Rackspace Reports Third Quarter Financial Results
Nov. 10 -- Rackspace (NYSE: RAX), the #1 managed cloud company, has announced financial results for the quarter that ended September 30, 2015.
On a GAAP basis, net revenue for the third quarter of 2015 was $509 million, up 10.7 percent from the third quarter of 2014. These results were adversely affected by shifts in currency exchange rates. On a constant currency basis, net revenue grew 12.9 percent from the third quarter of 2014.
Adjusted EBITDA for the third quarter of 2015 was $177 million, for a margin of 34.9 percent, up 11.9 percent from the third quarter of 2014. Net income for the third quarter of 2015 was $37 million, for a margin of 7.2 percent, up from 5.6 percent in the third quarter of 2014.
For the third quarter of 2015, cash flow from operating activities was $111 million, capital expenditures were $128 million, and Adjusted Free Cash Flow was $45 million. At the end of the third quarter of 2015, cash and cash equivalents were $189 million, and interest-bearing debt including capital lease obligations totaled $144 million. Return on Capital was 15.0 percent in the third quarter of 2015 compared to 11.8 percent in the third quarter of 2014.
On a worldwide basis, Rackspace employed 6,177 Rackers as of September 30, 2015.
"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."
For the fourth quarter of 2015, Rackspace expects revenue to grow between 2.0 percent and 3.0 percent quarter-over-quarter, on a constant currency basis, and expects Adjusted EBITDA margins to be between 33 percent and 34 percent. For the full year, Rackspace continues to expect revenue to grow between 12 percent and 14 percent year-over-year, on a constant-currency basis, and expects Adjusted EBITDA margins to be between 33 percent and 34 percent.
Capital Allocation
In the third quarter, pursuant to the buyback authorized by the Rackspace board of directors, the company purchased $250 million worth of shares.
Recent Highlights
- Rackspace announced AWS Managed Service Offerings
Rackspace expanded its managed cloud portfolio with its new Fanatical Support for AWS offering, which provides tools, expertise, application management, and operational support to customers on the AWS Cloud. Fanatical Support for AWS blends automation, technology, and human expertise to deliver ongoing architecture, management, and security services with 24x7x365 support.
- Rackspace announced Managed Security and Compliance Assistance Offering
The Managed Security and Compliance Assistance service offerings allow Rackspace to work with its customers to develop holistic security solutions and address compliance requirements that cover complex, multi-cloud environments. Customers can leverage Rackspace security experts to help with strategic planning for best practice multi-cloud security, tactical day-to-day security monitoring and threat analysis to deter, detect and respond to potential threats around the clock.
- Rackspace invested in SaaS-based security company, CrowdStrike
Rackspace made a significant investment in CrowdStrike's $100 million Series C financing round. CrowdStrike provides the first true Software-as-a Service (SaaS) based next-generation endpoint protection platform and is an innovator in the security space. The company provides Rackspace's 24x7x365 Security Operations Center with the expertise, technology and threat intelligence needed to help protect customers from advanced cyber-attacks, even malware-free intrusions. The financing round, led by Google Capital, brought CrowdStrike's total funding raised to $156 million.
- Rackspace announced Managed Cloud for Adobe Experience Manager
Rackspace expanded its portfolio of digital solutions with its new Managed Cloud for AEM offering, which enables companies to deploy and manage AEM environments with speed and ease, while also gaining access to specialized 24x7 support, maintenance, and monitoring of AEM environments. As a leading, comprehensive content management solution for building websites, mobile apps and forms, AEM makes it easier to manage marketing content and assets.
- ObjectRocket by Rackspace added Managed Elasticsearch
The new offering includes fully-managed instances of Elasticsearch, the open source, distributed, real-time, full-text search engine based on Apache Lucene. With the addition of Elasticsearch, Rackspace expanded the breadth and capability of its portfolio of managed databases, which now includes Elasticsearch, Hadoop, Spark, MongoDB, Redis, Oracle, Microsoft SQL Server, MySQL, Percona, and MariaDB.
Non-GAAP Financial Information
Adjusted EBITDA, Adjusted Free Cash Flow, and Return on Capital are non-GAAP financial measures. Rackspace believes these measures provide helpful information with respect to evaluating the company's performance. Other companies may calculate non-GAAP measures differently, limiting their usefulness as a comparative measure. The financial statement tables that accompany this press release include reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures.
About Rackspace
Rackspace (NYSE: RAX), the #1 managed cloud company, helps businesses tap the power of cloud computing without the challenge and expense of managing complex IT infrastructure and application platforms on their own. Rackspace engineers deliver specialized expertise on top of leading technologies developed by AWS, Microsoft, OpenStack, VMware and others, through a results-obsessed service known as Fanatical Support. The company has more than 300,000 customers worldwide, including two-thirds of the FORTUNE 100. Rackspace was named a leader in the 2015 Gartner Magic Quadrant for Cloud-Enabled Managed Hosting, and has been honored as one of Fortune's Best Companies to Work For in six of the past eight years. Learn more at www.rackspace.com.
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Source: Rackspace
