Red Hat 10-Q 7 Jul 16 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	May 31, 2016	Jun. 30, 2016
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	May 31, 2016
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Trading Symbol	RHT
Entity Registrant Name	RED HAT INC
Entity Central Index Key	1,087,423
Current Fiscal Year End Date	--02-28
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		181,096,136

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	May 31, 2016	Feb. 29, 2016	[1]
Current assets:
Cash and cash equivalents	$ 1,031,565	$ 927,778
Investments in debt securities, short-term	364,850	281,142
Accounts receivable, net of allowances for doubtful accounts of $2,315 and $2,798, respectively	326,334	509,715
Prepaid expenses	159,829	150,877
Other current assets	1,375	2,921
Total current assets	1,883,953	1,872,433
Property and equipment, net of accumulated depreciation and amortization of $208,451 and $194,819, respectively	168,015	166,886
Goodwill	1,029,636	1,027,277
Identifiable intangibles, net	140,704	146,071
Investments in debt securities, long-term	723,461	786,470
Deferred tax assets, net	116,393	111,456
Other assets, net	50,119	44,506
Total assets	4,112,281	4,155,099
Current liabilities:
Accounts payable and accrued expenses	251,401	284,802
Deferred revenue	1,251,096	1,272,908
Other current obligations	1,980	1,467
Total current liabilities	1,504,477	1,559,177
Long-term deferred revenue	441,060	449,636
Convertible notes	729,307	723,942
Other long-term obligations	88,102	87,912
Commitments and contingencies (NOTES 12 and 13)
Stockholders' equity:
Preferred stock, 5,000,000 shares authorized, none outstanding
Common stock, $0.0001 per share par value, 300,000,000 shares authorized, 235,700,463 and 234,896,137 shares issued, and 181,088,587 and 181,185,861 shares outstanding at May 31, 2016 and February 29, 2016, respectively	24	23
Additional paid-in capital	2,176,208	2,162,264
Retained earnings	1,160,472	1,099,738
Treasury stock at cost, 54,611,876 and 53,710,276 shares at May 31, 2016 and February 29, 2016, respectively	(1,919,622)	(1,853,144)
Accumulated other comprehensive loss	(67,747)	(74,449)
Total stockholders' equity	1,349,335	1,334,432
Total liabilities and stockholders' equity	$ 4,112,281	$ 4,155,099
[1]	Derived from audited financial statements.

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	May 31, 2016	Feb. 29, 2016	[1]
Accounts receivable, allowances for doubtful accounts	$ 2,315	$ 2,798
Property and equipment, accumulated depreciation and amortization	$ 208,451	$ 194,819
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, outstanding	0	0
Common stock, per share par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	235,700,463	234,896,137
Common stock, shares outstanding	181,088,587	181,185,861
Treasury stock, shares	54,611,876	53,710,276
[1]	Derived from audited financial statements.

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	May 31, 2016	May 31, 2015
Revenue:
Subscriptions	$ 501,665	$ 424,793
Training and services	66,234	56,208
Total subscription and training and services revenue	567,899	481,001
Cost of subscription and training and services revenue:
Cost of subscriptions	36,545	29,846
Cost of training and services	47,503	41,551
Total cost of subscription and training and services revenue	84,048	71,397
Gross profit	483,851	409,604
Operating expense:
Sales and marketing	243,248	198,872
Research and development	115,016	97,431
General and administrative	50,224	42,371
Total operating expense	408,488	338,674
Income from operations	75,363	70,930
Interest income	3,430	2,715
Interest expense	5,887	5,715
Other income (expense), net	(553)	(203)
Income before provision for income taxes	72,353	67,727
Provision for income taxes	11,169	19,641
Net income	$ 61,184	$ 48,086
Basic net income per common share	$ 0.34	$ 0.26
Diluted net income per common share	$ 0.33	$ 0.26
Weighted average shares outstanding
Basic	181,168	183,130
Diluted	184,187	186,175

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	May 31, 2016	May 31, 2015
Net income	$ 61,184	$ 48,086
Other comprehensive income (loss):
Change in foreign currency translation adjustment	5,917	(5,629)
Available-for-sale securities:
Unrealized gain (loss) on available-for-sale securities during the period	1,238	(406)
Reclassification for (gain) loss realized on available-for-sale securities, reported in Other income (expense), net	(9)	5
Tax benefit (expense)	(444)	47
Net change in available-for-sale securities (net of tax)	785	(354)
Total other comprehensive income (loss)	6,702	(5,983)
Comprehensive income	$ 67,886	$ 42,103

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	May 31, 2016		May 31, 2015
Cash flows from operating activities:
Net income	$ 61,184		$ 48,086
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	20,702		18,547
Amortization of debt discount and transaction costs	5,365		5,195
Share-based compensation expense	41,275		36,522
Deferred income taxes	(2,152)		1,914
Excess tax benefits from share-based payment arrangements	7,950		6,419
Net amortization of bond premium on debt securities available for sale	3,540		2,597
Other	(765)		830
Changes in operating assets and liabilities:
Accounts receivable	190,330		179,387
Prepaid expenses	(9,373)		(427)
Accounts payable and accrued expenses	(38,136)		(52,346)
Deferred revenue	(46,093)		(31,562)
Other	(1,530)		15
Net cash provided by operating activities	232,297		215,177
Cash flows from investing activities:
Purchase of investment in debt securities available for sale	(134,601)		(406,211)
Proceeds from sales and maturities of investment in debt securities available for sale	117,182		182,583
Purchase of other intangible assets	(2,868)		(3,929)
Purchase of property and equipment	(17,653)		(10,696)
Other	(111)		(2,000)
Net cash used in investing activities	(38,051)		(240,253)
Cash flows from financing activities:
Proceeds from exercise of common stock options	1,380		2,109
Payments related to net settlement of share-based compensation awards	(31,079)		(25,211)
Purchase of treasury stock	(66,478)
Other	55		(351)
Net cash used in financing activities	(96,122)		(23,453)
Effect of foreign currency exchange rates on cash and cash equivalents	5,663		(8,022)
Net increase (decrease) in cash and cash equivalents	103,787		(56,551)
Cash and cash equivalents at beginning of the period	927,778	[1]	1,047,473
Cash and cash equivalents at end of the period	$ 1,031,565		$ 990,922
[1]	Derived from audited financial statements.

Company

Company	3 Months Ended
	May 31, 2016
Company	NOTE 1—Company Red Hat, Inc., incorporated in Delaware, together with its subsidiaries (“Red Hat” or the “Company”) is a leading global provider of open source software solutions, using a community-powered approach to develop and offer reliable and high-performing operating system, virtualization, management, middleware, cloud, mobile and storage technologies. Open source software is an alternative to proprietary software and represents a different model for the development and licensing of commercial software code than that typically used for proprietary software. Because open source software code is often freely shared, there are customarily no licensing fees for the use of open source software. Therefore, the Company does not recognize revenue from the licensing of the code itself. The Company provides value to its customers through the development, aggregation, integration, testing, certification, delivery, maintenance, enhancement and support of its Red Hat technologies, and by providing a level of performance, scalability, flexibility, reliability and security for the technologies the Company packages and distributes. Moreover, because communities of developers not employed by the Company assist with the creation of the Company’s open source offerings, opportunities for further innovation of the Company’s offerings are supplemented by these communities. The Company derives its revenue and generates cash from customers primarily from two sources: (i) subscription revenue and (ii) training and services revenue. These arrangements typically involve subscriptions to Red Hat technologies. The arrangements with the Company’s customers that produce this revenue and cash are explained in further detail in NOTE 2—Summary of Significant Accounting Policies to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended February 29, 2016.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	May 31, 2016
Summary of Significant Accounting Policies	NOTE 2—Summary of Significant Accounting Policies Basis of presentation The unaudited interim consolidated financial statements as of and for the three months ended May 31, 2016 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These consolidated statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary for a fair statement of the consolidated balance sheets, consolidated operating results, consolidated other comprehensive income and consolidated cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America. Operating results for the three months ended May 31, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending February 28, 2017. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted in accordance with the SEC’s rules and regulations for interim reporting. These unaudited financial statements should be read in conjunction with the Company’s Consolidated Financial Statements, including notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 29, 2016. Other than the accounting pronouncement adopted during the three months ended May 31, 2016 related to accounting for share-based compensation as described below, there have been no changes to the Company’s significant accounting policies from those described in NOTE 2—Summary of Significant Accounting Policies to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended February 29, 2016. These unaudited financial statements should be read in conjunction with the financial statements included in the Annual Report on Form 10-K. Consolidation policy The accompanying Consolidated Financial Statements include the accounts of the Company and all of its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. There are no significant foreign currency exchange restrictions on the Company’s foreign subsidiaries. Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from such estimates. Accounting pronouncement adopted In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting Impact to Consolidated Statements of Operations One of the more significant impacts of adopting ASU 2016-09 is the required change in how the Company recognizes the excess tax benefits (“windfalls”) or deficiencies (“shortfalls”) related to share-based compensation. For example, prior to adopting ASU 2016-09 such windfalls and shortfalls were credited or charged, respectively, to additional paid-in capital in the Company’s Consolidated Balance Sheets. Under ASU 2016-09, these windfalls and shortfalls are recognized as a discrete tax benefit or discrete tax expense, respectively, in the Company’s Consolidated Statements of Operations. For the three months ended May 31, 2016, the Company recognized a discrete tax benefit of $7.9 million related to net windfall tax benefits from share-based compensation. ASU 2016-09 requires companies to adopt the amendment related to accounting for windfalls and shortfalls on a prospective basis only. As a result, no change has been made to the Consolidated Statement of Operations for the three months ended May 31, 2015 related to the $5.6 million of net windfall tax benefits the Company recognized as additional paid-in capital during the three months ended May 31, 2015. Net windfall tax benefits of $5.6 million recognized as additional paid-in-capital during the three months ended May 31, 2015 includes gross windfall tax benefits of $6.4 million net of $0.8 million shortfall tax expense. Impact to Consolidated Statements of Cash Flows In addition to the income tax consequences described above, under ASU 2016-09 all windfall tax benefits related to share-based payments are reported as cash flows from operating activities along with all other income tax cash flows. Previously, windfall tax benefits from share-based payment arrangements were reported as cash flows from financing activities. With respect to the classification of windfall tax benefits on the statement of cash flows, ASU 2016-09 allows companies to elect either a prospective or retrospective application. The Company has elected to apply this classification amendment retrospectively. As a result, $6.4 million of windfall tax benefits previously reported as cash flows from financing activities on the Company’s Consolidated Statement of Cash Flows for the three months ended May 31, 2015 have been reclassified as cash flows from operating activities. Impact to Consolidated Balance Sheets ASU 2016-09 requires that certain other amendments relevant to the Company be applied using a modified-retrospective transition method by means of a cumulative-effect adjustment to retained earnings as of the beginning of the period in which the guidance is adopted. As a result of adopting ASU 2016-09 during the three months ended May 31, 2016, the Company adjusted retained earnings for amendments related to (i) the timing of when unrealized net windfall tax benefits are recognized and (ii) an entity-wide accounting policy election to recognize share-based award forfeitures only as they occur rather than estimate by applying a forfeiture rate. The following table summarizes the impact to the Company’s Consolidated Balance Sheet, including the net amount charged to retained earnings as of March 1, 2016 (in thousands): As of March 1, 2016 Balance Sheet Classification Amount Increase to additional paid-in capital resulting from the Company’s election to recognize forfeitures as they occur rather than applying an estimated forfeiture rate Additional paid-in capital $ 2,369 Recognition of deferred tax assets related to cumulative-effect adjustment from the Company’s election to recognize forfeitures as they occur Deferred tax assets, net $ 603 Recognition of deferred tax assets related to certain unrealized net windfall tax benefits from share-based compensation Deferred tax assets, net $ 1,316 Net charge to retained earnings for cumulative-effect adjustment from adoption of ASU 2016-09 Retained earnings $ 450 Accounting pronouncements being evaluated In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842) In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers .

