Red Hat Inc. (RHT, Financial) released its fourth-quarter financial results after the market closed on March 25. While the open-source software giant managed to beat Wall Street’s profit projections, revenue missed the mark.
The quarterly profit was aided by lower income tax provisions as well as robust customer growth and steady demand from the company's hybrid cloud technology solutions.
Snapshot of the quarter
Earnings per share stood at $1.16, topping analysts’ estimates by 15 cents. Revenue grew 14% year over year to $879 million, but fell $4.85 million short of expectations.
For the year, Red Hat, which is being bought by tech giant International Business Machine Corp. (IBM, Financial) in a $34 billion deal, posted a 15% increase in revenue to $3.1 billionÂ
In a statement, CEO Jim Whitehurst commented on the company's results.Ă‚
“Enterprise organizations are continuing to move to hybrid cloud environments, which is contributing to strong growth in Red Hat’s cloud enabling technologies,” he said.Â
While the non-GAAP gross profit inched up 13.5% year over year to $758.2 million, non-GAAP operating expenses grew 11.2% to $531.1 million.
At the end of the fourth quarter, the company had $1.88 billion in cash, cash equivalents and restricted cash. It made $424 million in operating cash flow during the quarter.
Subscription revenue grows
Subscription revenue climbed 13% to $774 million and also accounted for 88% of the total quarterly revenue. Infrastructure-related subscription revenue grew 8% to $549 million.
Digging deeper, subscription revenue for application-development and emerging technologies totaled $225 million, up 30% from last year.Ă‚
"Across the portfolio, our total number of customers with active subscriptions greater than $5 million increased 33% year-over-year in fiscal year 2019," Whitehurst said. "Also key to that growth is the increasing number of Ansible and OpenShift customers, which now total more than 1,300 and 1,000, respectively, as of the end of fiscal year 2019."
Due to the pending transaction with IBM, the company did not issue any guidance.
Disclosure: I do not hold any positions in the stocks mentioned.
Read more here:
