Rackspace Hosting Inc - 3Q19 Results

• On 12 November 2019, information technology company Rackspace Hosting, Inc (Rackspace, Company) announced 3Q19 results for the three months ended 30 September 2019. Results were broadly in line with previous quarters, as CEO Kevin Jones continues to shift revenue mix towards Rackspace’s Managed Public Cloud Services (MCPS) operating segment.
• Although revenue was softer than prior comparative period (pcp), Rackspace reduced costs as it continues to focus on the less capital intensive MCPS operating segment, which bundles third-party infrastructure with managed services (such as Google Drive and Amazon Web Services). Additionally, revenues continue to grow in its Apps and Cross Platform segment following its acquisition of Relation Edge. Customer churn continued in its Managed Hosting and Private Cloud segment, as customers continue to migrate towards its MCPS operating segment.
• Rackspace reported revenues of USD600.8m (3Q18 USD 609.8m); EBITDA of USD127.2m (3Q18 USD181.7m), and a higher net loss of USD60.4m, compared to pcp net loss of USD38.3m. However, this is largely due to market price fluctuations from its investment in CrowdStrike, which is marked-to-market (shares are currently in a trading restriction).
• Liquidity remains adequate, as Rackspace reported USD190.4m in cash on its balance sheet and USD225m available under its revolving credit facility. Furthermore, the Company recorded free cash flow of USD132m for the quarter

Overall, Rackspace continues to deliver on its strategy. Under new CEO Kevin Jones, the Company recorded record bookings and announced the acquisition of Onica, a company which partners with Amazon Web Services to provide data solutions for clients. The acquisition, which is expected to be completed by 1Q20, is the latest in a number of acquisitions for the Company. In recent years, Rackspace has acquired Datapipe, RelationEdge and TriCore Solutions.