Open source solutions provider Red Hat (RHT) reported yet another quarter of revenue growth, consistent with the trend it has been following for some time now. Revenue jumped 20% year-over-year to $814 million, driven by increased adoption of the company’s cloud-enabled technological offerings and double-digit growth in subscription revenues.
Profit for the first quarter soared 51% to $113 million or $0.59 per share, while adjusted earnings swelled 24% to $0.72 per share.
Subscription revenue, which accounted for about 87% of Red Hat’s total revenue, grew 19% year-over-year to $712 million. However, training and services segment revenue growth of 27% was well below subscription revenue growth.
“The move to hybrid cloud architecture continues to be a strategic priority for our customers. We again delivered strong revenue growth in Q1 as customers continued to adopt our cloud enabling technologies for their applications,” stated CEO Jim Whitehurst.
During the quarter, the company partnered with Juniper Networks (JNPR) and also announced a partnership with Microsoft (MSFT) to integrate the company’s OpenShift software with Microsoft’s Azure cloud.
As for guidance, Red Hat provided weaker guidance, well below the consensus estimates, with second quarter adjusted earnings on a per share basis expected at $0.81 and revenue expected in the range of $822 million to $830 million. Reported profit is expected at about $0.50 per share.
For fiscal 2019, the company is expected to report adjusted earnings of $3.44 to $3.48 per share on revenue of $3.375 billion to $3.410 billion. GAAP earnings are expected to be about $2.36 to $2.40 per share, assuming 191 million diluted shares outstanding. Red Hat attributed the foreign exchange rates for its bleak guidance.
Also, the Board has authorized the repurchase of up to $1 billion of the company’s common stock. The new program would replace the previous $1 billion repurchase program set to expire on June 30, 2018.
Red Hat stock has surged about 66% over the past year while gaining 37% since January of this year. However, the stock plunged as much as 12% in the after-market trading hours post the earnings release.