The 10-second takeaway
For the quarter ended Aug. 31 (Q2), Red Hat met expectations on revenues and missed estimates on earnings per share.
Compared to the prior-year quarter, revenue expanded and GAAP earnings per share dropped.
Gross margins expanded, operating margins dropped, net margins dropped.
Red Hat notched revenue of $322.6 million. The 27 analysts polled by S&P Capital IQ foresaw net sales of $322.3 million on the same basis. GAAP reported sales were 15% higher than the prior-year quarter's $281.3 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 $0.28. The 29 earnings estimates compiled by S&P Capital IQ anticipated $0.29 per share. GAAP EPS of $0.18 for Q2 were 10% lower than the prior-year quarter's $0.20 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 85.2%, 180 basis points better than the prior-year quarter. Operating margin was 15.5%, 320 basis points worse than the prior-year quarter. Net margin was 10.9%, 330 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $340.1 million. On the bottom line, the average EPS estimate is $0.30.
Next year's average estimate for revenue is $1.33 billion. The average EPS estimate is $1.19.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 612 members out of 750 rating the stock outperform, and 138 members rating it underperform. Among 191 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 161 give Red Hat a green thumbs-up, and 30 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 $59.63.
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