The 10-second takeaway
For the quarter ended Feb. 28 (Q4), 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 increased significantly. GAAP earnings per share grew significantly.
Gross margins contracted, operating margins shrank, net margins grew.
Red Hat notched revenue of $347.9 million. The 30 analysts polled by S&P Capital IQ hoped for revenue of $349.4 million on the same basis. GAAP reported sales were 17% higher than the prior-year quarter's $297.0 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 $0.36. The 32 earnings estimates compiled by S&P Capital IQ predicted $0.30 per share. Non-GAAP EPS of $0.36 for Q4 were 24% higher than the prior-year quarter's $0.29 per share. GAAP EPS of $0.22 for Q4 were 16% 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%, 50 basis points worse than the prior-year quarter. Operating margin was 14.4%, 210 basis points worse than the prior-year quarter. Net margin was 12.4%, 30 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $360.0 million. On the bottom line, the average EPS estimate is $0.31.
Next year's average estimate for revenue is $1.53 billion. The average EPS estimate is $1.34.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 621 members out of 760 rating the stock outperform, and 139 members rating it underperform. Among 189 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 161 give Red Hat a green thumbs-up, and 28 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 $61.23.
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