ORCL) and Microsoft ( MSFT). HPQ) and VMware ( VMW), has begun to generate considerable momentum. What's more, unlike Oracle, which had an absolutely brutal June quarter and a less-than-joyful first quarter Wednesday, Red Hat's management continues to do an excellent job of balancing expectations with actual performance. So, as with IBM ( IBM) and Oracle, which have shown eroding growth trends, growth has never been an issue for Red Hat. With revenue climbing more than 15% in the June quarter, I've had no choice but to tip my cap to the company's management, especially since Oracle produced growth of less than 1%. Unlike Oracle and, to some extent, IBM, Red Hat continues to outperform in its subscription business, which grew 16% year over year and 4% sequentially. Not to mention, the company beat earnings-per-share estimates by 1 cent.
Along those lines, while I'm not willing to go "tit-for-tat" as to which software companies are better managed than others, it certainly appears as if Red Hat has begun to steal some meaningful share from its rivals. Before you disagree, consider that the company posted a 3% miss in its "billings" or deferred revenue target in the March quarter, which (then) prompted management to guide down. However, in the June quarter, Red Hat's billings, which is the metric that indicates the strength of future sales, increased 12% year over year. I don't believe that level of improvement was manufactured out of thin air. The question is if this can continue. On Monday, we are certain to find out. The Street is looking for 33 cents in earnings per share on revenue of $372 million, which represents year-over-year revenue growth of 15.3%.
Read: Robots and 3D Printing Although management did issue both revenue and profit outlook that were in line with analysts' expectations, on the basis of Red Hat's sequential improvement I'm expecting the company to beat both estimates. As is often the case, how the stock reacts will be based on how the company guides. With still no clear signs that enterprise spending will be back to robust levels, I expect that management will play it conservatively and not divert too much from consensus estimates. The good news is Red Hat is no longer just a niche Linux operator. Investors have long feared that despite the company's strong Linux business, Red Hat lacked differentiation in areas such as middleware, which is the software that lies between an operating system and specific software applications. With Open Stack gaining traction and both revenue and earnings trending in the right direction, expensive stock or not, "green" is the only color Red Hat sees. These realities have prompted investors to sell off the stock this year by as much as 13%. The stock still hasn't entered my value threshold yet, however. At the time of publication, the author held no position in any of the stocks mentioned. Follow @saintssense This article was written by an independent contributor, separate from TheStreet's regular news coverage.