Red Hat shares rose 7 percent in after-hours trading after the open source software company posted yet another quarter of double-digit revenue growth and reported a record number of large customer contracts.
“We are pleased to close out the first half of our fiscal year on a strong note, and we are even more excited about Red Hat’s future,” CEO Jim Whitehurst told analysts during a conference call.
The company, based in downtown Raleigh, reported landing 55 contracts over $1 million in its fiscal second quarter that ended Aug. 31, up 60 percent over a year ago. Five of those deals were worth more than $5 million.
“This traction highlights Red Hat’s growing strategic importance in our customers’ data centers,” said Frank Calderoni, chief financial officer.
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Red Hat reported after the markets closed Wednesday that revenue rose 19 percent to $599.8 million, $10 million more than analysts polled by Bloomberg News were projecting.
Revenue rose 18 percent after adjusting for currency fluctuations.
Subscription revenue rose 20 percent, including a 33 percent jump in subscriptions for products used to develop software applications and for emerging technologies such as middleware and cloud products.
Adjusted net income totaled $101.2 million, or 55 cents per share, versus $87.8 million a year ago. That beat analysts’ projections by a penny per share.
Net income calculated by Generally Accepted Accounting Principles, or GAAP, totaled $58.8 million, or 32 cents per share, versus $51.4 million, or 28 cents per share, a year ago. The company ended the quarter with $2 billion in cash. During the quarter, it repurchased $127 million worth of stock.
Red Hat’s open source software is available for free. The company makes money by charging its business customers for maintenance, support and service.
The company boosted its revenue guidance for the entire fiscal year from $2.415 billion to $2.435 billion, a $15 million bump at the upper end compared to prior guidance.
Whitehurst said that Red Hat’s previously stated goal of boosting annual revenue to $5 billion is tied to winning market share in markets where it already competes.
“The $5 billion isn’t premised on acquisitions,” he said.
Earlier Wednesday, Red Hat shares closed at $77.04, up 2 percent. So far this year, its shares have fallen 7 percent.