(By Balaseshan) Red Hat Inc. (NYSE:RHT), a provider of open source software solutions, reported a 12.4% decrease in quarterly earnings due to higher costs and expenses. Despite revenue beating consensus, earnings missed market expectations by a penny.
Earnings for the second quarter were $35.01 million or $0.18 per share, down from $39.97 million or $0.20 per share last year. Adjusted earnings declined to $0.28 per share from $0.29 per share.
The company's EPS for the quarter decreased by about $0.01 due to one-time closing costs arising from two small technology acquisitions in the middleware space.
Revenue increased 15% to $322.6 million. On a constant currency basis, total revenue grew 20%.
Analysts, on average, polled by Thomson Reuters had expected a profit of $0.29 per share on revenue of $322.12 million for the second quarter.
Revenue from subscriptions grew 17% to $278.8 million.
Adjusted gross margin improved to 86% from 85%. Adjusted operating margin shrank to 24.6% from 27.2%.
Finance chief Charlie Peters said this quarter marked a significant ramp-up in investments in the company's nascent storage business, with the launch in late June of Red Hat Storage Server 2.0.
RHT closed Monday's regular session down 0.17% at $57.54. The stock has been trading between $37.85 and $62.75 for the past 52 weeks.