Shares of Rackspace Hosting Inc (RAX) fell nine percent in extended trade on Tuesday after reporting a fourth-quarter profit and revenues that came in short of Street expectations. However, profit for the quarter improved from a year ago, as revenues grew 25 percent reflecting customer additions.
Rackspace's revenues for the quarter grew 24.6 percent to $352.9 million from $283.3 million last year. Analysts polled by Thomson Reuters had a consensus revenue estimate of $355.42 million for the quarter.
Rackspace's revenue growth indicates a slow down in the past few quarters, having reported year-over-year growth of 27 percent in third quarter, 29 percent in second quarter, 31 percent in first quarter, and 31.9 percent in fourth quarter last year.
Revenues from dedicated cloud business, which generates 75 percent of total revenues, grew to $265.6 million from $224.8 million last year. Revenues from the public cloud servers jumped to $87.3 million from $58.5 million last year.
Total server count at the end of the quarter rose to 90,524 from 89,051 servers in the previous quarter. Total customers increased to 205,538, up from 197,635 at the end of the previous quarter.
San Antonio, Texas-based Rackspace's fourth-quarter earnings improved to $29.9 million or $0.21 per share from $25.0 million or $0.18 per share last year. Analysts expected earnings of $0.22 per share for the quarter. Analysts' estimates typically exclude special items.
Chief Executive Lanham Napier said, "During 2012 we made significant investments across the business to bolster our systems, products, and service delivery capabilities. One of the most important projects we completed in 2012 was the launch of our Open Cloud platform."
RAX closed Tuesday's trading at $74.98, down 0.07%, on the NYSE. The stock further slipped $6.37 or 8.50% in after-hours trade.
For comments and feedback contact: editorial@rttnews.com
Business News
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.