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Rackspace beats The Street with strong Q3

No sign of AWS squeeze in financials

Roof of Crawley datacenter
Rackspace Crawley Data centre

Rackspace topped analyst expectations for Q3, pulling in $509m revenue, up 10.7 on same time last year and net income of $37m or 26c a share.

Consensus analyst forecasts were 20c a share. Net margin was 7.2 per cent, up from 5.6 per cent in Q3, 2014. Shares climbed 8.3 per cent in after hours trading.

For the full year Rackspace anticipates revenue up of 12-14 per cent and so-called adjusted EBITDA margins at 33-34 per cent.

As per usual these days, the results for the quarter ended September 30 2015, are affected by the strong dollar - on a constant currency basis, net revenue was up 12.9 per cent.

Rackspace has never been the cheapest web hosting company. And in many sectors its traditional customer base is migrating wholesale to the cloud - and not necessarily sticking with Rackspace.

Rackspace has taken an if you can’t beat ‘em join ‘em stance with the cloud giants - instead of competing in public cloud, it is carving a niche in delivering services for its rivals. In September the company signed up to resell AWS Managed Services. The company this year has also announced service deals with Google and Microsoft Azure.®

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