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Red Hat, Inc. (RHT), Oracle Corporation (ORCL), VMware, Inc. (VMW): Start Investing Now to Reach the Cloud

Red Hat, Inc. (NYSE:RHT), the world’s leading provider of open source solutions, announced its first quarter results for fiscal 2014 on June 19. The company met expectations on revenue and beat expectations on earnings per share. Looking at its recent shift towards cloud computing and some solid steps taken towards the same, the revenue growth looks pretty strong for the company, which is a common name among enterprises today and has been providing open source solutions for two decades now.

Red Hat Inc (NYSE:RHT)

System boot up

The company was founded in 1993, and is now the world leader in providing open-source software products to the enterprise community.  Red Hat, Inc. (NYSE:RHT) also develops and offers operating systems powering servers, middleware, virtualization, storage, and cloud technologies. The company uses a community-powered approach to develop and offer reliable and high-performing open source solutions.

The Number code

“The first quarter was a solid start to Fiscal 2014, with both revenue and profitability coming in above the high-end of our guidance,“ stated Jim Whitehurst, President and Chief Executive Officer of Red Hat, Inc. (NYSE:RHT).

The company reported revenue of $363.3 million, which was up 15% year-over-year, along with GAAP reported sales, which were also 15% higher than its prior-year quarter value of $314.7 million. Also, Non-GAAP sales increased in the quarter, unlike margins, which contracted across the board.

Red Hat, Inc. (NYSE:RHT)’s stock price is currently close to its 52-week low:

RHT data by YCharts

EPS was better than expected and higher than the same quarter last year. It came in at $0.32, above the estimates of $0.31 per share. But net margin was down by 11%, i.e. 80 basis points lower than the prior year quarter.

Red Hat, Inc. (NYSE:RHT) derives its revenue and generates cash primarily from two sources: (i) subscription revenue, and (ii) training and services revenue.

Charlie Peters, the Executive Vice President and CFO of Red Hat, noted that

During the first quarter, we delivered solid growth in total revenue and subscription revenue. In addition, quarterly operating cash flow grew to a record.

The new peripherals

At the same time, the company has continued to invest in their long-term growth initiatives around the open hybrid cloud to deliver new technologies. It has particularly ramped-up spending in R&D for cloud management, Red Hat Enterprise Linux OpenStack Platform, and Red Hat’s OpenShift platform-as-a-service technologies.

Red Hat recently introduced JBoss Data Grid 6, an in-memory data grid solution, and JBoss Enterprise Application Platform 6 with a new cloud-ready architecture.

JBoss Data Grid 6 mainly focuses on scaling application development for enhanced big data management, while the Enterprise Application Platform has been designed for streamlining and simplifying building enterprise applications thereby moving it to the cloud. Both solutions are available now.

“Red Hat is continuing to invest in important growth initiatives in markets such as virtualization, cloud computing and storage,” affirmed the company’s CFO.

The parallel processors

Oracle Corporation (NASDAQ:ORCL), a major competitor of Red Hat in infrastructure operating systems, also recently reported its earnings. It is still fighting to be in the game, and has succeeded quite well as its management believes in acquisition-driven growth. Being inline with the management’s promise, the company has made a series of partnership moves with Microsoft, Salesforce and NetSuite in order to enhance its cloud capabilities.

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