Red Hat handily tops Q2 earnings targets

Red Hat said Q2 subscription revenue was up 20 percent year over year to $638 million.

Red Hat reported better-than-expected second quarter earnings Monday, as strong subscription revenue growth continues to bolster the company's bottom line.

The open-source software company reported a net income of $97 million, or 53 cents per share.

Non-GAAP earnings were 77 cents per share on revenue of $723 million, up 21 percent year over year.

Wall Street was looking for earnings of 67 cents per share with $699 million in revenue.

Bolstering Red Hat's solid quarter was subscription revenue growth of 20 percent year over year to $638 million. The bulk of subscription revenue came from infrastructure-related products, while application-development related technologies accounted for the rest. More impressively, Red Hat said application-development revenue was up 44 percent above last year.

"Strong demand for our technologies that enable hybrid cloud computing has contributed to accelerated revenue growth in the first half of the fiscal year," said Red Hat CEO Jim Whitehurst. "In the second quarter, we delivered total revenue growth of 21 percent, fueled by over 40 percent growth in our application development-related and other emerging technology revenue."

For the current quarter, Red Hat expects revenue between $730 million to $737 million with earnings at 70 cents per share. Analysts expect revenue of at least $710 million with earnings of 70 cents a share.

Red Hat's share price was up nearly 5 percent in late trading.

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