Friday, May 24, 2024

Red Hat Revenue Increases 14.7%; Profit Decreases 12.4%

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On Tuesday, open source software vendor Red Hat released its second quarter financial report. The company’s revenue climbed nearly 15 percent year-over-year, reaching $322.6 million, However, net income totaled just $35 million, a 12.4 percent decrease that failed to meet analyst expectations.

In its press release, Red Hat emphasized the positive revenue numbers. “Our double-digit growth was driven by demand for Red Hat’s open source technologies that are key to creating innovation, scale and flexibility in our customers’ data centers and their businesses,” stated Jim Whitehurst, President and Chief Executive Officer of Red Hat. “At Red Hat, we firmly believe in the strength of community-powered innovation. In early September, we were pleased to be recognized by Forbes, Inc. on its list of the World’s Most Innovative Companies. We are also proud that our customers who have built mission-critical systems on Red Hat technologies are also reflected on the Forbes list of innovative companies.”

Red Hat partially blamed the lower income on higher expenses. “CFO Charlie Peters said in a statement that costs related to a new storage product increased expenses, as did two small acquisitions,” wrote All Things D’s Arik Hesseldahl. “Operating expenses were $224.7 million, up more than 23 percent from last year.”

The Register noted that currency issues also played a role in the report: “having the US dollar get stronger and taking off 5.3 points of revenue growth (or about $15m off the top line) at the same time that Red Hat was expanding its portfolio with heavy-duty infrastructure and platform cloud stacks and clustered storage was just unfortunate timing.”

Company shares tumbled after the report. “Red Hat declined 1.8 percent to $56.49 at 9:39 a.m. in New York. Through yesterday, the stock had jumped 39 percent this year,” noted Bloomberg.

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