Changes in Equity

Changes in Equity	3 Months Ended
	May 31, 2016
Changes in Equity	NOTE 3—Changes in Equity The following table summarizes the changes in the Company’s stockholders’ equity during the three months ended May 31, 2016 (in thousands): Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Balance at February 29, 2016 $ 23 $ 2,162,264 $ 1,099,738 $ (1,853,144 ) $ (74,449 ) $ 1,334,432 Net income — — 61,184 — — 61,184 Other comprehensive income (loss), net of tax — — — — 6,702 6,702 Exercise of common stock options 1 1,379 — — — 1,380 Common stock repurchase (see NOTE 10) — — — (66,478 ) — (66,478 ) Share-based compensation expense — 41,275 — — — 41,275 Minimum tax withholdings paid by the Company on behalf of employees related to net settlement of employee share-based awards — (31,079 ) — — — (31,079 ) Cumulative-effect adjustment from adoption of ASU 2016-09 — 2,369 (450 ) — — 1,919 Balance at May 31, 2016 $ 24 $ 2,176,208 $ 1,160,472 $ (1,919,622 ) $ (67,747 ) $ 1,349,335 The following table summarizes the changes in the Company’s stockholders’ equity during the three months ended May 31, 2015 (in thousands): Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Balance at February 28, 2015 $ 23 $ 1,963,851 $ 900,373 $ (1,515,288 ) $ (60,621 ) $ 1,288,338 Net income — — 48,086 — — 48,086 Other comprehensive income (loss), net of tax — — — — (5,983 ) (5,983 ) Exercise of common stock options — 2,109 — — — 2,109 Common stock repurchase — 75,000 — (75,000 ) — — Share-based compensation expense — 36,522 — — — 36,522 Net tax benefits related to share-based awards — 5,562 — — — 5,562 Minimum tax withholdings paid by the Company on behalf of employees related to net settlement of employee share-based awards — (25,211 ) — — — (25,211 ) Other adjustments — 213 — (213 ) — — Balance at May 31, 2015 $ 23 $ 2,058,046 $ 948,459 $ (1,590,501 ) $ (66,604 ) $ 1,349,423 Accumulated other comprehensive loss The following is a summary of accumulated other comprehensive loss as of May 31, 2016 and February 29, 2016 (in thousands): As of As of Accumulated loss from foreign currency translation adjustment $ (67,859 ) $ (73,776 ) Accumulated unrealized gain (loss), net of tax, on available-for-sale securities 112 (673 ) Accumulated other comprehensive loss $ (67,747 ) $ (74,449 )

Identifiable Intangible Assets

Identifiable Intangible Assets	3 Months Ended
	May 31, 2016
Identifiable Intangible Assets	NOTE 4—Identifiable Intangible Assets Identifiable intangible assets consist primarily of trademarks, copyrights and patents, purchased technologies, customer and reseller relationships and covenants not to compete, which are amortized over the estimated useful life, generally on a straight-line basis with the exception of customer and reseller relationships, which are generally amortized over the related asset’s pattern of economic benefit or on a straight-line basis if a straight-line basis results in a greater amount of amortization for the period reported. Useful lives range from two to ten years. As of May 31, 2016 and February 29, 2016, trademarks with an indefinite estimated useful life totaled $11.3 million and $11.1 million, respectively. The following is a summary of identifiable intangible assets (in thousands): As of May 31, 2016 As of February 29, 2016 Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Trademarks, copyrights and patents $ 140,245 $ (52,169 ) $ 88,076 $ 138,106 $ (49,876 ) $ 88,230 Purchased technologies 96,246 (73,191 ) 23,055 96,105 (70,940 ) 25,165 Customer and reseller relationships 104,745 (82,492 ) 22,253 104,593 (80,329 ) 24,264 Covenants not to compete 13,315 (10,698 ) 2,617 13,240 (9,875 ) 3,365 Other intangible assets 8,833 (4,130 ) 4,703 8,833 (3,786 ) 5,047 Total identifiable intangible assets $ 363,384 $ (222,680 ) $ 140,704 $ 360,877 $ (214,806 ) $ 146,071 Amortization expense associated with identifiable intangible assets recognized in the Company’s Consolidated Financial Statements for the three months ended May 31, 2016 and May 31, 2015 is summarized as follows (in thousands): Three Months Ended May 31, May 31, Cost of revenue $ 3,967 $ 2,917 Sales and marketing 1,916 2,005 Research and development 34 250 General and administrative 1,753 1,052 Total amortization expense $ 7,670 $ 6,224

Income Taxes

Income Taxes	3 Months Ended
	May 31, 2016
Income Taxes	NOTE 5—Income Taxes The following table summarizes the Company’s tax provision for the three months ended May 31, 2016 and May 31, 2015 (in thousands): Three Months Ended May 31, May 31, Income before provision for income taxes $ 72,353 $ 67,727 Estimated annual effective tax rate 27 % 29 % Provision for income taxes before discrete tax benefits 19,535 19,641 Discrete tax benefits related to net excess tax benefits from share-based payments 7,938 — Other discrete tax benefits 428 — Provision for income taxes $ 11,169 $ 19,641 For the three months ended May 31, 2016, the Company’s estimated annual effective tax rate of 27% differed from the U.S. federal statutory rate of 35% principally due to foreign income taxed at lower rates, research tax credits and the domestic production activities deduction. Tax expense for the three months ended May 31, 2016 included a discrete tax benefit of $7.9 million related to net excess tax benefits from share-based payments resulting from the Company’s early adoption of ASU 2016-09. See NOTE 2—Summary of Significant Accounting Policies for more details regarding the adoption of ASU 2016-09. For the three months ended May 31, 2015, the Company’s then-estimated annual effective tax rate of 29% differed from the U.S. federal statutory rate of 35%, principally due to foreign income taxed at lower rates, state income taxes net of federal benefits and the domestic production activities deduction.

Assets and Liabilities Measured

Assets and Liabilities Measured at Fair Value on a Recurring Basis	3 Months Ended
	May 31, 2016
Assets and Liabilities Measured at Fair Value on a Recurring Basis	NOTE 6—Assets and Liabilities Measured at Fair Value on a Recurring Basis Fair value is defined as the exchange price that would be received for the purchase of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for such asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. The Company’s investments are comprised primarily of debt securities that are classified as available for sale and recorded at their fair market values. Liquid investments with effective maturities of three months or less at the date of purchase are classified as cash equivalents. Investments with remaining effective maturities of twelve months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than twelve months from the balance sheet date are classified as long-term investments. The Company’s Level 1 financial instruments are valued using quoted prices in active markets for identical instruments. The Company’s Level 2 financial instruments, including derivative instruments, are valued using quoted prices for identical instruments in less active markets or using other observable market inputs for comparable instruments. Unrealized gains and temporary losses on investments classified as available for sale are included within accumulated other comprehensive income, net of any related tax effect. Upon realization, such amounts are reclassified from accumulated other comprehensive income to Other income (expense), net. Realized gains and losses and other than temporary impairments, if any, are reflected in the consolidated statements of operations as Other income (expense), net. The Company does not recognize changes in the fair value of its investments in income unless a decline in value is considered other than temporary. The vast majority of the Company’s investments are priced by pricing vendors. These pricing vendors use the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs. In the event observable inputs are not available, the Company assesses other factors to determine the security’s market value, including broker quotes or model valuations. Independent price verifications of all holdings are performed by pricing vendors which are then reviewed by the Company. In the event a price fails a pre-established tolerance check, it is researched so that the Company can assess the cause of the variance to determine what the Company believes is the appropriate fair market value. The Company minimizes its credit risk associated with investments by investing primarily in investment grade, liquid securities. The Company’s policy is designed to limit exposures to any one issuer depending on credit quality. Periodic evaluations of the relative credit standing of those issuers are considered in the Company’s investment strategy. The following table summarizes the composition and fair value hierarchy of the Company’s financial assets and liabilities at May 31, 2016 (in thousands): As of Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money markets (1) $ 284,422 $ 284,422 $ — $ — Available-for-sale securities (1): U.S. agency securities 341,705 — 341,705 — Corporate securities 746,606 — 746,606 — Foreign currency derivatives (2) 46 — 46 — Liabilities: Foreign currency derivatives (3) (437 ) — (437 ) — Total $ 1,372,342 $ 284,422 $ 1,087,920 $ — (1) Included in Cash and cash equivalents, Investments in debt securities, short-term or Investments in debt securities, long-term in the Company’s Consolidated Balance Sheet at May 31, 2016, in addition to $747.1 million of cash. (2) Included in Other current assets in the Company’s Consolidated Balance Sheet at May 31, 2016. (3) Included in Accounts payable and accrued expenses in the Company’s Consolidated Balance Sheet at May 31, 2016. The following table summarizes the composition and fair value hierarchy of the Company’s financial assets and liabilities at February 29, 2016 (in thousands): As of Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money markets (1) $ 221,970 $ 221,970 $ — $ — Available-for-sale securities (1): U.S. agency securities 331,117 — 331,117 — Corporate securities 736,495 — 736,495 — Foreign currency derivatives (2) 566 — 566 — Liabilities: Foreign currency derivatives (3) (452 ) — (452 ) — Total $ 1,289,696 $ 221,970 $ 1,067,726 $ — (1) Included in Cash and cash equivalents, Investments in debt securities, short-term or Investments in debt securities, long-term in the Company’s Consolidated Balance Sheet at February 29, 2016, in addition to $705.8 million of cash. (2) Included in Other current assets in the Company’s Consolidated Balance Sheet at February 29, 2016. (3) Included in Accounts payable and accrued expenses in the Company’s Consolidated Balance Sheet at February 29, 2016. The following table represents the Company’s investments measured at fair value as of May 31, 2016 (in thousands): Gross Unrealized Balance Sheet Classification Amortized Cost Gains Losses (1) Aggregate Fair Value Cash Investments Investments Money markets $ 284,422 $ — $ — $ 284,422 $ 284,422 $ — $ — U.S. agency securities 342,155 132 (582 ) 341,705 — 60,443 281,262 Corporate securities 746,340 1,128 (862 ) 746,606 — 304,407 442,199 Total $ 1,372,917 $ 1,260 $ (1,444 ) $ 1,372,733 $ 284,422 $ 364,850 $ 723,461 (1) As of May 31, 2016, there were $0.6 million of accumulated unrealized losses related to investments that have been in a continuous unrealized loss position for 12 months or longer. The following table represents the Company’s investments measured at fair value as of February 29, 2016 (in thousands): Gross Unrealized Balance Sheet Classification Amortized Cost Gains Losses (1) Aggregate Fair Value Cash Investments Investments Money markets $ 221,970 $ — $ — $ 221,970 $ 221,970 $ — $ — U.S. agency securities 331,302 160 (345 ) 331,117 — 50,453 280,664 Corporate securities 737,723 994 (2,222 ) 736,495 — 230,689 505,806 Total $ 1,290,995 $ 1,154 $ (2,567 ) $ 1,289,582 $ 221,970 $ 281,142 $ 786,470 (1) As of February 29, 2016, there were $0.9 million of accumulated unrealized losses related to investments that have been in a continuous unrealized loss position for 12 months or longer.

Derivative Instruments

Derivative Instruments	3 Months Ended
	May 31, 2016
Derivative Instruments	NOTE 7—Derivative Instruments The Company transacts business in various foreign countries and is, therefore, subject to risk of foreign currency exchange rate fluctuations. The Company from time to time enters into forward contracts to economically hedge transactional exposure associated with commitments arising from trade accounts receivable, trade accounts payable and fixed purchase obligations denominated in a currency other than the functional currency of the respective operating entity. All derivative instruments are recorded on the Consolidated Balance Sheets at their respective fair market values. The Company does not designate these forward contracts as hedging instruments under applicable accounting guidance and, therefore, changes in fair value are recorded in the Consolidated Statements of Operations. The effects of derivative instruments on the Company’s Consolidated Financial Statements are as follows as of May 31, 2016 and for the three months then ended (in thousands): As of May 31, 2016 Three Months Ended May 31, 2016 Balance Sheet Classification Fair Value Notional Value Classification of Amount of Gain Assets—foreign currency forward contracts not designated as hedges Other current assets $ 46 $ 6,563 Other income (expense), net $ 1,199 Liabilities—foreign currency forward contracts not designated as hedges Accounts payable and accrued expenses (437 ) 27,842 Other income (expense), net (678 ) Total $ (391 ) $ 34,405 $ 521 The effects of derivative instruments on the Company’s Consolidated Financial Statements are as follows as of May 31, 2015 and for the three months then ended (in thousands): As of May 31, 2015 Three Months Ended May 31, 2015 Balance Sheet Classification Fair Value Notional Value Classification of Amount of Gain Assets—foreign currency forward contracts not designated as hedges Other current assets $ 86 $ 2,765 Other income $ 680 Liabilities—foreign currency forward contracts not designated as hedges Accounts payable and accrued expenses (293 ) 29,919 Other income (809 ) Total $ (207 ) $ 32,684 $ (129 )

