While profit in the last quarter fell 25% due to higher costs, Red Hat Chief Financial Officer Charlie Peters forecast non-GAAP cash flow from operations this year would be between $250 million and $260 million.
Katherine Egbert, an analyst with Jefferies & Co., said that translates into an annual cash flow growth rate of 15 to 20%, beating Wall Street expectations of 12 to 13%.
"It's a bullish sign," Egbert said. "That's their entry point going into the year. It means they think they can do something north of that because you wouldn't be aggressive 12 months out."
Red Hat issued its forecast as it released quarterly results, which were weighed down by higher costs for taxes and stock-based compensation.
It said fiscal fourth-quarter net income fell to $21.5 million, or 10 cents a share, from $28.7 million, or 13 cents a share, a year earlier.
Revenue rose to $111.1 million from $78.7 million, short of the average analyst forecast of $112.6 million, according to Reuters Estimates.
The company reported fourth-quarter profit excluding items and stock-based compensation of 15 cents a share, in line with the average forecast of analysts polled by Reuters Estimates.
CFO Peters also forecast first quarter revenue at $116 million to $117.5 million, and non-GAAP earnings per share at 15 cents. That compared to analysts' expectations of $118.3 million in revenue and per-share earnings of 15 cents.
He saw full-year non-GAAP earnings per share of 67 cents to 72 cents, on revenue of $510 million to $520 million. Wall Street was looking for earnings of 68 cents a share on revenue of $517.2 million.