Shares of Red Hat rose as much as 5 percent in after-hours trading after it posted strong quarterly results that breezed past Wall Street’s expectations.
The fiscal fourth-quarter results were especially impressive because the headwinds from a strong U.S. dollar have been bedeviling companies such as Red Hat that have significant overseas sales. Some analysts who issued research notes over the past few days had cautioned that Red Hat’s earnings could slip below expectations because of the currency issue.
“The fourth quarter was a very strong finish for Red Hat, and our momentum is strong as we enter our new fiscal year,” CEO Jim Whitehurst told analysts during a conference call.
The Raleigh-based open source software company reported after the markets closed Wednesday that revenue rose 16 percent to $463.9 million in its fiscal fourth quarter that ended Feb. 28. Analysts polled by Bloomberg News were anticipating $456.4 million in revenue.
In a research note issued late Wednesday, Mizuhso Securities analyst Abhey Lamba pronounced the company’s revenue growth “remarkable in the current environment.”
Net income, after adjusting for stock compensation and amortization expenses, was $80.6 million, up 7 percent from a year ago. That amounted to 43 cents on a per-share basis, 2 cents ahead of what analysts anticipated.
To be sure, currency was a factor in Red Hat’s results. After adjusting for currency fluctuations, for example, the company’s revenue rose 22 percent rather than 16 percent.
On that basis, it marked the company’s strongest quarterly growth in three years.
Red Hat’s software is available for free; it makes money by charging its business customers for maintenance, support and related services.
For the full year, Red Hat posted revenue of $1.79 billion, up 17 percent – or 19 percent after adjusting for currency fluctuations. Net income totaled $302.5 million, or $1.60 per share, up from $285.5 million a year ago.
Charlie Peters, Red Hat’s chief financial officer, projected annual revenue for the new fiscal year would rise up to 13 percent, which would push revenue past the $2 billion mark. He also forecast revenue would rise 19 percent after adjusting for currency fluctuations.
Earlier Wednesday, Red Hat shares closed at $68.45, down 95 cents. Its shares have declined 1 percent this year.
Red Hat also announced Wednesday that its board of directors has authorized repurchasing up to $500 million of Red Hat stock over time. Buying back stock boosts a company’s net income on a per-share basis and is viewed by investors as a sign of confidence in the business.