Rackspace +9.7% AH on Q1 beat, solid Q2 guidance

Rackspace (RAX) expects Q2 revenue of $434M-$440M, favorable at the midpoint to a $435.5M consensus.

In spite of intense cloud infrastructure price pressure, adjusted EBITDA margin rose 80 bps Q/Q in Q1 to 33.2% (it was down 130 bps Y/Y), and contributing to its EPS beat. Rackspace expects a Q2 adjusted EBITDA margin of 32%-34%.

Adjusted free cash flow was $39.9M, up from $15.3M in Q4 and -$1.2M a year ago, and also topping net income of $25M. Capex totaled $101M (24% of revenue).

Dedicated cloud (Web hosting) revenue +3% Q/Q and +10% Y/Y to $299.7M. Public cloud revenue (inc. OpenStack) +4% Q/Q and +34% Y/Y to $121.4M.

Net upgrade rate fell to 0.9% from 1.1% in Q4. Churn was -0.6% vs. -0.7%. Servers deployed rose 2% Q/Q to 106.2K, and average revenue/server rose $14 to $1,336.

Q1 results, PR

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