Rackspace sees solid cloud growth, but shares skid anyway

Rackspace(s rax) had a pretty good quarter when it came to cloud growth, which was fueled by its new OpenStack-based cloud business. The San Antonio, Texas company said revenue from its dedicated cloud business grew 15 percent to $265.6 million from $224.8 million for the year while revenue from its smaller but closely-watched public cloud business rose 49 percent to $87.3 million from $58.5 million. Rackspace offers both public and private cloud implementations of OpenStack.


The public cloud metric is closely watched because Rackspace,  arguably the largest OpenStack player, competes with public cloud leader Amazon in that space. “How much of that growth is on the new platform? Today we’d say virtually all of it is,” Rackspace CEO Lanham Napier told analysts on the company’s earnings call Tuesday afternoon.

“In prior calls we talked about customers naturally migrating [from our older platform] and we’re seeing that but what we’re seeing is traction on the new platform. On prior calls we discussed we were having conversations with CIOs about the open cloud and those conversations have progressed into pilots,” he said.

For its fourth quarter, Rackspace earned $29.9 million, or 21 cents a share, up from $25 million, or 18 cents a share from the year-ago quarter.


This story was updated continually with new information from the analyst call and a subsequent conversation with Lanham Napier.