Rackspace Hosting (NYSE:RAX) is a hosting provider for websites, web-based IT systems, and computing.
All quotations are from the company’s most recent S-1 filing, with links provided.
Business Overview (from prospectus)
Rackspace Hosting is the world’s leader in hosting. We deliver websites, web-based IT systems, and computing as a service. Our rapid growth is the result of our commitment to serving our customers, known as Fanatical Support®, and our exclusive focus on hosting. Our financial success is the result of responsible financial management and our disciplined, just-in-time approach to capital investment. During 2007, we had net revenues of $362.0 million. As of March 31, 2008, we served over 31,000 business customers of all sizes with more than 39,000 servers, over 750,000 business email accounts, and more than 43,000 cloud hosting domains. To deliver on our Fanatical Support Promise to our customers, we have created a culture that encourages passionate, engaged employees who we call “Rackers.” In 2008, Fortune magazine ranked Rackspace Hosting #32 on its list of “100 Best Companies to Work For.”
Offering: 15 million shares at $12-$16 per share. Net proceeds of approx. $162.6 million to be used to supplement existing sources of capital to finance growth plans, for working capital, and for general corporate purposes.
Net revenues were $84.0 million for the quarter ended June 30, 2007 and $130.8 million for the quarter ended June 30, 2008, an increase of $46.8 million, or 55.7%..cost of revenues were $26.1 million for the quarter ended June 30, 2007 and $42.8 million for the quarter ended June 30, 2008, an increase of $16.7 million, or 64.0%...sales & marketing exp were $12.6 million for the quarter ended June 30, 2007 and $19.8 million for the quarter ended June 30, 2008, an increase of $7.2 million, or 57.1%...G&A exp. were $24.3 million for the quarter ended June 30, 2007 and $38.1 million for the quarter ended June 30, 2008, an increase of $13.8 million, or 56.8%.
We operate in a highly competitive market that is evolving rapidly. Our principal areas of competition include:
Do-it-Yourself Solutions - Businesses may choose to house and maintain their own IT systems or use a colocation provider to house the IT hardware and provide connectivity. Companies that provide colocation services include AT&T (NYSE:T), Equinix (NASDAQ:EQIX), SAVVIS (NASDAQ:SVVS), Switch & Data (SDXC) , and telecommunications companies.
IT Outsourcing Providers - Businesses may choose to outsource their entire IT system and computing operations to an IT outsourcing provider rather than use our hosting services. Companies that provide IT outsourcing include CSC (NYSE:CSC), EDS (NASDAQ:EDS), and IBM (NYSE:IBM).
Hosting Providers - Businesses may choose to use a hosting provider other than us to provide services and support for their IT systems. Companies besides us that are in this category include AT&T, IBM, Pipex (OTC:PIPXF), SAVVIS, Terremark (NASDAQ:TMRK), The Planet, and Verio. We also expect to face competition from new market entrants such as Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOG), and Amazon (NASDAQ:AMZN), who have already, or are expected to, offer hosting services, particularly in the “cloud” hosting area.