Red Hat, Inc. (RHT), the world's largest seller of Linux software, said Wednesday after the markets closed that fourth quarter earnings fell from last year despite an 18% jump in revenue, as expenses rose and other incomes declined. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations.

The Raleigh, North Carolina-based company reported GAAP net income for the fourth quarter of $16.0 million or $0.08 per share, compared to $22.0 million or $0.10 per share for the year ago quarter.

Excluding stock compensation, amortization and tax expense, non-GAAP net income for the fourth quarter was $42.3 million or $0.22 per share, compared to $45.7 million or $0.21 per share in the prior year quarter.

On average, 19 analysts polled by Thomson Reuters expected the company to earn $0.20 per share for the fourth quarter. Analysts' estimates typically exclude special items.

GAAP operating income for the fourth quarter was $20.2 million or 12.2% of revenue, compared to $18.2 million or $12.9% of revenue a year ago.

Non-GAAP operating income for the quarter was $39.8 million or 23.9% of revenue, compared to $31.3 million or 22.1% of revenue last year.

Total revenue for the fourth quarter increased 18% to $166.22 million from $141.49 million in the same quarter last year. Eighteen analysts had a consensus revenue estimate of $166.99 million for the fourth quarter.

Subscription revenue for the quarter rose 14% to $139.4 million from $121.9 million a year ago, while training and services revenue grew 37% to $26.9 million from $19.6 million last year.

Our ability to demonstrate real value and deliver cost savings to our customers enabled us to achieve significant new milestones during the quarter, including billings in excess of $200 million and more than 100 deals in excess of $250,000. Our value proposition is even more compelling in a challenging economic environment, and we believe that's a key driver to our solid financial results and market share gains, said Red Hat CEO Jim Whitehurst.

For the fiscal year ended February 28, 2009, the company reported GAAP net income of $78.7 million or $0.39 per share, compared to $76.7 million or $0.36 per share for the fiscal year ended February 29, 2008.

Non-GAAP net income for the year was $178.1 million or $0.86 per share, compared to $165.3 million or $0.77 per share in the previous year.

Total revenue for the full year rose 25% to $652.57 million from $523.02 million last year.

Analysts expected the company to earn $0.85 per share on revenue of $653.64 million for the full year.

During fiscal year 2009, Red Hat redeemed $570 million in convertible debt and repurchased 2.9 million shares of its common stock, which reduced its diluted share count by more than 10%. The company ended the fiscal year with cash and cash equivalents and investments of $846 million and essentially no debt.

Last month, rival Novell, Inc. (NOVL), which is the world's second largest seller of Linux software, reported a 36% drop in first quarter profit as revenue fell 7%. The company's adjusted earnings came in above analysts' estimate but revenue fell short of analysts' forecast.

In terms of stock performance, Red Hat shares have lost 16.10% in the last 12 months during which Novell shares have lost 34.76%. Red Hat shares trade at 25.86 times estimated forward earnings, compared to Novell's 14.00 times.

Red Hat shares, which have traded in a range of $7.50 to $24.84 over the last year, closed Wednesday's regular trading session at $15.00, down 27 cents or 1.77% but gained 60 cents or 4.00% in after hours trading.

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