Red Hat Posts Solid Beat on Earnings

By Chris Lange Updated Apr 28, 4:00AM EDT · Published Sep 21, 4:33PM EDT

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Red Hat, Inc. (NYSE: RHT) reported its fiscal second quarter financial results after the markets closed on Tuesday. The company had $0.47 in earnings per share (EPS) on $504 million in revenue compared to Thomson Reuters consensus estimates of $0.44 in EPS on $494.65 million in revenue. The same period from the previous year had $0.41 in EPS on $445.90 million in revenue.

The company has a quarterly subscription revenue of $442 million, up 13% year over year, and a quarterly operating cash flow of $120 million, up 12%. Overall total revenue was up 13% in U.S. dollars year over year, or 21% in constant currency.

Red Hat gave its guidance for the fiscal third quarter and the fiscal full year. For the third quarter the company expects $0.47 in EPS on $519 million to $523 million in revenue compared to consensus estimates of $0.46 in EPS on $513.56 million in revenue. For the fiscal full year the company expects $1.85 to $1.87 in EPS on $2.034 billion to $2.044 billion in revenue compared to the consensus estimates of $1.83 in EPS on $2.02 billion in revenue.

Jim Whitehurst, President and CEO of Red Hat, commented on earnings:

Strong execution in Q2 contributed to total revenue results that exceeded 21% year-over-year growth on a constant currency basis. We were pleased with the progress of our technologies that address cloud deployments across multiple footprints. Specifically in this quarter, we achieved a public cloud milestone in our Certified Cloud and Service Provider program of an annualized run-rate of $100 million. We are also thrilled to be the first open source company to achieve an annualized run-rate of $2 billion in revenue this quarter. In addition, we believe Red Hat is well-positioned for the second half of the fiscal year as we continue to benefit from delivering innovation to our customers.

On the books, operating cash flow was $120 million for the second quarter, an increase of 12%, from the same period in the previous year. The company had cash, cash equivalents and investments of $1.17 billion compared to $1.26 billion at the end of the previous fiscal year.

Shares of Red Hat closed Monday up 2.3% at $72.72 on its 52-week trading range of $52.53 to $81.49. Following the release of the earnings report, shares were initially up about 0.5% at $72.38 in the after-hours trading session. The stock has a consensus analyst price target of $83.30.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.