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.
Written by Larry Dignan, Contributor

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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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