March 25, 2015 / 8:24 PM / in 3 years

Red Hat profit forecast matches estimates despite strong dollar

(Reuters) - Red Hat Inc (RHT.N), the world’s largest commercial distributor of the Linux operating system, forecast a profit for the first quarter that matched analysts’ estimates despite warning on a strong dollar hurting its revenue.

Red Hat shares were up 5 percent in after-market trading on Wednesday after the company’s profit beat the average analyst estimate for the eighth straight quarter.

The company also said a $500 million share buyback program will replace an existing $300 million program.

Red Hat, which gets nearly half its revenue from international operations, joins Hewlett-Packard Co (HPQ.N), Microsoft Corp (MSFT.O) and IBM Corp (IBM.N) in estimating a significant impact from the dollar’s gains.

A majority of analysts polled by Reuters were confident that the dollar’s .DXY rally would continue mostly unabated through this year.

“I think they are being a little bit conservative,” Northland Securities analyst Timothy Klasell said.

The company, whose customers include Adobe Systems Inc (ADBE.O) and Verizon Communications Inc (VZ.N), forecast an adjusted profit of 41 cents per share on revenue of $469 million-$474 million for the first quarter.

Analysts on average were expecting a profit of 41 cents per share on revenue of $475.6 million, according to Thomson Reuters I/B/E/S.

Red Hat also forecast an adjusted profit of $1.79-$1.82 per share on revenue of $1.99-$2.02 billion for the full year. Analysts were expecting a profit of $1.84 per share on revenue of $2.02 billion, according to Thomson Reuters I/B/E/S.

The company’s billings revenue was $688 million in the fourth quarter, Klasell told Reuters. Analysts had expected $646.2 million, according to market research firm FactSet StreetAccount.

Red Hat defines billing proxy, a closely-watched metric by investors, as its total revenue combined with the change in deferred revenue.

The company gives away its open-source software for free and makes money by selling subscriptions for support and training services. It has benefited from higher demand from businesses for its software used in data-centers and cloud computing.

Red Hat’s net income rose to $47.7 million, or 26 cents per share, in the fourth quarter ended Feb. 28, from $45.1 million, or 24 cents per share, a year earlier.

Excluding items, Red Hat earned 43 cents per share.

Revenue jumped about 16 percent to $463.9 million.

Analysts had expected a profit of 41 cents per share on revenue of $456.5 million, according to Thomson Reuters I/B/E/S.

Reporting by Anya George Tharakan in Bengaluru; Editing by Sriraj Kalluvila and Joyjeet Das

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