Earnings Preview: Red Hat

Red Hat (RHT) is expected to report Q1 earnings after the market close on Wednesday, June 24, with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is 14c for EPS and $171.79M for revenue, according to First Call.

Analyst Views

Broadpoint AmTech anticipates an in-line quarter with no change to FY10 revenue guidance and an upward bias to FY10 EPS estimates due to slightly better margin expansion. The firm said unprecedented weakness in the enterprise server market remains a headwind to revenue, and it does not anticipate much upside to its $171.6M Q1 revenue forecast. Broadpoint's channel partner checks indicate JBoss continues to resonate well as the total cost of ownership is significantly lower than the two leading proprietary app servers. Red Hat provides renewal metrics around its top 25 customers in the quarter. Typically, the top 25 customers renew for 20-25% more and Broadpoint doesn’t anticipate much change in Q1.