Dallas, Texas 05/19/2014 (FINANCIALSTRENDS) – Rackspace Hosting, Inc (NYSE:RAX) has reported results for the Q1 of 2014. Reacting to this news, the company’s shares rose 17.73% to close at $ 36.12 in Friday’s trading. The server hosting & cloud computing company saw its sales rise 16% y-o-y to $421 million. The GAAP earnings climbed 5% to $0.19/ diluted share. Analysts had projected earnings of only $0.12/ share on $420M in sales. Now, the company has set the mid- point of its Q2 revenue guidance a notch above the analyst projections, at $437 million. The company upped its installed server-count by 2.2%, in comparison to the earlier quarter. The average monthly-revenue / server rose by 1.1%.
There was an increase in the free cash-flows from $8.2M in the Q1 of 2013 to $57M this time. This rise had been driven by much higher earnings, a $30M dip in the accounts receivable balances, as well as the lower capital expenses. Graham Weston, the company’s Q1 revenue growth came in as had been expected and they expect the growth to improve in the Q2. He added that the company is also very encouraged by the qualitative factors, including thousands of its new customers that they have added in the reported quarter, which included 1 of the very largest that they have ever landed.
Going great guns
The Rackspace Hosting, Inc (NYSE:RAX) stock is now trading over 20% lower on a year-to-date basis posts its generous after-hours surge. The critics are worried about the stiff competition and the budding price wars in the cloud-computing sector. RAX has also enlisted an investment bank to explore various methods of expanding its business. This move came after Amazon.com & Google axed their prices on many of the competing products at a much faster pace than had been expected. This result could also be a partnership/ an acquisition. But the company also said that there is no timetable as such.