Shares of Red Hat Inc. (RHT, Financial) jumped 0.18% to $181.79 in after-hours trading on Monday after beating consensus estimates on non-GAAP earnings for the last quarter of fiscal 2019 by 15 cents, having posted $1.16 per diluted share or a 26.1% increase year-over-year.
GAAP earnings were 75 cents per diluted share, reversing from the prior-year quarter loss of 7 cents per diluted share.
Earnings came from revenue of $878.99 million, which was a 13.8% increase year-over-year, missing consensus estimates by $6.65 million.
The Raleigh, North Carolina-based software company noted a 10% year-over-year jump in the infrastructure-related offerings sub-segment of subscription revenue to $549 million and 34% growth in the application development-related sub-segment to $225 million.
Red Hat also released results for full 2018, posting in constant currency a 16% increase in revenues to $3.4 billion, an 8% rise in GAAP operating income to $512 million and 13% growth in non-GAAP operating income to $795 million.
GAAP net income increased 65.6% to $434 million or $2.33 per diluted share and non-GAAP net income grew 24.8% to $679 million or $3.69 per diluted share. It is important to note that GAAP net income for the fiscal year 2018 included a $123 million one-time tax charge for the Tax Cuts and Jobs Act.
Further, the company recorded a GAAP operating margin of 15.2%, which was down 1.1 percentage points, and non-GAAP operating margin of 23.7%, reflecting a 0.3 percentage-point decline.
The company said that due to its pending acquisition by IBM Corp. (IBM), it will not provide its shareholders with guidance for full fiscal 2020.
The balance sheet had $2.4 billion in cash and securities, about $500.4 million in total debt and nearly 3 billion in total deferred revenue as of Feb. 28.
Red Hat has produced a free cash flow of $951.5 million in fiscal 2019, reflecting a 13.5% rise from fiscal 2018, resulting from operating cash flow of $1.01 billion and capital expenditures for fixed assets of $61.3 million.
Nonetheless, the company did not pay a dividend in 2018 but rewarded its shareholders with 46% share price appreciation, topping the S&P 500 by 53%. It also repurchased about 900,000 shares of its outstanding common stock for $413 million.
Under the current buyback program, it has authorized another $737.2 million for buybacks as of Feb. 28.
The company's share price was $181.5 at close on Monday for a market capitalization of $32.07 billion. Following an 18% increase for the 52 weeks through March 25, the share price stands above the 200-, 100- and 50-day simple moving average lines. The share price at close Monday was 57.4% above the 52-week low of $115.31 and just 1.1% below the 52-week high of $183.54.
Wall Street issued a hold recommendation rating with an average price target of $185.67, which reflects 2.3% upside from the closing price on Monday.
In addition, the 14-day relative strength index of 51.76 suggests the stock is neither oversold nor overbought.
Disclosure: I have no positions in any securities mentioned.