Share-based Awards

Share-based Awards	3 Months Ended
	May 31, 2016
Share-based Awards	NOTE 8—Share-based Awards The Company measures share-based compensation cost at the grant date, based on the estimated fair value of the award and recognizes the cost over the employee requisite service period, typically on a straight-line basis. The Company estimates the fair value of stock options using the Black-Scholes-Merton valuation model. The fair value of nonvested share awards, nonvested share units and performance share units are measured at their underlying closing share price on the day of grant. Effective March 1, 2016, the Company adopted ASU 2016-09. Upon adoption of ASU 2016-09 the Company made an accounting policy election to account for forfeitures as they occur rather than apply an estimated forfeiture rate. See NOTE 2—Summary of Significant Accounting Policies for more details regarding the adoption of ASU 2016-09. The following summarizes share-based compensation expense recognized in the Company’s Consolidated Financial Statements for the three months ended May 31, 2016 and May 31, 2015 (in thousands): Three Months Ended May 31, 2016 May 31, 2015 Cost of revenue $ 4,305 $ 3,727 Sales and marketing 18,440 15,412 Research and development 12,002 10,874 General and administrative 6,528 6,509 Total share-based compensation expense $ 41,275 $ 36,522 Share-based compensation expense qualifying for capitalization was insignificant for each of the three months ended May 31, 2016 and May 31, 2015. Accordingly, no share-based compensation expense was capitalized during the three months ended May 31, 2016 and May 31, 2015. During the three months ended May 31, 2016 and May 31, 2015, the Company granted the following share-based awards: Three Months Ended May 31, 2016 May 31, 2015 Shares and Shares Underlying Weighted Shares and Weighted Service-based shares and share units 934,890 $ 75.45 807,596 $ 74.81 Performance share units—target 360,676 (1) $ 76.70 258,118 $ 77.28 Performance share awards 140,182 (2) $ 76.70 98,525 $ 77.28 Total awards 1,435,748 $ 75.89 1,164,239 $ 75.57 (1) Certain executives and senior management were awarded a target number of performance share units (“PSUs”). PSU grantees may earn up to 200% of the target number of PSUs. Half of the target number of PSUs can be earned by the grantees depending upon the Company’s financial performance measured against the financial performance of specified peer companies during a three-year performance period beginning on March 1, 2016. The remaining target number of PSUs can be earned by the grantees depending upon the Company’s total shareholder return performance measured against the total shareholder return performance of specified peer companies during a three-year period beginning on March 1, 2016. (2) Certain executives were granted restricted stock awards. These shares were awarded subject to the achievement of a specified dollar amount of revenue for FY2017 (the “RSA Performance Goal”). If the Company fails to achieve the RSA Performance Goal for FY2017, then all such shares are forfeited. If the Company achieves the RSA Performance Goal for FY2017, then 25% of the restricted stock vests on or about July 16, 2017, and the remainder vests ratably on a quarterly basis over the course of the subsequent three-year period, provided that the grantee’s business relationship with the Company has not ceased.

Earnings Per Share

Earnings Per Share	3 Months Ended
	May 31, 2016
Earnings Per Share	NOTE 9—Earnings Per Share The Company computes basic net income per common share by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted net income per common share is computed by dividing net income by the weighted average number of common shares and dilutive potential common share equivalents then outstanding. Potential common share equivalents consist of shares issuable upon the exercise of stock options or vesting of share-based awards. The following table reconciles the numerators and denominators of the earnings per share (“EPS”) calculation for the three months ended May 31, 2016 and May 31, 2015 (in thousands, except per share amounts): Three Months Ended May 31, May 31, Net income, basic and diluted $ 61,184 $ 48,086 Weighted average common shares outstanding 181,168 183,130 Incremental shares attributable to assumed vesting or exercise of outstanding equity award shares 3,019 2,994 Dilutive effect of convertible notes — 51 Diluted shares 184,187 186,175 Diluted net income per share $ 0.33 $ 0.26 With respect to the Company’s convertible notes, the Company has the option to pay cash or deliver, as the case may be, either cash, shares of its common stock or a combination of cash and shares of its common stock for the aggregate amount due upon conversion of the convertible notes. The Company’s intent is to settle the principal amount of the convertible notes in cash upon conversion. As a result, upon conversion of the convertible notes, only the amounts payable in excess of the principal amounts of the convertible notes would be considered in diluted earnings per share under the treasury stock method. See NOTE 15—Convertible Notes for detailed information on the convertible notes. Warrants to purchase 10,965,630 shares of the Company’s common stock at $101.65 per share were outstanding during the three months ended May 31, 2016 and May 31, 2015 but were not included in the computation of diluted EPS because the warrants’ exercise price was greater than the average market price of the Company’s common stock during the related period. The following employee share awards were not included in the computation of diluted earnings per share because the aggregate value of proceeds considered received upon either exercise or vesting was greater than the average market price of the Company’s common stock during the related periods and the effect of including such share awards in the computation would be anti-dilutive (in thousands): Three Months Ended May 31, May 31, 2015 Number of shares considered anti-dilutive for calculating diluted EPS 1,081 3

Share Repurchase Programs

Share Repurchase Programs	3 Months Ended
	May 31, 2016
Share Repurchase Programs	NOTE 10—Share Repurchase Programs On March 25, 2015, the Company announced that its Board of Directors (the “Board”) has authorized the repurchase of up to $500.0 million of Red Hat’s common stock from time to time on the open market or in privately negotiated transactions. The program commenced on April 1, 2015, and will expire on the earlier of (i) March 31, 2017, or (ii) a determination by the Board, Chief Executive Officer or Chief Financial Officer to discontinue the program. During the three months ended May 31, 2016, the Company repurchased 901,600 shares of its common stock for $66.5 million under this repurchase program. As of May 31, 2016, the amount available under the program for the repurchase of the Company’s common stock was $170.9 million. On June 22, 2016, the Company announced that its Board authorized a new repurchase program and terminated the repurchase program described above effective June 30, 2016. See NOTE 16—Subsequent Events for additional information regarding the Company’s new share repurchase program.

Segment Reporting

Segment Reporting	3 Months Ended
	May 31, 2016
Segment Reporting	NOTE 11—Segment Reporting The following summarizes revenue from unaffiliated customers and income (loss) from operations for the three months ended May 31, 2016 and May 31, 2015 and total cash, cash equivalents and available-for-sale investment securities and total assets as of May 31, 2016 and May 31, 2015, by geographic segment (in thousands): Americas EMEA Asia Pacific Corporate (1) Consolidated Three Months Ended May 31, 2016 Revenue from unaffiliated customers $ 365,723 $ 124,299 $ 77,877 $ — $ 567,899 Income (loss) from operations $ 69,756 $ 25,688 $ 21,194 $ (41,275 ) $ 75,363 Total cash, cash equivalents and available-for-sale investment securities $ 1,240,377 $ 613,619 $ 265,880 $ — $ 2,119,876 Total assets $ 2,815,567 $ 892,729 $ 403,985 $ — $ 4,112,281 Three Months Ended May 31, 2015 Revenue from unaffiliated customers $ 321,833 $ 97,473 $ 61,695 $ — $ 481,001 Income (loss) from operations $ 75,533 $ 16,407 $ 15,512 $ (36,522 ) $ 70,930 Total cash, cash equivalents and available-for-sale investment securities $ 1,302,959 $ 446,318 $ 219,197 $ — $ 1,968,474 Total assets $ 2,727,050 $ 724,218 $ 309,012 $ — $ 3,760,280 (1) Amounts represent share-based compensation expense for each of the three months ended May 31, 2016 and May 31, 2015, which was not allocated to geographic segments. Supplemental information about geographic areas The following table lists, for each of the three months ended May 31, 2016 and May 31, 2015, revenue from unaffiliated customers in the United States, the Company’s country of domicile, and revenue from unaffiliated customers from foreign countries (in thousands): Three Months Ended May 31, 2016 May 31, 2015 United States, the Company’s country of domicile $ 328,529 $ 287,461 Foreign 239,370 193,540 Total revenue from unaffiliated customers $ 567,899 $ 481,001 Total tangible long-lived assets, net of accumulated depreciation, located in the United States, the Company’s country of domicile, and similar tangible long-lived assets, net of accumulated depreciation, held outside the United States are summarized in the following table as of May 31, 2016 and February 29, 2016 (in thousands): As of May 31, As of February 29, United States, the Company’s country of domicile $ 126,280 $ 126,937 Foreign 41,735 39,949 Total tangible long-lived assets $ 168,015 $ 166,886 Supplemental information about major customers For each of the three months ended May 31, 2016 and May 31, 2015, the U.S. government and its agencies represented in the aggregate approximately 10% of the Company’s total revenue. Supplemental information about products and services The following table, for each of the three months ended May 31, 2016 and May 31, 2015, provides further detail, by type, of the Company’s subscription and services revenues. Infrastructure-related offerings subscription revenue includes subscription revenue generated from Red Hat Enterprise Linux and related technologies such as Red Hat Satellite and Red Hat Enterprise Virtualization. Subscription revenue generated from the Company’s Application development-related and other emerging technology offerings includes Red Hat JBoss Middleware, Red Hat Storage, Red Hat Mobile and Red Hat cloud offerings such as Red Hat OpenStack Platform and OpenShift by Red Hat (in thousands): Three Months Ended May 31, May 31, Subscription revenue: Infrastructure-related offerings $ 403,182 $ 354,018 Application development-related and other emerging technology offerings 98,483 70,775 Total subscription revenue 501,665 424,793 Training and services revenue: Consulting services 50,310 43,199 Training 15,924 13,009 Total training and services revenue 66,234 56,208 Total subscription and training and services revenue $ 567,899 $ 481,001

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	May 31, 2016
Commitments and Contingencies	NOTE 12—Commitments and Contingencies Operating leases As of May 31, 2016, the Company had leases of office space and certain equipment under various non-cancelable operating leases. Rent expense under operating leases for the three months ended May 31, 2016 and May 31, 2015 was $8.5 million and $7.8 million, respectively. Product indemnification The Company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party from losses arising in connection with the Company’s services or products, or from losses arising in connection with certain events defined within a particular contract, which may include litigation or claims relating to intellectual property infringement, certain losses arising from damage to property or injury to persons or other matters. In each of these circumstances, payment by the Company is conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow the Company to challenge the other party’s claims. Further, the Company’s obligations under these agreements may in certain cases be limited in terms of time and/or amount, and in some instances, the Company may have recourse against third-parties for certain payments made by the Company. It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the Company’s obligations and the facts and circumstances involved in each particular agreement. The Company does not record a liability for claims related to indemnification unless the Company concludes that the likelihood of a material claim is probable and estimable. Historically, payments pursuant to these indemnifications have been immaterial.

Legal Proceedings

Legal Proceedings	3 Months Ended
	May 31, 2016
Legal Proceedings	NOTE 13—Legal Proceedings The Company experiences routine litigation in the normal course of its business, including patent litigation. The Company presently believes that the outcome of this routine litigation will not have a material adverse effect on its financial position, results of operations or cash flows.

