Red Hat’s quarterly results exceed expectations

Open source software company Red Hat exceeded Wall Street’s expectations for fiscal second-quarter revenue and net income and boosted its guidance for the year.

CEO Jim Whitehurst told analysts during a conference call that Red Hat continues to benefit from corporate customers that are looking to “modernize the data center and on-ramp to the cloud.”

The company said its revenue from its “certified cloud and service provider” program – that is, companies such as Amazon, Google and IBM that provide cloud services to their customers using Red Hat software – has achieved an annualized rate of $100 million. That’s up from an annualized run rate of $36 million six quarters ago. An annualized run rate extrapolates the latest quarterly numbers over a full year.

Red Hat’s total revenue for the quarter that ended Aug. 31 totaled $504 million, up 13 percent from a year ago – marking the first time that the company’s quarterly revenue exceeded one-half billion dollars. Revenue rose more than 21 percent after accounting for currency fluctuations. The consensus of analysts polled by Bloomberg News was that revenue would total $494.6 million.

Adjusted net income was $88 million, or 47 cents per share, up from $78 million, or 41 cents per share, a year ago. Analysts had projected adjusted net income of 44 cents per share.

Red Hat also raised its guidance for the full fiscal year. It now expects revenue for the year to range from $2.034 billion to $2.044 billion. Its prior guidance was for between $1.990 billion and $2.020 billion.

Billings for the quarter rose 9 percent to $479 million. Analysts were expecting billings of $489 million, said Mizuho Securities analyst Abhey Lamba.

“Billings growth of 9 percent on a reported basis or about 17 percent on a constant currency basis is impressive but was below expectations,” Lamba said.

Red Hat’s open source software is available for free. The company makes money by charging its business customers for maintenance, support and related services.

Red Hat issued its quarterly results Monday after the markets closed. Earlier in the day, the company’s shares closed at $72.72, up $1.66. Its shares have risen 5 percent this year.

Red Hat has 7,900 employees worldwide after adding a record 400 new hires in the quarter. The company, which previously said it had about 1,200 workers at its downtown Raleigh headquarters, isn’t disclosing how many new hires were added locally.

This story was originally published September 21, 2015 at 4:58 PM with the headline "Red Hat’s quarterly results exceed expectations."