Rackspace beats Q1 earnings targets with $421M in revenue

Summary:Rackspace shares shot up by roughly 10 percent in after-hours trading as soon as the report dropped.

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Rackspace turned in its first quarter earnings statement after the bell on Monday.

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The IT hosting company reported a net income of $25 million, or 19 cents per share (statement).

Non-GAAP earnings were 20 cents per share on a revenue of $421 million, up 3.2 percent sequentially and 16 percent annually.

Wall Street was looking for earnings of 12 cents per share on a revenue of $419.53 million.

In response, Rackspace shares shot up by roughly 10 percent in after-hours trading as soon as the report dropped.

Compared to a few industry rivals that attributed Q1 losses or misses due to exchange rates and taxes , Rackspace countered by crediting currency exchange rates for a positive impact on its quarterly revenue "when compared to the previous quarter by $2.4 million and positively impacted when compared to the first quarter of 2013 by $6.6 million."

Promising continued growth through the second quarter, CEO and chairman Graham Weston reflected on the quarter in prepared remarks:

We are encouraged by qualitative factors, including the thousands of new customers we added in the quarter, including one of the largest we’ve ever landed. We also added significant new workloads for existing customers including Alex and Ani, Appboy, Clarks shoes, Under Armour and SunPower. Each of these customers values our managed cloud approach and chose us over providers of less expensive unmanaged infrastructure.

For the current quarter, Wall Street expects Rackspace to deliver earnings of 14 cents per share on a revenue of $435.53 million.

Rackspace followed up with guidance of revenue growth between three to 4.5 percent, or approximately $434 million to $440 million.

Here's a glimpse at more highlights from Rackspace's solid opening quarter for 2014:

  • Total server count: 106,229, up from 103,886 servers at the end of Q4 2013
  • Headcount: 5,743 employees as of March 31, up from 5,651 at the end of Q4 2013
  • Stemming from a previous acquisition , Rackspace launched ObjectRocket, a NoSQL MongoDB Database-as-a-Service (DBaaS) out of the U.K. datacenter to better serve and attract Europe-based customers.
  • Tapped eBay alum Ryan Neading as the new chief information officer

Topics: Enterprise 2.0, Cloud, Data Management, IT Priorities

About

Rachel King is a staff writer for CBS Interactive based in San Francisco, covering business and enterprise technology for ZDNet, CNET and SmartPlanet. She has previously worked for The Business Insider, FastCompany.com, CNN's San Francisco bureau and the U.S. Department of State. Rachel has also written for MainStreet.com, Irish Americ... Full Bio

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