Rackspace Beats Q3 Expectations

reported better-than-expected results for the third quarter on Monday. The San Antonio, Texas-based company reported a quarterly profit of $36.5 million, or $0.26 per share, versus a year-ago profit of $25.7 million, or $0.18 per share. Its revenue climbed 10.7 percent year-over-year to $508.9 million. However, analysts were expecting earnings of $0.20 per share on revenue of $503.1 million. Its gross margin shrank to 66.4 percent from 68.9 percent. "We're proud of the financial results that we delivered in the third quarter," said Taylor Rhodes, president and CEO of Rackspace. "And we're excited about the new products and partnerships that we've launched in recent months, with Amazon Web Services, Intel and Microsoft. These initiatives will make us more competitive and will drive our growth for the future." The company also reported a proposed $350 million offering of senior notes due 2024. For the current quarter, the company expects revenue growth on a constant currency basis of 2 percent to 3 percent versus the third quarter. The company also projects FY sales to rise 12 percent to 14 percent year-over-year. Rackspace shares climbed 8.93 percent to $29.51 in the after-hours trading session.