Red Hat (RHT) Tops Q1 EPS by 3c; Guides Above Views

Red Hat (NYSE: RHT) reported Q1 EPS of $0.56, $0.03 better than the analyst estimate of $0.53. Revenue for the quarter came in at $677 million versus the consensus estimate of $647.84 million.

• First quarter total revenue of $677 million, up 19% year-over-year or 20% in constant currency
• First quarter total subscription revenue of $597 million, up 19% year-over-year or 20% in constant currency
• First quarter Application Development-related and other emerging technology subscription revenue of $139 million, up 41% year-over-year or 42% in constant currency
• Quarter-end deferred revenue balance of $2.05 billion, up 21% year-over-year

"The first quarter was a strong start to FY18, with double digit growth across a number of our financial metrics, including 19% total revenue growth in U.S. dollars or 20% measured in constant currency and over 40% growth in our Application Development-related and other emerging technology revenue," stated Jim Whitehurst, President and Chief Executive Officer of Red Hat. "We continued to benefit from our ability to deliver important foundational and cloud enabling technologies, which help our customers to modernize and manage their infrastructure and application development platforms for the hybrid cloud."

"The strength of the first quarter results was driven in part by robust global demand for our technologies and increased commitments from our largest customers," stated Eric Shander, Executive Vice President and Chief Financial Officer of Red Hat. "The combination of our strong first quarter results, business momentum and solid execution by Red Hat associates has enabled us to increase our full year revenue outlook."

Red Hat’s outlook assumes current business conditions and current foreign currency exchange rates.

Outlook

For the full year:

• Revenue is expected to be approximately $2.785 billion to $2.825 billion in USD. (*** consensus is $2.75B)
• GAAP operating margin is expected to be approximately 15.4% and non-GAAP operating margin is expected to be approximately 23.6%.
• Fully diluted GAAP earnings per share (EPS) is expected to be approximately $1.76 to $1.80 per share, assuming 181 million fully diluted shares outstanding. Fully diluted non-GAAP EPS is expected to be approximately $2.66 to $2.70 per share (*** consensus is $2.63), assuming 180 million fully diluted shares outstanding. Both GAAP and non-GAAP EPS assume approximately $2 million per quarter forecast for other income and an estimated annual effective tax rate of approximately 28% before discrete tax items.
• Operating cash flow is expected to be approximately $850 million to $870 million.

For the second quarter:

• Revenue is expected to be approximately $695 million to $702 million (*** consensus is $677.42M)
• GAAP operating margin is expected to be approximately 15.7% and non-GAAP operating margin is expected to be approximately 24.0%.
• Fully diluted GAAP EPS is expected to be approximately $0.43 per share, assuming 182 million fully diluted shares outstanding. Fully diluted non-GAAP EPS is expected to be approximately $0.67 per share (*** consensus is $0.65), assuming 181 million fully diluted shares outstanding. Both GAAP and non-GAAP EPS assume a $2 million per quarter forecast for other income and an estimated annual effective tax rate of 28% before discrete tax items.

For earnings history and earnings-related data on Red Hat (RHT) click here.

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