Red Hat (RHT) Tops Q3 EPS by 2c, Beats on Revenues; Offers FY18 EPS/Revenue Outlook Above Consensus

Red Hat (NYSE: RHT) reported Q3 EPS of $0.73, $0.02 better than the analyst estimate of $0.71. Revenue for the quarter came in at $748 million versus the consensus estimate of $739.27 million.

Outlook: Red Hat’s outlook assumes current business conditions and current foreign currency exchange rates.

For the full year:

• Revenue is expected to be approximately $2.906 billion to $2.911 billion in USD.
• GAAP operating margin is expected to be approximately 16.1% and non-GAAP operating margin is expected to be approximately 23.9%.
• Fully diluted GAAP earnings per share (EPS) is expected to be approximately $2.02 per share, assuming 184 million fully diluted shares outstanding. Fully diluted non-GAAP EPS is expected to be approximately $2.88 per share, assuming 181 million fully diluted shares outstanding. Both GAAP and non-GAAP EPS assume a $2 million per quarter forecast for other income and an estimated annual effective tax rate of approximately 27% before discrete tax items. This outlook includes a one-time gain on a strategic investment which benefits GAAP and non-GAAP EPS by $0.05.
• Operating cash flow is expected to be approximately $900 million to $910 million.

For the fourth quarter:

• Revenue is expected to be approximately $758 million to $763 million.
• GAAP operating margin is expected to be approximately 16.7% and non-GAAP operating margin is expected to be approximately 24.6%.
• Fully diluted GAAP EPS is expected to be approximately $0.54 per share, assuming 186 million fully diluted shares outstanding. Fully diluted non-GAAPEPS is expected to be approximately $0.81 per share, assuming 182 million fully diluted shares outstanding. Both GAAP and non-GAAP EPS assume a $2 million forecast for other income and an estimated annual effective tax rate of 27% before discrete tax items. This outlook includes a one-time gain on a strategic investment which benefits GAAP and non-GAAP EPS by $0.05.

GUIDANCE:

Red Hat sees FY2018 EPS of $2.88, versus the consensus of $2.78. Red Hat sees FY2018 revenue of $2.906-2.91 billion, versus the consensus of $2.89 billion.

For earnings history and earnings-related data on Red Hat (RHT) click here.

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