US-based IT hosting company Rackspace invested more than US$101m in CAPEX in Q1 2014, ending March 31, and a total of $10m was spent on building out its data centers.

Rackspace’s CFO Karl Pichler said in an earnings call earlier this week that one of the company’s goals for 2014 was to improve its capital efficiency by keeping CAPEX down towards 25% of revenue – its Q1 2014 results represented 24%.

“Obviously this is a good start, and we feel good about delivering on our goal to improve capital efficiency for the year,” Pichler said.

Rackspace witnessed revenue growth of 3.2% to $421m in Q1 2014 and forecasts sequential revenue growth of 3% to 4.5% with total revenue in the region of $434m to $440m.

“…revenue growth is typically lower in Q1 than Q4 due to a number of seasonal factors,” Pilcher said.

“These include fewer billing days, cloud workload spinning down after the holiday months and the relocation of IT budgets starting in a new year”.

Rackspace’s dedicated cloud generated net revenue of more than $299m in Q1 2014 and its public cloud generated net revenue of more than $121 in Q1 2014, both up from previous results.

The net revenue from both cloud services for Q1 2014 totalled just over $421m a 16.2% increase year-over-year.

“…we have to deal with the fact Amazon and Google are clearly in the cloud market,”  Rackspace’s president William Taylor Rhodes said.

Taylor Rhodes confronted the question how Rackspace can compete against Amazon and Google after their dramatic cloud price cuts in April, stating both companies are competing from a different segment of the market.

Amazon Web Services reduced some of its price plans by a huge 65% and Google slashed some of its prices by an incredible 85%.

“Clearly the price cuts cause people to think about their options. They create a compelling question of ‘should I go with the unmanaged cloud option, and what is the best path for me?’ For some customers it will be because they will choose, for whatever purposes, to manage clouds themselves,” Taylor Rhodes said.

“But the point here is they will manage it. A cloud infrastructure has to be managed”.

Taylor Rhodes said the question Rackspace is asking the potential market is, ‘who’s going to manage that for you?’

Rackspace’s chairman and CEO Graham Weston said the company plans to increase solutions it runs for customers on top of its hybrid cloud system.

“…it’s important to remember that this is just the latest iteration of a long-standing trend for those players who sell raw computing capacity, a service that only covers a fraction of the real cost of transitioning, running and scaling on the cloud,” Weston said.