Rackspace Hosting (RAX) Taylor Rhodes on Q4 2015 Results - Earnings Call Transcript

| About: Rackspace Hosting, (RAX)

Rackspace Hosting, Inc. (NYSE:RAX)

Q4 2015 Earnings Call

February 16, 2016 4:30 pm ET

Executives

Winston Len - Vice President of Finance

Taylor Rhodes - President, Chief Executive Officer & Director

Karl Pichler - Senior Vice President, Chief Financial Officer & Treasurer

Analysts

Frank G. Louthan - Raymond James & Associates, Inc.

Amir Rozwadowski - Barclays Capital, Inc.

James D. Breen - William Blair & Co. LLC

Sitikantha Panigrahi - Credit Suisse Securities (NYSE:USA) LLC (Broker)

Colby Synesael - Cowen & Co. LLC

Heather Bellini - Goldman Sachs & Co.

Simon Flannery - Morgan Stanley & Co. LLC

Steven M. Milunovich - UBS Securities LLC

Jonathan Schildkraut - Evercore Group LLC

Gray W. Powell - Wells Fargo Securities LLC

Operator

Good afternoon, ladies and gentlemen. Welcome to the Rackspace Hosting Q4 2015 Earnings Call. As a reminder, this call is being recorded. At this time, all lines are in a listen-only mode to prevent background noise. After the prepared remarks, there will be a question-and-answer session.

It is now my pleasure to introduce Winston Len, Vice President of Finance for Rackspace. Mr. Len, you may now begin.

Winston Len - Vice President of Finance

Thank you. Good afternoon, everyone. Welcome to Rackspace's fourth quarter and fiscal year 2015 earnings conference call. We hope that you've had a chance to read our press release and slide deck, which we issued earlier today. If you don't have a copy of the press release and slide deck, please visit the Investor Relations page on our website at ir.rackspace.com.

This call is also being webcast online and can be accessed through our Investor Relations site. For the Rackspace call today, we have Taylor Rhodes, our President and Chief Executive Officer; and Karl Pichler, our Chief Financial Officer.

I need to remind you that some of the comments we may make today are forward-looking statements, including statements regarding expected operations and business results, our growth plans and expectations, the impact of new products and services, and our expected level of capital expenditures. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of this call and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.

Please also note that certain financial measures we will use during this call, such as adjusted EBITDA and non-GAAP EPS are expressed on a non-GAAP basis and that our GAAP results and GAAP to non-GAAP reconciliation can be found in our earnings release, which is currently posted on the investor page of our website. After our prepared remarks this afternoon, we'll be happy to take your questions.

I will now turn the call over to Taylor. Taylor?

Taylor Rhodes - President, Chief Executive Officer & Director

Thanks, Winston. Good afternoon and thank you all for joining us for today's discussion of our financial results for Q4 and the full year of 2015. We'll also talk about our strategy and expectations for 2016. For Q4, we reported revenue of $523 million, which represents sequential growth of 3.2% on a constant currency basis and 2.8% as reported on a GAAP basis. Our adjusted EBITDA margin was 35.1%.

This was a strong quarter across all our metrics and builds on the good results we posted in Q3. For the full year of 2015, we're pleased to announce that our revenue passed the milestone of $2 billion. Our annual revenue grew by 13.7% on a constant currency basis and 11.5% on a GAAP basis. Our adjusted EBITDA margin was 34.2% for the year.

During 2015, we achieved four bold objectives that position us well for the future. First, we launched Fanatical Support for Amazon Web Services and for Microsoft's private cloud Azure and Office 365. These moves open up huge and fast-growing new markets for us and strongly differentiate us as the only company with the tools and expertise to provide Fanatical Support for the world-leading clouds.

Second, capital efficiency initiatives helped us reduce capital expenditures to 23% of revenue; and our adjusted free cash flow rose to $196 million. We expect that our capital efficiency will continue to improve as we provide more of our services on our partner's infrastructure. Third, we shared our increased free cash flow with our stockholders through a major share buyback that is still underway.

Finally, we hired key leadership talent. Our new sales and marketing leader, Alex Pinchev, brings deep experience and proven success in our industry, including as a senior executive at Red Hat.

We're confident that Alex will boost our sales and marketing execution. Brian Stein, our new head of global engineering who joined us in January, commands great respect in our industry for his innovative work at Red Hat and Puppet Labs.

Our results for Q4 and for 2015 demonstrate that our core product set has a stable customer base and generates consistent revenue growth, profit and free cash flow. Our customers are loyal and sticky. Their spending with us recurs and grows and we expect that growth to continue. A recent study by Gartner estimates that spending on managed hosting will grow almost 9% a year through 2019. We're number one in the world in managed hosting, and we're proud to report that customer churn for that product hit a three-year low during Q4.

Alongside our core product set, we've launched several new offers that help us expand into large fast-growing adjacent markets, where we are already gaining good traction. We expect these new offers to be the future growth drivers for Rackspace. What binds our core product set and our new offers is our strategy to provide Fanatical Support for the world's leading clouds.

