In a mixed bag of fourth-quarter and full-year results, hybrid cloud was a bright spot for Red Hat's earnings on Monday.
With IBM's $34 billion deal to buy open source vendor Red Hat closing sometime this year, Red Hat reported fourth-quarter revenues of $879 million, which was up 14% year over year, with earnings of $1.16 per share. Wall Street analysts had estimated $883.9 million in revenue with earnings of $1.01 per share.
For the full year, Red Hat reported revenue of $3.1 billion, which was a 15% year-over-year increase.
“Enterprise organizations are continuing to move to hybrid cloud environments, which is contributing to strong growth in Red Hat’s cloud enabling technologies,” said Red Hat CEO and President Jim Whitehurst in a prepared statement. “Across the portfolio, our total number of customers with active subscriptions greater than $5 million increased 33% year-over-year in fiscal year 2019.”
Whitehurst said a key to the company's growth was the increasing number of Ansible and OpenShift customers, which now total more than 1,300 and 1,000, respectively, at the end of fiscal year 2019 on Feb. 28. OpenShift is a family of containerization software and a Kubernetes platform developed by Red Hat. Ansible is an open-source software provisioning, configuration management and automation platform.
“We saw a 17% year-over-year increase in the number of deals over $1 million, despite the smaller base of large renewals in fiscal year 2019,” said Eric Shander, Red Hat's executive vice president and chief financial officer. “These deals included broad adoption across Red Hat’s portfolio of technologies, with cross-selling up 22% from the previous year. Additionally, our total backlog was $4.1 billion, a 22% increase year-over-year. This is the third consecutive year where backlog increased at a rate of more than 20% year-over-year, which further reflects the forward momentum of our business.”
Due to its impending merger with IBM, Red Hat didn't provide an outlook for the rest of the year during yesterday's earnings call. IBM announced the Red Hat deal in October, and Red Hat's shareholders approved it in January.
While buying Red Hat gives IBM more cloud clout, not everyone was optimistic about the deal. Scott Raynovich, the founder and chief analyst of Futuriom, said in October that the deal reeked of desperation on IBM's part.