Rackspace reports solid growth in the third quarter

Nov 12, 2014
Austin Business Journal

Rackspace saw its shares move sharply higher Tuesday after reporting that net income rise 14.6 percent during the third quarter while the company achieved its fastest sequential revenue growth since the fourth quarter of 2012


Net income was $26 million for the quarter, while the net income margin for the quarter was 5.6 percent compared to 5.1 percent for the previous quarter


Rackspace shares gained $4.93, or 13.2 percent, to close at $42.25 in heavy trading volume of more than 12.8 million shares


Net revenue for the third quarter of 2014 was $460 million, up 4.2 percent from the previous quarter and 18.3 percent from the third quarter of 2013


"We are poised to capitalize on the massive opportunity ahead in the managed cloud market, where we see increasing demand for our managed services and expertise," said Taylor Rhodes, president and CEO of Rackspace. "And while we made strong progress this year, we're determined to continually improve our execution and seize our future."


Rackspace also announced plans to execute a repurchase of up to $500 million of the company's stock over the next two years. The company will commence a $200 million accelerated share repurchase as its first initiative under this program funded through a combination of its available cash balance and existing line of credit


Total server count in the third quarter of 2014 increased to 110,453, up from 107,657 servers at the end of the previous quarter. Revenue per server grew to $1,405 per month up from $1,375 in the previous quarter


Rackspace employment grew during the quarter from 5,798 to 5,939 as of Sept. 30, 2014. Here in Austin, the company is embarking upon a big expansion at the former Dillard's department store at the former Highland Mall redevelopment. It will eventually house more than 1,000 Rackspace workers


San Antonio-based Rackspace is a leading managed cloud company



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