Corporate insiders tend to have superior knowledge about their firms’ operating, financing, and investing activities. If these insiders are buying company stock, it’s often worth taking a closer look.
In this report, we are going to highlight some interesting insider buying at Rackspace Technology Inc (RXT:US). Rackspace is a technology company that specializes in multi-cloud solutions. Operating 40 data centers, it serves more than half of Fortune 100 businesses. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $4.3 billion.
Rackspace Technology: Insider Buying
Our insider transaction data shows that in the last few weeks, three top-level insiders at Rackspace have purchased stock. On 13 May, both CEO Kevin Jones and CFO Amar Maletira purchased stock, spending around $200,000 on shares in total. Then, on 14 May, COO Subroto Mukerji purchased 3,970 shares, spending $75,226 on the stock.
These three insiders all have considerable industry experience. Mr Jones, for example, has over 30 years of experience in the technology space and has previously held global leadership roles at Electronic Data Systems, Hewlett-Packard, Dell, and DXC Technology. Meanwhile, Mr. Maletira has more than 25 years of broad technology industry experience in finance and operational management, business development and sales. Previously, he was CFO at VIAVI Solutions, Inc., a publicly held technology company. As for the COO, he was previously was Vice President and General Manager at DXC Technology. This experience gives more weight to these insider purchases. Given their experience, these insiders are likely to have a good read on their company’s prospects.
Strong Q1 Results
Rackspace’s first-quarter results, posted on 10 May, were strong. For the quarter, the company generated record revenue of $726 million, up 11% year on year, with core revenue up 15% to $677 million. Meanwhile, non-GAAP earnings per share came in at $0.23, up 44% year on year and exceeding guidance set in February 2021. Operating cash flow for the period improved dramatically to $103 million – a four-fold increase year on year.
Looking ahead, the company said that it expects to generate revenue of $2.9 million to $3.1 million this year, compared to $2.7 million last year. For the year, it expects to generate non-GAAP EPS of $0.95 to $1.05, versus $0.83 in 2020.
“We are continuing to position the company for consistent ongoing growth and earnings leverage. The new customers we landed in 2019 and 2020 provide a strong growth foundation, and the continued tectonic shift of workloads to the cloud will provide secular tailwinds for years to come,” said Mr. Jones.
In light of these results and the confident tone from management, we see the insider buying here as bullish.