Red Hat grows subscription revenue in Q2

The open-source software company beat market expectations for the second quarter.
Written by Stephanie Condon, Senior Writer on

Red Hat on Wednesday reported earnings for the second quarter of fiscal 2017, beating market estimates.

The open-source software company reported non-GAAP net income earnings of 55 cents per share. Total revenue came to $599.8 million, up 19 percent year over year. Wall Street was looking for earnings per share of 54 cents on $593 million in revenue.

Subscription revenue for the quarter was $531.2 million, up 20 percent year over year, making up 89 percent of total revenue. Subscription revenue specifically from infrastructure-related offerings for Q2 was $427 million, an increase of 18 percent year over year. Application development-related revenue, as well as revenue from other emerging technologies, came to $104 million, an increase of 33 percent year over year.

"Digital transformation and hybrid cloud computing are changing how applications are built, deployed, and managed," said CEO Jim Whitehurst in a statement. "As organizations adopt agile application development technologies such as Linux containers, they are able to rely on Red Hat as their strategic partner to modernize their infrastructure and application development platforms."

Red Hat closed a record number of deals over $1 million in the second quarter, bringing them up more than 60 percent year over year.

"This further demonstrates our customers' commitment to Red Hat and the broad demand for our expanding technology portfolio as enterprises embrace digital transformation and the hybrid cloud," said Executive Vice President Frank Calderoni in a statement.

For the third quarter, Red Hat is expecting non-GAAP earnings of 58 cents a share on revenue between $613 million and $623 million. For the full year, the company expects non-GAAP earnings of $2.23 to$2.25 per share on revenue between $2.415 billion and $2.435 billion.

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