Wed, Aug. 26, 4:21 PM
- The Nasdaq has closed its latest ultra-volatile day up 4.2%. Chip stocks, hit hard in recent weeks amid China/inventory concerns, were among the standouts (SOXX +5%) during the rally: Big gainers included Nvidia (NVDA +7.5%), Skyworks (SWKS +6.9%), Qorvo (QRVO +5.9%), Xilinx (XLNX +6.3%), Analog Devices (ADI +7.1%), Linear (LLTC +6.1%), SanDisk (SNDK +7.4%), ON Semi (ON +6.2%), and Cavium (CAVM +5.6%).
- Cybersecurity plays and various other enterprise tech names also did well. Standouts included HP (HPQ +5.5%), Palo Alto Networks (PANW +6%), Rackspace (RAX +9.8%), Red Hat (RHT +5.9%), KEYW (KEYW +8.1%), Brocade (BRCD +5.6%), ShoreTel (SHOR +5.7%), Violin Memory (VMEM +14.7%), and Rapid7 (RPD +7.2%).
- In addition to HP, tech large-caps turning in big gains included Apple (AAPL +5.7%) Microsoft (MSFT +5.5%), Google (GOOG +7.7%), and Intel (INTC +5.5%). Google benefited from a Goldman upgrade.
- KEYW announced a CEO change yesterday afternoon. HP and Brocade are adding to last week's post-earnings gains. Skyworks/Qorvo peer Avago has posted an FQ3 beat after the close.
Mon, Aug. 10, 4:25 PM
- Rackspace (NYSE:RAX) uses its Q2 report to announce the company's buyback authorization has been hiked to $1B; a $500M buyback was launched last November, of which $200M has been used. At least $500M worth of shares will be repurchased in 6-9 months.
- The program will be financed with a mixture of existing cash, future cash flows, and debt. Rackspace now plans to have a debt level equal to 1.5x annual EBITDA, and expects to achieve it in the next 24 months.
- Guidance: Q3 guidance is for revenue to rise 2%-3.5% Q/Q on a constant currency basis; consensus is for revenue to rise 4% Q/Q in dollars to $511.1M. Q4 guidance is also for 2%-3.5% Q/Q constant currency growth, and full-year guidance is for 12%-14% Y/Y constant currency growth; the 2015 revenue growth consensus (in dollars) is at 12.2%. Adjusted EBITDA margin guidance for all 3 periods is 33%-34% (compares with Q2's 33.1%, +100 bps Y/Y).
- As previously indicated, Rackspace is no longer breaking out its dedicated cloud (Web hosting) and public cloud (IaaS) revenue. Average revenue/server rose by $4 Q/Q and $41 Y/Y to $1,416. Servers deployed rose 2% Q/Q and 8% Y/Y to 116,329.
- Cost controls helped EPS meet estimates in spite of a revenue miss: GAAP costs/expenses rose 7% Y/Y to $435.8M, less than revenue growth of 11%. Ahead of the new capital structure policy, Rackspace ended Q2 with $317M in cash, and just $7M in debt.
- Shares have risen to $33.11 in AH trading.
- Q2 results, PR
Mon, Aug. 10, 4:03 PM
Sun, Aug. 9, 5:35 PM| Sun, Aug. 9, 5:35 PM | 13 Comments
Tue, Jul. 14, 1:13 PM
- A day after Rackspace (NYSE:RAX) announced a services partnership with Microsoft related to Azure, shares are rallying in response to a CRN report stating a similar deal with Amazon Web Services (NASDAQ:AMZN) is close.
- CRN states a channel partner for both Rackspace and Amazon "approached his company with an offer to participate in a beta program in which Rackspace would manage and provide support for his customers hosting workloads in Amazon's cloud." The source: "They are going to wrap their managed 'Fanatical Support' around AWS and essentially become an Amazon reseller."
- AWS had revenue of $5.16B over the 12 months ending March 31, and (per Synergy Research) still controls nearly 30% of the global cloud IaaS/PaaS market.
- Rackspace is now up 8.5% over the last two days. Shares are still down 17% YTD.
Mon, Jul. 13, 11:52 AM
- Rackspace (RAX +3.6%) is partnering with Microsoft (NASDAQ:MSFT) to provide managed support, monitoring, and "architectural guidance" services to companies looking to deploy Microsoft's Azure cloud infrastructure/app (IaaS/PaaS) platform, which supports public, private, and hybrid cloud deployments.
