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Red Hat (RHT) Posts Earnings Beat, Stock Tumbles on Sluggish Guidance

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Red Hat, Inc. (RHT - Free Report) just released its latest quarterly financial results, posting adjusted earnings of $0.72 per share and revenues of $314 million.

Currently, RHT is a Zacks Rank #3 (Hold), but that could change based on today’s results. Shares of the company have gained about 4.8% over the past month but slumped roughly 2.1% during regular trading hours today.

The stock is currently down 9.8% to $149.51 per share in after-hours trading shortly after its earnings report was released.

Red Hat:

Beat earnings estimates. The company posted non-GAAP earnings of $0.72 per share, topping the Zacks Consensus Estimate of $0.68. Investors should note that this consensus projection has trended downward over the duration of the quarter.

Beat revenue estimates. The company saw revenue figures of $814.0 million, beating our consensus estimate of $807.3 million.

Subscription revenue was $712 million, up 19% year over year. Subscription revenue accounted for 87% of total revenue. Subscription revenue from Infrastructure-related offerings was $522 million, while subscription revenue Application Development-related and other emerging technology offerings was $189 million. These results marked year-over-year growth of 14% and 37%, respectively.

“The move to hybrid cloud architecture continues to be a strategic priority for our customers. We again delivered strong revenue growth in Q1 as customers continued to adopt our cloud enabling technologies for their applications,” said CEO Jim Whitehurst.

Operating cash flow was $346 in the quarter, up 34% from the prior-year quarter. Red Hat now holds cash, cash equivalents, and investments worth $2.5 billion. The company has $249 million remaining in its current repurchase authorization, and it today approved a new $1 billion repurchase program.

Red Hat expects Q2 revenue to be in the range of $822 million to $830 million, with non-GAAP earnings coming in at $0.81 per share. These projections are well below our current consensus estimates of $856.2 million and $0.88 per share.

Meanwhile, Red Hat projects full-year revenue of $3.375 billion to $3.410 billion and non-GAAP earnings of $3.44 to $3.48 per share. Our most recent Zacks Consensus Estimates were standing at $3.45 billion and $3.40 per share.

Here’s a graph that looks at Red Hat’s recent earnings performance:

Red Hat, Inc. Price, Consensus and EPS Surprise

Red Hat, Inc. Price, Consensus and EPS Surprise | Red Hat, Inc. Quote

Red Hat is the world's leading provider of open source software solutions, using a community-powered approach to provide reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training, and consulting services.

Check back later for our full analysis on RHT’s earnings report!

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