Red Hat Offers Downbeat Guidance for the Year
June 22 2016 - 06:10PM
Dow Jones News
Red Hat Inc. said sales in its first quarter climbed above
expectations, but the open-source software and cloud infrastructure
firm gave downbeat guidance for the year that suggests growth may
cool.
Shares in the company, down 3.7% this year through Wednesday's
close, slid 6.2% in after-hours trading.
The North Carolina company is known for the open-source
operating system Linux and provides free versions of software for
which programming instructions are freely available and modifiable.
Red Hat has benefited from the rise in cloud computing, and it has
been working to beef up its offerings through acquisitions.
On Wednesday, Chief Executive Officer Jim Whitehurst reiterated
that Red Hat is seeing "strong adoption" of its hybrid cloud
infrastructures and open-source technologies. Revenue rose 18% in
the latest quarter as billings increased by the same rate, though
the clips of sales growth from both application development-related
offerings and infrastructure-related offerings slowed from a
quarter earlier.
Mr. Whitehurst called the first-quarter results a strong start
to the fiscal year, but he offered an outlook that disappointed
investors. For the year, the company expects to earn an adjusted
$2.19 to $2.23 a share, short of the $2.24 analysts have
anticipated. Sales will come in between $2.38 billion and $2.42
billion, a range that brackets the $2.40 billion average analyst
estimate.
The forecast includes the impact of an acquisition announced
Wednesday. Red Hat said it would buy application programming
interface management company 3scale for an undisclosed amount, a
deal it said would raise expenses by 3 cents a share this year.
Separately, Red Hat said its board approved a $1 billion share
repurchase program that replaces its previous $500 million program
that expires at the end of this month.
For the period ended May 31, Red Hat reported a profit of $61.2
million, or 33 cents a share, up from $48.1 million, or 26 cents a
share, a year earlier. Excluding compensation expenses, among other
items, per-share earnings rose to 50 cents from 44 cents.
Revenue rose 18% to $567.9 million. Analysts projected 50 cents
in adjusted earnings per share on $562.8 million in revenue.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
June 22, 2016 17:55 ET (21:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Red Hat (NYSE:RHT)
Historical Stock Chart
From Feb 2024 to Mar 2024
Red Hat (NYSE:RHT)
Historical Stock Chart
From Mar 2023 to Mar 2024