Red Hat reported that subscription revenue jumped 23% (in constant dollars) year-over-year to $425 million, and now accounts for about 88% of total revenues. That is also a constant-dollar increase of 22% from a year ago. Operating income rose 39% on a GAAP basis, and GAAP net income was up from $38 million a year ago to $48 million this year.
Red Hat did not offer guidance, but consensus estimates call for second-quarter EPS of $0.45 on revenues of $493.2 million. For the full fiscal year, EPS is estimated at $1.81 on revenues of $1.99 billion.
The company’s chief financial officer said:
Our solid start to fiscal year 2016 was evidenced by strong constant currency revenue growth of over 20%. This strong growth reflects in part the demand for our open, hybrid cloud technologies across four footprints: bare metal, virtualization, private cloud and public cloud deployments.
The stock slid after-hours despite the solid report. Revenue growth from cloud partners added a one-time $5 million to subscription revenue in the quarter. That is not a real difference maker, but the company’s training and services revenues accounts for about 12% of total revenues and the margins are well below subscription margins.
Red Hat’s shares closed up about 0.3% Thursday and slipped about 2.2% in the after-hours session to $76.79. The stock’s 52-week range is $52.53 to $79.35. The consensus price target from Thomson Reuters was around $79.00 before the report.
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