As more mainstream companies moved out of their own data centers and onto cloud models, we believe that they share two key traits that favor Rackspace as their cloud provider. First, they're using multiple clouds. They operate multiple workloads and want to run each one where it will achieve the highest performance and cost efficiency, whether on dedicated servers, public cloud or private cloud.

A new survey by RightScale of more than 1,000 technology professionals found that the average company today is using six clouds across public and private cloud and dedicated servers from multiple vendors. That survey mirrors what we're seeing among our customers who want a choice of leading cloud technologies. More and more customers are consuming services from our core product set, as well as our new offers of Fanatical Support on AWS and the Microsoft Cloud.

The second key point is that these are managed services buyers. They seek help to architect, migrate, secure and operate their application. They do not employ in-house all the specialized cloud engineers that they would need for this work.

In the recent RightScale survey, the number one challenge cited by cloud adopters is no longer security, which now ranks number two. The biggest challenge is finding the expertise and other resources required to operate multiple clouds. We find that many of these businesses favor a managed cloud model which combines the choice of multiple cloud platforms with high-value expertise, tools and customer service.

The two leading public clouds, AWS and Azure, are seeing a new wave of these mainstream customers who want to use their infrastructure along with managed services. AWS and Microsoft don't want to disrupt their product focus, so they are cultivating networks of managed service providers. We intend to become the biggest and the best of these, and we're seeing strong traction toward that goal.

Our top priority is to lead the AWS managed service provider ecosystem, letting AWS provide the economies of scale on its infrastructure, while we provide valuable economies of expertise. Let me share with you some of the characteristics of our AWS service, from its launch on October 6 through the end of January.

During its first four months, our AWS team signed 100 customers, including what we expect to be our first six-figure a month enterprise customer. The majority of these customers are new to Rackspace. We believe that this is an encouraging indicator of our ability to win new market share. Most of these new customers are ones we could not have won without providing AWS support. Now that we've got them in the door, we believe that we can cross-sell to them our other offers such as Managed Security, private clouds and data services.

We are also actively selling Fanatical Support on AWS to existing Rackspace customers. Of these, the large majority are bringing us new workloads. Through most of our history, our install base growth was driven by winning the first workload from a new customer, delighting it with Fanatical Support and then winning additional workloads.

In recent years, more of these incremental workloads have gone to AWS, contributing to our slowdown in growth. Now we're seeing encouraging signs that our multi-cloud portfolio can reignite that essential part of our growth engine.

More than a third of our AWS customers are international. We are actively leveraging AWS data centers and sales partnerships around the world and believe that we can now grow in a capital light manner in regions where we previously had no physical presence.

More than 70% of our AWS customers are choosing our highest service level, which we call Aviator. This trend indicates that we're adding significant value on top of the AWS infrastructure. We add that value in two ways: through the proprietary software tools that we've created to make the platform easier to use; and through the specialized expertise that we've built among our cloud engineers.

We've now achieved more than 230 AWS technical certifications and more than 1,100 business and technical accreditations on AWS. We are also proud to report that we've recently achieved AWS certification as a DevOps Competency partner. These accomplishments place us among the top few AWS service providers in terms of expertise. They also demonstrate a longstanding strength of Rackspace, which is to rapidly create technical expertise at scale.

The customers of our AWS service include market-leading companies such as Razorfish, one of the world's largest digital agencies. These customers also include one of the world's largest management consulting companies. Our sales pipeline is building nicely and we believe it is a good leading indicator of the growing demand for the expertise required to make the AWS cloud run better. As we've discussed in earlier calls, we expect this new offer to drive our growth in 2017 and beyond. We're pleased with our early traction and are determined to be the leader in the space.

So where does that leave us for 2016? Even as we nurture our fast-growing new offers, we're working to optimize our more established ones. By doing so, we intend to achieve significant savings, which we are investing in our new hyper-growth products. As we demonstrated in the second half of 2015, we can launch and fund new businesses while also keeping margins in line with historical levels.

One of our established products, or OpenStack public cloud, has a customer base that is sticky and continues to grow its spending with us. However, more and more new cloud workloads are heading towards AWS and Azure. Without those incremental workloads, we expect the growth rate for our OpenStack public cloud to slow in 2016. At the same time, now that we support AWS and Azure customers, we are in a good position to benefit from the growth in those clouds; and this is where we will see rapid growth in our business.

For that reason, we are shifting engineering and marketing resources from our OpenStack public cloud to our new offers, including our OpenStack private cloud, which is growing in the high-double digits. Several recent surveys of IT decision makers show rapid growth in private cloud adoption and particularly in the hosted private cloud model. For example, RightScale's survey showed that 77% of companies are now adopting private clouds, up from 63% last year.

Even as we shift resources toward our higher growth products, we intend to continue to improve the reliability and performance of our OpenStack public cloud for the many customers who continue to use it. Many of those are hybrid customers who connect their public cloud environment to our dedicated servers. These hybrid users are among our stickiest and fastest growing customers.

With regards to guidance, Karl will provide the specifics, but let me give you a brief overview. For the full year of 2016, we expect revenue growth in the range of 6% to 10% on a constant currency basis after normalization to account for a small asset divestiture, which Karl will discuss. We believe this range is prudently conservative and takes into account our expected Q1 softness, our lower expectations for growth in our OpenStack public cloud and the uncertain economic environment.

