Rackspace.com rose to about 6 per cent in late trading after the sales and profit topped analysts’ estimates. The largest competitor to Amazon in web-based data centers attributes this to their cloud computing. The net income peaked 85% to USD 25 million or 18 cents a share, from $13.5 million, or 10 cents just about a year ago. The revenue rose 32 per cent to $283.3 million according to a survey conducted by Bloomberg. The shares reached to a record high of USD 52.66 in extended trading. The stock value has clocked over 10 times its original value back in 2008.
Rackspace has a neck to neck competition with Amazon in the public-cloud market where computing power and services are rented, like the latter Rackspace has its stockpile of data centers. The revenue in just that particular sector skyrocketed to 86 per cent last quarter to USD 58.5 million, whereas the sales in the dedicated server business rose just 23 per cent to USD 224.8 million. The total customers grew by 6.9 per cent! These figures show a projected increase in margins as more profitable goods are sold.
“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”, said Chief Executive Officer Lanham Napier. Earlier the company’s margin excluding interest, taxes, amortization and depreciation increased to 36.1 per cent from 33.5 per cent a year earlier.
Rackspace delivers enterprise-level hosting services to businesses of all sizes and kinds around the world. Established in 1998, Rackspace has grown to serve more than 161,000 customers. Integrating the industry’s best technologies for each customer’s specific need and delivering it as a service via the company’s commitment to Fanatical Support. The core products include Managed Hosting, Cloud Hosting and Email & Apps.