Red Hat Results Top Estimates

(RTTNews) - Red Hat, Inc. (RHT), the world's largest seller of Linux software, said Wednesday after the markets closed that its first quarter profit fell 7% from last year, as higher costs and expenses more than offset a 17% increase in revenue.

However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations as did its quarterly revenue.

"Our global sales organization continued to execute at a high level during Q1, leading to double digit growth in every region. This execution, combined with the cross-selling of our expanded portfolio of innovative technologies, contributed to organic subscription revenue growth of 18% and operating cash flow growth of 16%, all of which were above the high-end of our guidance," said Charlie Peters, Executive Vice President and Chief Financial Officer of Red Hat.

Red Hat shares are currently gaining 3.92% in after hours trading after closing the day's regular trading session at $53.10, up 67 cents or 1.28%. The shares trade in a 52-week range of $41.89 to $61.45.

For the first quarter ended May 31, 2014, the Raleigh, North Carolina-based company reported net income of $37.7 million or $0.20 per share, compared to $40.4 million or $0.21 per share for the year-ago quarter.

Excluding items, adjusted net income for the first quarter was $64.2 million or $0.34 per share, as compared to $61.6 million or $0.32 per share in the prior year quarter.

On average, 29 analysts polled by Thomson Reuters expected the company to earn $0.33 per share for the first quarter. Analysts' estimates typically exclude special items.

Total revenue for the first quarter rose 17% to $423.75 million from $363.26 million in the same quarter last year. Twenty-six analysts had a consensus revenue estimate of $413.98 million for the first quarter.

Subscription revenue for the quarter increased 18% to $372 million.

Red Hat repurchased about 1.6 million shares of its common stock for about $80 million during the first quarter and ended the quarter with total cash, cash equivalents and investments of $1.40 billion.

Earlier Wednesday, Red Hat announced that it has agreed to buy privately-held eNovance, a provider of open source cloud computing services, for about 50 million euros cash and 20 million euros in common shares of Red Hat, subject to certain adjustments at closing. The deal may close this month.