Rackspace Hosting Earnings: Falling Short of Estimates

Rackspace Hosting, Inc. (NASDAQ:RAX) reported higher profit for the first quarter as revenue showed growth. Rackspace Hosting, Inc. is a provider of hosting and cloud computing services.

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Rackspace Hosting Earnings Cheat Sheet for the First Quarter

Results: Net income for Rackspace Hosting, Inc. rose to $13.8 million (10 cents/share) vs. $9.8 million (7 cents/share) in the same quarter a year earlier.

Revenue: Rose 28.6% to $230 million YoY.

Actual vs. Wall St. Expectations: RAX fell short of the mean analyst estimate of 12 cents/share. Estimates ranged from 10 cents per share to 13 cents per share.

Quoting Management: “During the quarter we invested across the organization to drive higher growth as well as increase our service level capability and enhance our product portfolio,” said Karl Pichler, chief financial officer.

Key Stats:

The company has enjoyed double-digit year-over-year revenue growth for the past five quarters. Over that span, the company has averaged growth of 25%, with the biggest boost coming in the most recent quarter when revenue rose 28.6% from the year earlier quarter.

Gross margins grew 1.6 percentage points to 69.7%. The growth seemed to be driven by increased revenue, as the figure rose 28.6% from the year earlier quarter while costs rose 22.3%.

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)

Stock Performance: Shares of RAX are down 1.9% from the previous close.

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