As you know, Q1 is seasonally a slow quarter for us. We expect it to be slower than usual this year, in part because of shifts that we are making in our marketing and sales efforts toward our multi-cloud offers. We are optimistic, however, that our focus on providing Fanatical Support for the world's leading clouds will enable us to accelerate over time. We expect 2016 adjusted EBITDA margins to be consistent with historical trends, despite significant investments in growth initiatives.

We've done a lot of hard work in 2015, revitalizing our product portfolio and our talent. In 2016, we intend to build on that foundation to aggressively expand our leadership of the market for managed cloud services. In the meantime, we will continue to advance the interests of our shareholders. In 2016 and beyond, we expect that our capital intensity will decrease and our free cash flow will increase. We will continue to share that cash flow with stockholders through the share buyback program already underway.

In closing, I want to thank our Rackers around the world for their indomitable spirit and for their hard work to develop the expertise and tools to deliver Fanatical Support for the world's leading clouds. They have rapidly mastered and created new technologies and learned to serve customers in new ways. They're special people who make us the world leader in rapidly creating technical expertise at scale.

With that, I'll turn the call over to Karl to update you on the details of our financial results. Karl?

Karl Pichler - Senior Vice President, Chief Financial Officer & Treasurer

Thank you, Taylor, and good afternoon to everyone on the call. Q4 was a very good quarter for us and we ended the year on a strong note. In Q4, we had solid growth, our highest operating income margin since Q1 of 2013, and record adjusted free cash flow.

In 2015, we increased our revenue, margins, capital efficiency and return on capital, even as we began investing in the new growth areas. Furthermore, we started to optimize our capital structure and returned $367 million to our shareholders through share repurchases. From the press release and slide deck supporting this call, you can get all the details of our financial results. Let me discuss the most important ones.

First, our revenue grew to $523 million in the fourth quarter and to $2 billion for the full year of 2015. Currency fluctuations had a negative impact on our top line results. On a constant currency basis, we grew 3.2% for the quarter and 13.7% for the year.

For the fourth quarter, we reported adjusted EBITDA margins of 35.1%. Margins improved over the course of the year and on a year-over-year basis. Our full-year 2015 adjusted EBITDA margin was 34.2%, up 50 basis points from 2014.

As the profit contribution from our U.S. business ended up higher than originally anticipated, we saw an increase in our overall effective tax rate for the year. Our previous estimate for the year was 32.4% and our final rate for the year is 34.8%. This true-up makes our Q4 rate look unusually high at 42.5%.

For Q4, our diluted earnings per share came in at $0.24. Our full year diluted EPS was $0.90, an increase of 17% year-over-year. For the purpose of comparability to other companies, we will start providing a non-GAAP EPS metric in our earnings release. This metric excludes stock-based compensation expense net of taxes. For 2015, non-GAAP diluted EPS was $1.26, an increase of 15% relative to 2014. Adjusted free cash flow for 2015 was $196 million, a 21% increase year-over-year. For the full year, CapEx was 23.3% of revenue.

For 2015, our capital turnover was 2 times versus 1.94 times in 2014, improving our annual return on capital to 13.2% in 2015 versus 12.3% in 2014.

During the fourth quarter, we issued $500 million worth of senior notes as part of our new capital structure policy, which will target a permanent level of debt and use excess cash for share repurchases.

We have in the past expressed a target leverage that included gross debt, capital leases and off-balance sheet operating leases. To simplify the conversation, we will use a more conventional definition of leverage that excludes off-balance sheet leases going forward. From now on, our leverage will be expressed as the sum of gross debt and capital leases divided by LTM adjusted EBITDA. Based on this definition, our target ratio is approximately 0.75 times.

As of December 31, 2015, our gross debt in capital leases added up to $502 million and our adjusted EBITDA was $684 million. This equates to a leverage ratio of 0.73 times, which means we are currently on target with respect to our indebtedness.

During our Q2 2015 earnings call back in August, we committed to buy back $500 million in shares within six months to nine months. Since then, we have completed a total of $367 million in share buybacks through a combination of open market and 10b5-1 plan purchases. We intend to fulfill our commitment by May of 2016.

In addition, as we have previously discussed, our board has approved an overall buyback program that runs through mid of 2017 and leaves us with $500 million of additional program capacity following completion of our current commitment.

With regard to our operating metrics, in Q4, our server count and megawatts utilized decreased quarter-over-quarter. There are two main reasons for this. First, we're actively migrating customers from our three OpenStack public cloud to our OpenStack offering. We expect this migration to continue into early 2017.

Second, the data center that we opened in London in 2015 allowed us to consolidate and decommission smaller facilities and redundant gear. As a result of these initiatives, we expect improving capital and operating efficiencies, as well as higher average revenue per server.

As Taylor referenced, in the first quarter of 2016, we divested an online file storage product called Jungle Disk, which is no longer a good fit with our strategy. During the first quarter, we will recognize a gain from that sale, which will be excluded from our adjusted EBITDA and non-GAAP EPS calculation. We will provide further details on the next call.

