Rackspace reports record revenue in Q2 but weak Q3 guidance

The cloud solutions company beat top and bottom line estimates for the second quarter.
Written by Stephanie Condon, Senior Writer

Rackspace on Wednesday reported better-than-expected second quarter financial results. However, the cloud solutions company gave a weak outlook for Q3, and shares fell in after-hours trading. 

Rackspace's non-GAAP earnings per share in Q2 came to 24 cents on revenue of $744 million, up 13% year-over-year. Revenue growth was strong thanks to new customer acquisitions and growing customer spend in the company's Multicloud Services and Apps & Cross Platform segments.

Analysts were expecting earnings of 22 cents per share on revenue of $740.66 million.

"Our second quarter financial results were solid, with double-digit revenue growth and strong operating profit margins," CEO Kevin Jones said in a statement. "In addition, our working capital and cash management transformation programs have driven excellent results with more than $100 million of operating cash flow for the second consecutive quarter."

Revenue from Rackspace's Core Segments, comprised of Multicloud Services and Apps & Cross Platform, increased 17 percent year-over-year in Q2 to $698 million.

Bookings in Q2 were $258 million, a decrease of 10 percent year-over-year. The company noted that bookings a year prior, in Q2 2020, included one large deal valued at approximately $38 million. Excluding this deal from the comparative period, bookings growth was 3 percent year-over-year.

For the third quarter, Rackspace expects revenue in the range of $750 million to $760 million.

Analysts are expecting revenue of $761.23 million.

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