Business Combinations

Business Combinations	3 Months Ended
	May 31, 2016
Business Combinations	NOTE 14—Business Combinations Acquisition of Ansible, Inc. On October 16, 2015, the Company completed its acquisition of all of the shares of Ansible, Inc. (“Ansible”). Ansible is a provider of IT automation solutions that allows its users to manage applications across hybrid cloud environments. The acquisition is intended to augment the Company’s management portfolio and help customers to deploy and manage applications across private and public clouds, speed service delivery through development and operations initiatives, streamline OpenStack installations and upgrades and accelerate container adoption by simplifying orchestration and configuration. The consideration paid was $126.0 million and includes $125.2 million of cash. Based on management’s provisional assessment of the acquisition-date fair value of the assets acquired and liabilities assumed, the total consideration transferred of $126.0 million has been allocated to the Company’s assets and liabilities on a preliminary basis as follows: $102.3 million to goodwill, $25.1 million to identifiable intangible assets and $1.4 million to working capital as a net current liability. During February 2016, the Company completed its valuation of the identifiable intangible assets acquired from Ansible. As a result of the valuation, the Company reduced its preliminary estimate of identifiable intangible assets by $17.3 million to $25.1 million as of February 29, 2016 from $42.4 million as of November 30, 2015. The $17.3 million measurement-period adjustment resulted in an increase to goodwill of $10.8 million and a decrease to deferred taxes of $6.5 million. This adjustment had no significant impact on the Company’s financial results. Management expects to finalize its assessment of the acquisition-date fair value of Ansible’s other assets and liabilities, primarily deferred income taxes, in early fiscal 2017. Pro forma consolidated financial information The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the three months ended May 31, 2015 (in thousands, except per share amounts) as if the acquisition of Ansible had closed on March 1, 2015, after giving effect to certain purchase accounting adjustments. These pro forma results are not necessarily indicative of what the Company’s operating results would have been had the acquisition actually taken place at the beginning of the period. Three Months Ended May 31, 2015 Revenue $ 481,812 Net income $ 46,048 Basic net income per common share $ 0.25 Diluted net income per common share $ 0.25

Convertible Notes

Convertible Notes	3 Months Ended
	May 31, 2016
Convertible Notes	NOTE 15—Convertible Notes Convertible notes offering On October 7, 2014, the Company completed its offering of $805.0 million aggregate principal amount of its 0.25% Convertible Senior Notes due 2019 (the “convertible notes”). The convertible notes were sold in a private placement under a purchase agreement, dated as of October 1, 2014, entered into by and among the Company and Morgan Stanley & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC as representatives of the several initial purchasers named therein (collectively, the “Initial Purchasers”), for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The Company used $148.0 million of the net proceeds from the offering of the convertible notes to pay the cost of the privately-negotiated convertible note hedge transactions described below. The Company received proceeds of $79.8 million from the sale of warrants pursuant to the warrant transactions described below. In addition, the Company used $375.0 million of the net proceeds from the offering of the convertible notes to repurchase shares of its common stock under an accelerated share repurchase program pursuant to an agreement that the Company entered into on October 1, 2014 and completed on February 27, 2015. The Company intends to use the remaining net proceeds from the offering for working capital and other general corporate purposes, which may include capital expenditures, potential acquisitions or strategic transactions. Indenture On October 7, 2014, the Company entered into an indenture (the “Indenture”) with respect to the convertible notes with U.S. Bank National Association, as trustee (the “Trustee”). Under the Indenture, the convertible notes will be senior unsecured obligations of the Company and bear interest at a rate of 0.25% per year, payable semiannually in arrears on April 1 and October 1 of each year, and began on April 1, 2015. The convertible notes will mature on October 1, 2019, unless previously purchased or converted. The convertible notes are convertible into shares of the Company’s common stock at an initial conversion rate of 13.6219 shares per $1,000 principal amount of convertible notes (which is equivalent to an initial conversion price of approximately $73.41 per share), subject to adjustment upon the occurrence of certain events. The initial conversion price represents a premium of approximately 30% to the $56.47 per share closing price of the Company’s common stock on October 1, 2014. Upon conversion of the convertible notes, holders will receive cash or shares of the Company’s common stock or a combination thereof, at the Company’s election. Prior to April 1, 2019, the convertible notes will be convertible only upon the occurrence of certain circumstances, and will be convertible thereafter at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the convertible notes. The conversion rate is subject to customary anti-dilution adjustments. If certain corporate events described in the Indenture occur prior to the maturity date, the conversion rate will be increased for a holder who elects to convert its convertible notes in connection with such corporate event in certain circumstances. The convertible notes are not redeemable prior to maturity, and no sinking fund is provided for the convertible notes. If the Company undergoes a “fundamental change,” as defined in the Indenture, subject to certain conditions, holders may require the Company to purchase for cash all or any portion of their convertible notes. The fundamental change purchase price will be 100% of the principal amount of the convertible notes to be purchased plus any accrued and unpaid special interest up to but excluding the fundamental change purchase date. The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of at least 25% in principal amount of the outstanding convertible notes may declare 100% of the principal of, and accrued and unpaid interest, if any, on, all the convertible notes to be due and payable. In accounting for the issuance of the convertible notes, the Company separated the convertible notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the estimated fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the face value of the convertible notes as a whole. The excess of the face value of the convertible notes as a whole over the carrying amount of the liability component (the “debt discount”) is amortized to interest expense over the term of the convertible notes using the effective interest method with an effective interest rate of 2.86% per annum. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. As of May 31, 2016 and February 29, 2016, the convertible notes consisted of the following (in thousands): As of As of Liability component: Principal $ 805,000 $ 805,000 Less: debt issuance costs (9,395 ) (10,029 ) Less: debt discount (66,298 ) (71,029 ) Net carrying amount $ 729,307 $ 723,942 Equity component (1) $ 96,890 $ 96,890 (1) Recorded in the Consolidated Balance Sheet in Additional paid-in capital. In accounting for the transaction costs related to the convertible note issuance, the Company allocated the total amount incurred of $15.2 million to the liability and equity components based on their relative fair values. Issuance costs attributable to the liability component totaled $13.4 million and are being amortized to interest expense over the term of the convertible notes using the effective interest method. The remaining $1.8 million of issuance costs have been allocated to the equity component and are included in Additional paid-in capital on the Company’s Consolidated Balance Sheet as of May 31, 2016. Additionally, the Company recorded a deferred tax asset of $0.7 million related to the $1.8 million equity component of transactional costs that are deductible for tax purposes. The following table includes total interest expense recognized related to the convertible notes for the three months ended May 31, 2016 and May 31, 2015 (in thousands): Three Months Ended May 31, May 31, Coupon rate 0.25% per year, payable semiannually $ 503 $ 503 Amortization of convertible note issuance costs—liability component 633 596 Accretion of debt discount 4,732 4,599 Total interest expense related to convertible notes $ 5,868 $ 5,698 The fair value of the convertible notes, which was determined based on inputs that are observable in the market (Level 2), and the carrying value of the convertible notes (the carrying value excludes the equity component of the convertible notes classified in equity) are as follows (in thousands): As of May 31, 2016 Fair Value Carrying Value Convertible notes $ 727,896 $ 729,307 Convertible note hedge transactions and warrant transactions On October 1, 2014, the Company entered into convertible note hedge transactions and warrant transactions with certain of the Initial Purchasers of the convertible notes or their respective affiliates. The convertible note hedge transactions are expected to offset the potential dilution with respect to shares of the Company’s common stock upon any conversion of the convertible notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted notes, as the case may be. To partially offset the $148.0 million cost of the convertible note hedge transactions, the Company issued warrants and received proceeds of $79.8 million. The number of shares of the Company’s common stock underlying the warrants total 10,965,630, the same number of shares underlying the convertible notes and the convertible note hedge transactions. The combination of the convertible note hedge transactions and the warrant transactions effectively increases the initial conversion price of the convertible notes from $73.41 per share to $101.65 per share. As a result, the warrant transactions will have a dilutive effect with respect to the Company’s common stock to the extent that the market price per share of the Company’s common stock, as measured under the terms of the warrant transactions, exceeds the $101.65 strike price of the warrants. However, subject to certain conditions, the Company may elect to settle all of the warrants in cash. The $101.65 strike price of the warrants represents a premium of approximately 80% over the $56.47 per share closing price of the Company’s common stock on October 1, 2014. The purchase of convertible note hedges and proceeds from issuance of warrants were recorded in stockholders’ equity and will continue to be classified as stockholders’ equity.

Subsequent Events

Subsequent Events	3 Months Ended
	May 31, 2016
Subsequent Events	NOTE 16—Subsequent Events On June 22, 2016, the Company announced that its Board authorized the repurchase of up to $1.0 billion of Red Hat’s common stock from time to time on the open market or in privately negotiated transactions. The new program commenced on July 1, 2016, and will expire on the earlier of (i) June 30, 2018 or (ii) a determination by the Board, Chief Executive Officer or Chief Financial Officer to discontinue the program. The new program replaced the previous $500 million repurchase program, which was terminated by the Board effective June 30, 2016.

Summary of Significant Accoun23

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	May 31, 2016
Basis of presentation	Basis of presentation The unaudited interim consolidated financial statements as of and for the three months ended May 31, 2016 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These consolidated statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary for a fair statement of the consolidated balance sheets, consolidated operating results, consolidated other comprehensive income and consolidated cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America. Operating results for the three months ended May 31, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending February 28, 2017. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted in accordance with the SEC’s rules and regulations for interim reporting. These unaudited financial statements should be read in conjunction with the Company’s Consolidated Financial Statements, including notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 29, 2016. Other than the accounting pronouncement adopted during the three months ended May 31, 2016 related to accounting for share-based compensation as described below, there have been no changes to the Company’s significant accounting policies from those described in NOTE 2—Summary of Significant Accounting Policies to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended February 29, 2016. These unaudited financial statements should be read in conjunction with the financial statements included in the Annual Report on Form 10-K.
Consolidation policy	Consolidation policy The accompanying Consolidated Financial Statements include the accounts of the Company and all of its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. There are no significant foreign currency exchange restrictions on the Company’s foreign subsidiaries.
Use of estimates	Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from such estimates.
Accounting pronouncements	Accounting pronouncement adopted In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting Impact to Consolidated Statements of Operations One of the more significant impacts of adopting ASU 2016-09 is the required change in how the Company recognizes the excess tax benefits (“windfalls”) or deficiencies (“shortfalls”) related to share-based compensation. For example, prior to adopting ASU 2016-09 such windfalls and shortfalls were credited or charged, respectively, to additional paid-in capital in the Company’s Consolidated Balance Sheets. Under ASU 2016-09, these windfalls and shortfalls are recognized as a discrete tax benefit or discrete tax expense, respectively, in the Company’s Consolidated Statements of Operations. For the three months ended May 31, 2016, the Company recognized a discrete tax benefit of $7.9 million related to net windfall tax benefits from share-based compensation. ASU 2016-09 requires companies to adopt the amendment related to accounting for windfalls and shortfalls on a prospective basis only. As a result, no change has been made to the Consolidated Statement of Operations for the three months ended May 31, 2015 related to the $5.6 million of net windfall tax benefits the Company recognized as additional paid-in capital during the three months ended May 31, 2015. Net windfall tax benefits of $5.6 million recognized as additional paid-in-capital during the three months ended May 31, 2015 includes gross windfall tax benefits of $6.4 million net of $0.8 million shortfall tax expense. Impact to Consolidated Statements of Cash Flows In addition to the income tax consequences described above, under ASU 2016-09 all windfall tax benefits related to share-based payments are reported as cash flows from operating activities along with all other income tax cash flows. Previously, windfall tax benefits from share-based payment arrangements were reported as cash flows from financing activities. With respect to the classification of windfall tax benefits on the statement of cash flows, ASU 2016-09 allows companies to elect either a prospective or retrospective application. The Company has elected to apply this classification amendment retrospectively. As a result, $6.4 million of windfall tax benefits previously reported as cash flows from financing activities on the Company’s Consolidated Statement of Cash Flows for the three months ended May 31, 2015 have been reclassified as cash flows from operating activities. Impact to Consolidated Balance Sheets ASU 2016-09 requires that certain other amendments relevant to the Company be applied using a modified-retrospective transition method by means of a cumulative-effect adjustment to retained earnings as of the beginning of the period in which the guidance is adopted. As a result of adopting ASU 2016-09 during the three months ended May 31, 2016, the Company adjusted retained earnings for amendments related to (i) the timing of when unrealized net windfall tax benefits are recognized and (ii) an entity-wide accounting policy election to recognize share-based award forfeitures only as they occur rather than estimate by applying a forfeiture rate. The following table summarizes the impact to the Company’s Consolidated Balance Sheet, including the net amount charged to retained earnings as of March 1, 2016 (in thousands): As of March 1, 2016 Balance Sheet Classification Amount Increase to additional paid-in capital resulting from the Company’s election to recognize forfeitures as they occur rather than applying an estimated forfeiture rate Additional paid-in capital $ 2,369 Recognition of deferred tax assets related to cumulative-effect adjustment from the Company’s election to recognize forfeitures as they occur Deferred tax assets, net $ 603 Recognition of deferred tax assets related to certain unrealized net windfall tax benefits from share-based compensation Deferred tax assets, net $ 1,316 Net charge to retained earnings for cumulative-effect adjustment from adoption of ASU 2016-09 Retained earnings $ 450 Accounting pronouncements being evaluated In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842) In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers .
Assets and Liabilities Measured at Fair Value	Fair value is defined as the exchange price that would be received for the purchase of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for such asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. The Company’s investments are comprised primarily of debt securities that are classified as available for sale and recorded at their fair market values. Liquid investments with effective maturities of three months or less at the date of purchase are classified as cash equivalents. Investments with remaining effective maturities of twelve months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than twelve months from the balance sheet date are classified as long-term investments. The Company’s Level 1 financial instruments are valued using quoted prices in active markets for identical instruments. The Company’s Level 2 financial instruments, including derivative instruments, are valued using quoted prices for identical instruments in less active markets or using other observable market inputs for comparable instruments. Unrealized gains and temporary losses on investments classified as available for sale are included within accumulated other comprehensive income, net of any related tax effect. Upon realization, such amounts are reclassified from accumulated other comprehensive income to Other income (expense), net. Realized gains and losses and other than temporary impairments, if any, are reflected in the consolidated statements of operations as Other income (expense), net. The Company does not recognize changes in the fair value of its investments in income unless a decline in value is considered other than temporary. The vast majority of the Company’s investments are priced by pricing vendors. These pricing vendors use the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs. In the event observable inputs are not available, the Company assesses other factors to determine the security’s market value, including broker quotes or model valuations. Independent price verifications of all holdings are performed by pricing vendors which are then reviewed by the Company. In the event a price fails a pre-established tolerance check, it is researched so that the Company can assess the cause of the variance to determine what the Company believes is the appropriate fair market value. The Company minimizes its credit risk associated with investments by investing primarily in investment grade, liquid securities. The Company’s policy is designed to limit exposures to any one issuer depending on credit quality. Periodic evaluations of the relative credit standing of those issuers are considered in the Company’s investment strategy.
Share Based Awards	The Company measures share-based compensation cost at the grant date, based on the estimated fair value of the award and recognizes the cost over the employee requisite service period, typically on a straight-line basis. The Company estimates the fair value of stock options using the Black-Scholes-Merton valuation model. The fair value of nonvested share awards, nonvested share units and performance share units are measured at their underlying closing share price on the day of grant. Effective March 1, 2016, the Company adopted ASU 2016-09. Upon adoption of ASU 2016-09 the Company made an accounting policy election to account for forfeitures as they occur rather than apply an estimated forfeiture rate. See NOTE 2—Summary of Significant Accounting Policies for more details regarding the adoption of ASU 2016-09.