Let me conclude with some remarks around our expectations for Q1 and 2016. With respect to the first quarter, we expect revenues to range between $517 million and $521 million. Excluding the impact of the Jungle Disk divestiture and currency movements which add up to approximately 170 basis points, we expect our normalized sequential revenue growth rates to range between 0.5% and 1.4%.

Starting today, in order to better account for the seasonal nature of our business and to align ourself with industry practice, we will express our revenue growth rates in year-over-year terms, comparing each quarter to the same quarter for the previous year. We expect our normalized year-over-year growth rates for Q1 to range between 9.2% and 10.2%. This excludes the impact of the Jungle Disk divestiture and currency movements, which add up to approximately 170 basis points.

For the year, we expect GAAP revenue to range between $2.08 billion and $2.16 billion. Excluding the impact of the Jungle Disk divestiture and currency movements which add up to approximately 190 basis points for the year, we expect our normalized annual revenue growth rates to range between 6% and 10%.

As for adjusted EBITDA, we expect margins to range between 33% and 35% for Q1 as well as for the full-year 2016. We expect margins to remain in line with historical trends, even though we are increasing investments in our new offerings.

We expect our CapEx requirements to come down as a result of increasing efficiencies, lower customer gear CapEx and increasing customer adoption of the offers that we provide on AWS and Microsoft infrastructure, which requires minimal CapEx on our side. In 2016, we expect CapEx as a percentage of revenue to be in the range of 20% to 22%. Finally, we expect our full year effective tax rate for 2016 to be approximately 35%.

With that, we will open the call for your questions.

Question-and-Answer Session

Operator

Certainly. And our first question comes from the line of Frank Louthan from Raymond James. Please go ahead.

Frank G. Louthan - Raymond James & Associates, Inc.

Great. Thank you. Just maybe give us a little bit more color on what's changed – it seems like a little bit of a rapid change from last quarter you were guiding 2% to 3% sequential growth, now guiding below that a few months later. What kind of shifted so much in the base business there? Is it demand that's causing that change in the guidance?

Taylor Rhodes - President, Chief Executive Officer & Director

Hey, Frank. Thanks for the question. This is Taylor. I think that's one a lot of you will want to understand, so let me run through what is driving our guidance. So on the last call we talked about the fact that a good rule of thumb is that our business has been growing in 2015 2% to 3% a quarter. We talked about the fact that the seasonal patterns in our business mean that will likely be below that range in the Q1s and likely ahead of that range as you saw in Q3 and Q4.

So we took a few things into account for the 2016 guidance. The first is the soft Q1; and the soft Q1 has a couple of things hitting it. The first is the normal seasonality and timing of kind of the enterprise deals that we saw last year. We don't have any reason to expect that we'll see anything different there from last year.

But the second factor is, as Alex Pinchev joins us, he is exercising the latitude to go make some changes to our sales and marketing teams in their focus areas. Alex has a lot of experience, but he's not a magician. So some of that will take some time as we move resources in front of these new opportunities; and we expect potentially a little gap there as Alex gets the engine revving. So that's the first thing that's driving the Q1 softness. As you know, in a recurring revenue model you start Q1 slower and that it has penalty for the rest of the year.

But the second thing that we baked into the guidance range is the trends that we're seeing in our public cloud. I mentioned in the prepared remarks that we're not worried about the base on our public cloud. That's a sticky and loyal base. They've been around a long time. For example, we still have thousands of customers on our public cloud who are on our pre-OpenStack first-generation cloud product. Our cloud customers are support seekers. And unless there is a real burning platform driving the migration, they don't tend to move every easily.

But I think it's fair to say that more and more incremental or new workloads are heading to AWS and Azure. Winning those new workloads used to be a key part of our growth driver; and without them we expect our OpenStack public cloud growth to slow in 2016, and that's a factor baked into the guidance as well.

And, finally, I think we're all living in very uncertain times. And so, while we're not seeing any specific macroeconomic indicators yet, we all realize that if the current uncertainty gets elongated and last for an extended period of time, we will see potentially impact on customers buying psyche and sales cycles, et cetera, budget sensitivity. So with an abundance of caution, we've baked in a bit of the challenging economic cycle into our estimate as well.

Frank G. Louthan - Raymond James & Associates, Inc.

How much on the economic side could there potentially be some upside that doesn't materialize? How much is that part of the slower growth?

Taylor Rhodes - President, Chief Executive Officer & Director

Look, I think overall what we know today is we feel good on the 6% to 10%, we think it's a fair guide. I can't handicap how much is macro versus other, but in the mix of those three things that's where we ended up. Certainly, throughout the year we're confident that Alex will have an impact and that we can get these new offers growing as well. So if we have an opportunity to update you on guidance later in the year, we'll do that. And right now what we're going to do is give you the best information we have.

Frank G. Louthan - Raymond James & Associates, Inc.

All right, great. Thank you. It's very helpful.

Operator

Our next question comes from the line of Amir Rozwadowski from Barclays. Please go ahead.

Amir Rozwadowski - Barclays Capital, Inc.

