Red Hat financial results disappoint; CFO Frank Calderoni is departing

Red Hat shares fell as much as 13 percent in after-hours trading after the open source software company reported quarterly revenue that fell short of Wall Street estimates – even though it was 18 percent higher than a year ago – and issued disappointing guidance.

The Raleigh company also reported that Frank Calderoni, who has been chief financial officer since July 2015, is departing in late January to take a CEO job elsewhere. The company named Eric Shander, vice president of finance and accounting and the company’s principal accounting officer, as acting CFO.

Red Hat reported after the markets closed Wednesday that revenue for its fiscal third quarter totaled $615.3 million, up from $523.6 million a year ago. Analysts polled by Bloomberg News had projected that revenue would total $618.7 million.

Adjusted net income totaled $111 million, or 61 cents per share, up from $89 million a year ago. That was 3 cents per share better than analysts projected.

Red Hat’s new guidance for the full fiscal year contemplates revenue of $2.40 billion to $2.41 billion, below analysts’ expectations of $2.42 billion. The company projected earnings per share of 61 cents for the fourth quarter, in line with Wall Street estimates.

CEO Jim Whitehurst said that the latest quarterly results were tempered by “a few challenges.” They included a delay in closing on about $20 million worth of deals with the federal government and fewer companies paying upfront for multi-year deals, which impacts revenue.

Red Hat closed on two deals worth more than $20 million each during the quarter, a first for the company.

Although the company consequently lowered its revenue and cash flow outlook for the year, Whitehurst added that “it’s important to note that we continue to expect full year total revenue growth of approximately 17 percent.”

In addition, Calderoni said that anticipated fiscal fourth quarter revenue would be depressed by about $16 million due to the strengthening of the U.S. dollar.

Whitehurst praised Calderoni as “a talented business leader and executive” who strengthened the company during his tenure.

“I’m grateful that Frank has agreed to stay on until late January and assist with the transition,” he said.

As for the new acting CFO, Whitehurst said Shander “will bring a rich and solid experience base to this role from his work at Red Hat and his almost 25 years of experience at IBM and Lenovo.” Shander joined Red Hat in November 2015.

Earlier in the day Red Hat shares closed at $79.79, up 40 cents. For the year, the stock is down 4 percent.

David Ranii: 919-829-4877, @dranii