure and post-PC environments, offers services backed by the best
understanding of open source and the most comprehensive resources, delivers
the brand of a widely trusted open source leader and corporate partner, and
persists in an indelible commitment to the virtues of open source to lead a
revolution in the computing industry.

Red Hat is based in Research Triangle Park, N.C. and has offices
worldwide. Visit Red Hat on the Web at www.redhat.com. For investor
inquiries, please call 1-888-REDHAT2.

# # #

Forward-looking statements in this press release are made pursuant to the
safe harbor provisions of Section 21E of the Securities Exchange Act of
1934.  Investors are cautioned that statements in this press release that
are not strictly historical statements, including, without limitation,
statements regarding current or future financial performance, management's
plans and objectives for future operations, product plans and performance,
management's assessment of market factors, and statements regarding the
strategy and plans of the Company and its strategic partners, constitute
forward-looking statements.  These forward-looking statements are not
guarantees of the Company's future performance and are subject to a number
of risks and uncertainties that could cause the Company's actual results in
the future materially to differ from the forward-looking statements.  These
risks and uncertainties include, without limitation, challenges associated
with the Company's domestic and international expansion, shifting to a
subscription-based model of product offerings, the difficulty of
integrating newly-acquired companies, the possible failure to realize the
beneficial synergies expected from such acquisitions, the Company's ability
to attract new enterprise customers and to meet their needs by expanding
and enhancing its service offerings, the need to continually enhance the
Company's Web site and the ability to generate significant revenue from it,
the Company's ability to enter into new and retain existing strategic
alliances with technology leaders, the continuing need for an increasing
number of Linux-based enterprise applications, the Company's dependence
upon an open source business model, reliance upon independent
enforceability of the GNU General Public License and other licenses under
which the Company's products are developed and licensed, the risks of
economic downturns generally, and in the Company's industry specifically,
the risks associated with competition and competitive pricing pressures,
the viability of the Internet, and other risks detailed in the Company's
filings with the Securities and Exchange Commission, copies of which may be
accessed through the SEC's Web site at http://www.sec.gov.

see attached file for tables