Rackspace reported better-than-expected quarterly results as demand rose for its Web-hosting services, and the company forecast current-quarter revenue above Wall Street estimates.
The company's shares rose as much as 12% in trading after the bell.
Rackspace forecast revenue of $434 million-$440 million for the second quarter ending June. Analysts on average were expecting revenue of $435.5 million, according to Thomson Reuters.
"We are encouraged by qualitative factors, including the thousands of new customers we added in the quarter..." chief executive Graham Weston said in a statement.
Web-hosting companies such as Rackspace and competitors Equinix and Internap Network Services own or lease space on a server, typically housed in data centres.
Rackspace's net income fell to $25.4 million, or 18 cents per share, in the quarter ended 31 March, from $27 million, or 19 cents per share, a year earlier.
Net revenue rose 16% to $421 million.
Analysts on average had expected a profit of 12 cents per share on revenue of $419.4 million.
Dedicated cloud revenue, which accounts for 71% of the company's total revenue, rose 11%. Public cloud revenue rose by more than a third.
Rackspace, whose shares declined about 30% in the year to Monday's close, is facing intense competition in the cloud business from Amazon, Microsoft and IBM.
The stock closed at $27.53 on the New York Stock Exchange on Monday.
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