Rackspace shares were down 9% in trading in New York yesterday, as investors responded to earnings that were just below expectations. But strip away that miss and you have a company that continues to grow fast and implement an impressively focused strategy for the hosting and cloud markets.
Firstly, the numbers looked like this. Revenue was up 31% year-on-year to $301m. Meanwhile, adjusted EBITDA margin was up slightly at 33.4%, compared to 33.0% in Q1 last year. Adjusted EBITDA was down compared to Q4 of 2011, but that’s a tough compare (see Rackspace powers on in Q4).
These numbers show that Rackspace’s ability to win and retain hosting and cloud customers, both in the US and EMEA (which principally means UK) shows little sign of abating. We had a chance to meet some of the UK/EMEA management team in London last week and get more insights into the company’s strategy, including its backing of open source technologies, its evolving as-a-service portfolio and its “fanatical support” positioning. Look out for more comment from us on those topics soon. Meanwhile, Rackspace’s growth means it is also likely to be a new entry in the top 20 for UK infrastructure services when we publish our rankings in a few weeks.