Rackspace Hosting, Inc. (RAX) CEO Taylor Rhodes Says Improved Margins Show Its Leadership Position In Managed Cloud Space


Rackspace Hosting, Inc. (NYSE:RAX) President and CEO, Taylor Rhodes, believes that the improving margins coupled with robust growth demonstrated that the company was gaining traction in the managed cloud segment. This also suggested its leadership position in the managed cloud space. However, its revenue for the fourth quarter came in below Street analysts’ estimations hurt by a strong Greenback.

Outlook

Rackspace Hosting, Inc. (NYSE:RAX) CEO said that the company would take the momentum forward in 2015 through the expansion of its specialized expertise in the areas of big data, security and ecommerce. He said that the company continues to offer businesses the leverage of cloud power without the pain of managing complex new technologies by themselves.

The company indicated that its revenue would witness a growth of 2 – 3.5% in the first quarter on a constant currency basis. The company also indicated that it sees one percentage point headwind of currency movement to hurt its revenue uptick in the March quarter. This would mean it would generate revenue of $477 – $484 million, which fell short of analysts’ consensus of $490.51 million for the same period. It sees adjusted EBITDA margins to be 32 – 34% for the March quarter.

4Q Results

Rackspace Hosting, Inc. (NYSE:RAX) reported that its net income jumped 77.5% to $25.74 million. Similarly, its earnings advanced 85.7% to 26 cents a share from 14 cents a share in the year-ago quarter. This was well above the Street analysts’ expectations of 19 cents a share.

The company’s top line witnessed a growth of 15.8% to $472.42 million from $408.1 million in the previous year quarter. Revenue fell short of the Street analysts’ predictions of $473.98 million.

The company indicated that its adjusted EBITDA recorded 25.3% growth while net income margin improved to 7.8% from 5.1% in the same quarter last year. Its cash flow from operating activities remained at $151 million while adjusted free cash flow was $55 million.

Full Year Results

Rackspace Hosting, Inc. (NYSE:RAX) said that its net income advanced 27.5% to $110.55 million from $86.74 million. Its earnings also grew 26.2% to 77 cents a share from 61 cents a share in 2013. Its revenue witnessed 17% uptick to $1.79 billion from $1.53 billion in the previous year.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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