Rackspace Second Quarter Sales Beat Expectations

After a sluggish first-quarter (2012) performance, web-hosting company Rackspace’s second-quarter performance certainly eased any worries about the company’s information management system having an effect on the traditionally steady growth.

Second-quarter profit rose by 43%, while share increased 9.6% to $54.05, a return to the company’s stock price levels last seen in May 2011. This is clearly shows that there is still great demand from small and medium businesses for more efficient ways of mounting large amounts of information, and the fact that Rackspace’s earnings have steadily increased for three years, demonstrates the company’s ability to provide a service that consumers want. The Rackspace cloud-computing sector, which allows companies to pay by the hour on server on storage capacity that they rent, has been a stand out in the three year growth. Revenue from the cloud business rose 69% in the last quarter, while dedicated cloud revenue surged 21%.

Rackspace CEO Latham Napier told Dow Jones Newswires, “”In general, five years from now, I believe the vast majority of compute consumed in our facilities will be in cloud form. The launch of the company’s newest cloud management system took longer than expected, but customers are growing more comfortable with it.”

Rackspace have spent much of the last quarter rolling out the new OpenStack cloud-computing platform that aims to rival the likes of Amazon and this led to fears about how well the web-hosting company would perform when Q2 were in; however, as JMP Securities analyst, Patrick Walravens explains, “”People’s fears that Rackspace was going to come up short because of OpenStack didn’t materialize.”

Rackspace’s overall recorded profit was $25.1 million, or 18 cents a share, climbing from $17.6 million, or 13 cents a share on Q2 last year. Revenue increased to $319 million, an increase of 29%.

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