Red Hat Earnings Mixed, Lacks Guidance

In short, the $0.28 EPS and $322.6 million in revenue compared to Thomson Reuters estimates of $0.29 EPS and $322.12 million in revenue. For a high-beta name like Red Hat, investors may want more.

Red Hat said that sales would have risen 20% as a whole and would have risen by 22% on subscriptions in constant currency basis. Second quarter operating cash flow was up 35% to $104 million. Strong demand for Red Hat’s open source technologies for creating scale and flexibility in data centers drove the quarter.

At quarter end, the company’s total deferred revenue balance was up 16% to $944.4 million and total cash and cash equivalents was $1.36 billion.

Red Hat shares closed down 10-cents on the day at $57.54 against a 52-week range of $37.85 to $62.75 and the stock is down almost 3% at $56.00 in the after-hours session. If you take the $1.19 EPS estimate for its February fiscal year in 2013 and $1.42 EPS in 2014, then the forward P/E ratios at the closing price would be 48.4 and 40.5, respectively.

Guidance was not offered in the press release. Until we have guidance we would consider this to be an incomplete report.

JON C. OGG