(Reuters) - Red Hat Inc’s RHT.N quarterly profit beat analysts’ expectation for the fifth straight quarter on the back of higher subscription revenue, and the business software maker said it would buy back $300 million of its shares.
The stock of the world’s largest distributor of the Linux operating system rose more than 8 percent after the bell.
The growing demand for cloud computing — boosted by users accessing more and more software and data on the Internet — has been a key driver of revenue growth for Red Hat’s Linux server software, as has expanding IT budgets after the recession years.
Red Hat — whose widely used Linux operating system is a major competitor to Microsoft Corp’s (MSFT.O) Windows in corporate markets — rode a 21 percent jump in fourth-quarter revenue to $297 million.
“We experienced a significant increase in large deals, both in Q4 and for the full year,” Chief Financial Officer Charlie Peters said in a statement.
The company also sells subscriptions to upgrades, bug fixes and helpdesk support for its business software, including Linux.
Net income for the quarter ended February 29 rose to $36 million, or 18 cents per share, from $33.5 million, or 17 cents per share, a year ago. Excluding items, the company earned 29 cents per share.
Fourth-quarter bookings grew highest in five years, with the company bagging three deals over $5 million, Red Hat said on a conference call.
Analysts expected earnings of 27 cents per share on revenue of $291.2 million.
Red Hat said it would kick off its buyback program in April, replacing a smaller $214 million one that ends this month.
Shares of the company were up at $55.75 in extended trade on Wednesday, after closing at $51.39 on the New York Stock Exchange.
The stock has risen nearly 12 percent since the company reported third-quarter results on December 19. It hit a 12-year-high of $54.01 on Tuesday.
Reporting by Sruthi Ramakrishnan and Sayantani Ghosh in Bangalore; Editing by Joyjeet Das