Rackspace posts double-digit jump in sales and profits

Analysts eye up results and still don't like look of them

Cloud purveyor Rackspace clocked up sales of $1.79bn (£1.16bn) for its full-year 2014, a 17 per cent increase on 2013, while net income rose 28 per cent to $110m (£73.1m).

Fourth-quarter net income at the cloudy firm was particularly strong, increasing 80 per cent to $37m (£24m) on revenue up 16 per cent to $472m (£306m).

But despite posting bumper results for the year and quarter, it still failed to live up to market expectations. Consequently shares fell five per cent after trading, said TechMarketView analyst Kate Hanaghan.

"The challenge for companies providing cloud infrastructure services is that there are such high expectations from industry watchers," she said.

Last year Rackspace admitted to investors that it couldn't find a buyer, despite being approached by a "multiple parties" in May.

Hanaghan said this reflects the difficult the company faces in occupying the middle ground between the hyperscale providers and the established services providers – "having to fight off fierce competition from both".

For the full year 2015, Rackspace expects revenue to grow between 14 and 18 per cent. It anticipates revenue increase of between 2 and 3.5 per cent.

Taylor Rhodes, chief executive of Rackspace, said: "We will build on this momentum in 2015 by expanding the specialized expertise that we offer in areas such as e-commerce, big data and security." ®