The 10-second takeaway
For the quarter ended May 31 (Q1), Red Hat met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew significantly. Non-GAAP earnings per share grew. GAAP earnings per share grew.
Margins contracted across the board.
Red Hat recorded revenue of $363.3 million. The 29 analysts polled by S&P Capital IQ expected revenue of $360.0 million on the same basis. GAAP reported sales were 15% higher than the prior-year quarter's $314.7 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.32. The 31 earnings estimates compiled by S&P Capital IQ forecast $0.31 per share. Non-GAAP EPS of $0.32 for Q1 were 6.7% higher than the prior-year quarter's $0.30 per share. GAAP EPS of $0.21 for Q1 were 11% higher than the prior-year quarter's $0.19 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 84.6%, 80 basis points worse than the prior-year quarter. Operating margin was 15.6%, 160 basis points worse than the prior-year quarter. Net margin was 11.1%, 80 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $372.0 million. On the bottom line, the average EPS estimate is $0.33.
Next year's average estimate for revenue is $1.53 billion. The average EPS estimate is $1.35.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 619 members out of 748 rating the stock outperform, and 129 members rating it underperform. Among 182 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 155 give Red Hat a green thumbs-up, and 27 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Red Hat is outperform, with an average price target of $59.16.
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