The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Rackspace Hosting met expectations on revenues and missed estimates on earnings per share.
Compared to the prior-year quarter, revenue expanded significantly and GAAP earnings per share expanded significantly.
Gross margins grew, operating margins grew, net margins contracted.
Rackspace Hosting reported revenue of $352.9 million. The 19 analysts polled by S&P Capital IQ expected sales of $355.4 million on the same basis. GAAP reported sales were 25% higher than the prior-year quarter's $283.3 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 $0.21. The 17 earnings estimates compiled by S&P Capital IQ anticipated $0.22 per share. GAAP EPS of $0.21 for Q4 were 17% higher than the prior-year quarter's $0.18 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 73.0%, 220 basis points better than the prior-year quarter. Operating margin was 14.1%, 10 basis points better than the prior-year quarter. Net margin was 8.5%, 30 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $377.2 million. On the bottom line, the average EPS estimate is $0.24.
Next year's average estimate for revenue is $1.64 billion. The average EPS estimate is $1.10.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 923 members out of 1,005 rating the stock outperform, and 82 members rating it underperform. Among 247 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 219 give Rackspace Hosting a green thumbs-up, and 28 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 $68.45.
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