Red Hat Grows Again As It Snaps Up API Firm 3scale

Red Hat has announced the acquisition of 3scale, a San Francisco-based provider of API management technology.

Terms of the deal were not revealed, but comes after the open source giant posted impressive first quarter results.

API Importance

Red Hat touts the acquisition as a way to “accelerate digital transformation with API driven hybrid-cloud architectures.”

Essentially, it feels the addition of 3scale’s technology will bolster its middleware products and Red Hat OpenShift by allowing companies to create and publish their own APIs.

3scale offers a hybrid cloud based API management platform, which separates the cloud management layer from the API gateway.

“APIs play an important role in helping to accelerate innovation and business growth in the digital economy, “ explained Craig Muzilla, head of Application Platforms Business at Red Hat.

“With digital transformation initiatives identified as a top priority for organisations 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.”

Red Hat’s decision to bolster its API creation capabilities comes after analyst house Forrester estimated that 40 percent of US companies will have API management solutions in 2020, spending $660 million (£445m) in that year.

The company believes that managed APIs are becoming strategic in the enterprise because they enable organisations to rapidly deliver new services that are easy to consume, but which are also secure, scalable, and reliable. The arrival of trends such as the Internet of Things (IoT) and mobility has further innreased the need for API management.

The acquisition is expected to close this month, subject to customary closing conditions. There is no word on any redundancies.

More Growth

Red Hat’s acquisition comes after the firm announced its 57th consecutive quarter of revenue growth.

For the period ending 31 May, Red Hat posted a net profit of $61 million (£41m), compared with $48 million (£32m) in the same year-ago quarter. There was equally good news on the sales side, as revenues rose 18 percent to $568 million (£384m), thanks to 18 percent rise in first quarter subscription revenue of $502 million (£339m).

“Digital transformation and cloud computing are changing the way companies compete in virtually every industry today,” said President and CEO Jim Whitehurst. “Our open source-based technologies are helping customers capture the business benefits associated with this rapid rate of change.

“Strong adoption of our technologies has been reflected in our total revenue growth including 18 percent year-over-year growth in Q1 that was driven in part by 39 percent growth of our Application Development-related and emerging technologies.”

It has been a good few months for Red Hat. In March it revealed it was the first open source company to reach revenues of $2 billion (£1.4bn), after it reported its 56th consecutive quarter of revenue growth.

Are you an open source guru? Try our quiz!