Rackspace Q2 report; Cloud Sites business sold to Liquid Web, no other strategic news

|About: Rackspace Hosting, Inc. (RAX)|By:, SA News Editor

Rackspace (NYSE:RAX) registers 8.9% Y/Y normalized revenue growth, net income of $36M (6.8% margin), adjusted EBITDA of $187M (35.8% margin), cash flow from operating activities of $165M, free cash flow of $98M, capital expenditures of $82M, cash and cash equivalents of $544M and interest-bearing debt of $501M.

Regarding the Cloud Sites divestment, Liquid Web is a cloud-hosting provider with $90M in annual sales. The deal is expected to close in the upcoming quarter.

Rackspace projects Q3 revenue of $510M-$515M and FY 2016 revenue of $2.06-$2.08B.

Taylor Rhodes, Rackspace president and CEO: "Demand is scaling rapidly for the expertise and managed services that we provide to businesses that use AWS, the Microsoft Cloud, and our OpenStack private cloud. We now serve almost 600 customers on these platforms, including some of the world's largest companies. During the second quarter, we demonstrated continued revenue growth, along with higher profitability, higher capital efficiency, strong operating cash flow and record free cash flow."

No news of a rumored takeover.

Shares are down around 1.7% in after hours and are up over 20% since the buyout speculation began last week.

Conference call

Press release

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