Red Hat, Inc. (NYSE:RHT) Q4 2016 Earnings Conference Call - Final Transcript
Mar 22, 2016 • 05:00 pm ET
[Operator Instructions] And we'll take our first question from Keith Weiss with Morgan Stanley. Please go ahead.
Hi. This is Sanjit Singh for Keith. Wanted to ask a question on the billings and I have a follow-up question on OpenStack. First on the quarterly billings. I know, Frank, you referred to the four quarter proxy. But on this quarter billings, was there anything from a duration perspective, or a ramping cloud business that caused that number to come in a little bit below consensus?
Actually, the number came in -- so the number that we posted from a 764 came in probably slightly above the average of consensus. And as you know, we don't guide billings and the consensus numbers do vary widely. So coming in slightly above the average, I think it's kind of well position there.
Just a couple of comments. As I did reflect in the call the best view of the trend in the business is that rolling four quarter proxy. And as you can see throughout the last year, we've had the rolling four quarter proxy be up about 20% from a constant currency basis, and I think that's fairly strong from a -- for a $2 billion company. Coming in at about 17%, it's modestly down from what we saw in the past few quarters, but nothing out of the ordinary.
This quarter, we had, as Jim mentioned, we had strong renewals. We had upsell in top deals. We did have -- Q4 had a tough compare as far as what we had in Q4 of last year, where the billings were up 26%. But, again, I think the overall performance is fairly strong.
Great. And there is a follow-up?
Yes, and a quick follow-up. And this sort of relates to margins and maybe to tie it into OpenStack. It sounds like that you're seeing a lot of momentum on the OpenStack business. And I guess my question is, when we look at the margin guidance for next year, which is -- looks to be flat, again, from a guidance perspective year-over-year in terms of your full-year outlook. Is the momentum in OpenStack, is that what's driving increased investments in sales and in the field? And when would we -- when should investors start to expect overall margin expansion? Is that after fiscal year 2017?
So, one of the things that -- so a couple of questions here. First, let me start with a comment about the emerging technologies. And as you know, I've been with the company for about three quarters, and I've been out at various conferences. And one of the things that I've noticed that's part of the company, which I think is very important is the emerging technology opportunity. And I -- we're early in that when you start thinking about OpenStack and OpenShift and some of the other emerging technology products that we have, it's important for us to invest in that business in order to see it scale. We