Red Hat Profit Tops View, Stock Down On Outlook

(RTTNews) - Red Hat Inc., (RHT), Wednesday reported an increase in profit for the first quarter as revenues grew 18 percent. Both earnings and revenues for the quarter topped Wall Street estimates. However, shares of the Linux software maker slipped 5 percent on weak outlook.

Raleigh, North Carolina-based Red Hat's first-quarter profit of $61.2 million or $0.33 per share, up from $48.1 million or $0.26 per share last year.

Adjusted earnings for the quarter rose to $0.51 per share from $0.44 per share last year. Analysts polled by Thomson Reuters estimated earnings of $0.50 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter grew 18 percent to $567.9 million from $481.0 million last year. Analysts had a consensus revenue estimate of $562.76 million for the quarter.

Subscription revenue, which represents the major chunk of revenues, increased 14 percent to $403 million.

Looking forward to the full year, Red Hat expects adjusted earnings of $2.19 to $2.23 per share and revenues of $2.38 billion to $2.42 billion. Analysts currently estimate earnings of $2.24 per share and revenues of $2.40 billion.

Earlier, Red Hat expected adjusted earnings of $2.22 to $2.26 per share on revenues of $2.38 to $2.42 billion.

For the second quarter, Red Hat expects adjusted earnings of about $0.54 per share and revenues of $587 million to $593 million. Analysts currently estimate earnings of $0.55 per share and revenues of $588.60 million.

Red Hat also authorized the repurchase of up to $1 billion of common stock. The new program is to replace the previous $500 million repurchase program that will be terminated effective June 30, 2016.

Separately, Red Hat announced it has agreed to buy 3scale, a provider of application programming interface (API) management technology. The deal is expected to close in June 2016, subject to customary closing conditions.

RHT closed Wednesday's trading at $79.75, down $0.64 or 0.80%, on the NYSE. The stock further dropped $4.75 or 5.96% in the after-hours trading.