Rackspace Hosting Inc. (NYSE:RAX) reported net income above Wall Street’s expectations for the third quarter. Rackspace Hosting is a provider of hosting and cloud computing services.

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Rackspace Hosting Earnings Cheat Sheet for the Third Quarter

Results: Net income for Rackspace Hosting Inc. rose to $20 million (14 cents per share) vs. $11.8 million (9 cents per share) in the same quarter a year earlier. This marks a rise of 69.2% from the year earlier quarter.

Revenue: Rose 32.5% to $264.6 million from the year earlier quarter.

Actual vs. Wall St. Expectations: RAX beat the mean analyst estimate of 13 cents per share. Analysts were expecting revenue of $261.6 million.

Quoting Management: “In summary, we are very pleased with this quarter’s results. We are focused on finishing the year on a strong note and will give you a more in depth look into our 2012 plans when we report our full year results in February,” said Karl Pichler, chief financial officer.

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 28.5%, with the biggest boost coming in the most recent quarter when revenue rose 32.5% from the year earlier quarter.

Last quarter marked the fifth consecutive quarter of gross margins expanding as the company’s gross margin expanded 1.2 percentage points to 68.8% from the year earlier quarter. Over that span, margins have grown on average 1.3 percentage points per quarter on a year-over-year basis.

The company has now seen net income rise in three straight quarters. In the second quarter, net income rose 56.8% and in the first quarter, the figure rose 40.9%.

The company has now beaten estimates the last two quarters. In the second quarter, it topped expectations with net income of 13 cents versus a mean estimate of net income of 12 cents per share.

Looking Forward: The average estimate for the fourth quarter is steady at 15 cents a share. For the fiscal year, the average estimate has moved up from 51 cents a share to 52 cents over the last thirty days.

Competitors to Watch: Equinix, Inc. (NASDAQ:EQIX), SAVVIS, Inc. (NASDAQ:SVVS), Akamai Technologies, Inc. (NASDAQ:AKAM), Computer Sciences Corp. (NYSE:CSC), InterNAP Network Services (NASDAQ:INAP), Intl. Business Machines Corp. (NYSE:IBM), EarthLink, Inc. (NASDAQ:ELNK), Hewlett-Packard Company (NYSE:HPQ), Microsoft Corporation (NASDAQ:MSFT), and Onstream Media Corp (NASDAQ:ONSM).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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