Rackspace Reports Strong Quarter On Cloud Demand

Shares in Rackspace, the Texas-based web hosting giant, rose more than 10 percent in after-hours trading on better-than-expected quarterly results that were boosted by rising demand for cloud-based services.

Rackspace reported net income of $25 million (£16m), or 19 cents per share, in the quarter ending 31 March, from $27m in the same quarter last year; non-GAAP earnings were 20 cents per share on revenue of $421m, up 3.2 percent on the previous quarter, or 16 percent year-on-year, the company said.

Customer growth

Wall Street analysts had predicted earnings of 12 cents per share on revenue of $419.53m. The company’s shares have declined about 30 percent during the past year, as it faces competition from IT giants including Amazon, Microsoft and IBM.

Rackspace’s chief executive and chairman, Graham Weston (pictured), said he was “encouraged” by factors including the strong growth in the company’s customer base and the growth in services for existing customers.

“Each of these customers values our managed cloud approach and chose us over providers of less expensive unmanaged infrastructure,” Weston said in a statement.

Revenues from dedicated cloud services, which make up 71 percent of total revenues, rose 11 percent, while public cloud revenues rose by more than one-third.

European expansion

The company forecast revenues of $434m to $440m for the second quarter, compared to analyst estimates of $435.5m.

Rackspace recently launched ObjectRocket, a cloud database service, based in a UK data centre and aimed at European customers.

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