[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / September 23, 2016 / Active Wall St. announces its post-earnings coverage on Red Hat, Inc. (NYSE: RHT). The company reported its financial results for the second quarter fiscal 2017 (Q2 FY17), on September 21, 2016. The Raleigh, North Carolina-based company's total revenue grew 19% y-o-y in Q2 FY17; whereas total subscription revenue was up by 20.3% on y-o-y basis. Register with us now for your free membership at: http://www.activewallst.com/register/.
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Earnings Reviewed
For the quarter ended on August 31, 2016, the company's total revenue was $599.81 million which was above the $504.15 million in Q2 FY16 and market consensus estimate of $589.8 million. The company attributed the healthy growth in revenue numbers to better-than-expected sales performance and growth in additional revenue associated with the company's education and compliance program.
Red Hat's GAAP net income came in at $58.77 million, or $0.32 per diluted share, compared with $51.40 million, or $0.28 per diluted share, reported in the year ago period. The company's non-GAAP net income for the reported period stood at $101.23 million, or $0.55 per diluted share, compared to $87.81 million, or $0.47 per diluted share, in Q2 FY16. Non-GAAP net income numbers outperformed the market estimates of $0.54 per diluted share.
Jim Whitehurst, President and CEO of Red Hat said during the earnings call:
"We are pleased to close out the first half of our fiscal year on a strong note, and we are even more excited about Red Hat's future. We believe that Red Hat is uniquely positioned to benefit from long-term, secular changes in IT infrastructure that companies are deploying to support their businesses."
In Q2 FY17, Red Hat repurchased approximately 1.8 million shares of common stock at an approximate cost of $127 million. The company is authorized to repurchase additional shares worth $901 million as of August 31, 2016.
Operating Metrics
In the reported period, the company's GAAP operating income came in at $81.88 million, up 7% year-over-year from $76.47 million in Q2 FY16. Furthermore, excluding onetime non-cash-based and amortization expenses the non-GAAP operating income for Q2 FY17 stood at $136.66 million, up 11% y-o-y from $123.14 million in Q2 FY16. For the reported period, the GAAP and non- GAAP operating margin came in at 13.7% and 22.8%, respectively.
Segment-wise
Red Hat's subscription revenue for Q2 FY17 came in at $531.21 million compared to $441.53 million recorded in the year ago period. Subscription revenue contributed 89% to the total revenue in the reported quarter.
The company GAAP Subscription revenue from infrastructure-related offerings grew 17.7% y-o-y to $427.04 million in Q2 FY17 from $362.93 million in Q2 FY16. Furthermore, GAAP Subscription revenue from Application development-related and other emerging technology offerings surged 32.5% y-o-y to $104.17 million in Q2 FY17 from $78.60 million in Q2 FY16.
Region-wise
The open-source software developer witnessed a double-digit growth in revenues for all regions it serves.
In the reported quarter the revenues from the American region grew 16.1% y-o-y to $385.53 million.
The EMEA region revenues increased by 17.5% y-o-y to $127.47 million in Q2 FY17.
Furthermore, Asia/Pacific region revenue during Q2 FY17 surged 36.7% y-o-y to $86.81 million.
Cash Flow & Balance
In Q2 FY17, cash provided by operating was $96.81 million, down from $123.09 million in Q2 FY16. Red Hat had cash and cash equivalents balance of $970.57 million as on August 31, 2016 compared to $927.78 million as on February 29, 2016.
Earnings Guidance
In its guidance for third quarter fiscal 2017 (Q3 FY17), the company anticipates total revenue to be in the range of $613 million to $623 million. Red Hat's management forecasts non-GAAP operating margin for the current quarter to be approximately 23.3% with non-GAAP earnings per share of $0.58.
The company raised its full year FY17 revenue guidance and forecast total revenue to be in the range of $2.415 billion to $2.435 billion. Red Hat reaffirmed its non-GAAP operating margin for FY17 at approximately 23% with cash flows in the range of $800 million to $820 million. For full year FY17, non-GAAP earnings per share are projected to be between $2.23 and $2.25 per share.
Stock Performance
On Thursday, September 22, 2016, Red Hat's shares climbed 3.87%, finishing the day at $80.02 with trading volume of 7.8 million shares exchanging hands by the close of the trading session. Total daily volume for the session was above the 3-month average volume of 1.61 million shares. For the last month and past twelve months, the stock has gained 6.85% and 9.24% respectively. Shares of the company have a PE ratio of 69.89.
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