Rackspace (RAX) Q2 2013 Results: AWS Can’t Kill Us

Rackspace (RAX), a Top 100 Cloud Services Provider for 2013, today delivered better-than-expected Q2 2013 earnings results. The results gave customers and investors some much needed peace of mind amid cloud price wars with Amazon Web Services (AWS), Microsoft Windows Azure (MSFT) and Google App Engine (GOOG). But a big channel partner question remains: How do VARs and MSPs fit into Rackspace’s longer-term business strategy?

First, the financials. For the quarter ended June 30, 2013:

• Net revenue was $376 million, up 18 percent from Q2 2012.
• Net income was $22 million, down 11 percent from Q2 2012 but still better than Wall Street expected.  
• Rackspace now manages nearly 100,000 servers, up about five thousand servers compared to Q1 2013.
• Hiring also continues strong. Headcount is now 5,272 “Rackers,” up from 5,043 in Q1 2013.

In addition to its public cloud efforts, the company during the quarter released Rackspace Private Cloud Software built on OpenStack. On the hiring front, Rackspace recruited Todd Cione from Microsoft to lead the company’s Americas Acquisition Sales division. Also, Rick Jackson joined Rackspace from VMware as chief marketing officer.

Still, it’s unclear who is running Rackspace’s channel partner organization — and just how much VARs and MSPs figure into Rackspace’s revenue growth. We’re gathering information from Rackspace’s earnings call today to see if there were any partner program mentions.

Meanwhile, the bigger story involves a collective sigh of relief. Rackspace shares had been sagging most of this year, because investors worried Amazon price cuts would squeeze Rackspace’s business. OpenStack won’t generate real revenues for Rackspace anytime soon, so the company is leaning hard on its Fanatical Support reputation.