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The Associated Press September 21, 2011, 5:52PM ET

Red Hat 2Q earnings rise 69 percent

Red Hat Inc. said Wednesday that its second-quarter net income climbed 69 percent as demand rose for its subscription software services.

The company's results beat analyst expectations, and Red Hat's shares climbed nearly 5 percent in extended trading.

For the quarter that ended Aug. 31, Red Hat earned $40 million, or 20 cents per share, up from $23.7 million, or 12 cents per share, in the same quarter a year earlier.

Excluding one-time items, the company earned 29 cents per share. Analysts polled by FactSet expected 25 cents per share.

Revenue rose 28 percent year over year to $281 million, higher than the $271 million analysts were looking for. Most of this was from subscription revenue, which rose 28 percent to $238 million.

Red Hat's business model is based around selling support services for its "open-source" business software. The software itself is technically free because its source code is distributed freely on the Internet. But while the code found online can make a computer system run, users are on their own for maintaining the software and making sure it gets the necessary security and other updates. Red Hat makes money by selling those services.

Red Hat shares rose $1.92, or 4.8 percent, to $42.21 in after-hours trading. The stock finished regular trading up 20 cents at $40.29.

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