Shares of Rackspace Hosting, Inc (RAX) plunged 16 percent in extended trading on Wednesday after the cloud computing services provider reported results for the first quarter that missed analysts' expectations. However, profit for the quarter that increased 18 percent from last year, boosted by improved double-digit revenue growth.
"We got off to a slow start for the year. Building a lasting, successful business is our number one priority. However, our immediate focus is on restoring our growth trajectory. We are excited to see the industry momentum behind OpenStack and we are determined to claim the service leadership position in the Open Cloud movement," CFO Karl Pichler said in a statement.
The San Antonio, Texas-based company reported net income of $27.26 million or $0.19 per share for the first quarter, up from $23.18 million or $0.17 per share in the prior-year quarter.
On average, 19 analysts polled by Thomson Reuters expected the company to report earnings of $0.20 per share for the first quarter. Analysts' estimates typically exclude special items.
Net revenue for the quarter increased 20.2 percent to $362.20 million from $301.36 million in the same quarter last year, but missed seventeen Wall Street analysts' consensus estimate of $367.20 million by a whisker.
Net revenue from dedicated cloud grew 21 percent to $271 million, from $237 million, and public cloud net revenue increased to $91 million from $65 million in the year-ago quarter.
Total server count at the end of the quarter stood at 94,122, up from 82,438 servers at the end of the year-ago quarter, and average monthly revenue per server grew to$1,308 from $1,238 in the prior-year quarter.
"We are optimistic about our long-term position in the market and our future opportunity as the world moves to a new model of computing," President and CEO Lanham Napier noted.
RAX closed Wednesday's regular trading session at $52.24, up $2.52 or 5.07% on a volume of 3.77 million shares. However, the stock plunged $8.39 or 16.06% in after-hours trading.
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