Categories AlphaGraphs, Earnings, Technology

Red Hat swings to profit in Q4, beats estimates

Red Hat (RHT) swung to a profit in the fourth quarter from a loss last year, helped by lower income taxes provision. The results were benefited by strong customer growth and stable demand from its hybrid cloud technology solutions. The bottom line exceeded analysts’ expectations while the top line missed consensus estimates.

Net income was $139.5 million or $0.75 per share compared to a loss of $12.16 million or $0.07 per share in the previous year quarter. Adjusted earnings increased by 26.1% to $1.16 per share.

Revenue grew 14% year-over-year to $879 million. On a constant currency basis, revenue increased by 17%. Subscription revenue for the quarter was $774 million, up 13% year-over-year, or 16% measured in constant currency.

Red Hat fourth quarter 2019 earnings snapshot
Red Hat Q4 2019 Earnings Infographic

Subscription revenue from Infrastructure-related offerings for the fourth quarter rose by 8% to $549 million while that from Application Development-related and other emerging technology offerings climbed by 30% to $225 million.

Total backlog for the fiscal year 2019 was in excess of $4.1 billion, up 22% year-over-year. At the end of the fiscal year, the company’s total deferred revenue balance was $3.0 billion, an increase of 15% year-over-year. The negative impact to total deferred revenue from changes in foreign exchange rates was $77 million year-over-year.

The portion of total backlog to be billed in the future not reflected in the company’s financial statements was in excess of $1 billion as of February 28, 2019, compared with the ending balance in excess of $775 million reported for fiscal 2018. The portion of total backlog to be billed during fiscal 2020 was in excess of $490 million as of February 28, 2019, compared with in excess of $450 million last year.

Also read: Red Hat shareholders give green signal for acquisition by IBM

Due to the pending transaction with International Business Machines Corp. (IBM), Red Hat will not be hosting a conference call for its fourth quarter 2019 business results and will not be providing an outlook for its fiscal 2020.

In comparison, Red Hat’s rival and industry leader Microsoft (MSFT) posted a 12% increase in revenues to $32.5 billion in the second quarter. Meanwhile, IBM (IBM) reported a decline in revenues to $22 billion for the most recent quarter when adjusted earnings dropped 5% to $4.87 per share but beat the estimates.

Shares of Red Hat ended Monday’s regular session down 0.13% at $181.46 on the NYSE. The stock has risen over 22% in the past year and over 4% in the past three months.


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