Red Hat Inc. Shares Surge Amid Solid Q4 Earnings & Upbeat Forecast

Red Hat Inc. (NYSE:RHT) late Monday posted solid fourth quarter earnings results and offered an upbeat outlook for 2018, sending its shares jumping higher in aftermarket trading.

Written by StockNews.com

The Raleigh, NC-based open source software giant reported Q4 earnings per share (EPS) of $0.61, which was in-line with the Wall Street consensus estimate of $0.61. Revenues rose 15.7% from last year to $628.8 million, topping analysts’ view for $618.64 million.

RHT also noted that billings jumped 45% quarter-over-quarter to $986 million, while subscription revenue gained 17% year-over-year to $560 million.

Looking ahead, the company forecast Q1 EPS ranging from $0.52 to $0.53, below Wall Street’s current $0.59 estimate. Q1 revenues are seen between $643 and $650 million, above analysts’ view for $642.44 million.

Red Hat’s full-year outlook was much better. Its 2018 EPS estimate of $2.60 to $2.64 was above expectations for $2.59, and its revenue range of $2.72 to 2.76 billion would beat the $2.71 billion analysts are looking for.

The company commented via press release:

“Our strategic position with customers is evidenced by the continued growth in large commitments to Red Hat. The number of deals greater than $1 million in fiscal 2017 grew by over 30% annually, and we closed a record number of deals over $20 million, including our first-ever deal of approximately $100 million in the fourth quarter,” stated Eric Shander, acting Chief Financial Officer of Red Hat. “This performance also drove a record backlog of $2.7 billion in U.S. dollars, up 28% year-over-year which contributes to our fiscal year 2018 revenue outlook of 13% to 14% growth and should help drive expanded GAAP operating margin of 15.2% and non-GAAP operating margin of 23.6%.”

Investors cheered Red Hat’s results after the bell on Monday, sending the stock up $3.70 (+4.50%) to $85.90. Year-to-date, RHT had already gained 17.93% prior today’s report, versus a more modest 4.51% rise in the benchmark S&P 500 index during the same period.

RHT currently has a StockNews.com POWR Rating of A (Strong Buy), and is ranked #5 of 65 stocks in the Software – Application category.