Rackspace Beats Estimates on Revenues, Shares Rise

Rackspace Hosting Inc., the biggest competitor to Amazon.com Inc. in the market for Web-based data centers, rose 9.5 percent in early trading after sales and profit topped analysts’ estimates.

The company earned $25 million, or 18 cents per share, on revenue of $283.3 million. Analysts had expected a profit of 15 cents per share and revenue of $281 million. The company also said that total server count increased to 79,805 from 78,717 in the third quarter.

The company runs a fleet of data centers, letting customers store their websites and applications on its servers. It competes with the Amazon Web Services business in the public- cloud market, where customers rent computing power along with related services. Rackspace’s revenue in that area jumped 86 percent last quarter to $58.5 million, the San Antonio-based company said yesterday in a statement. Sales in the traditional dedicated server business, where the company manages specific machines for customers, rose 23 percent to $224.8 million.

More Customers

Rackspace’s customer tally increased 6.9 percent from the previous quarter to 172,510. Its installed based rose 1.2 percent per month in the period, compared with growth of 0.6 percent a year earlier and 0.9 percent in the third quarter. As that number grows, Rackspace’s margins increase because the company is able to sell more profitable services to existing customers, said Chief Executive Officer Lanham Napier.

“The longer we serve them, the more valuable and profitable they become,” Napier said yesterday in a conference call. “The installed base climbing is a tailwind for profitability.”


Earlier this year Rackspace named a new Chief Marketing Officer, Suaad Sait. In the newly created role, Sait will oversee global marketing.

“Having worked in the technology industry for more than 20 years, I am honored to be a member of the leadership team at a market leading company like Rackspace,” Sait said. “Cloud computing is the future, and Rackspace has the advantage of being on bleeding edge. I look forward to strengthening our presence in the marketplace, based on our longstanding commitment to Fanatical Support.”

Leave a Reply

Your email address will not be published. Required fields are marked *