Red Hat Profit Falls On Costs, But Tops Estimate; Stock Up

(RTTNews) - Linux software maker Red Hat Inc (RHT), on Thursday reported a lower third-quarter profit despite a 15 percent increase in revenues, hurt by stock-based compensation expense and other costs. Nevertheless, both earnings and revenue for the quarter topped Wall Street estimates.

Red Hat said its strategic tie-up with customers has a healthy impact on the size of deals, and demand is up for its broadening portfolio.

Following the announcement, Red Hat shares gained 11 percent in after-hours trade on the New York Stock Exchange.

Red Hat's better-than-expected results come amid demand for open source technologies. The company is the world's leading provider of open source solutions.

Red Hat, based in Raleigh, North Carolina, posted quarterly net earnings of $48 million or $0.26 per share, compared with $52 million or $0.27 per share last year.

Results for the quarter included $33.6 million of non-cash share-based compensation expense, among other items.

Excluding items, adjusted earnings for the quarter were $0.42 per share, unchanged from a year ago.

On average, 30 analysts polled by Thomson Reuters expected earnings of $0.40 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the third quarter were $456 million, compared with $396.5 million in the prior year. Twenty-seven analysts had a consensus revenue estimate of $451.4 million for the quarter.

"Our strong Q3 results marked the eleventh straight quarter of mid-to-high teens revenue growth as we continued to reinforce and expand our strategic relationship with our customers," said Jim Whitehurst, President and Chief Executive Officer of Red Hat.

"Cloud computing and big data trends are driving increased demand for open source technologies. We believe our leadership position in the open source industry and broad portfolio of Open Hybrid Cloud technologies creates a strong position."

The company's adjusted operating margin for the quarter fell to 23.8 percent from 24.8 percent last year.

RHT closed Thursday at $61.50, up $2.02 or 3.40%, on a volume of 4.2 million shares on the NYSE. In after hours, the stock gained $7.00 or 11.38% at $68.50. In the past year, the stock has traded in the range of $47.45 - $63.69.