Rackspace Hosting (f/k/a RAX)

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UPDATE: Rackspace Hosting 4Q Up 85% On Revenue, Margin Growth Date : 02/13/2012 @ 6:12PM
Source : Dow Jones News
Stock : Rackspace Hosting Inc. (RAX)
Quote : 49.23 0.72 (1.48%) @ 8:00PM



UPDATE: Rackspace Hosting 4Q Up 85% On Revenue, Margin Growth
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Rackspace Hosting, Common Stock (NYSE:RAX)
Today : Monday 13 February 2012
Rackspace Hosting Inc.'s (RAX) fourth-quarter earnings jumped 85% as it grew its customer base and sold more high-end offerings involving cloud computing.

The San Antonio-based data storage provider continued to benefit from businesses' push to manage technology resources more efficiently. Rackpace's cloud storage business--which allows companies to rent server capacity by the hour, paying only for what they use--again saw particular growth.

Looking to the current year, Rackspace expects "revenue growth and margin profile that is similar to our performance in 2011," Chief Executive Lanham Napier said on a conference call with analysts.

Shares jumped 5.8% to $52.10 in after-hours trading as the latest results beat analysts' expectations.

The company reported a profit of $25 million, or 18 cents a share, up from $13.5 million, or 10 cents a share, a year earlier. Revenue rose 32% to $283.3 million.

Analysts polled by Thomson Reuters most recently forecast a profit of 15 cents a share on revenue of $281 million.

"Dedicated cloud" revenue, which accounts for the bulk of the total, increased 23%. The smaller public cloud segment saw revenue jump 86%.

Rackspace ended the period with 172,510 customers, up from 130,291 a year earlier. Installed-base growth, a measure of revenue derived only from existing customers, was 1.2%, up from 0.6% a year earlier.

Operating margin rose to 36.1% from 33.5%.

Rackspace has added software and higher levels of service to its offering, seeking to stand out amid a crowded storage services field that includes rivals such as Amazon.com Inc. (AMZN) and Verizon Communications Inc. (VZ).

Napier said on the call that the company is benefiting from longtime customers taking on added services, which raises the company's profitability.

The stock, which hit an all-time high last week, is up 14% so far this year.

-By Matt Jarzemsky, Dow Jones Newswires, 212-416-2240; [e-mail]

--Nathalie Tadena contributed to this article.

http://www.nasdaq.com/article/update-rackspace-hosting-4q-up-85-on-revenue-margin-growth-20120213-01392