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Rackspace tops Street 3Q forecasts, stock jumps

November 9, 2015

SAN ANTONIO (AP) — Rackspace Hosting Inc. shares rose in after-market trading Monday after the company posted better-than-expected results.

The San Antonio-based company said it earned a third-quarter profit of $36.5 million, or 26 cents per share.

The results beat Wall Street expectations. The average estimate of 12 analysts surveyed by Zacks Investment Research was for earnings of 21 cents per share.

The cloud computing company posted revenue of $508.9 million in the period, also exceeding Street forecasts. Ten analysts surveyed by Zacks expected $503.6 million.

A year earlier, Rackspace earned $25.7 million, or 18 cents per share, on revenue of $459.7 million.

Looking ahead, the company said it expects continued revenue growth, with 2 to 3 percent revenue growth in the fourth quarter, on a sequential basis, and full-year revenue growth of 12 to 14 percent year over year.

Separately the company announced it plans to sell up to $350 million in senior notes and use proceeds to repay its revolving credit facility and for general corporate purposes.

Rackspace shares have decreased 42 percent since the beginning of the year through the close of regular-session trading Monday. They rose $2.15, or 8 percent, to $29.24 in extended trading following the release of the earnings report.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on RAX at http://www.zacks.com/ap/RAX

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Keywords: Rackspace, Earnings Report

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