Rackspace Announces Better-Than-Expected Q3 Results, Including Revenue of $509M, Plans $350M Debt Offering

Following the bell, Rackspace announced its third-quarter financial results, including revenue of $509 million and earnings per share of $0.26.

The market had expected Rackspace to report $0.20 in per-share profit off revenue of $503.08 million. Down nearly four points in regular trading, the company has swayed both positive and negative following its earnings announcement; investors, it seems, are not entirely sure at the moment how to parse the results.

The company’s top line expansion clocked in at 10.7 percent, compared to the year-ago quarter.

On the product side of things, Rackspace recently announced, and I’ll quote here to avoid butchering the truth, “Carina, A Hosted Environment For Running Docker Containers.” It has been rumored that Rackspace could entertain the possibility of going Full Dell, and heading private.

The company also announced today that it intends to issue $350 million in senior debt to “repay all outstanding amounts under its senior revolving credit facility.” Sums leftover will be used for “general corporate purposes.” I presume that we are looking at a company, fully aware that interest rates are about to rise retooling its balance sheet to its own advantage. Fair play, I’d say.

Rackspace purchased $250 million of its own equity in the quarter. Compared to its year-ago quarter, the firm saw its cash supply decline by around $25 million to $189 million. Notably, Rackspace’s debt load rose from $47.2 million in the year-ago quarter, to a far stiffer $140 in its recent third quarter.

The company’s growth is ahead of expectations, but it will be interesting to see if it can continue to impress investors. Cloud is a competitive market, after all.

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