Analysts React to Rackspace Earnings with Downgrades

Since the cloud MSP reported its second-quarter earnings, investment analysts have changed their ratings.

Kelly Teal, Contributing Editor

August 15, 2022

7 Slides

In the wake of the latest round of Rackspace earnings, investment analysts have changed their expectations for the company’s performance.

Recall that, last week, Rackspace earnings came in lower than hoped. Rackspace — the Texas-based managed cloud computing provider — already had said its second-quarter per-share earnings would weaken compared to previous periods. It reported 17 cents per share; analysts wanted to see 23 cents per share. Overall, Rackspace showed a net loss of $40.6 million for the three months ended June 30. Its revenue rose a mere 4% compared to a year ago. That was $12.5 million less than analysts had forecast.

Much of Rackspace’s performance will hinge on how it tackles its public-cloud-private-cloud conundrum. At first, this past May, Rackpace execs said they were exploring sale options. That tactic appears to have dissolved in favor of splitting the company into two groups, though there is not yet confirmation on that. All eyes are on Rackspace’s analyst day, coming up next month.

In the intervening weeks, investment analysts may continue to deliver recommendations stemming from the Aug. 9 Rackspace earnings call and subsequent guidance. Find out what big names – including Credit Suisse, Royal Bank of Canada, Raymond James and Barclays – already have done in the past week. See the slideshow above.

Want to contact the author directly about this story? Have ideas for a follow-up article? Email Kelly Teal or connect with her on LinkedIn.


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About the Author(s)

Kelly Teal

Contributing Editor, Channel Futures

Kelly Teal has more than 20 years’ experience as a journalist, editor and analyst, with longtime expertise in the indirect channel. She worked on the Channel Partners magazine staff for 11 years. Kelly now is principal of Kreativ Energy LLC.

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