Rackspace's Public Cloud revenue, which saw growth slow in 1Q, re-accelerated into the OpenStack launch.
Management announced that 4Q would be the tipping point for when the company could start realizing revenue from the new OpenStack public hosting platform. 4Q will be the deciding point for the investment community’s view on the company’s OpenStack strategy and ability to execute on it.
One of the key benefits of the OpenStack platform is the expected higher operating leverage. However, at 2Q earnings, management stepped away from providing a timeline for the conversion of customers from the existing cloud platform to the OpenStack platform. As such, the company will be running two parallel systems for some time.