Rackspace Lays Off 275 Employees As Stock Hits Bottom
‘During this uncertain time, it is important that we align our cost structure to the demands of the business,’ says Rackspace Technology Chief Marketing Officer Casey Shilling.
Rackspace Technology is joining the ever-growing list of tech companies laying off hundreds, sometimes thousands, of employees in one fell swoop.
The $3.2 billion San Antonio, Texas-based cloud company confirmed it will be laying off 275 employees, representing about 4 percent of its roughly 6,800-strong global workforce, which includes just over 3,000 staffers in North America.
“During this uncertain time, it is important that we align our cost structure to the demands of the business. This requires some elimination of roles across the company,” Rackspace’s chief marketing officer Casey Shilling confirmed. “Like so many companies that are feeling the effects of the macroeconomic downturn, Rackspace is no exception.”
[Related: Why Accenture Is Laying Off 19,000 Employees]
Rackspace’s stock has fallen significantly over the past 12 months, currently trading at a near all-time low of $1.76 per share as of Tuesday afternoon.
The company’s stock was well over $11 per share in March 2022. It has dropped a whopping 84 percent over the last 12 months. Rackspace Technology’s market cap is now $375 million.
Rackspace said affected U.S.-based employees were recently notified of their termination.
$805 Million Net Loss; Ransomware Attack
The stock drop over the past 12 months comes during an economic downturn in Rackspace’s business.
In 2022, Rackspace reported a net loss of $805 million, compared to a loss of $218 million in 2021. Losses from operations totaled $679 million for Rackspace in 2022.
The company generated $3.12 billion in sales in 2022, up 4 percent, compared to about $3 billion in revenue in 2021. Rackspace expects to generate approximately $757 million in revenue for its current first quarter 2023.
In December, Rackspace was hit by a ransomware attack, which caused massive outages for thousands of Rackspace customers. The company confirmed hackers gained access to data from dozens of customers.
Rackspace isn’t the first tech company this year to conduct a layoff round. IT companies of all shapes and sizes have laid off thousands of tech workers in 2023. According to Layoffs.fyi, which tracks tech job cuts across the globe, there have been more than 153,000 layoffs in 2023 in the tech industry alone.
Some of the more significant layoffs this year include Accenture terminating 19,000 employees, Google cutting 12,000 jobs, Dell Technologies slashing 6,650 employees, Microsoft axing 10,000 employees and Amazon recently announcing 9,000 layoffs including in its popular cloud computing unit, Amazon Web Services.
Layoffs in similar size to Rackspace include semiconductor company Marvell Technology terminating 320 employees, or 4 percent of its global workforce; and cloud security company Zscaler laying off about 180 employees, or 3 percent of its workforce.
In a statement, Rackspace said despite the downturn, the company is in an attractive and growing multi-cloud market. “We have a sound strategy and have successfully implemented our new operating model. We’ve reorganized into two business units – Public Cloud and Private Cloud,” said Rackspace. “We are focused on executing our strategy and plans, which includes continuing to invest in strategic areas of growth.”