Summary of Significant Accoun24

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	May 31, 2016
Impact to Consolidated Balance Sheet Including Net Amount Charged to Retained Earnings	The following table summarizes the impact to the Company’s Consolidated Balance Sheet, including the net amount charged to retained earnings as of March 1, 2016 (in thousands): As of March 1, 2016 Balance Sheet Classification Amount Increase to additional paid-in capital resulting from the Company’s election to recognize forfeitures as they occur rather than applying an estimated forfeiture rate Additional paid-in capital $ 2,369 Recognition of deferred tax assets related to cumulative-effect adjustment from the Company’s election to recognize forfeitures as they occur Deferred tax assets, net $ 603 Recognition of deferred tax assets related to certain unrealized net windfall tax benefits from share-based compensation Deferred tax assets, net $ 1,316 Net charge to retained earnings for cumulative-effect adjustment from adoption of ASU 2016-09 Retained earnings $ 450

Changes in Equity (Tables)

Changes in Equity (Tables)	3 Months Ended
	May 31, 2016
Summary of Changes in Stockholders' Equity	The following table summarizes the changes in the Company’s stockholders’ equity during the three months ended May 31, 2016 (in thousands): Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Balance at February 29, 2016 $ 23 $ 2,162,264 $ 1,099,738 $ (1,853,144 ) $ (74,449 ) $ 1,334,432 Net income — — 61,184 — — 61,184 Other comprehensive income (loss), net of tax — — — — 6,702 6,702 Exercise of common stock options 1 1,379 — — — 1,380 Common stock repurchase (see NOTE 10) — — — (66,478 ) — (66,478 ) Share-based compensation expense — 41,275 — — — 41,275 Minimum tax withholdings paid by the Company on behalf of employees related to net settlement of employee share-based awards — (31,079 ) — — — (31,079 ) Cumulative-effect adjustment from adoption of ASU 2016-09 — 2,369 (450 ) — — 1,919 Balance at May 31, 2016 $ 24 $ 2,176,208 $ 1,160,472 $ (1,919,622 ) $ (67,747 ) $ 1,349,335 The following table summarizes the changes in the Company’s stockholders’ equity during the three months ended May 31, 2015 (in thousands): Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Balance at February 28, 2015 $ 23 $ 1,963,851 $ 900,373 $ (1,515,288 ) $ (60,621 ) $ 1,288,338 Net income — — 48,086 — — 48,086 Other comprehensive income (loss), net of tax — — — — (5,983 ) (5,983 ) Exercise of common stock options — 2,109 — — — 2,109 Common stock repurchase — 75,000 — (75,000 ) — — Share-based compensation expense — 36,522 — — — 36,522 Net tax benefits related to share-based awards — 5,562 — — — 5,562 Minimum tax withholdings paid by the Company on behalf of employees related to net settlement of employee share-based awards — (25,211 ) — — — (25,211 ) Other adjustments — 213 — (213 ) — — Balance at May 31, 2015 $ 23 $ 2,058,046 $ 948,459 $ (1,590,501 ) $ (66,604 ) $ 1,349,423
Summary of Accumulated Other Comprehensive Loss	The following is a summary of accumulated other comprehensive loss as of May 31, 2016 and February 29, 2016 (in thousands): As of As of Accumulated loss from foreign currency translation adjustment $ (67,859 ) $ (73,776 ) Accumulated unrealized gain (loss), net of tax, on available-for-sale securities 112 (673 ) Accumulated other comprehensive loss $ (67,747 ) $ (74,449 )

Identifiable Intangible Assets

Identifiable Intangible Assets (Tables)	3 Months Ended
	May 31, 2016
Summary of Identifiable Intangible Assets	The following is a summary of identifiable intangible assets (in thousands): As of May 31, 2016 As of February 29, 2016 Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Trademarks, copyrights and patents $ 140,245 $ (52,169 ) $ 88,076 $ 138,106 $ (49,876 ) $ 88,230 Purchased technologies 96,246 (73,191 ) 23,055 96,105 (70,940 ) 25,165 Customer and reseller relationships 104,745 (82,492 ) 22,253 104,593 (80,329 ) 24,264 Covenants not to compete 13,315 (10,698 ) 2,617 13,240 (9,875 ) 3,365 Other intangible assets 8,833 (4,130 ) 4,703 8,833 (3,786 ) 5,047 Total identifiable intangible assets $ 363,384 $ (222,680 ) $ 140,704 $ 360,877 $ (214,806 ) $ 146,071
Schedule of Amortization Expense Associated with Identifiable Intangible Assets	Amortization expense associated with identifiable intangible assets recognized in the Company’s Consolidated Financial Statements for the three months ended May 31, 2016 and May 31, 2015 is summarized as follows (in thousands): Three Months Ended May 31, May 31, Cost of revenue $ 3,967 $ 2,917 Sales and marketing 1,916 2,005 Research and development 34 250 General and administrative 1,753 1,052 Total amortization expense $ 7,670 $ 6,224

Income Taxes (Tables)

Income Taxes (Tables)	3 Months Ended
	May 31, 2016
Summary of Tax Provision	The following table summarizes the Company’s tax provision for the three months ended May 31, 2016 and May 31, 2015 (in thousands): Three Months Ended May 31, May 31, Income before provision for income taxes $ 72,353 $ 67,727 Estimated annual effective tax rate 27 % 29 % Provision for income taxes before discrete tax benefits 19,535 19,641 Discrete tax benefits related to net excess tax benefits from share-based payments 7,938 — Other discrete tax benefits 428 — Provision for income taxes $ 11,169 $ 19,641

Assets and Liabilities Measur28

Assets and Liabilities Measured at Fair Value on a Recurring Basis (Tables)	3 Months Ended
	May 31, 2016
Fair Value of Assets and Liabilities Acquired	The following table summarizes the composition and fair value hierarchy of the Company’s financial assets and liabilities at May 31, 2016 (in thousands): As of Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money markets (1) $ 284,422 $ 284,422 $ — $ — Available-for-sale securities (1): U.S. agency securities 341,705 — 341,705 — Corporate securities 746,606 — 746,606 — Foreign currency derivatives (2) 46 — 46 — Liabilities: Foreign currency derivatives (3) (437 ) — (437 ) — Total $ 1,372,342 $ 284,422 $ 1,087,920 $ — (1) Included in Cash and cash equivalents, Investments in debt securities, short-term or Investments in debt securities, long-term in the Company’s Consolidated Balance Sheet at May 31, 2016, in addition to $747.1 million of cash. (2) Included in Other current assets in the Company’s Consolidated Balance Sheet at May 31, 2016. (3) Included in Accounts payable and accrued expenses in the Company’s Consolidated Balance Sheet at May 31, 2016. The following table summarizes the composition and fair value hierarchy of the Company’s financial assets and liabilities at February 29, 2016 (in thousands): As of Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money markets (1) $ 221,970 $ 221,970 $ — $ — Available-for-sale securities (1): U.S. agency securities 331,117 — 331,117 — Corporate securities 736,495 — 736,495 — Foreign currency derivatives (2) 566 — 566 — Liabilities: Foreign currency derivatives (3) (452 ) — (452 ) — Total $ 1,289,696 $ 221,970 $ 1,067,726 $ — (1) Included in Cash and cash equivalents, Investments in debt securities, short-term or Investments in debt securities, long-term in the Company’s Consolidated Balance Sheet at February 29, 2016, in addition to $705.8 million of cash. (2) Included in Other current assets in the Company’s Consolidated Balance Sheet at February 29, 2016. (3) Included in Accounts payable and accrued expenses in the Company’s Consolidated Balance Sheet at February 29, 2016.
Investments Measured at Fair Value	The following table represents the Company’s investments measured at fair value as of May 31, 2016 (in thousands): Gross Unrealized Balance Sheet Classification Amortized Cost Gains Losses (1) Aggregate Fair Value Cash Investments Investments Money markets $ 284,422 $ — $ — $ 284,422 $ 284,422 $ — $ — U.S. agency securities 342,155 132 (582 ) 341,705 — 60,443 281,262 Corporate securities 746,340 1,128 (862 ) 746,606 — 304,407 442,199 Total $ 1,372,917 $ 1,260 $ (1,444 ) $ 1,372,733 $ 284,422 $ 364,850 $ 723,461 (1) As of May 31, 2016, there were $0.6 million of accumulated unrealized losses related to investments that have been in a continuous unrealized loss position for 12 months or longer. The following table represents the Company’s investments measured at fair value as of February 29, 2016 (in thousands): Gross Unrealized Balance Sheet Classification Amortized Cost Gains Losses (1) Aggregate Fair Value Cash Investments Investments Money markets $ 221,970 $ — $ — $ 221,970 $ 221,970 $ — $ — U.S. agency securities 331,302 160 (345 ) 331,117 — 50,453 280,664 Corporate securities 737,723 994 (2,222 ) 736,495 — 230,689 505,806 Total $ 1,290,995 $ 1,154 $ (2,567 ) $ 1,289,582 $ 221,970 $ 281,142 $ 786,470 (1) As of February 29, 2016, there were $0.9 million of accumulated unrealized losses related to investments that have been in a continuous unrealized loss position for 12 months or longer.

