Rackspace Hosting Earnings Cheat Sheet: Five Straight Quarters of Double-Digit Growth

Rackspace Hosting, Inc. (NYSE:RAX) reported net income above Wall Street’s expectations for the second quarter. Rackspace Hosting, Inc. is a provider of hosting and cloud computing services.

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Rackspace Hosting Earnings Cheat Sheet for the Second Quarter

Results: Net income for Rackspace Hosting, Inc. rose to $17.6 million (13 cents per share) vs. $11.2 million (8 cents per share) in the same quarter a year earlier. This marks a rise of 56.8% from the year earlier quarter.

Revenue: Rose 32% to $247.2 million from the year earlier quarter.

Actual vs. Wall St. Expectations: RAX beat the mean analyst estimate of 12 cents per share. It beat the average revenue estimate of $241.3 million.

Quoting Management: “This past quarter we made good progress toward our goal of accelerating revenue growth while strengthening the business. While we still have lots to accomplish throughout the year, we remain on the right track to achieve our goals for 2011,” said Karl Pichler, chief financial officer.

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 26.7%, with the biggest boost coming in the most recent quarter when revenue rose 32% from the year earlier quarter.

The company has now seen net income rise in three straight quarters. In the first quarter, net income rose 40.9% and in the fourth quarter of the last fiscal year, the figure rose 49.9%.

The company topped expectations last quarter after falling short of forecasts in the first quarter with net income of 10 cents versus a mean estimate of net income of 12 cents per share.

Gross margins grew 2.9 percentage points to 70%. The growth seemed to be driven by increased revenue, as the figure rose 32% from the year earlier quarter while costs rose 20.5%.

Competitors to Watch: Equinix, Inc. (NASDAQ:EQIX), SAVVIS, Inc. (NASDAQ:SVVS), Akamai Technologies, Inc. (NASDAQ:AKAM), Computer Sciences Corp. (NYSE:CSC), InterNAP Network Services (NASDAQ:INAP), Intl. Business Machines Corp. (NYSE:IBM), EarthLink, Inc. (NASDAQ:ELNK), Hewlett-Packard Company (NYSE:HPQ), Microsoft Corporation (NASDAQ:MSFT), and Onstream Media Corp (NASDAQ:ONSM).

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(Source: Xignite Financials)

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