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"We are excited about our two business units."

Kevin Jones gave analysts insight into what’s ahead for the giant managed services provider.

Don’t expect more insight into a potential restructuring of Rackspace until next month.

The Texas-based managed cloud computing provider says it won’t reveal new details until September’s Analyst Day. But some observers expected a bit more information on August 9, when Rackspace announced its second-quarter earnings.

Rackspace’s Kevin Jones

There were some clues as to where Rackspace was headed. At first, CEO Kevin Jones told analysts:[W]We are excited to split this organization into two business units. … we’re seeing very strong demand on the public cloud side and strong demand on the private cloud side. ”

However, he added:[W]With the restructuring, we are restructuring our go-to-market organization,” he said.

Jones added, knowing it was on the way. That said, we are confident that our leadership team is experienced and driving the company towards the right operating model. and then accelerated and, as I said, our partners expressed very strong support for shaping change. ”

Rackspace President and CFO Amar Maletira agrees. Next month he said: We are currently deeply engaged in the detailed planning of this reorganization that Kevin spoke about, and will begin in the early stages of implementing the new operating model in the third quarter of the fiscal year. ”

Why you need to rebuild your rack space

Rackspace has struggled to define itself in a crowded marketplace. The restructuring veteran is once again faced with deciding how best to compete as organizations seek help with their digital transformations. As cloud computing began to dominate the tech space, Rackspace re-established itself as a competitor to Amazon Web Services, Microsoft Azure, and Google Cloud. But we couldn’t keep up with the pace of these companies, so we switched to a managed service provider model. Rackspace is currently ranked as the top hyperscaler partner, but is trying to determine its foundation.

Another Rackspace restructuring or sale seemed likely in May, but management said it made more sense to sell parts of the organization than to let go of the entire company. said there may be. The crosshair’s biggest target seems to be Private His Cloud. However, Jones’ comments on Tuesday suggest that Rackspace is considering splitting the business into two businesses rather than selling it.

Amar Maretira of Rackspace

Amar Maretira of Rackspace

“[O]Salespeople will sell both public and private clouds,” Maretira told analysts on Tuesday.

Indeed, Rackspace sees great opportunities in the public cloud. Last month, we hired Dharmendra Sinha from Cognizant to serve as our first president of Public Cloud. Perhaps with that in mind, Jones told analysts on Tuesday.[W]Certainly, we continue to double down on public cloud investments. ”

With the restructuring of Rackspace underway, how were your earnings in the second quarter?

Rackspace’s financials were weak in the second quarter, which shouldn’t come as a surprise. Rackspace itself had provided lower guidance than analysts expected for its earnings per share in the second quarter. (They wanted him to see 23 cents a share. Rackspace said that figure was closer to 15-17 cents for him, the latter before considering specific costs.) )

In fact, Rackspace reported a net loss of $40.6 million for the three months ended June 30. Earnings are up just 4% compared to his year ago, putting him $12.5 million less than analysts had predicted.

The company has seen rapid growth between Wall Street and privately owned in recent years. After going private in 2016, it finally went public in 2020. Prior to that, Rackspace was publicly traded. It’s unclear how or if the upcoming Rackspace restructuring will affect its Wall Street presence.