Editor’s note: Red Hat beat Wall Street expectations for revenue and profits in its latest earnings report Tuesday, sending the stock toward its all-time high of $105. What’s fueling the growth? Here’s an analyst’s view from Sanjay Medvitz at Technology Business Research.

HAMPTON, N.H. – Linux sustainability and accelerating emerging solutions adoption are growing Red Hat’s revenue and partner value
Red Hat (NYSE: RHT) beat revenue expectations in 2Q17, posting quarterly revenue of $677 million and year-to-year revenue growth of 19.2%, marking its highest growth rate in four years. Red Hat’s core enterprise Linux business continues to progress within the rapidly changing IT market unabated, evidenced by year-to-year subscription growth of 14% for the vendor’s infrastructure-related offerings.

Subscription revenue from application development-related and other emerging technologies grew an impressive 41% year-to-year, illustrating Red Hat’s success in delivering hybrid cloud value through key solutions such as OpenShift and OpenStack. 2Q17 operating income increased 16% year-to-year, while operating margin dipped 40 basis points to 12.9%.

Red Hat’s leadership position as an open-source vendor and innovation efforts around cloud platforms and container technologies is increasingly resounding with infrastructure modernization initiatives across industries such as telecom and government, making Red Hat a highly valuable and sought after partner.

As complexity grows with hybrid, multi-infrastructure environments, Red Hat delivers highly flexible cloud-based platforms such as OpenStack and OpenShift that enable customers to deploy, migrate and manage workloads seamlessly across various infrastructures. Red Hat continues to build out its flexibility and add services capabilities to its cloud platforms through strategic partnerships and integrations.

At Red Hat Summit 2017, the vendor announced a new alliance with AWS to provide access to AWS services on Red Hat OpenShift.

TBR expects Red Hat to maintain high levels of innovation, partner activity and growth results in 2017 and beyond.

(C) TBR