Red Hat delivered its fourth quarter and year-end financial results after the bell on Wednesday, and the news gets ever rosier. The company is in the midst of a major shift in its strategy toward OpenStack-based cloud computing, and it looks like service revenues from that effort are starting to arrive.
The company posted net income of $48 million, or 26 cents per share (see results). Non-GAAP earnings were 43 cents per share on revenue of $464 million, up 16 percent year-over-year, marking the 12th consecutive quarter of revenue growth in the mid-teens. Analysts were looking for earnings of 41 cents per share on revenue of $456.50 million. For all of 2014, Red Hat earned $1.79 billion in revenue, up 17 percent year-over-year.
Red Hat also announced a $500 million share buyback program that will replace an existing $300 million program. Notably, Red Hat gets nearly half its revenue from international operations, and, like other big tech companies will be impacted by the dollar’s gains.
Subscription revenue for the Q4 was $405 million, up 15 percent in U.S. dollars year-over-year, which illustrates the fact that Red Hat’s biggest customers just keep coming back, even as subscription prices rise.
As 2014 ended, there were many eloquent summaries of the state of open source and the state of cloud computing, but one of the most focused ones came from Red Hat CEO Jim Whitehurst. In an online post that was fresh on the heels of a knockout financial quarter for Red Hat, Whitehurst lauded the fact that open source technology is now pervasive, and provided glimpses of how his company is gaining momentum with its cloud efforts.
“Today, it is almost impossible to name a major player in IT that has not embraced open source,” Whitehurst said. “Only a few short years ago, many would have argued we would never see that day.”
In announcing Q4 results, Whitehurst said: “Customers value the consistency and flexibility as they run their applications using Red Hat solutions across a variety of deployment models, including public and private clouds, to modernize and transform their IT infrastructure. We believe that our strategic position as a trusted provider of infrastructure and our execution this past year have positioned us for strong constant currency revenue growth in the next fiscal year.”