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Chief Information Officer
First Name
Steve
Last Name
Mills
Title
Chief Information Officer
Headline
Rackspace Hosting Reports Fourth Quarter and Year-End 2009 Results
Company Name
Rackspace
Industry
Software & Internet : Software & Internet Other
Company Website
City
San Antonio
Date of announcement/
Effective date
Effective date
Feb 16 2010
Type
Appointment
The full text of the press release
Rackspace Hosting Reports Fourth Quarter and Year-End 2009 Results
For the quarter ended December 31, 2009:
•?? Net revenue of $169.5 million grew 18.4% year-over-year and 4.4% from Q3 2009
•?? Adjusted EBITDA (1) of $56.0 million grew 31.4% year-over-year and 8.8% from Q3 2009
•?? Achieved adjusted EBITDA margin of 33.0%, up from 29.7% in Q4 2008
•?? Net income of $9.0 million grew 32.0% year-over-year and 18.8% from Q3 2009
SAN ANTONIO – February 16, 2010 – Rackspace® Hosting, Inc. (NYSE: RAX) announced financial results for the quarter and year ended December 31, 2009.
Net revenue for the fourth quarter ended December 31, 2009 was $169.5 million, up 4.4% from the previous quarter and up 18.4% from the fourth quarter of 2008. Unfavorable changes in currency exchange rates had a minimal negative impact on fourth quarter net revenue. Net revenue for the year was $629.0 million, an increase of 18.2% relative to 2008. Unfavorable changes in currency exchange rates had a negative impact on full year net revenue of $28 million. 2009 net revenue growth on a constant currency basis was 23%.
Managed hosting revenue for the quarter increased to $152.4 million, up from $147.1 million in the third quarter of 2009. Cloud revenue increased to $17.1 million in the quarter, up from $15.3 million in the third quarter of 2009. For the full year, cloud net revenue was $56.4 million, an increase of 124.8% relative to 2008.
Total server count increased to 56,671, up from 54,655 servers at the end of the third quarter of 2009, and total customers increased to 90,925, up from 80,944 at the end of the third quarter of 2009.
“We have spent the past year preparing for the next cycle of growth and we are developing fast. We have a strong position in the market today because of our specialized focus on hosted computing, our unique culture of customer service, known as Fanatical Support®, and our powerful hybrid portfolio approach that combines dedicated hosting and cloud hosting,” said Lanham Napier, president and chief executive officer. “In 2010, we plan to boost enterprise sales, continue to gain traction in the cloud, improve our SMB offering and mine our installed base for growth opportunities.”
Adjusted EBITDA for the quarter was $56.0 million, an 8.8% increase compared to the third quarter of 2009 and a 31.4% increase compared to the fourth quarter of 2008. For the full year, adjusted EBITDA was $200.6 million, an increase of 38.0% relative to 2008. The adjusted EBITDA margin for the quarter was 33.0%, up from 31.7% in the third quarter and 29.7% in the fourth quarter of 2008. For the full year, the adjusted EBITDA margin was 31.9%, up nearly 460 basis points from 2008.
Adjusted EBITDA and adjusted EBITDA margin were negatively impacted by a non-cash charge of $2.5 million for the quarter and $4.6 million for the full year relating to operating leases for the data centers in Northern Virginia and Chicago. Operations began in Northern Virginia in the second quarter of 2009 and Rackspace is now in the fifth of ten phases, while operations will begin in Chicago at the end of the first quarter of 2010.
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“We are pleased with the business performance in 2009. Amid the toughest economy in 70 years, we delivered on all the promises that we outlined last February,” said Bruce Knooihuizen, chief financial officer. “As we think about 2010 and beyond, we’re excited about the opportunities in our managed hosting and cloud businesses. We have made significant investments over the past year – we bolstered our management team, developed an enterprise offering and transformed the cloud. These investments and others have earned us the number one spot in the managed hosting and cloud computing industry, positioning us well for next cycle of growth.”
Net income was $9.0 million for the quarter, up 18.8% from the previous quarter and up 32.0% from the fourth quarter of 2008. For the full year, net income was $30.2 million, an increase of 39.2% relative to 2008. Net income margin for the quarter was 5.3% compared to 4.7% for the previous quarter and 4.8% for the fourth quarter of 2008. For the full year, the net income margin was 4.8%, up more than 70 basis points from 2008.
