Red Hat Inc. stock rose $4.24 — or 4 percent — to $110 during after-hours trading Monday after earnings that beat analyst estimates were released.
According to the average estimate of 26 analysts, the Raleigh-based software company was expected to report revenue of $699.45 million during the quarter.
However, the actual revenue reported was higher at $723 million for the three months ended Aug. 31. That is up 21 percent from the same time last year.
The company, a global provider of open source solutions, had a 20 percent increase in subscription revenue that contributed $637.6 million, or 88.1 percent, to total revenue for the quarter.
Net income rose 64.8 percent to $96.9 million, or 53 cents per diluted share, from $58.8 million, or 32 cents per diluted share.
Adjusted earnings were 77 cents per share, higher than the 67 cents per share projected by analysts.
“Strong execution and global demand for Red Hat technologies continued to drive financial results which exceeded expectations for the second quarter and the first half of fiscal year 2018,” stated Eric Shander, chief financial officer of the company, in the filing.
The company is increasing the outlook for the year based on the first half results and expects revenue for the year to be between $2.88 billion and $2.895 billion.
The rise in Red Hat stock price comes at the same time that many tech stocks declined. The S&P 500 tech sector fell 1.4 percent, which is three times higher the loss than any of the other sectors in the index.