Red Hat sales, profits beat Wall Street expectations
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Local Tech Wire
RALEIGH, N.C. – Red Hat (NYSE: RHT), the world’s top developer and provider of Linux software solutions, beat Wall Street expectations in the quarter ending Aug. 31 with revenues and profits higher than expected.
The Raleigh-based company reported revenues of $183.6 million, beating analysts’ expectations as polled by Thomson Reuters of $179 million.
Profits minus one-time expenses and including a 4-cent per share tax benefit hit $39.4 million, or 20 cents per share, up more than 30 percent from 2008. The Thomson Reuters poll of analysts had projected a 15-cent profit. A year ago, Red Hat reported a $30 million profit.
Unlike many other high-tech firms have reported in recent quarters, Red Hat actually improved revenues by 12 percent over the same quarter last year as the recession was starting to bite.
Subscription revenue for Red Hat services led the increase, hitting $156.3 million, or up 15 percent for a year earlier.
The report, which came after the markets closed Wednesday, ignited 3 percent, or 82 cents, surge in Red Hat shares to $25.70 in after-hours trading. Red Hat had closed down 52 cents at $24.88.
The Red Hat report reflected a recent study from Wall Street firm Goldman Sachs that projected an increase in revenues for open source firms such as Red Hat as information technology clients turn to them in efforts to cut costs. Red Hat also is seeking to exploit growing demand for cloud computing and virtualization that enable more use if existing hardware in collaborative environments.
Red Hat Chief Executive Officer Jim Whitehurst picked up on the “value proposition” point as a reason why the Hatters are increasing sales.
“IT organizations continue to move ahead with purchases of high value solutions, and Red Hat is capitalizing on this demand as a result of our strong customer relationships and proven value proposition,” Whitehurst said.
“These factors contributed to our better than expected total revenue in the second quarter, and drove annual subscription revenue growth of 15 percent for both the quarter and first half of fiscal year 2010. We continue to be optimistic about Red Hat’s future and believe the company is well positioned when the economic and IT spending environment improves.”
Copyright 2010 Local Tech Wire. All rights reserved.
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