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August 9, 2009

Rackspace Q2 profit up 67%

Reports increase in customer base, revenue up 16.2%

By CBR Staff Writer

Rackspace Hosting has reported a 67.2% increase in its profit for the second quarter of 2009, compared to the same quarter of 2008. The company posted a net income of $7m for the second quarter of 2009, up from $4.18m in the second quarter of 2008.

Net revenue for the second quarter ended June 30, 2009 was $152m, up 16.2%, compared to net revenue of $130.8m in the same period a year-ago. Revenue for the quarter was impacted by $2.4m of service credits relating to service interruptions in a portion of the company’s DFW data centre in June, offset by a sequential quarterly lift of $2.7m in currency exchange rate fluctuation.

The company said that its Managed Hosting revenue was $138.9m, while Cloud revenue was $13.1m during the quarter. Total customer count increased to 70,803, up from 62,078 customers in the first quarter of 2009.

Lanham Napier, president and chief executive officer of Rackspace, said: “We have been running the business to scale the profits and returns in our Managed Hosting offering while investing in the long-term, game changing offerings in our Cloud business. Additionally, we have strengthened our pipeline by competing for larger opportunities and we are gaining traction in the enterprise space with several key customer wins.”

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Looking ahead, the company expects to have total capital expenditures of $165m to $185m compared to previous estimates of between $120m and $160m. The increased spend is based on improved growth expectations for the next twelve months, the company said.

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