Thank you very much. I was wondering if we could talk a bit more about your investment initiatives. If we take a look at the guidance that you folks have for 2016, it seems as though you're keeping sort of your margin targets really flattish with historical trends, but there it seems to be a lot of discussion around some of the investments that you folks are going to be making to support some of these new initiatives. I was wondering if you could provide us with some color on how we should think about the shifting allocation of capital as you look to target some of these new opportunities.

Karl Pichler - Senior Vice President, Chief Financial Officer & Treasurer

Yeah. That's great. This is Karl. So we've made a couple of statements along those lines in the past. First, as we started the initiatives, the investments were really minimal, which is targeting starting with initial offer development and customer research, et cetera, coming out with the right set of offerings. And then as we go after this and go into beta and then GA launches, we apply more and more resources towards it. So that is our kind of established approach of developing and launching new offers.

And then very quickly, we get into success based mode of resourcing and staffing really against the opportunity and the traction that we see in the marketplace. And that has allowed us to really in the past developing new offers, while the core business – and really core meaning in the sense of the traditional managed hosting business – has provided more and more leverage over the years and have provided economies of scale.

So that has really helped us over the years; and this year it's not really different. We have significant investment dollars that go to those new businesses. We can fund those with the efficiencies and the savings that we generate on the bigger part, on the more established part of the business. And we expect that to basically result in equivalent margin profiles as we've seen in 2015. Of course, there will be quarter-to-quarter variability as we expect. But, overall, all of these investments can be funded with our existing business.

Amir Rozwadowski - Barclays Capital, Inc.

Thank you very much for the color. And if I may, one follow-up, if we think about some of the opportunities out there, I mean it seems as though, as you had mentioned, there is this transition occurring from your current business opportunities as workflows move to some of these cloud service providers. What gives you the confidence that sort of as that transition happens, the ultimate – how should I put it – addressable market for you folks expands within this timeframe? Because it does seem like there is a bit of a transition phase as we should think about for 2016 as you look to those new opportunities.

Taylor Rhodes - President, Chief Executive Officer & Director

Amir, this is Taylor. I'll take that one. And I can tell you unequivocally every single data point we see points to the fact that the rates out of the corporate data center is on. I think it's a latest IDC or Forrester estimate that estimates between $200 billion and $300 billion conservatively that's in corporate data centers that's in play to come out in the cloud and SaaS models.

When we interact with partners and prospects in the market, the feedback we hear is the bottleneck right now is clearly that CIOs are moving, but they are now figuring out how to get there. So we don't have any trepidation at all about the market opportunity. However, as we move into this new space, we've got to build our capabilities, we've got to build our sales acumen on the front-end, we've got to build our support models, we've got to train Rackers, we've got to change the way we work with partners.

So that's really our ramp. It's ramping into this market. And, remember, these are adjacent markets for Rackspace. Cloud is big. We all know that. It's getting bigger. But we have a long heritage and history of supporting clouds and running technology for customers. So these are really adjacent markets. The market is here. We're just building our capabilities to really lead I think the very nascent and fragmented managed service provider ecosystem on top of them.

Amir Rozwadowski - Barclays Capital, Inc.

Thank you very much for the incremental color.

Operator

Our next question comes from the line of James Breen from William Blair. Please go ahead.

James D. Breen - William Blair & Co. LLC

Thanks for taking the question. Just around some of the new initiatives with Azure and Amazon. I think, Taylor, you talked about having 100 customers and one in particular six-figures. As I think about that, one-six figure customer on a monthly basis adds probably about 0.5% of growth to the total. So it would imply that you're starting to see some help on the growth line from that. I'm just wondering how that balances out between your core business and the support business (30:27) estimate is there, and then how you sort of strategize around the marketing side of that? Thanks.

Taylor Rhodes - President, Chief Executive Officer & Director

Sure. I'll go marketing first. I think our very clear positioning statement in the market is Fanatical Support for the world's leading clouds, right. We've had to manage cloud strategy in the market since mid-2014. And under than umbrella we want to make it very clear that if you are choosing one of the world's leading clouds, which in our mind is AWS, Azure and OpenStack for private clouds, then if you are a support seeker, then you should call Rackspace to run those and add value to those clouds.

So you'll see our marketing content already at our first Solve of the year in New York last week, on the website and other places start to rollout with that positioning around Fanatical Support for the world's leading clouds. We think that's a clear message. We want to be able to answer the question when should I call Rackspace. If you're trying to add value to the AWS, Azure or OpenStack private clouds and you're getting out of your data center, you should call Rackspace.

In terms of the revenue growth, look, it's early innings, right. We wanted to share lots of transparency with you all on the first three plus months of this offer, but that is three plus months. And I still would echo the comment that says while we're encouraged on the traction, we expect for these things to take some time to get to revenue levels that are big enough to move the $2 billion base. We'll update you along the way. But I would say, we're certainly encouraged by the early traction, by the sales pipeline build; and we're seeing good demand.

I mentioned AWS specifically, because in listening to our shareholders that's where the main focus was. But I think it's also fair to comment that our Microsoft Cloud business is off to a good start. Our sales initiatives around the Microsoft Cloud are seeing pipeline build led by Microsoft's private cloud, their Hyper-V stack, and then followed up with Azure starting to build in the pipeline as well. And that just sort of follows Microsoft's product roadmap in the market. You've seen them launch Azure Stack, which is their combination of private cloud and public working together. So we're seeing good traction on the Microsoft Cloud business as well.

