Red Hat Inc. (RHT), the world's largest seller of Linux software, said Wednesday after the markets closed that its fourth quarter profit rose 46% from a year ago, as revenue increased 18%. The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly revenue. Separately, Red Hat said its Board of Directors has authorized the repurchase of up to $300 million of the company's common stock.
The Raleigh, North Carolina-based company reported GAAP net income for the fourth quarter of $23.4 million or $0.12 per share, compared to $16.0 million or $0.08 per share for the year-ago quarter.
Excluding stock options expense and other items, Non-GAAP net income for the fourth quarter was $36.5 million or $0.19 per share, compared to $28.5 million or $0.15 per share in the prior year quarter.
On average, 22 analysts polled by Thomson Reuters expected the company to earn $0.16 per share for the fourth quarter. Analysts' estimates typically exclude special items.
GAAP operating income for the quarter was $28.0 million or 14.3% of revenue, compared to $20.2 million or 12.2% of revenue a year ago.
Non-GAAP operating income for the quarter was $46.6 million or 23.8% of revenue, compared to $39.8 million or 23.9% of revenue last year.
Total revenue for the fourth quarter rose 18% to $195.87 million from $166.22 million in the same quarter last year. Nineteen analysts had a consensus revenue estimate of $193.18 million for the fourth quarter.
Subscription revenue for the quarter rose 21% to $169.2 million from $139.4 million a year ago, while training and services revenue fell slightly to $26.7 million from $26.9 million last year.
At the end of the quarter, the company's total deferred revenue balance was $645.9 million, up 19% from a year earlier.
"With double digit revenue growth and record billings, our fourth quarter capped off a year of solid performance, moving us closer to our milestone revenue goal of a billion dollars," said Jim Whitehurst, President and Chief Executive Officer of Red Hat.
During the fourth quarter, the company repurchased 3.1 million shares of its common stock for about $90.1 million and ended the quarter with cash and investments of $970.2 million.
For the fiscal year 2010, the company reported GAAP net income of $87.3 million or $0.45 per share, compared to $78.7 million or $0.39 per share for the fiscal year 2009.
Non-GAAP net income for the fiscal year 2010 was $138.1 million or $0.71 per share, compared to $121.5 million or $0.59 per share in the prior year.
Total revenue for the fiscal year 2010 increased 15% to $748.24 million from $652.57 million in fiscal 2009.
Analysts expected the company to earn $0.68 per share on revenue of $745.50 million for the fiscal year 2010.
Separately, Red Hat said that its Board of Directors has authorized the repurchase of up to $300 million of the company's common stock. The new program replaces the previous $250 million repurchase program, the final $10 million of which was completed this month. As of February 28, the company had about 187.4 million shares of common stock outstanding.
Rival Novell, Inc. (NOVL), which is the world's second largest seller of Linux software, last month reported sharply higher first quarter profit, helped by lower operating expenses, even though revenue declined.
However, Novell announced earlier this month that its Board of Directors has authorized a thorough review of various alternatives to enhance shareholder value, including sale of the company. On March 2, Elliott Associates L.P., a fund managed by Elliott Management Corp., made a $2 billion unsolicited takeover offer for the Waltham, Massachusetts-based Novell, which the software company rejected by calling it "inadequate."
In terms of stock performance, Red Hat shares have jumped 97.6% in the last 12 months during which Novell shares have gained 38.32%. Red Hat shares trade at 40.39 times estimated forward earnings, compared to Novell's 19.57 times.
Red Hat shares, which have traded in a range of $14.43 to $31.76 over the last year, closed Wednesday's regular trading session at $30.70, up 53 cents or 1.76%. The stock is currently losing 35 cents or 1.14% in after hours trading.
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