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Red Hat channel revenues increasing

The open source specialist has indicated that as of the end of its first quarter three quarters of its services business is going through the channel

Red Hat continues to increase the business it puts through the channel with the open source specialist reporting increases in indirect revenues.

The firm reported that 75% of its business now goes through the channel as of its fiscal Q1, which was up from 72% a year earlier.

The vendor issued its first quarter numbers, for the three months ended 31 May, giving investors the mixed bag of a Q1 with a 20% revenue increase to $814m but a note of caution about the rest of the year because of exchange rate headwinds.

Red Hat shared more details of the numbers with analysts and indicated it is looking to work with more partners to increase its penetration of the midmarket.

"We are focused on building our strategic partnerships within our mid-market customers. In Q1, our mid-market deals greater than $250,000 increased 138% year-over-year from 21 deals to 50 deals, with notable growth in Ansible and OpenShift," said Eric Shander, executive vice president and CFO at Red Hat.

"Our partnership with Global Systems Integrators is helping to drive growth in the mid-market with these emerging technologies," he told analysts.

The firm has been increasing the focus on services for the last couple of years and Shander said there was still work to be done in getting more partners involved.

"We’re continuing to get the partner ecosystem really up and running around a lot of these emerging technologies, we’re really starting to kind of scale a lot of that out to them," he added "So in the second-half probably sometime between our late Q3 and into Q4, you’ll start to see a lot more that activity start getting performed by our partners, which is certainly what we want to do enables us to scale the business."

Shander said that the firm was heading in the right direction, tapping into the increasing customer demand for hybrid cloud solutions, but the next couple of quarters would be challenging.

'We continue to expect strong demand for our hybrid cloud enabling technologies. Given the headwinds that have developed in foreign exchange rates since that time, we are adjusting our full year total revenue guidance by approximately $50m, solely to account for the change in FX rates," he said.

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