James D. Breen - William Blair & Co. LLC

Thanks. And can you just give us a little bit of color on the press release you put out in the last week or so about the agreement with the Red Hat on the OpenStack side and sort of strategically where you're going there?

Taylor Rhodes - President, Chief Executive Officer & Director

Yeah. Think of the Red Hat version of OpenStack running in a hosted cloud model as very analogous to us having been the leading service provider channel for Red Hat Enterprise Linux in our dedicated hosting business for years and years. So this is simply following a strategy of not inventing all the technology, but offering our customers choice of leading cloud technologies.

The common thread is that we want to be and will be the predominant hosted services provider for private clouds. We're seeing more data points show up, not only on intent to have private cloud as an element of multi-cloud architecture, but also as companies are considering what is happening in the post-VMware world, OpenStack is gaining traction as the leading private cloud stack. So we want to be able to offer customers a choice of Red Hat, if they choose that flavor, or Rackspace if they choose that flavor. The commonality is they should buy it from us as a managed service.

James D. Breen - William Blair & Co. LLC

Great. Thanks. And I just had one follow-up for Karl. When you look at the guidance, 9% to 10% year-over-year for the first quarter, but 6% to 10% for the full year, how should we think about that as the year progresses? It would imply there's potential for that growth rate to slow down as the year goes on. Thanks.

Karl Pichler - Senior Vice President, Chief Financial Officer & Treasurer

Yeah. That's correct. I mean that's mainly an artifact of the mix between 2015 and 2016 growth. When you look at it from a sequential rate basis, the low rate in Q1 that we've guided to, that Taylor alluded to and myself as well, is really what creates the headwind getting out of the box, so to speak. And so the sequential rate of roughly 1% for Q1 at the midpoint is really what kind of has an impact on the full year as well.

James D. Breen - William Blair & Co. LLC

Great. Thank you very much.

Operator

Our next question comes from the line of Siti Panigrahi from Credit Suisse. Please go ahead.

Sitikantha Panigrahi - Credit Suisse Securities (USA) LLC (Broker)

Hi. Thanks for taking my question. Just wanted to dig into the managed hosting, you talked about that industry growing around 9%. Just wondering what's your expectation, whether your managed hosting part of the business grows above, below or in line with industry?

Taylor Rhodes - President, Chief Executive Officer & Director

Yeah. Siti, this is Taylor. Thanks. I think it's fair to say we expect our managed hosting business to grow at market rates; and again that base of business has two important things to remember. The first is that very low churn. I mentioned we saw a multi-year low churn rate in Q4. So those customers are proving to be sticky and have long lives.

The second thing to remember, though, is that base of business is actually a really strong business for us to go into and cross-sell/upsell our new offers. If you'll remember, in past years, our installed base growth was really fueled by incremental workload. And so as Amazon has really become the predominant home for new apps over the last several years, more of those incremental workloads have gone to AWS. And in our initial results that I shared with you on the AWS business, we're seeing existing Rackspace customers running in our managed hosting business bring us net new workloads to run in AWS. So we're excited about having that base to go in and sell things like AWS, Azure, Managed Security to, et cetera. So it has not only its sown inherent value as a growing business, but it has that platform value of being able to expand and bring new workloads in.

Sitikantha Panigrahi - Credit Suisse Securities (USA) LLC (Broker)

Yeah, got it. So as I look at your public cloud business and then the guidance, you talked about the new workloads moving to now AWS and Azure. But what have you factored in, in terms of churn from your public cloud business, existing business, when you guided 6% to 10%?

Taylor Rhodes - President, Chief Executive Officer & Director

Well, it's all in there, Siti. I mean we're giving a 6% to 10%, we're saying our public cloud growth rate is slowing. So we don't break it out anymore. But the churn as well as the seasonality and the installed base growth are all in there. I think I would reemphasize the fact that we don't see any blinking red lights on churn in that base. Again, these are long-lived customers who historically have been around for multiple generations of the cloud product.

And primarily again, these customers come to Rackspace for support. Historically, they're customers who value three things. They value support; they don't want to run their own cloud. Second, they like to connect public cloud to our dedicated servers. And right now our OpenStack public cloud is the best platform to allow that connection to happen. And third, there are a good healthy number of them who are open-source minded people, who chose OpenStack for the open-source value.

So for those three reasons, we don't see them as being huge candidates for churn risk. Again, where the growth slowdown is predominantly coming from is not winning as many net new customers with net new workloads on that cloud. But that's again the reason that we are very excited about the progress that we're making into AWS and Azure, because we can now go compete for those incremental workloads.

Operator

Our next question comes from the line of Colby Synesael from Cowen & Co. Please go ahead.

Colby Synesael - Cowen & Co. LLC

Great. Thank you. I guess just to follow-up on that last question. You had previously, I think a year or so ago, broken out public cloud versus managed hosting; and obviously you've moved away from that. But can you give us a sense how big the public cloud business is today? Because I think what we're trying to get at as an investment community is, where is that business today in terms of revenue and growth rate, and ultimately where does it need to go and over what period of time so that we can start to see more of what we'll refer to as the normalized growth rate for the managed hosting business, and then obviously these new support models that you're building out today. Any help I think on that would be extremely helpful for I think all of us.

