Rackspace (RAX) Tops Q3 EPS by 2c, Q4 Revenue Guidance Light

Rackspace (NYSE: RAX) reported Q3 EPS of $0.18, $0.02 better than the analyst estimate of $0.16. Revenue for the quarter came in at $460 million versus the consensus estimate of $458.4 million.

Rackspace sees Q4 2014 revenue of $469-476 million, versus the consensus of $476.5 million.

This range includes an expected negative foreign currency impact of approximately $5 million in the quarter or 110 basis points of sequential growth. Our expected range of net revenue assumes sequential growth of 3.0 percent to 4.5 percent on a constant currency basis, or growth of 2.0 percent to 3.5 percent on a GAAP basis.

In addition, after a review of the company’s growth strategy, capex requirements, capital structure, and cash flow profile, the company’s Board of Directors authorized a repurchase of up to $500 million of the company’s stock over the next two years. The company intends to execute a $200 million accelerated share repurchase as its first initiative under this program. Rackspace intends to fund these share repurchases through a combination of its available cash balance and existing line of credit. The remaining $300 million will be available for purchases in future periods and the actual timing, method, number and value of any shares repurchased will be determined by the company at its discretion.

For earnings history and earnings-related data on Rackspace (RAX) click here.

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