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Red Hat Inc. endured a miserable after-hours trading session that saw its stock fall as much as 7 percent following a poor second quarter that saw it miss revenue targets and deliver guidance below forecasts.

The company, which sells support for an array of open-source software and services for enterprises, reported earnings before certain costs such as stock compensation of 85 cents per share on revenue of $823 million, which was up 14 percent from a year ago.

Strangely, Red Hat beat Wall Street expectations on profit but fell short on revenue. Analysts were looking for earnings of 82 cents per share on revenue of $829 million.

Investors reacted with disappointment to the news, with Red Hat’s share price down more than 5 percent at the end of the after-hours trading session. Update: On Thursday, shares fell more than 6.5 percent, to $133.81.

Breaking down the numbers, Red Hat said its subscription revenue, which comes from its open-source Red Hat Enterprise Linux operating system and other products, rose 13 percent, to $722.7 million. That was below the $724.1 million analysts were expecting.

There was one bright spot regarding Red Hat’s application-development revenue, a big focus for the company as it bets on new software container technologies, which rose 31 percent, to $196 million.

However, the company also missed targets on training and services revenue, which came in at $100 million, below Wall Street’s forecast of $104 million.

Guidance for the third quarter was also disappointing. Red Hat said it’s expecting a profit of 87 cents per share on revenue of between $848 million and $856 million. Analysts were hoping for at least 92 cents on $862 million in revenue.

In a conference call, Red Hat Chief Financial Officer Eric Shander told analysts that one of its contracts with the U.S. Army had been “tweaked,” and that the company had another “larger competitive loss” to an unnamed on-premises software provider. These had a negative effect on RHEL’s growth, the executive said.

However, Shander said he believed that the slowdown in renewal growth for RHEL subscriptions has now bottomed out.

During the call, Red Hat Chief Executive Jim Whitehurst also said RHEL is not losing market share to its rivals, which include Amazon Web Services Inc.’s free Amazon Linux operating system.

Analyst Charles King of Pund-IT Inc. said that despite investors’ reaction, the aftermath of Red Hat’s quarter was a “fairly common narrative” in Silicon Valley for previously high flying companies that come back down to earth a bit.

“Red Hat’s results for the quarter were less than a percentage point below analysts’ estimates,” King said. “The company has beaten estimates for the last four quarters in a row, which likely lent a bit more gravity to the situation than it might have deserved. It was also compounded by Red Hat’s caution that it will also likely miss analysts’ estimates for the current quarter.”

King was upbeat about Red Hat’s prospects going forward, however. “Its hard to say exactly where things go from here but despite it’s challenges, Red Hat is well-positioned to gain from the recent burst of good news we’re seeing among some traditional data center vendors,” he said.

Others were less optimistic, though. In a note to clients earlier this week, Raymond James’ analyst Michael Turits said that “qualitative comments in recent conversations with channels and customers reinforce our concerns regarding headwinds to RHEL, middleware and OpenShift.”

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