Rackspace Becomes $1B Company Amid “Insatiable” Cloud Demand
Following a dark day on Wall Street, Rackspace delivered a bright ray of hope. During a Q2 earnings call on Aug. 4, Rackspace CEO Lanham Napier said the cloud service provider is seeing “an insatiable thirst” for cloud computing business services worldwide. Moreover, Rackspace’s annual revenue run rate has hit $1 billion. And the company says the march to $2 billion in annual revenues will happen even more quickly.
“Although it has taken us nearly 12 years to achieve our first $1 billion of run rate revenue,” said Napier. “We believe it will take a fraction of that time to attain the second.” The earnings call transcript is available from SeekingAlpha.com.
It’s important to put Napier’s statements in context. Generally speaking, corporate executives at fast-growing companies make “cautiously optimistic” statements on earnings calls, guiding analysts to understand that the business is performing well amid market challenges. But Napier’s statements sounded incredibly upbeat.
Within the earnings call, I don’t believe Rackspace specifically mentioned SMB channel partners like VARs and MSPs. But the company did mention growing channel and partner relationships involving…
- OpenStack, the open source cloud computing platform, which has gained more than 90 partners — including relationships with Citrix Systems, Dell and Hewlett-Packard.
- The Cloud Builders business, which helps companies deploy and manage OpenStack-based clouds.
“Looking ahead, we are investing in a number of new projects such as the development of cloud block storage, firewall as a service, unified control panel, and of course, building out our Cloud Builders business,” Napier added.
Optimism With The Economic Storm
On August 4, the U.S. stock market suffered its worst one-day performance since 2008 amid concerns about U.S. and European debt. Amid those dark economic shadows, Rackspace delivered some shining results:
- Rackspace’s Q2 net revenue was $247.2 million, up 32% from Q2 2010.
- Total customers grew to 152,578, up from 142,441 the previous quarter.
- In a prepared staement, CFO Karl Pichler said the company remains “right on track” to achieve financial goals for 2011.
- Adjusted Q2 EBITDA for the quarter was $81.6 million, a 31% increase compared to Q2 2010 2010.
- Net income was $17.6 million, up 56.8% from Q2 2010.
Rackspace announced the earnings after U.S. markets closed on August 4. All 20 companies within our Talkin’ Cloud Stock Index saw their shares fall on August 4 amid the Wall Street sell-off. We will update the index again once U.S. markets close on Friday, Aug. 5.