Rackspace posts solid Q3, signs large deal in Q4

Shares of the cloud solutions company were up in after-hours trading, after it noted it had a large deal in Q4 that will help it achieve its $1 billion bookings target for fiscal 2021.

Rackspace on Monday published its third quarter financial results, slightly beating market estimates. While Q3 bookings were down year-over-year, the cloud solutions company said it landed a large, competitive deal early in the fourth quarter. 

Rackspace's non-GAAP earnings per share in Q3 came to 25 cents on revenue of $763 million, up 12% year-over-year. Revenue growth was once again strong thanks to new customer acquisitions and growing customer spending in the company's Multicloud Services and Apps & Cross Platform segments.

Analysts were expecting earnings of 24 cents per share on revenue of $756 million.

"The Cloud market continues to grow and momentum continues to accelerate," CEO Kevin Jones said in a statement. "Companies of all sizes need help with their move to the cloud. And as a leading pure-play cloud services company, Rackspace Technology is poised to be their partner of choice for all things cloud – wherever they are in their journey."

Revenue from Rackspace's Core Segments, comprised of Multicloud Services and Apps & Cross Platform, grew 15% year-over-year in Q3 to $718 million.

Bookings in Q3 were $200 million, a decrease of 36%year-over-year. However, Rackspace said it expects to achieve its $1 billion bookings target for fiscal 2021, given the large deal that was awarded to the company early in Q4. That deal is expected to be signed before year end.

For the fourth quarter, Rackspace expects revenue in the range of $766 million to $776 million.

Analysts are expecting revenue of $771.44 million.