These results were adversely affected by shifts in currency exchange rates. On a constant currency basis, net revenue grew 16.6% from the first quarter of 2014.
The company briefly touched on its guidance for the second quarter of 2015. Rackspace expects that revenue will grow in a range of 1.5% to 2.5% on a constant currency basis and adjusted EBITDA margins will be between 32% and 34%. There are consensus estimates of $0.22 in EPS on $502.11 million in revenue for the second quarter.
Recently, the popular matchmaking mobile app Tinder became a new customer of Rackspace, looking to power its matching and moment rating capabilities. Among other things, conferences in New York, Atlanta and San Francisco have touted how Rackspace’s Managed Cloud has been a solid solution for high-profile tech businesses.
On a worldwide basis, Rackspace employed 5,964 Rackers as of the end of March.
Return on capital was 12.6% in the first quarter, compared to 11.5% in the same period last year.
Taylor Rhodes, president and CEO of Rackspace, commented on the earnings:
We delivered on our promises in the first quarter and are better positioning ourselves to benefit from the rapid growth of the managed cloud market. The execution of our strategy is driving profitable growth for Rackspace, including through a rising number of new, larger enterprise customers.
At end the first quarter, Rackspace had cash and cash equivalents totaling $275.7 million, compared to $213.5 million at the end of December 2014.
In this quarter John Harper was appointed to the board of directors. According to Rackspace:
John is an industry veteran with a strong track record of driving financial success for leading technology companies. His extensive background in finance and technology make him a valued addition to the Board.
Looking at the chart, this stock is right back to where it was in October of 2013 when it fell out of bed. For the past 52-weeks, this stock has had phenomenal growth but it doesn’t look like this earnings report was enough to satisfy investors and keep the turnaround alive.
Shares of Rackspace closed Monday down 1.6% at $53.13. Following the release of the earnings report, shares were down even further, dropping 8.7% to change hands at $48.49 in after-hours trading. The stock has a consensus analyst price target of $54.84 and a 52-week trading range of $26.24 to $56.20.
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