The second question I have then is on that new support model, whether it's for Microsoft Azure or AWS or anybody else, do you intend to break out that business separately, whether it's revenue, margin, capital intensity? And the reason I ask that is obviously the growth rates; the margins and the capital intensity of that business are very different than your current business. And I guess my concern is that if you start to model those two, well, it might make your overall growth rate look better? It could be detrimental to margins and ultimately send the wrong message? Thank you.

Karl Pichler - Senior Vice President, Chief Financial Officer & Treasurer

Yeah. Let me take the first set of that. Hi, Colby; this is Karl. So let's just go back to the point in time when we did disclose it. So the public cloud business was back in the day about a year ago above the quarter of our total revenue. And since then from a product perspective it has still been growing, it has still been growing in double-digit rates. It has been growing faster than our dedicated hosting business, which is high-single digit rates when you look at it from a product perspective.

I don't want to repeat all the reasons why that made us collapse the two revenue lines, but the products are merging together there. The lines are blurry. The customer has consumed them together. And so there is just many reasons why this is really our kind of managed hosting business that combines utility type of products with subscription type of products; and we continue to see that merging together.

Now from a going forward perspective, we are looking actively into a couple of issues around segments versus product versus consolidated reporting. We have every intention, which I think you've seen today on the call, to share with you very explicitly traction metrics that we observe and monitor and manage on our new service offerings to give you insight into how they're going to take off.

From a revenue perspective, they're immaterial from a corporate standpoint, so they don't trigger really any SEC disclosure requirement. But we look forward to a possibility where certain product, business lines or maybe certain revenue types, for example, resell revenue would be broken out separately to provide the substantiation of the comments that we're making. So this is certainly variable over time. We are both bound by regulatory requirements and by our desire to provide color and in-depth discussions. But right now the numbers are just small to begin with. And so that's why we focus on traction metrics.

Colby Synesael - Cowen & Co. LLC

Great. Thank you for taking my question.

Operator

Our next question comes from the line of Heather Bellini from Goldman Sachs. Please go ahead.

Heather Bellini - Goldman Sachs & Co.

Yeah. Hi. I had a couple of questions. Just one, I guess, to what a lot of people have been following up on in the end just thinking about the OpenStack cloud and the fact that that business isn't growing as quickly. I know you guys are being confident that you're going to maintain your existing deployments, but I mean why is that the case? I mean, if you are not – why wouldn't those people also take advantage of the AWS or Azure or Google instead of being on a platform that seems like maybe it's not going to get the same level of attention from an innovation standpoint, otherwise you would see that business be growing more quickly? So I guess that's one question.

And the other would be, on your CapEx guidance for this year, I guess I'm wondering, because it does seem like you're pivoting to be a lot of the managed services company and if I look at a lot of the other consulting firms that are out there, their CapEx levels are materially lower. Even though you're having a big step-down in CapEx in 2016 versus 2015, why shouldn't your CapEx come way down and therefore really help free cash flow conversion going forward? I guess I'm a little confused as to what the aggressive spending on CapEx is for if the majority of what you're seeing is growth on other people's platforms?

Taylor Rhodes - President, Chief Executive Officer & Director

Yeah. Heather, thanks. This is Taylor. On the first question why are we confident about keeping the OpenStack base, look, I think there's a couple of reasons on that. The first I would say is that, again, we have a customer intimacy model. We're known as the leaders in service and we tap a lot of data from our NPS surveys and interactions with customers that tell us what they like, don't like, et cetera. And predominantly on our public cloud, we see customers with three hallmarks.

The first is, again, they're open-source minded folks, they are support seekers, they're less worried about what the infrastructure and technology is underneath; and a lot of them are again connecting – their use case of preference is hybrid, where they connect to dedicated servers for part of their environment and the public cloud for part of their environment. And today, the only way that we offer that service is through our RackConnect product that connects our public cloud to our dedicated servers.

All that said, if we're wrong on this and these customers choose to go to AWS or Azure, we're confident that we'll have the best chance to keep them. And what we've done with our economics is we've made ourselves indifferent further down the P&L to lower capital as you know, higher free cash flow; and we said publicly in the past similar on EBT, et cetera. So we would certainly want to offer these customers choice of best fit for them. We're very mindful of that. But we don't see huge signs yet or any indication that these customers are all looking at a burning platform that would have them undertake a complex and risky and costly application migration to a new platform.

So those are some of the reasons why. But again, if we do see the migration, we will be happy to help them to get on to an AWS or an Azure solution; we'll be happy on the way to sell them Managed Security, which is an uplift on the revenue they pay us, et cetera. So that's our perspective on that.

I think your question on CapEx is a good one. Remember that we are the number one managed hosting company in the world for dedicated hosting; and also we intend to be number one in private clouds because we see an increasing buying cycle from particular verticals around that. That is an area where we deploy the capital, where we build the stack, and own and control the stack and where we earn very good EBITDA margins and good ROC. So there will be a part of our business that is on our capital, very sticky, recurring subscription revenue models. And we will then marry that up with choice of the world's leading public cloud and operate that as a multi-cloud environment for our customers.