Cash flow from operating activities was $65.7 million for the fourth quarter of 2009. Capital expenditures were $47.1 million, including $28.4 million for purchases of customer gear, $7.9 million for data center build outs, $5.4 million for office build outs, and $5.4 million for capitalized software and other expenditures.
For the full year of 2010, the company expects to have total capital expenditures of $185 to $235 million, including $140 to $160 million for customer gear, $10 to $20 million for data centers, $10 to $20 million for office space, and $25 to $35 million for capitalized software and other.
Adjusted free cash flow (1) for the quarter was $6.1 million and for the full year was $13.8 million.
At the end of the fourth quarter, cash and cash equivalents were $125.4 million. Included in that amount are investments in money market funds in the amount of $60.7 million. Debt obligations totaled $167.4 million consisting of $109.7 million related to capital leases and $57.7 million related to current and non-current debt. $50.0 million of non-current debt is related to borrowings on the company’s line of credit. The company has an additional $194.3 million available for future borrowings on the company’s line of credit.
On a worldwide basis, Rackspace employed 2,774 Rackers as of December 31, 2009, up from 2,730 Rackers as of September 30, 2009 and 2,611 Rackers as of December 31, 2008.
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Rackspace Developments and Cloud Highlights
•?? Additions to Senior Leadership Team: In December, the company appointed Mark Roenigk as Chief Operating Officer. Mark has executive experience at eBay, where he served as its Chief Procurement Officer and Vice President of Operational Excellence, and XM Satellite Radio, where he served as Senior Vice President of Operations. In January, the company also appointed Steve Mills as Chief Information Officer.
•?? Launch of Cloud Servers for Windows: This beta offering marries Microsoft technology with utility pricing and on-demand convenience. Windows users can now deploy servers in minutes and pay only for what they use.
•?? Launch of Cloud Drive, Server Backup and Hosted Microsoft SharePoint: This new set of product offerings allows businesses to move their IT applications to the cloud. These products help customers spend less time maintaining basic IT systems, such as file servers and data backup software, and instead focus on their core competencies that drive revenue and add business value.
•?? Rackspace Email & Apps Named Winner of Frost & Sullivan Customer Value Award: This award recognizes Rackspace’s outstanding performance in customer service and high value-to-cost ratio, leading to improved customer retention and customer base expansion.
For the quarter ended December 31, 2009:
•?? Net revenue of $169.5 million grew 18.4% year-over-year and 4.4% from Q3 2009
•?? Adjusted EBITDA (1) of $56.0 million grew 31.4% year-over-year and 8.8% from Q3 2009
•?? Achieved adjusted EBITDA margin of 33.0%, up from 29.7% in Q4 2008
•?? Net income of $9.0 million grew 32.0% year-over-year and 18.8% from Q3 2009
SAN ANTONIO – February 16, 2010 – Rackspace® Hosting, Inc. (NYSE: RAX) announced financial results for the quarter and year ended December 31, 2009.
Net revenue for the fourth quarter ended December 31, 2009 was $169.5 million, up 4.4% from the previous quarter and up 18.4% from the fourth quarter of 2008. Unfavorable changes in currency exchange rates had a minimal negative impact on fourth quarter net revenue. Net revenue for the year was $629.0 million, an increase of 18.2% relative to 2008. Unfavorable changes in currency exchange rates had a negative impact on full year net revenue of $28 million. 2009 net revenue growth on a constant currency basis was 23%.
Managed hosting revenue for the quarter increased to $152.4 million, up from $147.1 million in the third quarter of 2009. Cloud revenue increased to $17.1 million in the quarter, up from $15.3 million in the third quarter of 2009. For the full year, cloud net revenue was $56.4 million, an increase of 124.8% relative to 2008.
Total server count increased to 56,671, up from 54,655 servers at the end of the third quarter of 2009, and total customers increased to 90,925, up from 80,944 at the end of the third quarter of 2009.
“We have spent the past year preparing for the next cycle of growth and we are developing fast. We have a strong position in the market today because of our specialized focus on hosted computing, our unique culture of customer service, known as Fanatical Support®, and our powerful hybrid portfolio approach that combines dedicated hosting and cloud hosting,” said Lanham Napier, president and chief executive officer. “In 2010, we plan to boost enterprise sales, continue to gain traction in the cloud, improve our SMB offering and mine our installed base for growth opportunities.”
