Red Hat Inc. RHT reported first-quarter fiscal 2020 non-GAAP earnings of $1 per share, which outpaced the Zacks Consensus Estimate by 15 cents. The figure increased 38.9% on a year-over-year basis.
Revenues increased 15% year over year to $934.1 million, beating the Zacks Consensus Estimate of $925.9 million. Further, the top line adjusted for currency impact, increased 18.4% year over year to $963.5 million.
The top line growth can be attributed to its robust emerging technologies which aided its large deal momentum during the reported quarter. Further, accelerating subscription revenues contributed to revenues.
Americas, Europe, Middle East & Africa (EMEA), and Asia-Pacific (APAC) revenues increased 16.4%, 11.2% and 14.2%, respectively. After adjusting for currency impact, Americas, EMEA and APAC revenues increased 17.5%, 20.2% and 19.3%, respectively.
Subscription revenues (87.2% of revenues) increased 14.5% year over year to $814.9 million. When adjusted for currency impact, revenues increased 17.9% to $839.1 million.
Infrastructure related subscription revenues increased 11.1% from the year-ago quarter to $580.3 million. After adjusting for currency impact, revenues increased 14% to $595.5 million.
Application development & emerging technologies (Ansible, OpenShift, OpenStack, Storage and cloud management) subscription revenues surged 24.1% year over year to $234.6 million. After adjusting for currency impact, revenues increased 28.8% to $243.5 million.
Training & services revenues (12.8% of revenues) increased 16.8% from the year-ago quarter to $119.2 million. When adjusted for currency impact, revenues increased 21.9% to $124.4 million.
Non-GAAP gross profit increased 14.1% year over year to $801.1 million. Non-GAAP gross margin contracted 50 bps to 85.8%.
Non-GAAP operating expenses increased 12.1% from the year-ago quarter to $598.8 million.
Non-GAAP operating income increased 20.3% from the year-ago quarter to $202.2 million and non-GAAP operating margin expanded 100 bps to 21.7%.
Red Hat, Inc. Price, Consensus and EPS Surprise
Red Hat, Inc. price-consensus-eps-surprise-chart | Red Hat, Inc. Quote
Balance Sheet & Cash Flow
Red Hat ended the quarter with cash, cash equivalents & restricted cash of $2.3 billion compared with $1.8 billion at the end of the previous quarter.
The company generated operating cash flow of almost $474 million compared with $424 million in the previous quarter.
At the end of the first quarter, total deferred revenue balance was $2.8 billion compared with $2.9 billion at the end of the prior quarter.
Zacks Rank and Stocks to Consider
Red Hat currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader computer technology sector are OptimizeRx Corp. OPRX, Rosetta Stone RST and Alteryx, Inc. AYX. While OptimizeRx and Rosetta Stone sport a Zacks Rank #1 (Strong Buy), Alteryx carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for OptimizeRx, Rosetta Stone and Alteryx is pegged at 50%, 12.5% and 13.66%, respectively.
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