Red Hat Posts Solid Earnings Beat

By Chris Lange Updated Jan 13, 3:18AM EST · Published Sep 21, 4:37PM EDT

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Red Hat Posts Solid Earnings Beat — © Thinkstock

Red Hat, Inc. (NYSE: RHT) released fiscal second-quarter financial earnings report after the markets closed. This company continued to benefit from solid demand and strong overall execution. Closing a record number of deals over the $1 million mark, which is up over 60% from last year.

The company said that it had $0.55 in earnings per share (EPS) on $600 million in revenue. There were consensus estimates from Thomson Reuters that called for $0.54 in EPS on $593.46 million in revenue. The same period from the previous year had $0.47 in EPS on $504.15 million in revenue.

Subscription revenue for the second quarter grew 20% year over year to a total of $531 million. Total deferred revenue also grew 19% from last year to $1.68 billion.

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In terms of the outlook for the fiscal third-quarter, the company expects to have $0.58 in EPS and revenues in the range of $613 million to $623 million. There are consensus estimates calling for $0.57 in EPS on $615.18 million in revenue.

Operating cash flow was $97 million for the second quarter, a decrease of 21% from last year. On the books, cash, cash equivalents and investments at the end of the quarter totaled $2.0 billion after repurchasing roughly $127 million in the second quarter. The remaining balance in the current repurchase authorization is $901 million.

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

Red Hat’s second quarter revenue results were highlighted by 18% in year-over-year growth for our Infrastructure offerings combined with 33% in year-over-year growth for our Application development and other emerging technologies. Digital transformation and hybrid cloud computing are changing how applications are built, deployed, and managed. As organizations adopt agile application development technologies such as Linux containers, they are able to rely on Red Hat as their strategic partner to modernize their infrastructure and application development platforms.

Shares of Red Hat closed Wednesday up 1.7% at $77.04, with a consensus analyst price target of $87.71 and a 52-week trading range of $59.59 to $84.44. Following the release of the earnings report, the stock was up 3.4% at $79.67 in the after-hours trading session.

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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.