Derivative Instruments (Tables)

Derivative Instruments (Tables)	3 Months Ended
	May 31, 2016
Summary of Effects of Derivative Instruments	The effects of derivative instruments on the Company’s Consolidated Financial Statements are as follows as of May 31, 2016 and for the three months then ended (in thousands): As of May 31, 2016 Three Months Ended May 31, 2016 Balance Sheet Classification Fair Value Notional Value Classification of Amount of Gain Assets—foreign currency forward contracts not designated as hedges Other current assets $ 46 $ 6,563 Other income (expense), net $ 1,199 Liabilities—foreign currency forward contracts not designated as hedges Accounts payable and accrued expenses (437 ) 27,842 Other income (expense), net (678 ) Total $ (391 ) $ 34,405 $ 521 The effects of derivative instruments on the Company’s Consolidated Financial Statements are as follows as of May 31, 2015 and for the three months then ended (in thousands): As of May 31, 2015 Three Months Ended May 31, 2015 Balance Sheet Classification Fair Value Notional Value Classification of Amount of Gain Assets—foreign currency forward contracts not designated as hedges Other current assets $ 86 $ 2,765 Other income $ 680 Liabilities—foreign currency forward contracts not designated as hedges Accounts payable and accrued expenses (293 ) 29,919 Other income (809 ) Total $ (207 ) $ 32,684 $ (129 )

Share-based Awards (Tables)

Share-based Awards (Tables)	3 Months Ended
	May 31, 2016
Share-Based Compensation Expense	The following summarizes share-based compensation expense recognized in the Company’s Consolidated Financial Statements for the three months ended May 31, 2016 and May 31, 2015 (in thousands): Three Months Ended May 31, 2016 May 31, 2015 Cost of revenue $ 4,305 $ 3,727 Sales and marketing 18,440 15,412 Research and development 12,002 10,874 General and administrative 6,528 6,509 Total share-based compensation expense $ 41,275 $ 36,522
Summary of Share-Based Awards Granted During Period	During the three months ended May 31, 2016 and May 31, 2015, the Company granted the following share-based awards: Three Months Ended May 31, 2016 May 31, 2015 Shares and Shares Underlying Weighted Shares and Weighted Service-based shares and share units 934,890 $ 75.45 807,596 $ 74.81 Performance share units—target 360,676 (1) $ 76.70 258,118 $ 77.28 Performance share awards 140,182 (2) $ 76.70 98,525 $ 77.28 Total awards 1,435,748 $ 75.89 1,164,239 $ 75.57 (1) Certain executives and senior management were awarded a target number of performance share units (“PSUs”). PSU grantees may earn up to 200% of the target number of PSUs. Half of the target number of PSUs can be earned by the grantees depending upon the Company’s financial performance measured against the financial performance of specified peer companies during a three-year performance period beginning on March 1, 2016. The remaining target number of PSUs can be earned by the grantees depending upon the Company’s total shareholder return performance measured against the total shareholder return performance of specified peer companies during a three-year period beginning on March 1, 2016. (2) Certain executives were granted restricted stock awards. These shares were awarded subject to the achievement of a specified dollar amount of revenue for FY2017 (the “RSA Performance Goal”). If the Company fails to achieve the RSA Performance Goal for FY2017, then all such shares are forfeited. If the Company achieves the RSA Performance Goal for FY2017, then 25% of the restricted stock vests on or about July 16, 2017, and the remainder vests ratably on a quarterly basis over the course of the subsequent three-year period, provided that the grantee’s business relationship with the Company has not ceased.

Earnings Per Share (Tables)

Earnings Per Share (Tables)	3 Months Ended
	May 31, 2016
Reconciliation of Numerators and Denominators of Earnings Per Share Calculation	The following table reconciles the numerators and denominators of the earnings per share (“EPS”) calculation for the three months ended May 31, 2016 and May 31, 2015 (in thousands, except per share amounts): Three Months Ended May 31, May 31, Net income, basic and diluted $ 61,184 $ 48,086 Weighted average common shares outstanding 181,168 183,130 Incremental shares attributable to assumed vesting or exercise of outstanding equity award shares 3,019 2,994 Dilutive effect of convertible notes — 51 Diluted shares 184,187 186,175 Diluted net income per share $ 0.33 $ 0.26
Shares Considered Anti-Dilutive for Calculating Diluted EPS	The following employee share awards were not included in the computation of diluted earnings per share because the aggregate value of proceeds considered received upon either exercise or vesting was greater than the average market price of the Company’s common stock during the related periods and the effect of including such share awards in the computation would be anti-dilutive (in thousands): Three Months Ended May 31, May 31, 2015 Number of shares considered anti-dilutive for calculating diluted EPS 1,081 3

Segment Reporting (Tables)

Segment Reporting (Tables)	3 Months Ended
	May 31, 2016
Summary of Revenue, Income (Loss) from Operations, Total Assets and Total Cash, Cash Equivalents and Available-for-Sale Investment Securities by Geographic Segment	The following summarizes revenue from unaffiliated customers and income (loss) from operations for the three months ended May 31, 2016 and May 31, 2015 and total cash, cash equivalents and available-for-sale investment securities and total assets as of May 31, 2016 and May 31, 2015, by geographic segment (in thousands): Americas EMEA Asia Pacific Corporate (1) Consolidated Three Months Ended May 31, 2016 Revenue from unaffiliated customers $ 365,723 $ 124,299 $ 77,877 $ — $ 567,899 Income (loss) from operations $ 69,756 $ 25,688 $ 21,194 $ (41,275 ) $ 75,363 Total cash, cash equivalents and available-for-sale investment securities $ 1,240,377 $ 613,619 $ 265,880 $ — $ 2,119,876 Total assets $ 2,815,567 $ 892,729 $ 403,985 $ — $ 4,112,281 Three Months Ended May 31, 2015 Revenue from unaffiliated customers $ 321,833 $ 97,473 $ 61,695 $ — $ 481,001 Income (loss) from operations $ 75,533 $ 16,407 $ 15,512 $ (36,522 ) $ 70,930 Total cash, cash equivalents and available-for-sale investment securities $ 1,302,959 $ 446,318 $ 219,197 $ — $ 1,968,474 Total assets $ 2,727,050 $ 724,218 $ 309,012 $ — $ 3,760,280 (1) Amounts represent share-based compensation expense for each of the three months ended May 31, 2016 and May 31, 2015, which was not allocated to geographic segments.
Summary of Revenue from Unaffiliated Customers	The following table lists, for each of the three months ended May 31, 2016 and May 31, 2015, revenue from unaffiliated customers in the United States, the Company’s country of domicile, and revenue from unaffiliated customers from foreign countries (in thousands): Three Months Ended May 31, 2016 May 31, 2015 United States, the Company’s country of domicile $ 328,529 $ 287,461 Foreign 239,370 193,540 Total revenue from unaffiliated customers $ 567,899 $ 481,001
Summary of Tangible Long-Lived Assets	Total tangible long-lived assets, net of accumulated depreciation, located in the United States, the Company’s country of domicile, and similar tangible long-lived assets, net of accumulated depreciation, held outside the United States are summarized in the following table as of May 31, 2016 and February 29, 2016 (in thousands): As of May 31, As of February 29, United States, the Company’s country of domicile $ 126,280 $ 126,937 Foreign 41,735 39,949 Total tangible long-lived assets $ 168,015 $ 166,886
Summary of Subscription Revenue and Services by Technology Classes	The following table, for each of the three months ended May 31, 2016 and May 31, 2015, provides further detail, by type, of the Company’s subscription and services revenues. Infrastructure-related offerings subscription revenue includes subscription revenue generated from Red Hat Enterprise Linux and related technologies such as Red Hat Satellite and Red Hat Enterprise Virtualization. Subscription revenue generated from the Company’s Application development-related and other emerging technology offerings includes Red Hat JBoss Middleware, Red Hat Storage, Red Hat Mobile and Red Hat cloud offerings such as Red Hat OpenStack Platform and OpenShift by Red Hat (in thousands): Three Months Ended May 31, May 31, Subscription revenue: Infrastructure-related offerings $ 403,182 $ 354,018 Application development-related and other emerging technology offerings 98,483 70,775 Total subscription revenue 501,665 424,793 Training and services revenue: Consulting services 50,310 43,199 Training 15,924 13,009 Total training and services revenue 66,234 56,208 Total subscription and training and services revenue $ 567,899 $ 481,001

Business Combinations (Tables)

Business Combinations (Tables)	3 Months Ended
	May 31, 2016
Ansible, Inc
Pro Forma Consolidated Financial Information	The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the three months ended May 31, 2015 (in thousands, except per share amounts) as if the acquisition of Ansible had closed on March 1, 2015, after giving effect to certain purchase accounting adjustments. These pro forma results are not necessarily indicative of what the Company’s operating results would have been had the acquisition actually taken place at the beginning of the period. Three Months Ended May 31, 2015 Revenue $ 481,812 Net income $ 46,048 Basic net income per common share $ 0.25 Diluted net income per common share $ 0.25

Convertible Notes (Tables)

Convertible Notes (Tables)	3 Months Ended
	May 31, 2016
Components of Convertible Notes	As of May 31, 2016 and February 29, 2016, the convertible notes consisted of the following (in thousands): As of As of Liability component: Principal $ 805,000 $ 805,000 Less: debt issuance costs (9,395 ) (10,029 ) Less: debt discount (66,298 ) (71,029 ) Net carrying amount $ 729,307 $ 723,942 Equity component (1) $ 96,890 $ 96,890 (1) Recorded in the Consolidated Balance Sheet in Additional paid-in capital.
Schedule of Total Interest Expense Recognized Related to Convertible Notes	The following table includes total interest expense recognized related to the convertible notes for the three months ended May 31, 2016 and May 31, 2015 (in thousands): Three Months Ended May 31, May 31, Coupon rate 0.25% per year, payable semiannually $ 503 $ 503 Amortization of convertible note issuance costs—liability component 633 596 Accretion of debt discount 4,732 4,599 Total interest expense related to convertible notes $ 5,868 $ 5,698
Summary of Fair Value of Convertible Notes and Carrying Value of Convertible Notes	The fair value of the convertible notes, which was determined based on inputs that are observable in the market (Level 2), and the carrying value of the convertible notes (the carrying value excludes the equity component of the convertible notes classified in equity) are as follows (in thousands): As of May 31, 2016 Fair Value Carrying Value Convertible notes $ 727,896 $ 729,307

Summary of Significant Accoun35

Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2016	May 31, 2015
Significant Accounting Policies [Line Items]
Description of accounting pronouncement adoption	In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) to simplify several aspects of the accounting for share-based compensation, including the income tax consequences. This guidance is effective for the Company as of the first quarter of the fiscal year ending February 28, 2018. However, the Company elected to early adopt ASU 2016-09 effective March 1, 2016.
Discrete tax benefits related to net windfall tax benefits from share-based compensation	$ 7,938
Tax benefits related to share-based awards		$ 5,600
Provision for income taxes	11,169	19,641
Excess tax benefits from share-based payment arrangements	$ 7,950	6,419
Tax Shortfall Share Based Compensation
Significant Accounting Policies [Line Items]
Provision for income taxes		$ 800

Consolidated Balance Sheet Incl

Consolidated Balance Sheet Including Net Amount Charged to Retained Earnings (Detail) - New accounting pronouncement, early adoption, effect $ in Thousands	Mar. 01, 2016USD ($)
Deferred Tax Assets | Recognition related to election to recognize forfeitures as they occur
New Accounting Pronouncement, Early Adoption [Line Items]
Cumulative-effect adjustment from adoption of ASU 2016-09	$ 603
Deferred Tax Assets | Recognition related to unrealized net windfall tax benefits from share-based compensation
New Accounting Pronouncement, Early Adoption [Line Items]
Cumulative-effect adjustment from adoption of ASU 2016-09	1,316
Additional Paid-In Capital | Increases from election to recognize forfeitures as they occur
New Accounting Pronouncement, Early Adoption [Line Items]
Cumulative-effect adjustment from adoption of ASU 2016-09	2,369
Retained Earnings | Net charge for cumulative-effect adjustment
New Accounting Pronouncement, Early Adoption [Line Items]
Cumulative-effect adjustment from adoption of ASU 2016-09	$ 450

Summary of Changes in Stockhold

Summary of Changes in Stockholders' Equity (Detail) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2016		May 31, 2015
Beginning Balance	$ 1,334,432	[1]	$ 1,288,338
Net income	61,184		48,086
Other comprehensive income (loss), net of tax	6,702		(5,983)
Exercise of common stock options	1,380		2,109
Common stock repurchase	(66,478)
Share-based compensation expense	41,275		36,522
Net tax benefits related to share-based awards			5,562
Minimum tax withholdings paid by the Company on behalf of employees related to net settlement of employee share-based awards	(31,079)		(25,211)
Cumulative-effect adjustment from adoption of ASU 2016-09	1,919
Ending Balance	1,349,335		1,349,423
Common Stock
Beginning Balance	23		23
Exercise of common stock options	1
Ending Balance	24		23
Additional Paid-In Capital
Beginning Balance	2,162,264		1,963,851
Exercise of common stock options	1,379		2,109
Common stock repurchase			75,000
Share-based compensation expense	41,275		36,522
Net tax benefits related to share-based awards			5,562
Minimum tax withholdings paid by the Company on behalf of employees related to net settlement of employee share-based awards	(31,079)		(25,211)
Other adjustments			213
Cumulative-effect adjustment from adoption of ASU 2016-09	2,369
Ending Balance	2,176,208		2,058,046
Retained Earnings
Beginning Balance	1,099,738		900,373
Net income	61,184		48,086
Cumulative-effect adjustment from adoption of ASU 2016-09	(450)
Ending Balance	1,160,472		948,459
Treasury Stock
Beginning Balance	(1,853,144)		(1,515,288)
Common stock repurchase	(66,478)		(75,000)
Other adjustments			(213)
Ending Balance	(1,919,622)		(1,590,501)
Accumulated Other Comprehensive Income (Loss)
Beginning Balance	(74,449)		(60,621)
Other comprehensive income (loss), net of tax	6,702		(5,983)
Ending Balance	$ (67,747)		$ (66,604)
[1]	Derived from audited financial statements.

