Accelerates digital transformation with API
driven hybrid-cloud architectures
Red Hat, Inc. (NYSE: RHT), the world's leading provider of open
source solutions, today announced that it has signed a definitive
agreement to acquire 3scale, a leading provider of application
programming interface (API) management technology. By adding 3scale
to its existing portfolio, including Red Hat JBoss Middleware, Red
Hat OpenShift and Red Hat Mobile Application Platform, Red Hat
strengthens its enablement of the API economy with simplified cloud
integration and microservices-based architectures.
In an era of digital transformation, agile development
practices, and hybrid technology footprints, the API economy has
become the norm. Forrester has estimated that 40 percent of U.S.
companies will have API management solutions in 2020, spending $660
million in that year.1 Managed APIs are becoming strategic in the
enterprise because they enable organizations to rapidly deliver new
services that are easy to consume yet secure, scalable, and
reliable, as well as enabling services (as APIs) to be monetized as
products. Emerging architectures that decompose functionality into
ever more finely-grained components--”microservices”--driven by
mobile, the Internet of Things (IoT), and other trends, have
further heightened the need for API management.
3scale was founded in 2007 with a goal of enabling organizations
of all sizes to successfully create, manage, and use APIs in a
web-enabled world where APIs became paramount. Today, 3scale offers
a hybrid cloud based API management platform, which separates the
cloud management layer from the API gateway, providing customers
with flexibility, performance, and scale. 3scale provides this API
management platform within a self-service model at more than 700
organizations across multiple industries, including Campbell’s
Soup; Cartera Commerce; CrunchBase; Johnson Controls; Oxford
University Press; SITA; and the University of California, Berkeley.
3scale has offices in Barcelona and San Francisco.
3scale and Red Hat began partnering in early 2015 to deliver a
comprehensive platform for API-based application development. The
joint solution combined the 3scale API Management Platform with
technologies from Red Hat JBoss Middleware, Red Hat OpenShift and
Red Hat Mobile Application Platform to provide an API-centric
development, deployment, and management offering designed to
accelerate application time-to-market. Red Hat JBoss Middleware
customers will benefit from the hybrid-cloud capabilities from
3scale for modern architectures. Mobile application development in
particular is highly API-centric and 3scale’s platform combined
with the Red Hat Mobile Application Platform can lead to
development and management simplicity at massive scales.
Most recently, 3scale introduced a containerized version of
their API Gateway for Red Hat OpenShift, enabling users to easily
and consistently create applications with microservices distributed
across diverse, hybrid environments. The combined power of Red
Hat’s container application platform and 3scale’s API management
capabilities enables customers to simplify and automate tasks,
helping reduce errors while increasing flexibility and control.
Red Hat has provided enterprises with leading open source
platforms for building modern applications, integration and
automation solutions. With the addition of 3scale’s API management
solutions, and its existing middleware, container application
platform, and mobile offerings, Red Hat can further simplify and
accelerate customers’ digital strategies and accelerate
time-to-market for API initiatives, and enable enterprises to
innovate faster, in a smarter way.
The acquisition is expected to have no material impact to Red
Hat's revenue for the second fiscal quarter ending August 31, 2016
(the “second quarter”), or its fiscal year ending Feb. 28, 2017
(“fiscal 2017”). Management expects GAAP operating expense to
increase by approximately $3 million, or ($0.01) per share, in the
second quarter and approximately $7 million, or ($0.03) per share,
for fiscal 2017 as a result of the transaction. Management expects
that non-GAAP operating expense will increase by approximately $1.5
million, or approximately ($0.01) per share, in the second quarter
and approximately $5 million, or approximately ($0.03) per share,
for fiscal 2017 as a result of the transaction. Red Hat calculates
non-GAAP operating expense by subtracting from GAAP operating
expense the estimated impact of non-cash share-based compensation
expense, which is expected to increase by approximately $0.8
million for the second quarter, amortization of intangible assets,
which is expected to increase by approximately $0.2 million for
each of the remaining quarters in fiscal 2017, and transaction
costs related to business combinations, which are expected to be
less than $1 million in the second quarter. For Red Hat’s full
forecast, including the expected impact of the transaction on GAAP
and non-GAAP operating margin and GAAP and non-GAAP earnings per
share, refer to the guidance provided in its June 22, 2016 earnings
press release.
The transaction is expected to close in June 2016, subject to
customary closing conditions.
Supporting QuotesCraig Muzilla, senior vice president,
Application Platforms Business, Red Hat"APIs play an important role
in helping to accelerate innovation and business growth in the
digital economy. With digital transformation initiatives identified
as a top priority for organizations today, API management has
become the foundation for exposing those APIs for better use,
performance, and value creation. 3scale complements our existing
middleware product portfolio and Red Hat OpenShift by enabling
companies to create and publish APIs with tools such as Red Hat
JBoss Fuse, and then manage and drive adoption of those APIs once
they have been published."
Steven Willmott, CEO, 3scale“We’ve already seen great customer
success combining Red Hat’s excellent middleware platform with
3scale API management, and we see tremendous opportunity to benefit
customers even more as they expand their API, middleware and
microservices plans. We see this as a natural extension of our
relationship, and we’re excited to be joining an organization with
such a strong commitment to open standards, open source and
spreading the benefits of technology.”
About Red Hat, Inc.
Red Hat is the world's leading provider of open source software
solutions, using a community-powered approach to provide reliable
and high-performing cloud, Linux, middleware, storage and
virtualization technologies. Red Hat also offers award-winning
support, training, and consulting services. As a connective hub in
a global network of enterprises, partners, and open source
communities, Red Hat helps create relevant, innovative technologies
that liberate resources for growth and prepare customers for the
future of IT. Learn more at http://www.redhat.com.
Forward-Looking Statements
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constitute "forward-looking statements" within the meaning of the
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statements provide current expectations of future events based on
certain assumptions and include any statement that does not
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vulnerabilities; ineffective management of, and control over, the
Company's growth and international operations; fluctuations in
exchange rates; and changes in and a dependence on key personnel,
as well as other factors contained in our most recent Annual Report
on Form 10-K (copies of which may be accessed through the
Securities and Exchange Commission's website at
http://www.sec.gov), including those found therein under the
captions "Risk Factors" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations". In addition to
these factors, actual future performance, outcomes, and results may
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Red Hat, Red Hat Enterprise Linux, the
Shadowman logo, JBoss, and OpenShift are trademarks or registered
trademarks of Red Hat, Inc. or its subsidiaries in the U.S. and
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1 Forrester Research, “Sizing The Market For API Management
Solutions,” April 2, 2015.
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Red Hat, Inc.Stephanie Wonderlick,
+1-571-421-8169swonderl@redhat.comorInvestor Relations:Tom
McCallum, +1-919-754-4630tmccallum@redhat.com
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