Rackspace Hosting Profit Falls 40%

(RTTNews) - Rackspace Hosting, Inc. (RAX) said Monday after the markets closed that its third quarter profit fell 40% from last year, as higher costs and expenses more than offset a 16% increase in revenue.

The company's quarterly earnings per share also came in below analysts' expectations, but its quarterly revenue just managed to beat analysts' forecast.

Rackspace shares are currently losing 6.81% in after hours trading after closing the day's regular trading session at $49.31, up 77 cents or 1.59%. The shares trade in a 52-week range of $33.91 to $81.36.

The San Antonio, Texas-based open cloud company reported net income for the third quarter of $16.3 million or $0.11 per share, compared to $27.2 million or $0.19 per share for the year-ago quarter.

On average, 19 analysts polled by Thomson Reuters expected the company to earn $0.16 per share for the third quarter.

Net revenue for the third quarter rose 16% to $388.64 million from $335.99 million in the same quarter last year. Seventeen analysts had a consensus revenue estimate of $387.47 million for the third quarter.

Total costs and expenses surged 24% to $360.9 million from $290.7 million a year ago.

Total server count increased to 101,967, up from 98,884 servers at the end of the previous quarter.