Open source solutions provider Red Hat Inc. (RHT) Wednesday said its first quarter profit increased from last year, helped by a 11% growth in revenue, partially offset by higher expenses. The company's quarterly earnings excluding items, also came in above the analysts' expectations.
The Raleigh, North Carolina-based company posted net income of $18.5 million or $0.10 per share for the first quarter, up from $17.3 million or $0.08 per share in the prior year quarter.
Excluding items, non-GAAP net income rose to $28.7 million or $0.15 per share from $26.0 million or $0.12 per share in the year-ago quarter. On average, 23 analysts polled by Thomson Reuters expected the company to earn $0.14 per share for the first quarter. Analysts' estimates typically exclude special items.
The company, which is the world's largest seller of Linux software, said GAAP operating income for the quarter was $25.1 million, up from $19.9 million a year earlier.
Non-GAAP operating income for the first quarter was $40.7 million or 23.4% of revenue, compared to $34.2 million or 21.8% of revenue in the preceding year quarter.
Red Hat's first quarter revenue increased 11% to $174.4 million from $156.6 million in the same quarter last year. Nineteen analysts had a consensus revenue estimate of $171.79 million for the first quarter.
Charlie Peters, executive vice president and CFO of Red Hat said, "While we remain focused on managing discretionary costs and improving efficiencies, we also continue to invest in growth opportunities in middleware, virtualization and cloud computing. These efforts combined with solid top line growth contributed to non-GAAP operating income growth of 19% year-over-year and healthy cash flow."
Subscription revenue grew 14% to $148.8 million from $130.7 million, while training and services revenue dropped to $25.6 million from $25.9 million in the previous year quarter.
Total operating expense for the first quarter increased to $122.9 million from $110.3 million in the first quarter last year.
During the quarter, the company repurchased $47 million of its common stock. The company ended the first quarter with total cash, cash equivalents and investments of $884.5 million.
Last month, rival Novell Inc. (NOVL), world's second largest seller of Linux software, reported that its second quarter profit jumped from a year ago as expenses declined, despite an 8.5% fall in revenues reflecting a huge drop in software licenses and services revenue.
In response to market rumors that hinted the possibility of a sale of some parts or the entire company, Waltham, Massachusetts-based Novell clarified that it has no plans to sell itself.
Red Hat shares closed Wednesday's regular trading session at $20.13, up 50 cents or 2.55%, on a volume of 3.52 million shares. In after-hours, the shares lost 33 cents or 1.64%. The stock has been moving in a range of $7.50 - $23.38 for the past 52 weeks, with an average daily volume of about 3.04 million shares for the past three months.
For comments and feedback: editorial@rttnews.com