- The companies will also offer a hybrid cloud solution that combines Azure, Rackspace's private cloud solution, and Microsoft's Cloud Platform (a collection of products for deploying private clouds).
- Rackspace, whose IaaS offerings compete with Azure and has often called its "fanatical" customer support as a differentiator, is offering both an Azure infrastructure and support bundle (effectively acts as a reseller arrangement), as well as a support-only option. The services will initially be provided to U.S. clients; international availability arrives in 2016.
- Azure is believed to be the world's second-largest IaaS/PaaS platform, trailing only Amazon Web Services.
Wed, Jun. 3, 1:26 PM
- IBM (IBM +0.1%) has acquired Blue Box, a provider of managed cloud services for companies deploying private and hybrid clouds based on the open-source OpenStack cloud infrastructure (IaaS) platform.
- Cisco (CSCO +0.1%) is buying Piston Cloud Computing, a provider of software (called CloudOS) for managing and deploying services on commodity servers running OpenStack, as well as popular big data/analytics software platforms such as Hadoop and Spark. Terms for both deals are undisclosed.
- IBM, whose SoftLayer unit already offers OpenStack services, will use Blue Box to "help businesses rapidly integrate their cloud-based applications and on-premises systems into OpenStack-based managed cloud," and that the deal allows it to offer a remotely-managed OpenStack private cloud solution.
- Cisco asserts Piston and its engineers will "help accelerate the product, delivery, and operational capabilities" of its Intercloud platform, which (via service provider partners) provides a network of OpenStack cloud infrastructures running on Cisco hardware and software, and within which workloads can be moved between data centers. It also expects Piston to strengthen its OpenStack private cloud offering, the fruits of last year's acquisition of private cloud services provider Metacloud.
- IBM ended Q1 on a $3.8B/year run rate for its various "cloud delivered as a service" offerings. Synergy Research believes IBM is the third-largest player in the public/private/hybrid cloud services space, trailing Amazon (easily the market leader) and Microsoft.
- Many tech/telecom giants have embraced OpenStack in their efforts to compete against Amazon, Microsoft, and Google's proprietary platforms. Rackspace (RAX +0.7%) remains a top independent OpenStack provider
Tue, May 12, 9:16 AM
Mon, May 11, 5:03 PM
- With forex clearly a headwind (it had a 250 bps impact on Q1 revenue growth), Rackspace's (NYSE:RAX) guidance for Q2 revenue to be up 1.5%-2.5% Q/Q in constant currency implies Q2 sales will fall short of a consensus of $502.1M (+4.6% Q/Q in actual dollars).
- Financials: Revenue growth fell to 14.1% Y/Y in Q1 from Q4's 15.8% and Q3's 18.3%. Gross margin was 66.4%, -100 bps Q/Q and -30 bps Y/Y. R&D rose to 6.7% of revenue from 6% a year ago, and G&A to 18% from 16.9%. Sales/marketing fell to 12.3% from 13.6%. $90.2M was spent on capex, -10% Y/Y and equal to 19% of revenue.
- Business metrics: Average revenue/server was $1,412, flat Q/Q and up $76 Y/Y; it had been rising Q/Q in prior quarters. Servers deployed rose 1% Q/Q and 7% Y/Y to 114,105. Headcount rose by 28 Q/Q and 221 Y/Y to 5,964. Rackspace is no longer breaking out its dedicated cloud (Web hosting) and public cloud (IaaS) revenue.
- Also: 1) Adjusted EBITDA margin was 33.6% vs. 35% in Q4 and 33.2% a year ago (Q2 guidance is at 32%-34%). 2) Adjusted free cash flow was $67.4M, +69% Y/Y and above net income of $28.4M. 3) No buybacks took place; $200M was spent on them in Q4. Rackspace says it's seeing "a rising number of new, larger enterprise customers."
- Rackspace has fallen to $46.88 AH. Is competition taking a toll? Amazon's AWS revenue rose 49% Y/Y in Q1 to $1.57B, and Synergy Research thinks Microsoft, IBM, and Google saw even faster IaaS/PaaS cloud service growth (albeit off much smaller bases).
