Rackspace, within an SEC filing, disclosed a $75 million stock buyback plan. Read between the lines, and the multi-cloud MSP is seeking to lift its share price ($RXT) and boost investor confidence in the business.
Rackspace is an important bellwether stock for midmarket MSPs that are seeking private equity funding or M&A partners. Indeed, Rackspace ranks among the world's Top 250 Public Cloud MSPs, according to ChannelE2E research.
Rackspace's revenue was $777 million in Q4 of 2021, up 9% compared to Q4 of 2020. Also, multi-cloud services represent 81% of Rackspace’s revenue, CFO Amar Maletira told Wall Street analysts in February 2022.
Rackspace: Growth Concerns, Business Evolution
However, Rackspace investors ($RXT) appear concerned about potential slowing grow at the company.
The 2022 growth concerns surfaced after Rackspace laid off 10 percent of its staff and offshored some support responsibilities in mid-2021.
Instead of competing against public cloud providers, Rackspace in recent years shifted to multi-cloud partnerships with Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform. Moreover, Rackspace has expanded its co-managed, multi-cloud security services.
The Rackspace business transformation has involved multiple tuck-in acquisitions and investments -- such as Microsoft Azure partner Just Analytics, and managed Kubernetes provider Platform 9. Additional buyouts have included RelationEdge, Datapipe, TriCore Solutions, and Onica.
Rackspace Business Valuation: 2016, 2018 and 2022 Data Points
The Rackspace business evolution has also involved multiple ownership models.
In 20216, Apollo Global Management acquired Rackspace for $4.3 billion and took the company private. By 2018, Rackspace owners and investors were seeking a $10 billion valuation for the multi-cloud MSP. However, a Rackspace IPO in August 2020 disappointed investors.
Fast forward to March 2022, and Rackspace's market capitalization is roughly $2.2 billion, according to SeekingAlpha.
