Rackspace Shares Tumble Following Q1 Results

Shares of

dipped more than 9 percent in after-hours trading after the company reported results for the first quarter and issued a weak revenue forecast for the current quarter. The San Antonio, Texas-based company posted quarterly net income of $28.4 million, or $0.20 per share, compared to $25.4 million, or $0.18 per share, in the year-ago period. Its revenue climbed 14.1 percent to $480.2 million from $421 million, while revenue surged 16.6 percent on a constant currency basis. However, analysts were expecting a profit of $0.20 per share on revenue of $481.57 million. The average estimate among 27 Estimize users was for earnings of $0.21 per share and revenue of $482.32 million. Its adjusted EBITDA for the first quarter rose 15.5 percent year-over-year to $161 million. Cash flow from operating activities totaled $145 million, while capital expenditures came in at $90 million during the quarter. "We delivered on our promises in the first quarter and are better positioning ourselves to benefit from the rapid growth of the managed cloud market," said Taylor Rhodes, president and CEO of Rackspace. "The execution of our strategy is driving profitable growth for Rackspace, including through a rising number of new, larger enterprise customers." For the second quarter, the company projects expects revenue growth on a constant currency basis of 1.5 percent to 2.5 percent and adjusted EBITDA margins of 32 percent to 34 percent. Rackspace Hosting shares fell 9.43 percent to $48.12 in the after-hours trading session.