Red Hat Inc., which sells the Linux open source operating system, on Wednesday reported a 15 percent jump in first-quarter profit and better-than-expected revenue. But weaker-than-expected billings, a key revenue indicator, sent shares tumbling nearly 10 percent after-hours.
Billings refer to revenue that a company must defer until it provides the goods or services that the money covers. Red Hat posted a 16 percent increase, but Citigroup analyst Walter Pritchard said the market expected billings to rise 18 percent to 19 percent. He had forecast an even bigger 22 percent jump.
The miss cast a shadow over the company's other results. Red Hat, based in Raleigh, N.C., earned $37.5 million, or 19 cents per share, for the quarter that ended May 31. That's up from $32.5 million, or 17 cents per share, a year earlier.
Excluding stock compensation, amortization costs and other one-time items, Red Hat earned 30 cents per share, compared with 24 cents per share in last year's first quarter. That beat analysts' average forecast for adjusted earnings of 27 cents per share, according to FactSet.
Its reported revenue — $314.7 million — also topped analysts' average estimate of $310.8 million.
The company's shares fell $5.35, or 9.5 percent, to $51.15 following the aftermarket report. They had ended regular trading down 42 cents at $56.50.