RAX: Rackspace now +10.8% AH on Q2 beat; public cloud growth strong

Rackspace now +10.8% AH on Q2 beat; public cloud growth strong • 4:30 PM

• Rackspace's (RAX) server count rose 5% Q/Q in Q2 to 98.8K. However, average revenue/server fell by $10 to $1,298; it fell by $2 in Q1.
• Capex was $107M, down from Q1's $125.4M but still making up a hefty 28% of revenue.
• Dedicated cloud (Web hosting) revenue +2% Q/Q and +12% Y/Y to $276.8M in spite of investor fears of defections to rival cloud infrastructure platforms.
• Public cloud revenue (inc. OpenStack) +9% Q/Q and +36% Y/Y to $99M; Q/Q growth accelerated from Q1's disappointing 4%.
• Net upgrade rate rose 60 bps Q/Q to 1.5% after diving for two quarters. Churn was steady at -0.8%. Installed base +0.7% after growing only 0.1% in Q1.
• Headcount rose by 229 Q/Q to 5,272. R&D spend +60% Y/Y to $26.8M, sales/marketing +27% to $52.3M, G&A +25% to $69.3M.
• Heavy capex and opex led op. margin to fall to 9.4% from 11.8% in Q1 and 12.8% a year ago. Adjusted EBITDA margin was 32.8% vs. 34.5% in Q1 and 35.1% a year ago.
• Canaccord's call isn't looking too good for now. Wells Fargo and Cowen are looking better.
• Q2 results, PR

Read comments

RAX price at time of publication: $46.13. Check RAX price now »

Get Seeking Alpha notifications with our iPhone App | Android App | iPad App

Focus Articles on RAX

• Can IBM Save OpenStack? by Dana Blankenhorn
• Bear Of The Day: Rackspace Hosting by Zacks Investment Research
• Rackspace - As Long-Term Growth Story Remains Intact, Shares Should Find Support by The Value Investor

Press Releases on RAX

• Rackspace Hosting Reports Second Quarter 2013 Results (Business Wire)
• Mazda Chooses Rackspace to Take the Driver's Seat with Its Web and Application Hosting (Business Wire)
• Rackspace to Host Conference Call for Second Quarter 2013 Results (Business Wire)

Related Articles on RAX

• Red Hat: Take Advantage Of Investors Being Offsides For 10%+ Move This Week by Josh Burwick
• SDN World Conference Notes by Edward Schneider
• Buy This Undervalued Growth Stock To Own A Legal Monopoly by Mike the PhD

StockTalk on RAX: RAX StockTalk | Twitter RAX | Twitter $RAX | RAX Instablogs

Recent Market Alerts on RAX: All currents | Earnings | Dividends | M&A | On the move

Transcripts on RAX

• Rackspace Hosting Management Discusses Q2 2013 Results (Webcast) by SA Transcripts
• Rackspace Hosting Management Discusses Q1 2013 Results - Earnings Call Transcript
• Rackspace Hosting, Inc. - Shareholder/Analyst Call

---

Why are you receiving this? You subscribed to real-time Market Currents alerts at Seeking Alpha.
If this email was forwarded to you and you wish to subscribe to this email, click here.

Manage your emails:
Get alerts on additional tickers and manage all your email alert choices here
I'm getting too many emails: manage your email alert choices
I'm no longer following RAX: unsubscribe from all RAX email alerts
This type of alert isn't helpful to me: unsubscribe from Market Currents (breaking news) alerts on RAX

To ensure you receive these emails in the future, please add account@seekingalpha.com to your address book, contacts or list of safe senders.

Prices in this email are BATS Last Sale quotes.

Sent by Seeking Alpha, 345 7th Ave. Suite 1400 New York, NY 10001