Rackspace Hosting Reports Higher Profit
November 09 2015 - 5:20PM
Dow Jones News
Cloud-computing company Rackspace Hosting Inc. reported higher
profit and revenue in the third quarter.
Shares, down 42% this year, rose 1.5% to $27.50 in late trading
as results topped Wall Street projections.
Rackspace, which last year called off a possible sale saying it
failed to attract a high enough offer, has struggled to increase
business since it changed its business model to focus on the
so-called managed cloud market, selling bundled computing and
support. Rackspace said product and marketing hiccups were
exacerbated by high staff turnover tied to the last year's
strategic evaluation.
The San Antonio company is one of the pioneers in
cloud-computing services, which free companies from having to
build, maintain and staff data centers. It has reached key
partnerships with Amazon.com Inc., Microsoft Corp. and Intel
Corp.
Overall, Rackspace reported profit of $36.5 million, or 26 cents
a share, compared with $25.7 million, or 18 cents a share, a year
earlier.
Revenue rose 11% to $508.9 million.
Analysts surveyed by Thomson Reuters projected 20 cents a share
on $503.1 million in revenue.
Gross margin narrowed to 66.4% from 68.9% a year earlier, while
costs rose 8% to $452.4 million.
The number of servers deployed at the end of the quarter rose 7%
to 118,654.
Rackspace is trying to expand operations in continental Europe,
the Asia-Pacific region and Latin America. For the first six months
of the year, the company said, about 30% of its revenue came from
international customers.
For the current quarter, Rackspace projects revenue to increase
2% to 3% from the third quarter, adjusted for currency
fluctuations, topping analysts' projected $517.6 million.
Write to Maria Armental at maria.armental@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 09, 2015 17:05 ET (22:05 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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