Red Hat Q1 solid, but currency dings outlook

Red Hat's first quarter was swell, but the company cut its second quarter and fiscal year outlook due to currency fluctuations.

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Red Hat delivered another strong quarter as its OpenShift portfolio drove subscriptions and services revenue, but its outlook for the second quarter was light.

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The company reported first quarter earnings of $113 million, or 59 cents a share, on revenue of $814 million, up 20 percent from a year ago. Non-GAAP earnings for the first quarter checked in at 72 cents a share.

Wall Street was looking for non-GAAP first quarter earnings of 69 cents a share on revenue of $807.5 million.

CEO Jim Whitehurst said Red Hat saw strong growth in OpenShift as more companies "modernize their applications in Linux containers for their hybrid cloud and digital transformation initiatives."

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The number of deals worth more than $1 million grew 48 percent in the quarter. Subscription revenue from infrastructure products was $522 million, up 14 percent from a year ago. Application development and other subscriptions was $189 million, up 37 percent from a year ago.

Red Hat ended the quarter with $2.5 billion in total cash, cash equivalents and investments.

As for the outlook, Red Hat said second quarter revenue will be between $822 million to $830 million with non-GAAP earnings of about 81 cents a share. Wall Street was looking for revenue of $854.9 million with non-GAAP earnings of 89 cents a share.

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The company said currency exchange rates were the primary reason for the outlook.

Red Hat projected fiscal 2019 revenue between $3.37 billion to $3.41 billion with non-GAAP earnings between $3.44 a share to $3.48 a share.

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