Dive Brief:

• Red Hat announced Wednesday that its revenue was up 18% year-over-year for the first quarter.

• Subscription revenue for the quarter was $502 million, up 18% in U.S. dollars year-over-year, Red Hat said in a news release.

• The company also announced Wednesday that it plans to purchase API management company 3scale for an undisclosed amount.

Dive Insight:

Analysts expected the company to perform better than it did, and the company's stock fell about 5% in after-hours trading Wednesday. For the year, the company said it expects to earn an adjusted $2.19 to $2.23 a share, shy of the $2.24 analysts anticipated.

The role of open-source software has been steadily growing over the last several years. Because it offers advantages in terms of cost, control and innovation, experts predict open-source tools will soon be a much higher percentage of every IT organization’s environment.

The purchase of 3scale, meanwhile, may help Red Hat compete better in the API arena by “enabling companies to create and publish APIs with tools such as Red Hat JBoss Fuse, and then manage and drive adoption of those APIs once they have been published,” Craig Muzilla, Red Hat’s senior vice president of application platforms business, said in a news release.