Red Hat’s first quarter, which includes its metrics of earnings, revenue, operational cash flow, and billings, is concluded strong by analysts.
Red Hat constant-currency revenue increased by 17% ($424 million) and revenue on subscription has a raise of 18% year-over-year ($372 million). The cash flow and the billings of the company also grew by 16% ($165 million) and 17% ($404 million) consecutively.
Revenue guidance was offered by Red Hat management, which is higher than the Street. The company continues to compensate on sales and marketing, reinvestment in its new technologies, and devotion in acquisition to expand the organization. Relatively, an agreement to obtain eNovance, a privately managed systems integrator, was announced by the company (totaling $95 million, including stock offering and cash). The systems integrator is responsible for helping large-scale private enterprises and service providers have cloud infrastructures. Since 2013, Red Hat benefited from eNovance services to deliver customers effective OpenStack implementation and integration services.
The use of RHEL OpenStack platforms will be easily promoted to customers as the merger of eNovance and Red Hat continues. Inktank and eNovance acquisitions will provide Red Hat an estimated additional subscription revenue of $2 million and service revenue of $8 million. The given returns will have feeble effect on 100 basis points non-GAAP operating margins and non-GAAP EPS (an estimated $0.07 per share for the fiscal year).
Red Hat’s good record for the fiscal first quarter is considered driven by strong cross-selling efforts, large deals increase, and demand that became broad across various areas. The cross-selling efforts of the management are believed big contributors of the company’s success. Red Hat’s cross-selling remains strong as it makes up 65% of the top 30 deals (comprising middleware component offerings). Large deals for Red Hat are huge winning steps as well, which are recorded to have ranked along top 30 deals (with value more than $1 million). Just recently, the top 25 deals of Red Hat have renewed from their original value by above 120%.