As it recovers from ransomware attack, Rackspace tops quarterly earnings forecast

Shares in Rackspace Technology Inc. rose by practically 10% in late buying and selling after the cloud providers supplier topped estimates in its newest earnings report.

For the fourth quarter that ended Dec. 31, Rackspace reported earnings earlier than prices reminiscent of inventory compensation of $74 million, or six cents per share, down from $122 million, or 25 cents per share, in the identical quarter of final 12 months. Income rose simply 1%, to $787 million. Analysts had expected earnings per share of 5 cents on income of $776.31 million.

Income from Rackspace’s core Core Segments, comprised of Multicloud Companies and Apps & Cross Platform, edged up 2% year-over-year within the quarter, pushed by new buyer acquisitions and rising buyer spending. On a constant-currency foundation, income rose 3% year-over-year.

The fourth quarter additionally noticed Rackspace report $217 million in noncash impairment expenses pushed by $129 million of goodwill and a $75 million asset impairment. The goodwill impairment was the results of a decline in market capitalization following a ransomware assault on Rackspace’s Hosted Alternate electronic mail enterprise. The asset impairment got here from Rackspace plan to maneuver officers from one a part of San Antonio to a different later this 12 months.

The ransomware assault hit Rackspace in early December, forcing the corporate to close down its Hosted Alternate Setting. In early January, Rackspace mentioned that an investigation into the assault had discovered that cybercriminals had solely stolen information from 27 of its 30,000 prospects. The corporate added that it had determined to not rebuild the Hosted Alternate electronic mail atmosphere and would as an alternative migrate to Microsoft 365.

For the complete 2022, Rackspace reported an adjusted revenue of $364 million, or 54 cents per share, down from $484 million, or 97 cents per share, in 2021. Income rose 4%, or 5% in fixed foreign money, to $3.122 billion.

“We delivered fourth-quarter income and revenue above our steerage and reported strong money move,” Amar Maletira, chief government officer of Rackspace, mentioned in a statement. “My focus is on altering the trajectory of the enterprise and positioning Rackspace for sustained, long-term progress.”

For the primary quarter of 2023, Rackspace expects an adjusted loss per share of 1 to 5 cents on income of $752 million to $762 million. Analysts had been anticipating breakeven on $762.14 million in income.

Regardless of the slight miss in outlook, traders preferred the earnings beat, with Rackspace shares up greater than 9% after-hours.

Photograph: Scott Beale/Laughing Squid