Cloud services provider Rackspace Technology Inc. reported mixed second-quarter financial results today, beating expectations on earnings but missing on revenue.

However, its sales guidance for the next period was light, sending its stock down in after-hours trading.

The company reported a net loss of $40.6 million, with earnings before certain costs such as stock compensation coming to 17 cents per share, just ahead of Wall Street’s target of 16 cents per share. Revenue for the period came to $772.2 million, up by just 4% from a year earlier and below the analyst consensus of $784.7 million.

Investors were less than impressed, and Rackspace’s stock dropped more than 7% after-hours, adding to a 2% drop earlier in the day.

Rackspace Chief Executive Kevin Jones (pictured) put on a brave face, insisting that the results demonstrated “solid growth and profitability” in addition to robust cash flow. “We continue to benefit from secular tailwinds in the cloud market, which show no signs of abating,” Jones said.

Rackspace was once a member of esteemed company, competing with the likes of Amazon Web Services Inc., Microsoft Corp. and Google Cloud in the public cloud infrastructure market. However, a lack of funding ultimately meant Rackspace was forced to pivot away from that industry, and it switched to offering managed services, assisting enterprises in designing, building and operating cloud environments on its former rival’s platforms.

Although Rackspace has seen some success as a cloud services provider, it has struggled to accelerate its growth beyond the somewhat pedestrian level it demonstrated today. As a result, it has come under pressure to do something, and three months ago it announced it was carrying out an “in-depth strategic review” that could possibly result in it looking for a buyer and going private.

Jones said today the review is almost complete and that it has had “very positive feedback” from its customers, partners and other stakeholders. “We are nearing the point where we can provide additional details on our go-forward game plan, including any additional decisions regarding the structure of the company, later this fall,” Jones said.

Whatever new structure the company decides upon, it will probably need to do something drastic to kick-start its core business offering, which is comprised of “multicloud services” and “apps and cross-platform” sales. Revenue from these core segments rose by just 5%, to $697.8 million, in the quarter. Rackspace’s other, much smaller business is OpenStack Public Cloud, which pulled in just $46 million during the quarter.

Holger Mueller of Constellation Research Inc. said it was another pedestrian result for Rackspace, with the company struggling to reignite growth. “Unfortunately the costs of revenue grew faster than the actual revenues,” Mueller added. “Remarkably, it did at least reduce its general and administrative costs by a little, thereby reducing its overall losses by a little. All eyes are on the restructuring plan following the strategic review, which CEO Kevin Jones said will be made public in the fall.”

For the third quarter, Rackspace is predicting yet more labored growth. It said it expects revenue of between $769 million to $779 million, some way below Wall Street’s estimate of $818.8 million.

Photo: Rackspace