Red Hat, the world's largest commercial distributor of the Linux operating system, forecast a profit for the first quarter that matched analysts' estimates, despite warning on a strong dollar hurting its revenue.
Red Hat shares were up 5% in after-market trading yesterday after the company's profit beat the average analyst estimate for the eighth straight quarter.
The company also said a $500 million share buyback programme will replace an existing $300 million programme.
Red Hat, which gets nearly half its revenue from international operations, joins Hewlett-Packard, Microsoft and IBM in estimating a significant impact from the dollar's gains.
A majority of analysts polled by Reuters were confident the dollar's .DXY rally would continue mostly unabated throughout this year.
"I think they are being a little bit conservative," said Northland Securities analyst Timothy Klasell.
The company, whose customers include Adobeand Verizon, forecast an adjusted profit of 41 cents per share on revenue of $469 million-$474 million for the first quarter.
Analysts on average were expecting a profit of 41 cents per share on revenue of $475.6 million, according to Thomson Reuters.
Red Hat also forecast an adjusted profit of $1.79-$1.82 per share on revenue of $1.99-$2.02 billion for the full year. Analysts were expecting a profit of $1.84 per share on revenue of $2.02 billion, according to Thomson Reuters.
The company's billings revenue was $688 million in the fourth quarter, Klasell told Reuters. Analysts had expected $646.2 million, according to market research firm FactSet StreetAccount.
Red Hat defines billing proxy, a closely-watched metric by investors, as its total revenue combined with the change in deferred revenue.
The company gives away its open source software for free and makes money by selling subscriptions for support and training services. It has benefited from higher demand from businesses for its software used in data centres and cloud computing.
Red Hat's net income rose to $47.7 million, or 26 cents per share, in the fourth quarter ended 28 February, from $45.1 million, or 24 cents per share, a year earlier.
Excluding items, Red Hat earned 43 cents per share. Revenue jumped about 16% to $463.9 million.
Analysts had expected a profit of 41 cents per share on revenue of $456.5 million, according to Thomson Reuters.
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