Adjusted EBITDA for the quarter was $56.0 million, an 8.8% increase compared to the third quarter of 2009 and a 31.4% increase compared to the fourth quarter of 2008. For the full year, adjusted EBITDA was $200.6 million, an increase of 38.0% relative to 2008. The adjusted EBITDA margin for the quarter was 33.0%, up from 31.7% in the third quarter and 29.7% in the fourth quarter of 2008. For the full year, the adjusted EBITDA margin was 31.9%, up nearly 460 basis points from 2008.
Adjusted EBITDA and adjusted EBITDA margin were negatively impacted by a non-cash charge of $2.5 million for the quarter and $4.6 million for the full year relating to operating leases for the data centers in Northern Virginia and Chicago. Operations began in Northern Virginia in the second quarter of 2009 and Rackspace is now in the fifth of ten phases, while operations will begin in Chicago at the end of the first quarter of 2010.
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________________________________________
“We are pleased with the business performance in 2009. Amid the toughest economy in 70 years, we delivered on all the promises that we outlined last February,” said Bruce Knooihuizen, chief financial officer. “As we think about 2010 and beyond, we’re excited about the opportunities in our managed hosting and cloud businesses. We have made significant investments over the past year – we bolstered our management team, developed an enterprise offering and transformed the cloud. These investments and others have earned us the number one spot in the managed hosting and cloud computing industry, positioning us well for next cycle of growth.”
Net income was $9.0 million for the quarter, up 18.8% from the previous quarter and up 32.0% from the fourth quarter of 2008. For the full year, net income was $30.2 million, an increase of 39.2% relative to 2008. Net income margin for the quarter was 5.3% compared to 4.7% for the previous quarter and 4.8% for the fourth quarter of 2008. For the full year, the net income margin was 4.8%, up more than 70 basis points from 2008.
Cash flow from operating activities was $65.7 million for the fourth quarter of 2009. Capital expenditures were $47.1 million, including $28.4 million for purchases of customer gear, $7.9 million for data center build outs, $5.4 million for office build outs, and $5.4 million for capitalized software and other expenditures.
For the full year of 2010, the company expects to have total capital expenditures of $185 to $235 million, including $140 to $160 million for customer gear, $10 to $20 million for data centers, $10 to $20 million for office space, and $25 to $35 million for capitalized software and other.
Adjusted free cash flow (1) for the quarter was $6.1 million and for the full year was $13.8 million.
At the end of the fourth quarter, cash and cash equivalents were $125.4 million. Included in that amount are investments in money market funds in the amount of $60.7 million. Debt obligations totaled $167.4 million consisting of $109.7 million related to capital leases and $57.7 million related to current and non-current debt. $50.0 million of non-current debt is related to borrowings on the company’s line of credit. The company has an additional $194.3 million available for future borrowings on the company’s line of credit.
On a worldwide basis, Rackspace employed 2,774 Rackers as of December 31, 2009, up from 2,730 Rackers as of September 30, 2009 and 2,611 Rackers as of December 31, 2008.
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________________________________________
Rackspace Developments and Cloud Highlights
•?? Additions to Senior Leadership Team: In December, the company appointed Mark Roenigk as Chief Operating Officer. Mark has executive experience at eBay, where he served as its Chief Procurement Officer and Vice President of Operational Excellence, and XM Satellite Radio, where he served as Senior Vice President of Operations. In January, the company also appointed Steve Mills as Chief Information Officer.
•?? Launch of Cloud Servers for Windows: This beta offering marries Microsoft technology with utility pricing and on-demand convenience. Windows users can now deploy servers in minutes and pay only for what they use.
•?? Launch of Cloud Drive, Server Backup and Hosted Microsoft SharePoint: This new set of product offerings allows businesses to move their IT applications to the cloud. These products help customers spend less time maintaining basic IT systems, such as file servers and data backup software, and instead focus on their core competencies that drive revenue and add business value.
•?? Rackspace Email & Apps Named Winner of Frost & Sullivan Customer Value Award: This award recognizes Rackspace’s outstanding performance in customer service and high value-to-cost ratio, leading to improved customer retention and customer base expansion.