Rackspace Results Beat Estimates as Web-hosting Demand Rises

Monday, 12 May 2014 05:56 PM

 

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Rackspace Hosting Inc. reported better-than-expected quarterly results as demand rose for its web-hosting services, and the company forecast current-quarter revenue above Wall Street estimates.

The company's shares rose sharply in trading after the bell.

Rackspace forecast revenue of $434 million-$440 million for the second quarter ending June. Analysts on average were expecting revenue of $435.5 million, according to Thomson Reuters I/B/E/S.

"We are encouraged by qualitative factors, including the thousands of new customers we added in the quarter ...," Chief Executive Graham Weston said in a statement.

Web-hosting companies such as Rackspace and competitors Equinix Inc. and Internap Network Services Corp. own or lease space on a server, typically housed in data centers.

Rackspace's net income fell to $25.4 million, or 18 cents per share, in the quarter ended March 31, from $27 million, or 19 cents per share, a year earlier.

Net revenue rose 16 percent to $421 million.

Analysts on average had expected a profit of 12 cents per share on revenue of $419.4 million.

Dedicated cloud revenue, which accounts for 71 percent of the company's total revenue, rose 11 percent. Public cloud revenue rose by more than a third.

At about 6 p.m. in New York Monday, Rackspace shares were up 12 percent at $30.90, after gaining 4.8 percent during the regular session to close at $27.53 on the New York Stock Exchange.

Rackspace, whose shares declined about 30 percent in the year to Monday's close, is facing intense competition in the cloud business from Amazon Inc, Microsoft Corp and International Business Machines Corp.

 

© 2014 Thomson/Reuters. All rights reserved.

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