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Red Hat Profit Tops View, Outlook Strong; Shares Up 6%

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Red Hat Inc., (RHT), Wednesday reported an increase in profit for the second quarter driven largely by 19 percent growth in revenues. Both earnings and revenues for the quarter topped Wall Street estimates. Shares of the Linux software maker gained 6 percent on a strong upbeat outlook.

Raleigh, North Carolina-based Red Hat's second-quarter profit rose to $58.8 million or $0.32 per share from $51.4 million or $0.28 per share last year.

Adjusted earnings for the quarter rose to $0.55 per share from $0.47 per share last year. Analysts polled by Thomson Reuters estimated earnings of $0.54 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter grew 19 percent to $599.8 million from $504.1 million last year. Analysts had a consensus revenue estimate of $593.34 million for the quarter.

Subscription revenue, which represents the major chunk of revenues, increased 19 percent to $531.2 million.

"Red Hat's second quarter revenue results were highlighted by 18% in year-over-year growth for our Infrastructure offerings combined with 33% in year-over-year growth for our Application development and other emerging technologies," said CEO Jim Whitehurst.

"We continued to close a record number of deals over $1 million in our second quarter, which are up more than 60% year over year," said CFO Frank Calderoni.

Looking forward to the full year, Red Hat expects adjusted earnings of $2.23 to $2.25 per share and revenues of $2.42 billion to $2.44 billion. Analysts currently estimate earnings of $2.21 per share and revenues of $2.40 billion.

Earlier, Red Hat expected adjusted earnings of $2.19 to $2.23 per share on revenues of $2.38 to $2.42 billion.

For the third quarter, Red Hat expects adjusted earnings of about $0.58 per share and revenues of $613 million to $623 million. Analysts currently estimate earnings of $0.57 per share and revenues of $614.9 million.

RHT closed Wednesday's trading at $77.04, up $1.26 or 1.66% on the NYSE. The stock further gained $4.86 or 6.31% in the after-hours trading.

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