NEW YORK (TheStreet) -- Rackspace Hosting (RAX) stock is retreating by 5.06% to $21.40 in after-hours trading on Monday, after the cloud services provider reported lower-than-expected revenue for the 2016 first quarter.
The San Antonio-based company reported revenue of $518.1 million for the three months ended March 31, missing estimates of $518.95 million.
Revenue increased by 7.9% year over year and was affected by unfavorable foreign exchange rates and the sales of the Jungle Disk unit. On a constant currency basis, revenue was up 9.9%.
Adjusted earnings of 34 cents per share were well above Wall Street's estimates of 22 cents per share.
"We've continued to build market power behind our managed cloud strategy," CEO Taylor Rhodes said in a statement. "Demand for Rackspace's managed services for AWS (AMZN), the Microsoft (MSFT) cloud, and our OpenStack private cloud is scaling rapidly."
Shares of Rackspace are also being pressured by second quarter revenue projections that were in line with estimates on the high end of guidance, but well below expectations on the lower end.
The company expects revenue to be between $519 million and $524 million for the second quarter of 2016, while analysts are estimating $523.57 million in revenue.
Separately, Rackspace has a "hold" rating and a letter grade of C at TheStreet Ratings because of the company's revenue growth, reasonable valuation levels and good cash flow from operations, which is offset by unimpressive growth in net income and a generally disappointing performance in the stock itself.
You can view the full analysis from the report here: RAX
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.