Red Hat shares rose 5 percent Tuesday after the business software company reported a better-than-expected 16 percent jump in quarterly revenue led by strong growth in its cloud offerings.
The company also forecast that revenue next quarter would exceed Wall Street estimates.
Meanwhile, net income for the fiscal fourth quarter that ended Feb. 28 was in line with estimates.
The Raleigh-based company, which has about 10,500 employees, expects to add 1,000 new hires company-wide this fiscal year, Eric Shander, acting chief financial officer, said during a conference call after the company released its quarterly reports late Monday.
Those hires would come on the heels of 1,700 employees that Red Hat added last fiscal year.
Tom McCallum, vice president of investor relations, said of the smaller number of new hires planned for this year: “We’ve been hiring ahead to support our new technologies. I think we have come to a point where we have a pretty good base of folks.”
McCallum didn’t have a breakdown of how many of the planned new hires would be based in Raleigh. Today Red Hat has about 1,400 workers at its downtown Raleigh headquarters, up from 900-plus when it moved from N.C. State University’s Centennial Campus in the summer of 2013.
CEO Jim Whitehurst said that as companies increasingly embrace hybrid clouds – that is, operating their own private cloud as well as working with public clouds operated by third parties such as Amazon – they are turning to Red Hat. That, he said, “is fueling our growth and positioning Red Hat for the long term.”
Red Hat’s middleware and cloud technologies, including OpenStack and OpenShift, rose 40 percent to $125 million in the quarter and accounted for about one-fifth of total revenue.
The accelerating revenue for those technologies shows that the company’s investments in OpenShift and OpenStack “are beginning to bear fruit,” Baird Equity Research analyst Rob Oliver wrote in a research note.
Red Hat also reported that billings and backlog – two metrics that analysts follow closely because they are leading indicators of future revenue – showed robust growth.
Billings for the quarter totaled $986 million, up 29 percent and well ahead of analysts’ estimates of $869 million, Mizuho Securities analyst Abhey Lamba wrote in a research note. Backlog exceeded $2.7 billion for the entire fiscal year, up 28 percent and the biggest annual gain since the company started reporting backlog nine years ago.
Whitehurst said the company landed more than 280 contracts worth over $1 million last fiscal year, up 30 percent from the prior year. In the fourth quarter, the company signed its first $100 million contract.
Revenue for the quarter totaled $628.9 million, up from $543.5 million, marking the 60th consecutive quarter of revenue growth for the Raleigh-based company. Analysts polled by Bloomberg News had projected revenue of $618.8 million.
Adjusted net income totaled $110 million, or 61 cents per share, up from $97 million, or 52 cents a share, a year ago.
For all of fiscal 2017, revenue totaled $2.4 billion, up 18 percent. Adjusted net income was $414 million, or $2.27 per share, versus $355 million, or $1.91 per share, a year ago.
Red Hat shares closed Tuesday at $86.48, up $4.28. Its shares have risen 24 percent this year.