Red Hat tops $2 billion in annual revenue

Yet another quarter of double-digit revenue growth powered Red Hat’s annual revenue past the $2 billion mark for the first time ever.

The open source software company, which is headquartered in downtown Raleigh, also reported fiscal fourth-quarter revenue and net income that bested Wall Street’s forecast – as did the company’s projections for the current fiscal year.

Still, the company’s shares dipped in after-hours trading, possibly because billings – an indicator of future revenue – fell short in the eyes of some analysts.

“The fourth quarter was a strong finish to another great year for Red Hat and our momentum and outlook are strong as we begin the new fiscal year,” CEO Jim Whitehurst told analysts during a conference call.

Whitehurst said that Red Hat is benefiting from companies “increasingly adopting hybrid cloud infrastructures and open source technologies.”

The hybrid cloud is a combination of companies operating their own private cloud as well as working with public clouds operated by third parties. During the last fiscal year Red Hat generated more than $100 million, an increase of about 90 percent, from companies such as Amazon, Google and IBM that provide public cloud services.

Red Hat’s open source software is available for free; it makes money by charging its business customers for maintenance, support and related services. The company added 1,500 employees worldwide during the fiscal year and now has 8,800 employees worldwide, including more than 1,500 in Raleigh.

Red Hat reported after the markets closed Tuesday that revenue for the quarter that ended Feb. 29 rose 17 percent to $544 million compared with a year ago. Revenue rose 21 percent after adjusting for currency fluctuations. Analysts surveyed by Bloomberg News anticipated revenue would hit $537.5 million.

After adjusting for currency fluctuations, Red Hat has posted 20 percent-plus revenue growth for five consecutive quarters.

Adjusted net income totaled $97 million, or 52 cents per share, up from $81 million a year ago. Wall Street was projecting adjusted net income of 47 cents per share.

Revenue for the full fiscal year rose 15 percent to $2.05 billion. Revenue rose 21 percent after adjusting for currency fluctuations.

Adjusted net income for the year totaled $355 million, or $1.91 per share, up from $303 million a year ago.

Red Hat customers are incredibly loyal. Of the company’s 25 largest contracts that were up for renewal in the quarter, all 25 customers renewed and their new deals were 20 percent higher in the aggregate. Moreover, over the last five years, 498 of the company’s 500 largest deals were renewed.

“While we never want to lose a deal, if we do, we never give up trying to win back the business,” said Chief Financial Officer Frank Calderoni. “This quarter, I am pleased to report that we closed a multi-million-dollar ‘win-back’ of one of those two former top deals” that previously wasn’t renewed.

Red Hat projects that revenue for the current fiscal year will range between $2.38 billion and $2.42 billion, whereas analysts have been anticipating $2.35 billion. The company is forecasting that adjusted net income will be $2.22 to $2.26 per share, versus $2.19 projected by analysts.

Earlier Tuesday, Red Hat shares closed at $75.71, up 81 cents. The company’s shares have fallen 9 percent this year.

David Ranii: 919-829-4877, @dranii