) -- Even though Wall Street isn't reacting well to

stronger-than-expected earnings,

Red Hat

(RHT) - Get Report

CEO Jim Whitehurst has highlighted the software maker's ability to capitalize on a tough economy.

In a phone interview with


, Whitehurst pointed out strength in Europe, particularly Southern Europe, citing the fact that Red Hat does well in a down economic environment, as companies rethink their tech strategies.

Red Hat CEO Jim Whitehurst

"What allows us to accelerate growth is change," Whitehurst explained. "If the change is extreme cost pressure, then we do well. We do well in both weak environments and strong environments as long as there's change."

Even with investors giving Red Hat shares a haircut this morning on weak billings numbers and

weak guidance,

Whitehurst is confident about the next couple of quarters. "We see a very strong pipeline for us. The spending outlook for the rest of the calendar year is very strong for Red Hat. Operating cash flow grew 38% year-over-year, the core metrics look fantastic, and we continue to be optimistic."

The CEO noted that other high growth companies are growing along with their markets, such as


(VMW) - Get Report


(CRM) - Get Report

. Red Hat, he added, is not in a new category, rather taking market share in traditional categories, such as middleware and servers.

Red Hat's operating margins and cash flow came in exceptionally strong this quarter, Whitehurst said, as those two metrics are not affected by currency fluctuations. Non-GAAP operating margin was 25.8%, up 70 basis points year-over-year, and operating cash flow for the first-quarter was $124.4 million, up from $90.2 million.

Raleigh, N.C.-based Red Hat reported a non-GAAP profit of 30 cents a share, on revenue of $315 million for the three months ended May 31. Analysts polled by

Thomson Reuters

were looking for earnings of 27 cents per share on $310.77 million in revenue.

Red Hat provided second-quarter guidance slightly weaker than what Wall Street was looking for. The company said it expects to earn 28 cents to 29 cents per share on $320 million to $322 million in revenue. Analysts polled by

Thomson Reuters

expect Red Hat to earn 29 cents per share on $330.83 million in revenue.

Billings growth was lighter-than-anticipated, coming in at 16%, or 20% growth on a constant currency basis, but Whitehurst says billings is not a relevant metric for his business.

"Bookings is more relevant for our business," he explained. "Billings is not a great proxy, bookings is more accurate. We're not in business to generate revenue, we're in business to generate profit."

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Written by Chris Ciaccia in New York

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