Red Hat Beats Analyst Estimates on EPS

Red Hat (NYSE: RHT  ) reported earnings on June 19. Here are the numbers you need to know.

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.

Revenue details
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 details
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.

Margin details
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.)

Looking ahead
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.

Investor sentiment
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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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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