Fueled by its accelerating cloud business, open source software giant Red Hat posted robust quarterly results Thursday that exceeded Wall Street’s expectations.
“The cloud business is growing very rapidly,” Charlie Peters, chief financial officer of the Raleigh-based company, said during a conference call with analysts. “It has a very positive impact on revenue. It brings a lot of new customers into Red Hat.”
The Raleigh-based company reported that revenue for the fiscal second quarter that ended in August totaled $445.9 million, up 19 percent from a year ago. Analysts had forecast revenue would come in at $434.8 million.
Net income, after adjusting for items such as stock compensation and amortization, totaled $78 million, or 41 cents per share, up from $68 million a year ago. Analysts had forecast earnings per share of 38 cents.
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Today Red Hat has more than 80 “Red Hat certified public cloud providers” – including companies such as Amazon, Google and IBM – that provide cloud services to their customers using Red Hat software. That’s up from 50 certified providers in mid-April.
“Open source technologies are the most popular technologies in the public cloud,” Peters said. “As far as we know, every public cloud except for one runs on Linux, and the one that doesn’t is Microsoft because they have their own operating system.”
Red Hat is the dominant open source software company. Its software is available free; it makes money by charging customers for maintenance, support and related services, such as training and consulting.
Red Hat estimates that more than half of its cloud revenue is coming from small and midsize businesses that haven’t previously been Red Hat customers. Those businesses, Peters said in an interview Thursday, are attracted by their ability to in effect “rent the cloud space” from providers without making a major investment.
Red Hat also raised its guidance for earnings per share for the full fiscal year by a penny despite weakening foreign currencies such as the yen, the euro and the pound that are expected to negatively impact revenue. Red Hat is now projecting earnings per share for the year to be between $1.53 and $1.55.
Red Hat released its earnings results after the markets closed Thursday. Earlier in the day, its shares closed at $60.66, down 42 cents. Its shares have risen 8 percent this year.
Thursday morning, Red Hat announced that it was upping its capabilities in the increasingly important mobile arena by acquiring an Ireland-based startup for $82.2 million.
It has signed a definitive agreement to acquire FeedHenry, a 4-year-old, privately held company with 65 employees in Ireland, England and Massachusetts.
FeedHenry’s software enables business customers to design, develop, deploy and manage applications used by mobile devices.
Red Hat said FeedHenry’s platform technology will expand its ability to enable its corporate customers to “build, integrate and manage rich, scalable mobile applications.”
Red Hat’s business customers increasingly are focused on enabling their employees to do more work from mobile devices and upping their ability to interact with customers wielding smartphones and tables.
“Mobile computing is changing the way enterprises conduct business and engage with their employees, partners and customers,” said CEO Jim Whitehurst.
Peters said the FeedHenry acquisition is expected to close in a few weeks and could add $1 million in revenue over the remainder of this fiscal year that ends in February.
“Although it has immaterial revenue now, in time we expect this early-stage business to add to our fast-growing emerging technologies efforts,” Peters said.