Seeking Alpha

Red Hat guidance mixed, shares now -7.7% AH

  • Red Hat (RHT) guides on its CC (webcast) for FY14 (ends Feb. '14) EPS of $1.36-$1.38; that's better than prior guidance of $1.31-$1.35 and a consensus of $1.35. However, the company expects FY14 revenue to be in a range of $1.51B-$1.52B, at the low end of a prior range of $1.51B-$1.54B and below a consensus of $1.53B.
  • Moreover, FQ3 revenue is expected to be in a range of $381M-$384M, below a $391.5M consensus. While subscription revenue (87% of total in FQ2) is expected to keep growing, services revenue is expected to be flat after rising 9% in FQ2. FQ3 EPS is expected to be in a range of $0.34-$0.35 vs. a $0.34 consensus.
  • The Americas accounted for 60% of FQ2 bookings, up from 58% a year ago (U.S. federal was strong). EMEA slipped to 23% from 24%, and Asia-Pac to 17% from 18%. Channel sales made up 70% of revenue, up from 66% a year ago and a new high.
  • 30 deals were $1M+ vs. 27 a year ago. 40% of those deals involved middleware, and 6 were middleware-only.
  • Driving home its point about long-term deals affecting billings, Red Hat pointed out only 15% of two very large deals ($20M+) were billed.
  • Raymond James observes Red Hat's FQ2 billings figure of $376M was well short of a $389M consensus.
  • FQ2 results, details

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