- Q1 results, PR
Mon, May 11, 4:09 PM
Sun, May 10, 5:35 PM
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Fri, Apr. 24, 11:08 AM
- In its first quarter of breaking out Amazon Web Services' results on their own, Amazon reported the business had Q1 revenue of $1.57B (+49% Y/Y) and (notably) a $265M op. profit (+8%).
- Rival Rackspace (NYSE:RAX) is getting a lift from the numbers ahead of its May 11 Q1 report. For reference, Rackspace had Q4 public cloud segment revenue of $147.7M (+26% Y/Y, 31% of total revenue).
Mon, Apr. 20, 4:09 PM
- Equinix (EQIX +1.6%) should post revenue and EBITDA ahead of Street estimates amid "y/y growth in MRR ... and a secular shift to the cloud," according to Pacific Crest's Michael Bowen and Trevor Upton. It's one of five stocks that Pacific Crest mentioned buying into upcoming earnings in its Q1 Communications Services Preview.
- The stocks all get an Outperform rating from the analysts. Equinix received a $255 price target and the firm "would remind investors that our bull case on shares remains $280." Shares closed today at $239.80 and the firm reports April 29.
- Rackspace (RAX +0.9%) also benefits from shifting business, the firm says: "We believe we are in the early stages of a secular shift from on-premise data centers to hybrid clouds made up of private and public cloud platforms. We believe the company is executing more efficiently and improving its managed service value proposition." Their price target is $58; shares closed today at $52.53 and the company reports May 11.
- SBA Communications (SBAC +1.8%) got a price target of $138 on expectations of strong leasing activity and hearing about positive impact from the FCC's last spectrum auction; it closed today at $121.84 and reports on Friday.
- Cogent Communications (CCOI +1%) received a price target of $45 and closed today at $34.24; it reports May 7. GTT Communications (GTT +1.6%) got a $24 target and closed today at $18.31; it reports May 7 as well.
Wed, Apr. 15, 12:40 PM
- Scott Crenshaw, until now domain name/authentication service provider VeriSign's (VRSN +0.1%) SVP of products (responsible for developing new products/services), has been hired by Rackspace (RAX +0.1%) to be its SVP of strategy and product.
- In his new job, Crenshaw will oversee Rackspace's "corporate strategy, business development and product and engineering portfolio." He'll report to CEO Taylor Rhodes, who landed the top job only 7 months ago.
- VeriSign's Q1 report arrives on April 23. Rackspace hasn't set an earnings date yet.
Thu, Apr. 9, 10:56 AM
- BofA/Merrill has downgraded cloud HR/payroll software vendor Paylocity (PCTY -5.9%) and cloud fleet management software vendor Fleetmatics (FLTX -3.2%) to Underperform, and cloud contact center software vendor Five9 (FIVN -4.7%) to Neutral. Rackspace (NYSE:RAX) and Citrix (NASDAQ:CTXS) have also been downgraded (to Neutral and Underperform, respectively), but are posting sub-1% declines.
- Shares of all 3 companies rallied in February in response to Q4 beats (I, II, III)
Fri, Mar. 6, 7:22 PM
- During talks with Rackspace (NYSE:RAX) sales chief Todd Cione and other execs, JMP's Patrick Walravens was told business and demand signals remain good, particularly from larger organizations, and that the Web hosting/cloud infrastructure provider is beginning to reap the benefits of last year's big sales reorg.
- Also heard: Last year's favorable Gartner Magic Quadrant report (named Rackspace one of two leaders, along with Datapipe, in cloud-enabled managed hosting) has driven an increase in enterprise RFPs; Microsoft (though competing against Rackspace via Azure) remains Rackspace's largest hosting partner.
- In addition, Walravens reports VMware (NYSE:VMW) and Rackspace plan joint account planning and branding related to their recently-launched partnership - it involves a managed private cloud service based on VMware's comprehensive vCloud management platform.
- Following the deal, Rackspace offers managed private cloud services relying on VMware and Microsoft software at similar prices to its mainstay OpenStack offerings. "We are agnostic," says Rackspace exec Arrian Mehis. VMware, meanwhile, has been relying on service provider partnerships to extend vCloud's reach.
- Previously: Rackspace gains post-earnings as analysts react
- Previously: VMware forms public cloud service partnership with Google
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