The 10-second takeaway
For the quarter ended June 30 (Q2), Rackspace Hosting met expectations on revenues and missed estimates on earnings per share.
Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share increased significantly.
Margins increased across the board.
Rackspace Hosting logged revenue of $319.0 million. The 18 analysts polled by S&P Capital IQ foresaw a top line of $318.1 million on the same basis. GAAP reported sales were 29% higher than the prior-year quarter's $247.2 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.18. The 18 earnings estimates compiled by S&P Capital IQ predicted $0.19 per share. GAAP EPS of $0.18 for Q2 were 38% higher than the prior-year quarter's $0.13 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 71.8%, 180 basis points better than the prior-year quarter. Operating margin was 12.8%, 120 basis points better than the prior-year quarter. Net margin was 7.9%, 80 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $336.6 million. On the bottom line, the average EPS estimate is $0.21.
Next year's average estimate for revenue is $1.32 billion. The average EPS estimate is $0.80.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 890 members out of 946 rating the stock outperform, and 56 members rating it underperform. Among 202 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 186 give Rackspace Hosting a green thumbs-up, and 16 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Rackspace Hosting is outperform, with an average price target of $55.64.
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