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FINANCIAL RESULTS FOR FISCAL YEAR 2008 • $523 million in total revenue, an increase of 31% over fiscal 2007. ANNUAL REPORT • $450 million in subscription revenue, up 32% from fiscal 2007. • $77 million in net income, or $0.36 per diluted share. • $473 million in deferred revenue at fiscal year-end, 082008 an increase of 40%. Dear Red Hat Stockholder: Fiscal year 2008 was another year of solid execution, rapid growth and global expansion. Red Hat’s performance reflects the continued robust global demand for our open source solutions and resulted in another year of strong growth in revenue, operating income and cash flow. This year we continued to leverage the open source development model to innovate in the areas of performance, virtualization and security. Our award-winning Red Hat Enterprise Linux 5, launched in March 2007, addresses the growing demand for technologies such as virtualization that enable customers to scale their IT infrastructure. We also applied the enterprise subscription model to our middleware solutions, offering customers in other key areas of infrastructure the value they have realized with Red Hat Enterprise Linux. During the year we continued to expand our Service-Oriented Architecture solutions, advancing the Red Hat brand beyond the operating system and application server and into the rapidly growing area of integration software. In a highly competitive technology market, Red Hat continues to be acknowledged as a leading brand that enterprise customers trust. Enterprise customers face the dilemma of finding ways to reduce costs to address budget constraints while providing increased performance and flexibility in their IT infrastructure. Red Hat has delivered value to these customers and is considered a standard, found in enterprise applications across industries and geographies worldwide. Red Hat has become synonymous with customer value, winning the honor of being named #1 enterprise software vendor in delivering value to customers in the independent CIO Insight Vendor Value survey for the fourth year in a row. Investment in our people and infrastructure were top priorities in fiscal year 2008. We added over 400 associates to our global team and now have over 55 offices worldwide. To enhance our global reach, we have trained and certified approximately 1,700 channel partners around the world. From an infrastructure perspective, we continued to transform our internal systems and processes to provide the necessary scale to support future growth. In fiscal year 2008, Red Hat became the first open source vendor to cross the $500 million mark in revenues. Continuing to add value to our customer relationships, scaling the Red Hat business to deliver quality service beyond customer expectations and nurturing our partnerships will be our core areas of focus in fiscal year 2009. Red Hat’s fiscal year 2008 results and accomplishments can be attributed to our strong brand, open source development method and proven enterprise subscription model. Ultimately, our success is driven by our more than 2,200 employees, a dedicated team focused on delivering value to our customers. As a final note, I would like to thank Matthew Szulik, who stepped down as President and CEO on January 1, 2008, but continues to serve as Chairman of the Board. Matthew’s vision for Red Hat and his stewardship of open source served the company well for over a decade, and I am honored to have the opportunity to build upon this legacy of success. I feel more than fortunate to join this amazing company and, on behalf of our employees worldwide, would like to thank you for your continued support and belief in our mission. James M. Whitehurst Chief Executive Officer and President Red Hat, Inc. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934 (Mark One) È Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended February 29, 2008 OR ‘ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to . Commission File Number: 001-33162 RED HAT, INC. (Exact name of registrant as specified in its charter) Delaware (State of Incorporation) 06-1364380 (I.R.S. Employer Identification No.) 1801 Varsity Drive, Raleigh, North Carolina 27606 (Address of principal executive offices, including zip code) (919) 754-3700 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, $0.0001 par value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No È Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes È No ‘ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ‘ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer È Accelerated filer ‘ Non-accelerated filer ‘ Smaller reporting company ‘ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No È The aggregate market value of the common equity held by non-affiliates of the registrant as of August 31, 2007 was approximately $2.7 billion based on the closing price of $19.45 of our common stock as reported by the New York Stock Exchange on August 31, 2007. For purposes of the immediately preceding sentence, the term “affiliate” consists of each director, executive officer and greater than 10% stockholders of the registrant. There were 190,631,015 shares of common stock outstanding as of April 25, 2008. DOCUMENTS INCORPORATED BY REFERENCE Portions of Red Hat, Inc.’s Definitive Proxy Statement to be filed with the Securities and Exchange Commission and delivered to stockholders in connection with its annual meeting of stockholders to be held on August 14, 2008 are incorporated by reference into Part III of this Form 10-K. With the exception of the portions of the Proxy Statement expressly incorporated into this Annual Report on Form 10-K by reference, such documents shall not be deemed filed as part of this Annual Report on Form 10-K. TABLE OF CONTENTS Page No. PART I Item 1. Business ................................................................ 3 Item 1A. Risk Factors ............................................................. 18 Item 1B. Unresolved Staff Comments ................................................. 31 Item 2. Properties ............................................................... 31 Item 3. Legal Proceedings ......................................................... 31 Item 4. Submission of Matters to a Vote of Security Holders ............................. 34 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ............................................. 35 Item 6. Selected Financial Data ..................................................... 38 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ............................................................. 39 Item 7A. Quantitative and Qualitative Disclosures About Market Risk ....................... 57 Item 8. Financial Statements and Supplementary Data .................................. 59 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ............................................................. 100 Item 9A. Controls and Procedures .................................................... 100 Item 9B. Other Information ......................................................... 100 PART III Item 10. Directors, Executive Officers and Corporate Governance .......................... 101 Item 11. Executive Compensation ................................................... 101 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ..................................................... 101 Item 13. Certain Relationships and Related Transactions, and Director Independence ........... 101 Item 14. Principal Accountant Fees and Services ........................................ 101 PART IV Item 15. Exhibits and Financial Statement Schedules .................................... 101 2 ITEM 1. BUSINESS OVERVIEW We are a global leader in providing open source software

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