Rackspace Hosting (RAX), a provider of Web hosting and cloud computing services, continues its steady growth, late Thursday reporting a 27% jump in sales and 43% rise in per-share profit last quarter.
Rackspace's revenue has risen every quarter for at least the past 17 quarters, and in that span its year-over-year sales growth has never been lower than 16%.
For the fourth quarter, the company said sales rose to $214.7 million from $169.5 million in the year-earlier quarter. Analysts polled by Thomson Reuters had expected $210.1 million. Per-share profit minus items rose to 10 cents from 7 cents, meeting views. It's the eighth straight quarter that the service provider's profit either met views or beat by a penny.
The company doesn't provide an outlook. The stock is up 144% since June, but slipped a fraction after hours, after it released Q4 results.
"Cloud computing is only in its infancy. It's a mistake to think cloud computing is mainstream yet," Rackspace CEO Lanham Napier said on a conference call with analysts.
More than 90% of computing capacity of the most-trafficked Web sites still run in-house and have yet to transfer to the "modern cloud," he said, indicating the growth potential.
Rackspace provides services in the emerging areas known as managed hosting and cloud computing. It provides the computer systems, software, data storage and services that companies and other enterprises use to run much of their operations. It provides these services via the Internet, or cloud.
"They have a strong market potential in managed hosting and public cloud," analyst Chad Bartley of Pacific Crest Securities said in comments made before the company released its results. "Their business trends have been stable with what we've seen since early in 2010.
"Overall the fundamental trends are positive, and Rackspace has launched new services to drive incremental growth."
Rackspace said revenue from managed hosting services rose 6% from Q3 to $183.3 million. Cloud revenue rose 17% to $31.4 million.
Research firm Gartner estimates global cloud service spending will more than double to $149 billion in 2014 from $68 billion in 2010.
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