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 Click Here for more Red Hat Charts.
Red Hat (NYSE:RHT)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Red Hat Charts.