August 8, 2013 / 8:22 PM / in 5 years

Rackspace results beat estimates on higher revenue from its servers

(Reuters) - Rackspace Hosting Inc, which runs server farms that lease online storage space to companies, reported better-than-expected quarterly results as it generated more revenue per server.

Shares of the company jumped 11 percent in extended trading.

Web hosting companies such as Rackspace, Equinix Inc and Internap Network Services Corp own or lease space on servers housed in data centers, warehouses lined wall-to-wall with powerful storage servers.

Average monthly revenue per server rose 2.2 percent to $1,298 in the quarter.

Rackspace added 4,762 servers in the quarter, bringing its total server count to 98,884.

The company’s net income fell to $22.4 million, or 16 cents per share, in the second quarter, from $25.1 million, or 18 cents per share, a year earlier.

Revenue rose 18 percent to $376 million.

Analysts on average had expected earnings of 13 cents per share on revenue of $372.3 million, according to Thomson Reuters I/B/E/S.

Shares of the company, which have dropped more than 15 percent since it reported results in May, were trading at $48.85. They closed at $44.22 on the Nasdaq on Thursday.

Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Maju Samuel and Saumyadeb Chakrabarty

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