Rackspace Journal

Budding cloud merchant Rackspace Hosting came in with better-than-expected net revenue of $162.4 million for the September quarter, up 17.4% year-over-year and up 6.8% sequentially. Earnings were up 45.3% year-over-year to $7.6 million or six cents a share and up 8.8% quarter-over-quarter.

Managed hosting revenue increased to $147.1 million, up 6% sequentially. Cloud revenue increased to $15.3 million, up 17% from the previous quarter. The company said its cloud business now represents ~10% of its total net revenues, up from 5% this time last year.

Total server count increased to 54,655, up from 52,269 servers and total customers increased to 80,944, up from 70,803 in Q2.

Capital expenditures were $46.7 million, including $28.7 million for purchases of customer gear, $4 million for data center build outs, $5.4 million for office buildouts and $8.5 million for capitalized software and other expenditures. These capex costs hurt.

Rackspace expects to have total capex of ~$185 million for the year, including $110 million for customer gear, $35 million for data centers, $15 million for office space, and $25 million for capitalized software and other.

It's got $103 million in the bank and $58.5 million in debt. Employment is up to 2,730 people.