Summary of Accumulated Other Co

Summary of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands	May 31, 2016	Feb. 29, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated loss from foreign currency translation adjustment	$ (67,859)	$ (73,776)
Accumulated unrealized gain (loss), net of tax, on available-for-sale securities	112	(673)
Accumulated other comprehensive loss	$ (67,747)	$ (74,449)	[1]
[1]	Derived from audited financial statements.

Identifiable Intangible Asset39

Identifiable Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	May 31, 2016	Feb. 29, 2016
Acquired Finite-Lived Intangible Assets [Line Items]
Carrying amount for intangible assets	$ 11.3	$ 11.1
Trademarks, Copyrights and Patents | Minimum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life (in years)	2 years
Trademarks, Copyrights and Patents | Maximum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life (in years)	10 years
Purchased Technologies | Minimum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life (in years)	2 years
Purchased Technologies | Maximum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life (in years)	10 years
Customer and Reseller Relationships | Minimum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life (in years)	2 years
Customer and Reseller Relationships | Maximum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life (in years)	10 years
Covenants Not To Compete | Minimum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life (in years)	2 years
Covenants Not To Compete | Maximum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life (in years)	10 years

Summary of Identifiable Intangi

Summary of Identifiable Intangible Assets (Detail) - USD ($) $ in Thousands	May 31, 2016	Feb. 29, 2016
Finite-Lived Intangible Assets [Line Items]
Gross Amount	$ 363,384	$ 360,877
Accumulated Amortization	(222,680)	(214,806)
Net Amount	140,704	146,071	[1]
Trademarks, Copyrights and Patents
Finite-Lived Intangible Assets [Line Items]
Gross Amount	140,245	138,106
Accumulated Amortization	(52,169)	(49,876)
Net Amount	88,076	88,230
Purchased Technologies
Finite-Lived Intangible Assets [Line Items]
Gross Amount	96,246	96,105
Accumulated Amortization	(73,191)	(70,940)
Net Amount	23,055	25,165
Customer and Reseller Relationships
Finite-Lived Intangible Assets [Line Items]
Gross Amount	104,745	104,593
Accumulated Amortization	(82,492)	(80,329)
Net Amount	22,253	24,264
Covenants Not To Compete
Finite-Lived Intangible Assets [Line Items]
Gross Amount	13,315	13,240
Accumulated Amortization	(10,698)	(9,875)
Net Amount	2,617	3,365
Other Intangible Assets
Finite-Lived Intangible Assets [Line Items]
Gross Amount	8,833	8,833
Accumulated Amortization	(4,130)	(3,786)
Net Amount	$ 4,703	$ 5,047
[1]	Derived from audited financial statements.

Schedule of Amortization Expens

Schedule of Amortization Expense Associated with Identifiable Intangible Assets (Detail) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2016	May 31, 2015
Finite-Lived Intangible Assets [Line Items]
Total amortization expense	$ 7,670	$ 6,224
Cost of Revenue
Finite-Lived Intangible Assets [Line Items]
Total amortization expense	3,967	2,917
Sales and Marketing
Finite-Lived Intangible Assets [Line Items]
Total amortization expense	1,916	2,005
Research and Development
Finite-Lived Intangible Assets [Line Items]
Total amortization expense	34	250
General and Administrative
Finite-Lived Intangible Assets [Line Items]
Total amortization expense	$ 1,753	$ 1,052

Summary of Tax Provision (Detai

Summary of Tax Provision (Detail) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2016	May 31, 2015
Reconciliation of Provision of Income Taxes [Line Items]
Income before provision for income taxes	$ 72,353	$ 67,727
Estimated annual effective tax rate	27.00%	29.00%
Provision for income taxes before discrete tax benefits	$ 19,535	$ 19,641
Discrete tax benefits related to net excess tax benefits from share-based payments	7,938
Other discrete tax benefits	428
Provision for income taxes	$ 11,169	$ 19,641

Income Taxes - Additional Infor

Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2016	May 31, 2015
Income Taxes [Line Items]
Estimated effective tax rate excluding discrete tax items	27.00%	29.00%
Federal statutory rate	35.00%	35.00%
Discrete tax benefits related to net excess tax benefits from share-based payments	$ 7,938

Fair Value of Assets and Liabil

Fair Value of Assets and Liabilities Acquired (Detail) - USD ($) $ in Thousands	May 31, 2016		Feb. 29, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	$ 1,372,733		$ 1,289,582
Total	1,372,342		1,289,696
Foreign Exchange Contract
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivatives, assets	46	[1]	566	[2]
Foreign currency derivatives, liabilities	(437)	[3]	(452)	[4]
Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	284,422	[5]	221,970	[6]
U.S. Agencies Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	341,705	[5]	331,117	[6]
Corporate Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	746,606	[5]	736,495	[6]
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	284,422		221,970
Fair Value, Inputs, Level 1 | Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	284,422	[5]	221,970	[6]
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	1,087,920		1,067,726
Fair Value, Inputs, Level 2 | Foreign Exchange Contract
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency derivatives, assets	46	[1]	566	[2]
Foreign currency derivatives, liabilities	(437)	[3]	(452)	[4]
Fair Value, Inputs, Level 2 | U.S. Agencies Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	341,705	[5]	331,117	[6]
Fair Value, Inputs, Level 2 | Corporate Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	$ 746,606	[5]	$ 736,495	[6]
[1]	Included in Other current assets in the Company's Consolidated Balance Sheet at May 31, 2016.
[2]	Included in Other current assets in the Company's Consolidated Balance Sheet at February 29, 2016.
[3]	Included in Accounts payable and accrued expenses in the Company's Consolidated Balance Sheet at May 31, 2016.
[4]	Included in Accounts payable and accrued expenses in the Company's Consolidated Balance Sheet at February 29, 2016.
[5]	Included in Cash and cash equivalents, Investments in debt securities, short-term or Investments in debt securities, long-term in the Company's Consolidated Balance Sheet at May 31, 2016, in addition to $747.1 million of cash.
[6]	Included in Cash and cash equivalents, Investments in debt securities, short-term or Investments in debt securities, long-term in the Company's Consolidated Balance Sheet at February 29, 2016, in addition to $705.8 million of cash.

Fair Value of Assets and Liab45

Fair Value of Assets and Liabilities Acquired (Parenthetical) (Detail) - USD ($) $ in Millions	May 31, 2016	Feb. 29, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash	$ 747.1	$ 705.8

Investments Measured at Fair Va

Investments Measured at Fair Value (Detail) - USD ($) $ in Thousands	May 31, 2016		Feb. 29, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost	$ 1,372,917		$ 1,290,995
Gross Unrealized Gains	1,260		1,154
Gross Unrealized Losses	(1,444)	[1]	(2,567)	[2]
Aggregate Fair Value	1,372,733		1,289,582
Cash Equivalent Marketable Securities	284,422		221,970
Investments in debt securities, short-term	364,850		281,142	[3]
Investments in debt securities, long-term	723,461		786,470	[3]
Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost	284,422		221,970
Aggregate Fair Value	284,422	[4]	221,970	[5]
Cash Equivalent Marketable Securities	284,422		221,970
U.S. Agencies Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost	342,155		331,302
Gross Unrealized Gains	132		160
Gross Unrealized Losses	(582)	[1]	(345)	[2]
Aggregate Fair Value	341,705	[4]	331,117	[5]
Investments in debt securities, short-term	60,443		50,453
Investments in debt securities, long-term	281,262		280,664
Corporate Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Amortized Cost	746,340		737,723
Gross Unrealized Gains	1,128		994
Gross Unrealized Losses	(862)	[1]	(2,222)	[2]
Aggregate Fair Value	746,606	[4]	736,495	[5]
Investments in debt securities, short-term	304,407		230,689
Investments in debt securities, long-term	$ 442,199		$ 505,806
[1]	As of May 31, 2016, there were $0.6 million of accumulated unrealized losses related to investments that have been in a continuous unrealized loss position for 12 months or longer.
[2]	As of February 29, 2016, there were $0.9 million of accumulated unrealized losses related to investments that have been in a continuous unrealized loss position for 12 months or longer.
[3]	Derived from audited financial statements.
[4]	Included in Cash and cash equivalents, Investments in debt securities, short-term or Investments in debt securities, long-term in the Company's Consolidated Balance Sheet at May 31, 2016, in addition to $747.1 million of cash.
[5]	Included in Cash and cash equivalents, Investments in debt securities, short-term or Investments in debt securities, long-term in the Company's Consolidated Balance Sheet at February 29, 2016, in addition to $705.8 million of cash.

Investments Measured at Fair 47

Investments Measured at Fair Value (Parenthetical) (Detail) - USD ($) $ in Millions	May 31, 2016	Feb. 29, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Accumulated unrealized losses related to investments	$ 0.6	$ 0.9

Summary of Effects of Derivativ

Summary of Effects of Derivative Instruments (Detail) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2016	May 31, 2015
Derivative [Line Items]
Total, Fair Value	$ (391)	$ (207)
Notional value of foreign currency forward contracts not designated as hedges	34,405	32,684
Amount of Gain (Loss) Recognized in Income on Derivatives	521	(129)
Other Current Assets
Derivative [Line Items]
Assets-foreign currency forward contracts not designated as hedges	46	86
Notional value of foreign currency forward contracts not designated as hedges, assets	6,563	2,765
Accounts Payable and Accrued Expenses
Derivative [Line Items]
Liabilities-foreign currency forward contracts not designated as hedges	(437)	(293)
Notional value of foreign currency forward contracts not designated as hedges, liabilities	27,842	29,919
Other Income (Expense), Net | Derivative Liabilities
Derivative [Line Items]
Amount of Gain (Loss) Recognized in Income on Derivatives	(678)	(809)
Other Income (Expense), Net | Derivative Assets
Derivative [Line Items]
Amount of Gain (Loss) Recognized in Income on Derivatives	$ 1,199	$ 680

Share Based Awards - Additional

Share Based Awards - Additional Information (Detail) - USD ($)	3 Months Ended
	May 31, 2016	May 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value assumptions, method used	Black-Scholes-Merton
Share-based compensation expense capitalized	$ 0	$ 0

Share-Based Compensation Expens

Share-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2016	May 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total share-based compensation expense	$ 41,275	$ 36,522
Cost of Revenue
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total share-based compensation expense	4,305	3,727
Sales and Marketing
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total share-based compensation expense	18,440	15,412
Research and Development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total share-based compensation expense	12,002	10,874
General and Administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total share-based compensation expense	$ 6,528	$ 6,509

Summary of Share-Based Awards G

Summary of Share-Based Awards Granted During Period (Detail) - $ / shares	3 Months Ended
	May 31, 2016		May 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares and Share units, Shares and Shares Underlying Awards	1,435,748		1,164,239
Shares and share units, Weighted Average Per Share Award Fair Value	$ 75.89		$ 75.57
Service-Based Shares and Share Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares and Share units, Shares and Shares Underlying Awards	934,890		807,596
Shares and share units, Weighted Average Per Share Award Fair Value	$ 75.45		$ 74.81
Performance Share Units - Target
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares and Share units, Shares and Shares Underlying Awards	360,676	[1]	258,118
Shares and share units, Weighted Average Per Share Award Fair Value	$ 76.70		$ 77.28
Performance Share Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares and Share units, Shares and Shares Underlying Awards	140,182	[2]	98,525
Shares and share units, Weighted Average Per Share Award Fair Value	$ 76.70		$ 77.28
[1]	Certain executives and senior management were awarded a target number of performance share units ("PSUs"). PSU grantees may earn up to 200% of the target number of PSUs. Half of the target number of PSUs can be earned by the grantees depending upon the Company's financial performance measured against the financial performance of specified peer companies during a three-year performance period beginning on March 1, 2016. The remaining target number of PSUs can be earned by the grantees depending upon the Company's total shareholder return performance measured against the total shareholder return performance of specified peer companies during a three-year period beginning on March 1, 2016.
[2]	Certain executives were granted restricted stock awards. These shares were awarded subject to the achievement of a specified dollar amount of revenue for FY2017 (the "RSA Performance Goal"). If the Company fails to achieve the RSA Performance Goal for FY2017, then all such shares are forfeited. If the Company achieves the RSA Performance Goal for FY2017, then 25% of the restricted stock vests on July 16, 2017, and the remainder vests ratably on a quarterly basis over the course of the subsequent three-year period, provided that the grantee's business relationship with the Company has not ceased.

