Red Hat Q2 Profit Rises, But Shares Slip

(RTTNews) - Linux software provider Red Hat, Inc. (RHT), Monday reported a rise in second-quarter profit, helped mainly by a 16 percent growth in revenue driven by strong subscription revenue. Both earnings and revenues for the quarter came in ahead of Wall Street expectations.

Nevertheless, Red Hat shares dropped over 7 percent in after-hours trade on the NYSE.

The billing proxy, defined as total revenue plus the change in deferred revenue totaled $376 million, reflecting modest IT spending in Europe and the impact of large deal arrangements.

For the second quarter, Red Hat registered a profit of $41 million or $0.21 per share, up from $35 million or $0.18 per share in the same period last year.

Excluding stock compensation, amortization of intangible assets, and facility exit expenses, adjusted earnings for the quarter were $68 million or $0.35 per share, compared to $55 million or $0.28 per share a year ago.

On average, 31 analysts polled by Thomson Reuters expected the company to earn $0.33 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter increased 16 percent to $374 million from $278.8 million last year. Analysts expected revenues of $372.11 million for the quarter.

On a constant-currency basis, revenues were up 17 percent from last year. Subscription revenue increased 17 percent, or 18 percent in constant currency, to $327 million from last year.

Cost of subscription, training and services revenue amounted to $55.58 million, up from $47.86 million last year. Operating expenses increased to $263.27 million from $224.76 million last year.

The Raleigh, North Carolina-based company recently added infrastructure-as-a-service, Red Hat Enterprise Linux OpenStack Platform, to its portfolio of cloud offerings.

"The combination of this powerful technology with our platform-as-a-service, open software-defined storage and cloud management solutions create a compelling road map for our customers in the move to cloud computing, " said Jim Whitehurst, President, CEO.

Red Hat shares closed Monday's regular trade at $52.93, down $0.29 or 0.54 percent, on a volume of 3.0 million shares on the NYSE. In the last 52-week period, the stock trended in a range of $44.92 to $57.81, on a three-month average volume of 1.24 million shares. In after hours, the stock fell 7.18 percent or $3.80, at $49.13.