Rackspace Adding 50 Servers Per Day

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As Rackspace expands its cloud, it's adding more than 50 servers a day, filling up wholesale data halls like this one at DuPont Fabros in Ashburn, Virginia. (Photo: DuPont Fabros Technology)

The growth is back at Rackspace Hosting. The cloud computing specialist added 4,762 physical servers in the second quarter of 2013, an average increase of 52 servers per day. It's the equivalent of rolling in at least a full cabinet of servers every day, including weekends.

The server growth in the three months ending June 30 marked a significant increase from recent reporting periods. Rackspace added 3,598 servers in the first quarter of 2013, and just 1,473 in the final quarter of 2012. The gain brought Rackspace's total servers under management to 98,884.

The results were welcomed by investors, who have scrutinized the pace of growth in Rackspace's cloud computing business in recent quarters, as the company has reported a lengthening of some enterprise sales cycles as it goes through a transition to its new cloud architecture based ion the OpenStack cloud platform.

Cloud Expansion Drives Growth

So what's driving growth? Rackspace (RAX) is deploying new cloud infrastructure across several regions.

"We just completed a new cloud build-out in Australia," said Rackspace CEO Lanham Napier. "When we built a new cloud, obviously, we create capacity upfront, and so we had a number of servers going online for that. We're building a new cloud in Virginia, as well as in Hong Kong. So part of what's driving this number is that we just flat out have capacity expansion and increases as we add these new clouds on a global basis.

"The other element that drives this number is that it's basically success-based growth. We did a little bit better growth-wise this quarter. And as we grow a little bit faster, we add more servers."

As a result, Rackspace invested $119.8 million in property and equipment in the second quarter, compared to $105.5 million in the prior quarter and $69.3 million in the same quarter in 2012.

"We've increased our investment levels to play for a bigger, long-term outcome," said Napier. "We feel we have the opportunity to build a really important global company and now is the time to make those investments. We want to make sure we are giving ourselves the proper funding to make the investments necessary to build a great long-term company. This is how we see things right now. We think now is the time to really go for it."