Summary of Share-Based Awards52

Summary of Share-Based Awards Granted During Period (Parenthetical) (Detail)	3 Months Ended
	May 31, 2016
Performance Share Units - Target
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Targeted percentage of performance share units earned by executive	200.00%
Performance Share Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage vested after one year if performance conditions achieved	25.00%

Reconciliation of Numerators an

Reconciliation of Numerators and Denominators of Earnings Per Share Calculation (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	May 31, 2016	May 31, 2015
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net income, basic and diluted	$ 61,184	$ 48,086
Weighted average common shares outstanding	181,168	183,130
Incremental shares attributable to assumed vesting or exercise of outstanding equity award shares	3,019	2,994
Dilutive effect of convertible notes		51
Diluted shares	184,187	186,175
Diluted net income per share	$ 0.33	$ 0.26

Earnings Per Share - Additional

Earnings Per Share - Additional Information (Detail) - $ / shares	May 31, 2016	May 31, 2015	Oct. 01, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of shares of common stock underlying the warrants	10,965,630	10,965,630	10,965,630
Exercise price per share	$ 101.65	$ 101.65	$ 101.65

Shares Considered Anti-Dilutive

Shares Considered Anti-Dilutive for Calculating Diluted EPS (Detail) - shares shares in Thousands	3 Months Ended
	May 31, 2016	May 31, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of shares considered anti-dilutive for calculating diluted EPS	1,081	3

Share Repurchase Programs - Add

Share Repurchase Programs - Additional Information (Detail) - USD ($)	Mar. 25, 2015	May 31, 2016
Accelerated Share Repurchases [Line Items]
Common stock authorized for stock repurchase program	$ 500,000,000
Stock repurchase program expiration date	Mar. 31, 2017
Stock repurchase program expiration description	A determination by the Board, Chief Executive Officer or Chief Financial Officer to discontinue the program.
Repurchase of common stock, shares		901,600
Aggregate cost of common stock repurchased		$ 66,478,000
Stock available for repurchase		$ 170,900,000
Stock repurchase program termination date	Jun. 30, 2016

Summary of Revenue, Income (Los

Summary of Revenue, Income (Loss) from Operations, Total Assets and Total Cash, Cash Equivalents and Available-for-Sale Investment Securities by Geographic Segments (Detail) - USD ($) $ in Thousands		3 Months Ended
		May 31, 2016	May 31, 2015	Feb. 29, 2016	[1]
Segment Reporting Information [Line Items]
Revenue from unaffiliated customers		$ 567,899	$ 481,001
Income (loss) from operations		75,363	70,930
Total cash, cash equivalents and available-for-sale investment securities		2,119,876	1,968,474
Total assets		4,112,281	3,760,280	$ 4,155,099
Corporate
Segment Reporting Information [Line Items]
Income (loss) from operations	[2]	(41,275)	(36,522)
Americas
Segment Reporting Information [Line Items]
Revenue from unaffiliated customers		365,723	321,833
Income (loss) from operations		69,756	75,533
Total cash, cash equivalents and available-for-sale investment securities		1,240,377	1,302,959
Total assets		2,815,567	2,727,050
EMEA
Segment Reporting Information [Line Items]
Revenue from unaffiliated customers		124,299	97,473
Income (loss) from operations		25,688	16,407
Total cash, cash equivalents and available-for-sale investment securities		613,619	446,318
Total assets		892,729	724,218
Asia Pacific
Segment Reporting Information [Line Items]
Revenue from unaffiliated customers		77,877	61,695
Income (loss) from operations		21,194	15,512
Total cash, cash equivalents and available-for-sale investment securities		265,880	219,197
Total assets		$ 403,985	$ 309,012
[1]	Derived from audited financial statements.
[2]	Amounts represent share-based compensation expense for each of the three months ended May 31, 2016 and May 31, 2015, which was not allocated to geographic segments.

Summary of Revenue from Unaffil

Summary of Revenue from Unaffiliated Customers (Detail) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2016	May 31, 2015
Segment Reporting Information [Line Items]
Total revenue from unaffiliated customers	$ 567,899	$ 481,001
United States, the Company's Country of Domicile
Segment Reporting Information [Line Items]
Total revenue from unaffiliated customers	328,529	287,461
Foreign
Segment Reporting Information [Line Items]
Total revenue from unaffiliated customers	$ 239,370	$ 193,540

Summary of Tangible Long-Lived

Summary of Tangible Long-Lived Assets (Detail) - USD ($) $ in Thousands	May 31, 2016	Feb. 29, 2016
Segment Reporting, Asset Reconciling Item [Line Items]
Total tangible long-lived assets	$ 168,015	$ 166,886	[1]
United States, the Company's Country of Domicile
Segment Reporting, Asset Reconciling Item [Line Items]
Total tangible long-lived assets	126,280	126,937
Foreign
Segment Reporting, Asset Reconciling Item [Line Items]
Total tangible long-lived assets	$ 41,735	$ 39,949
[1]	Derived from audited financial statements.

Segment Reporting - Additional

Segment Reporting - Additional Information (Detail)	3 Months Ended
	May 31, 2016	May 31, 2015
U.S. Government and Agencies | Subscription Revenues | Customer Concentration Risk
Segment Reporting Information [Line Items]
Percentage of revenue	10.00%	10.00%

Summary of Subscription and Ser

Summary of Subscription and Services Revenue by Technology Classes (Detail) - USD ($) $ in Thousands	3 Months Ended
	May 31, 2016	May 31, 2015
Revenue from External Customer [Line Items]
Subscription revenue	$ 501,665	$ 424,793
Training and services revenue	66,234	56,208
Total subscription and training and services revenue	567,899	481,001
Infrastructure Related Subscriptions
Revenue from External Customer [Line Items]
Subscription revenue	403,182	354,018
Application Development Related and Other Emerging Technology Subscriptions
Revenue from External Customer [Line Items]
Subscription revenue	98,483	70,775
Consulting Services
Revenue from External Customer [Line Items]
Training and services revenue	50,310	43,199
Training Services
Revenue from External Customer [Line Items]
Training and services revenue	$ 15,924	$ 13,009

Commitments and Contingencies -

Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	May 31, 2016	May 31, 2015
Commitments and Contingencies [Line Items]
Rent expense under operating leases	$ 8.5	$ 7.8

Business Combinations - Additio

Business Combinations - Additional Information (Detail) - USD ($) $ in Thousands	Oct. 16, 2015	Feb. 29, 2016		May 31, 2016	Nov. 30, 2015
Business Acquisition [Line Items]
Goodwill acquired		$ 1,027,277	[1]	$ 1,029,636
Ansible, Inc
Business Acquisition [Line Items]
Business combination, consideration transferred	$ 126,000
Cash paid	125,200
Goodwill acquired	102,300
Identifiable intangible assets acquired	25,100
Working capital - net current liability	$ 1,400
Identifiable intangible assets acquired		25,100			$ 42,400
Decrease in identifiable intangible assets		(17,300)
Increase in goodwill		10,800
Decrease in deferred income taxes		$ (6,500)
[1]	Derived from audited financial statements.

Pro Forma Consolidated Financia

Pro Forma Consolidated Financial Information (Detail) $ / shares in Units, $ in Thousands	3 Months Ended
	May 31, 2015USD ($)$ / shares
Business Acquisition, Pro Forma Information [Line Items]
Revenue | $	$ 481,812
Net income | $	$ 46,048
Basic net income per common share | $ / shares	$ 0.25
Diluted net income per common share | $ / shares	$ 0.25

Convertible Notes - Additional

Convertible Notes - Additional Information (Detail)	Oct. 07, 2014USD ($)	Oct. 01, 2014USD ($)$ / sharesshares	May 31, 2016USD ($)$ / sharesshares	Feb. 29, 2016USD ($)	May 31, 2015$ / sharesshares
Debt Instrument [Line Items]
Purchase of convertible note hedges	$ 148,000,000
Proceeds from issuance of warrants	79,800,000	$ 79,800,000
Repurchase of common stock, value		$ (375,000,000)
Effective interest rate for amortizing debt discount of convertible debt			2.86%
Strike price of warrants | $ / shares		$ 101.65	$ 101.65		$ 101.65
Premium on closing price of common stock		80.00%
Number of shares of common stock underlying the warrants | shares		10,965,630	10,965,630		10,965,630
Fundamental Change
Debt Instrument [Line Items]
Repurchase of note principal amount			100.00%
Default
Debt Instrument [Line Items]
Repurchase of note principal amount			100.00%
0.25% Convertible Senior Notes due 2019
Debt Instrument [Line Items]
Debt instrument, aggregate principal amount	$ 805,000,000
Debt instrument, interest rate	0.25%		0.25%		0.25%
Debt instrument, offering date	Oct. 1, 2014
Frequency of interest payment			Semiannually
Transaction cost related to note issuance	$ 15,200,000		$ 9,395,000	$ 10,029,000
Transaction cost related to note issuance allocated to equity component	1,800,000
0.25% Convertible Senior Notes due 2019 | Liability Component
Debt Instrument [Line Items]
Transaction cost related to note issuance	13,400,000
0.25% Convertible Senior Notes due 2019 | Equity Component
Debt Instrument [Line Items]
Deferred tax liability, equity component	$ 700,000
0.25% Convertible Senior Notes due 2019 | Unsecured Debt
Debt Instrument [Line Items]
Debt instrument, interest rate	0.25%
Debt instrument, maturity date	Oct. 1, 2019
Frequency of interest payment			Semiannually in arrears on April 1 and October 1 of each year, and began on April 1, 2015
Common stock conversion rate per $1,000 principal amount of notes			13.6219
Principal amount per note			$ 1,000
Debt instrument, convertible, conversion price, per share | $ / shares		$ 73.41	$ 73.41
Premium on closing price of common stock		30.00%
Closing price of common stock | $ / shares		$ 56.47

Components of Notes (Detail)

Components of Notes (Detail) - USD ($) $ in Thousands		May 31, 2016	Feb. 29, 2016		Oct. 07, 2014
Liability component
Net carrying amount		$ 729,307	$ 723,942	[1]
0.25% Convertible Senior Notes due 2019
Liability component
Principal		805,000	805,000
Less: debt issuance costs		(9,395)	(10,029)		$ (15,200)
Less: debt discount		(66,298)	(71,029)
Net carrying amount		729,307	723,942
Equity component	[2]	$ 96,890	$ 96,890
[1]	Derived from audited financial statements.
[2]	Recorded in the Consolidated Balance Sheet in Additional paid-in capital.

Schedule of Total Interest Expe

Schedule of Total Interest Expense Recognized Related to Convertible Notes (Detail) - 0.25% Convertible Senior Notes due 2019 - USD ($) $ in Thousands	3 Months Ended
	May 31, 2016	May 31, 2015
Debt Instrument [Line Items]
Coupon rate 0.25% per year, payable semiannually	$ 503	$ 503
Amortization of convertible note issuance costs-liability component	633	596
Accretion of debt discount	4,732	4,599
Total interest expense related to convertible notes	$ 5,868	$ 5,698

Schedule of Total Interest Ex68

Schedule of Total Interest Expense Recognized Related to Convertible Notes (Parenthetical) (Detail) - 0.25% Convertible Senior Notes due 2019	3 Months Ended
	May 31, 2016	May 31, 2015	Oct. 07, 2014
Debt Instrument [Line Items]
Coupon rate per year	0.25%	0.25%	0.25%
Frequency of coupon payment	Semiannually

Fair Value of Notes Based on In

Fair Value of Notes Based on Inputs Observable in Market (Level 2) and Carrying Value of Debt Instruments (Detail) - USD ($) $ in Thousands	May 31, 2016	Feb. 29, 2016	[1]
Debt Instrument [Line Items]
Carrying value, convertible notes	$ 729,307	$ 723,942
Fair Value, Inputs, Level 2
Debt Instrument [Line Items]
Fair value, convertible notes	$ 727,896
[1]	Derived from audited financial statements.

Subsequent Events - Additional

Subsequent Events - Additional Information (Detail) - USD ($)	Jun. 22, 2016	Mar. 25, 2015
Subsequent Event [Line Items]
Common stock authorized for stock repurchase program		$ 500,000,000
Stock repurchase program expiration date		Mar. 31, 2017
Stock repurchase program expiration description		A determination by the Board, Chief Executive Officer or Chief Financial Officer to discontinue the program.
Stock repurchase program termination date		Jun. 30, 2016
Subsequent Event
Subsequent Event [Line Items]
Common stock authorized for stock repurchase program	$ 1,000,000,000
Stock repurchase program expiration date	Jun. 30, 2018
Stock repurchase program expiration description	A determination by the Board, Chief Executive Officer or Chief Financial Officer to discontinue the program.