Red Hats Earnings and Stock Soar

Red Hats cash flow jumped by 48 percent year-over-year to $45.8 million in its last quarter, and its stock followed it skyward on Thursday.

Red Hat Inc., announced its financial results for its fiscal second quarter, which ended Aug. 31, on Wednesday. Its total revenue for the quarter was $65.7 million, a year-over-year increase of 42 percent and a sequential increase of 8 percent.

Of that sum, subscription revenue for RHEL (Red Hat Enterprise Linux) came to $54.3 million, an increase of 56 percent year-over-year and 10 percent sequentially. As this number indicates, Red Hat is selling more RHEL subscriptions.

In a press conference, Red Hat CEO Matt Szulik said that that in the last quarter, Red Hat had sold more than 12,000 more subscriptions.

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The Raleigh, N.C.-based companys total operating income was $12.8 million. This represented a 68 percent increase from the prior quarter and 90 percent from the year-ago period. Net income for the quarter was $16.7 million, a sequential increase of 35 percent and year-over-year increase of 42 percent.

Red Hat has been working more closely with its partners in the last quarter. After over a year of public fussing, Sun Microsystems Inc. and Red Hat buried the hatchet in early September.

The company also loosened its control of its community Linux, Fedora, by setting up the Fedora Foundation.

For share holders this meant that they saw earnings per diluted share of $0.09 for the quarter, an increase from $0.07 in the prior quarter and $0.06 in the year ago period.

This easily beat First Call analysts expectations of net income of 7 cents per share on revenue of $64.9 million for the quarter.

The good news for Red Hat didnt stop there.

Billings were at $91.8 million, up 58 percent year-over year, while the gross margin improved to 83 percent from 80 percent in the prior quarter, and operating margin grew to 20 percent from 13 percent last quarter.

"Our second quarter results show strong growth in revenue and cash flow," stated Charlie Peters, Red Hats executive VP and CFO.

"We continue to focus on operational improvements and solid execution in all areas of our business. Our investments in people and systems have improved our productivity, positively impacting our results."

The market agreed with his positive assessment.

Red Hats stock soared nearly 30 percent on Thursday. By days end, the Linux distributors stock had closed at $21.44. This was up $4.93 from the previous days close of $16.51.

In addition, Red Hats stock volume exploded. During the day, more than 40.8 million shares were traded. Red Hat had previously averaged a trading volume of 3 million shares.

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