Red Hat Earnings Cheat Sheet: Beats the Street on Profit Rise, Shares Up 5%

S&P 500 (NYSE:SPY) component Red Hat, Inc. (NYSE:RHT) reported net income above Wall Street’s expectations for the second quarter. Red Hat, Inc. is engaged in providing open source software solutions. They are known for their version of Linux, Red Hat Enterprise Linux.

Investing Insights: Steve Jobs Prepares to Deliver a New Catalyst for Apple’s Stock.

Red Hat Earnings Cheat Sheet for the Second Quarter

Results: Net income for Red Hat, Inc. rose to $40 million (20 cents per share) vs. $23.7 million (12 cents per share) in the same quarter a year earlier. This marks a rise of 69% from the year earlier quarter.

Revenue: Rose 28% to $281.3 million from the year earlier quarter.

Actual vs. Wall St. Expectations: RHT reported adjusted net income of 28 cents per share. By that measure, the company beat the mean estimate of 19 cents per share. It beat the average revenue estimate of $253.6 million.

Quoting Management: “The combination of strong sales execution and customer demand led to second quarter revenue that was above our guidance and represented our fourth straight quarter of accelerating revenue growth,” stated Jim Whitehurst, President and Chief Executive Officer of Red Hat. “We continued to win and strengthen relationships with enterprise customers who partner with Red Hat to reduce costs while modernizing their IT infrastructure to enable applications to run on bare metal, virtualization and in the cloud. Based on the strong first half results, we believe Red Hat remains well positioned to finish fiscal 2012 as the first billion dollar open source software vendor.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 24.1%, with the biggest boost coming in the most recent quarter when revenue rose 28% from the year earlier quarter.

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 0.3 percentage point to 83.4% from the year earlier quarter. Over that time, margins have contracted on average one percentage point per quarter on a year-over-year basis.

The company has now seen net income rise in three straight quarters. In the first quarter, net income rose 34.8% and in the fourth quarter of the last fiscal year, the figure rose 43.4%.

The company has now topped analyst estimates for the last three quarters. It beat the mark by one cent in the first quarter and by one cent in the fourth quarter of the last fiscal year.

Competitors to Watch: Oracle Corporation (NASDAQ:ORCL), CA, Inc. (NASDAQ:CA), BMC Software, Inc. (NASDAQ:BMC), Novell, Inc. (NASDAQ:NOVL), Microsoft Corporation (NASDAQ:MSFT), Intl. Business Machines Corp. (NYSE:IBM), EMC Corporation (NYSE:EMC), Hewlett-Packard Company (NYSE:HPQ), VMware, Inc. (NYSE:VMW), and Symantec Corporation (NASDAQ:SYMC).

Investing Insights: Steve Jobs Prepares to Deliver a New Catalyst for Apple’s Stock.

(Source: Xignite Financials)