Red Hat (RHT), a provider of open source software solutions, has announced a 14.74 percent rise in profit for the quarter ended Aug. 31, 2014. The company earned $46.82 million or $0.25 a share in the second-quarter compared with $40.81 million or $0.21 a share a year ago. Non-GAAP earnings per share came in at $0.41, when analysts expected $0.38.
Revenue during the second-quarter grew 19.09 percent to $445.90 million from $374.42 million in the last year period.
Gross margin contracted by 22 basis points over the last year period to 84.94 percent. Total expenses as a percentage of revenues increased to 85.60 percent from 85.16 percent in the same period last year. That has resulted in contraction of 44 basis points in operating margins to 14.40 percent. The company posted operating income of $64.23 million, compared with $55.57 million in the previous year period.
''Broad demand for open source technologies, combined with Red Hat's value proposition and market leadership position, has helped to drive organic revenue growth in the mid-to-high teens for the last 10 quarters,'' stated Jim Whitehurst, president and chief executive officer of Red Hat. ''Our high level of execution and commitment to investing across our technology stack, including enabling open, hybrid cloud computing in the enterprise, has led to Red Hat being recognized once again by Forbes, Inc. on its list of the World’s Most Innovative Companies.''
Cash Flow
Red Hat has generated cash of $272.42 million from operating activities during the first half, up 4.48 percent or $11.68 million when compared with the last year period. The company has generated 31.33 cents of operating cash flow in every sales dollar for the first half, down from 35.35 cents in the same period last year.
The company has spent $149.61 million cash to meet investing activities during the first half, as against cash inflow of $69.73 million in the last year period. It has made net capital expenditure of $24.64 million during the first half, which was lower by 59.63 percent or $36.39 million, from a year ago.
The company's free cash flow accounted for 90.96 percent of operating cash flow for the first half, compared with 76.60 percent in the last year period.
The company has spent $177.51 million cash to meet financing activities during the first half, as against cash outgo of $208.05 million in the last year period. It has made net repayment of $1.99 million debt during the first half. It has spent net of $159.37 million on repurchase of common stocks.
As on Aug. 31, 2014, the company's cash balance stood at $585.38 million, down 1.91 percent or $11.41 million from Aug. 31, 2013.
Working Capital
Red Hat has witnessed a decline in the working capital over the last one year. The company's working capital stood at $191.56 million as at Aug. 31, 2014, down $114.16 million or 37.34 percent from $305.72 million on Aug. 31, 2013. It registered a decrease in current ratio to 1.17 as at Aug. 31, 2014 from 1.31 on Aug. 31, 2013.
Days' sales outstanding moved down to 53 days for second quarter compared with 57 days for the last year period. This indicates the company has shortened credit period to clients for making payment.
Shares of the company declined $0.42 or 0.69 percent to settle at $60.66 on Thursday.
