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Will Rackspace’s Fiscal 2Q16 Results Meet Analyst Estimates?

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Analyst expectations from Rackspace in fiscal 2Q16 earnings

Rackspace (RAX) is scheduled to report its fiscal 2Q16 earnings on August 8, 2016. For fiscal 2Q16, Estimize, a financial research platform, expects Rackspace to report revenues of $521.07 million and non-GAAP (generally accepted accounting principles) loss per share of $0.21.

In fiscal 1Q16, Rackspace reported revenues and non-GAAP (generally accepted accounting principles) EPS (earnings per share) of $518.9 million and $0.34, respectively. Though the company’s EPS exceeded analysts’ expectations by 12 cents, its revenue, despite a growth of ~8% on a YoY basis, fell short of analysts’ expectations by $0.85 million. Its EPS grew 21% on a YoY basis in fiscal 1Q16.
rackspace revenues

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Rackspace’s “fanatical support” for AWS exceeded 300 certifications

Rackspace is a “managed cloud” company. As a managed service provider, Rackspace has to get its cloud interface from players like Amazon, Microsoft (MSFT), or Google (GOOG) (GOOGL). Rackspace and other managed service providers resell the capabilities offered by Amazon’s AWS, Microsoft Azure, and Google Cloud Platform.

In mid-July 2016, Rackspace stated that its “fanatical support” (or support and service) had surpassed 300 Amazon (AMZN) AWS (Amazon web services) certifications. Rackspace launched its fanatical support for Microsoft’s Azure in 2015.

Rackspace’s increased customer signing from AWS is an encouraging sign, considering Amazon rules the cloud space with a 31% market share. Moreover, its deal with Microsoft’s Azure is also beneficial for the company, as Microsoft is rapidly making its presence felt in the cloud space.

Later in the series, we will discuss the factors impacting Rackspace’s growth in the cloud space.

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