Rackspace Hosting Q2 Profit Down, But Tops Views; Shares Surge

(RTTNews) - Rackspace Hosting Inc. (RAX) Thursday reported a drop in profit for the second quarter, as increased marketing, research and administrative costs offset a double-digit revenue growth. Nevertheless, shares of the cloud computing service provider jumped 11 percent in extended trade after its earnings and revenues easily trumped Wall Street estimates.

The San Antonio, Texas-based company's profit dropped to $22.4 million or $0.16 per share from $25.1 million or $0.18 per share last year. On average, 21 analysts polled by Thomson Reuters expected the company to report a profit of $0.13 per share for the quarter. Analysts' estimates typically exclude special items.

Net revenues for the quarter grew18 percent to $375.8 million from $319.0 million a year ago. Analysts expected revenue of $372.25 million for the quarter.

Total server count increased to 98,884, up from 94,122 servers at the end of the previous quarter. Average monthly revenue per server rose to $1,298 from $1,270.

Operating margin declined to 9.4 percent from 12.8 percent last year, as research and development, marketing, and general and administrative expenses increased.

RAX closed Thursday at $44.22, down $0.85 or 1.89%, on the NYSE. The stock , however, gained $4.78 or 10.81% in after-hours trade.