Red Hat's Q2 mixed relative to expectations

Summary:Red Hat CFO Charlie Peters said the second quarter marked "a significant ramp-up in investments in our nascent storage business."

Red Hat's second quarter was solid, but the company's non-GAAP earnings fell short of expectations.

The company reported second quarter earnings of $35 million, or 18 cents a share, down from 20 cents a share a year ago. Non-GAAP earnings were 28 cents a share. Second quarter sales were $322.6 million, up 15 percent from a year ago.

Wall Street was looking for non-GAAP earnings of 29 cents a share on revenue of $322.15 million.

Overall, Red Hat CFO Charlie Peters said the second quarter marked "a significant ramp-up in investments in our nascent storage business, with the launch in late June of Red Hat Storage Server 2.0." Those investments in addition to two middleware acquisitions in the quarter cut earnings by a penny a share.

Despite the mixed earnings report, Red Hat is continuing to show traction on multiple fronts. The company ended the quarter with $1.36 billion in cash and equivalents.

By the numbers:

  • Red Hat's second quarter subscription revenue was $278.8 million.
  • Training and services sales were $43.79 million.
  • Sales and marketing expenses in the second quarter were $123.6 million, up from $99.7 million a year ago.
  • R&D spending in the second quarter was $63.4 million, up from $51.5 million a year ago.
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Topics: Enterprise Software, Data Centers, Open Source, Virtualization

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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