Heather Bellini - Goldman Sachs & Co.

Great. Thank you.

Operator

Our next question comes from the line of Simon Flannery from Morgan Stanley. Please go ahead, sir.

Simon Flannery - Morgan Stanley & Co. LLC

Great. Thanks very much. I mean, coming back to the guidance for 2016 by quarters, if Q2 becomes sort of the low order mark for year-over-year revenue growth and then will accelerate, I think you were saying that you would see better growth trends given history in the second half of the year. So how should we think about those year-over-year trends as we go through the year, exiting maybe at a higher rate than we might be, say, in the middle of the year? Is that something you can see at this point or is it going to be fairly level beyond Q1? And then the buyback data, I think you said you've done $367 million of the $500 million. Is that a year-end number or is that to today and can you provide any color if it is a year-end number of what you've done so far this year? Thanks.

Taylor Rhodes - President, Chief Executive Officer & Director

Yeah, sure. Simon, this is Taylor. I'll tackle the first one. Karl can answer the second. First, I want to be clear we're not providing Q2 guidance today. But the second – I think looking at the patterns in our business, historically, you'll see a Q1 low point; you'll see Q2 a little bit better there or thereabout; and then you'll see Q3 and Q4 where a lot of our customers hit their seasonal highs, the strongest quarters of the year. History is useful if history holds that should be apparent we'd see this year. But I want to be careful not to provide you with specific Q2 guidance on this call, but I think you know how to model our business historically. And then in terms of the buyback, is that a year-end number, Karl, you want to comment?

Karl Pichler - Senior Vice President, Chief Financial Officer & Treasurer

Yeah. So the $367 million is all the buybacks combined that we executed during 2015. So if you want the year-end number, we've done $250 million in Q3 and $117 million in Q4, adding up to the $367 million.

Simon Flannery - Morgan Stanley & Co. LLC

Okay. And have you been buying since. How much do you have left on the facility as of today of that $500 million?

Karl Pichler - Senior Vice President, Chief Financial Officer & Treasurer

Of the $500 million, $133 million.

Simon Flannery - Morgan Stanley & Co. LLC

But that – have you spent some of that in January and February?

Karl Pichler - Senior Vice President, Chief Financial Officer & Treasurer

We can't comment on that.

Simon Flannery - Morgan Stanley & Co. LLC

Okay. All right. Thank you.

Operator

Our next question comes from the line of Steve Milunovich from UBS. Please go ahead.

Steven M. Milunovich - UBS Securities LLC

Thank you. A few summers ago you talked about the difference between managed and unmanaged cloud. And I think you made the comment that if you and Amazon were in the same deal, somebody was in the wrong place; and yet today you talk about obviously losing incremental workloads to them. So did that turn out to be a problem, particularly in public cloud, but not as much in managed and private or how should we kind of think about that in retrospect?

Taylor Rhodes - President, Chief Executive Officer & Director

Yeah. Steve, great question. Thank you. I remember when we had that conversation. Look, I think as we've learned through this, there's a couple of things that have happened. One, yes, it impacted our public cloud growth. We found that as Amazon really leverage their strengths, which are pouring capital under their product, building their developer ecosystem, training people on APIs, et cetera, they really picked up a lot of momentum that took public cloud apps further and further into their model. And that was a – just – you've seen them, right, they're a tornado. So we think that was an impact that was larger to our public cloud than we anticipated at the time.

I think the second thing though is frankly now what we are seeing and hearing when we talk to really anybody who is deep in the market, either through the professional services side or large customers who are thinking about what they're doing, the most important thing for us to consider is that the – whereas we were still in what I would call early adoption a couple of years ago. We're now firmly in central IT land, where CIOs have caught up and saying we've got to go drive our businesses to the cloud, we've got to govern it, we've got to understand how to secure it, we've got to understand how to migrate applications, et cetera.

And so what Amazon is seeing and Azure is seeing, and you can look at their actions that back this up, they are seeing the same hitting of that portion of the market. That's why they are working so hard on enabling their managed service provider ecosystems and putting so much of their effort there. AWS and Azure have sales reps who are trying to cover thousands of opportunities. And the feedback we get is, anecdotally, we don't have time to be here helping customers with the architecture, with the cloud readiness assessment, with the migration certainly and certainly with the ongoing operate it and put SLAs on it.

So we think we've hit that part of the market where you're really seeing the managed service model and the managed service buyer show up at scale and our intent on getting out of the data center and doing a data center shutdown. So to reiterate, these are new offerings that we can benefit from. And as AWS proves to be the predominant leader, we are seeing a lot of evidence that the big part of the market that wants to use their technology, that wants help doing it is showing up.

Steven M. Milunovich - UBS Securities LLC

And then can you remind us how you price your cloud support, is it off of the Amazon bill or is it separate?

Taylor Rhodes - President, Chief Executive Officer & Director

It's on our website. I'd encourage you to go to rackspace.com/aws. You can see it there. We've been very transparent on the pricing. It is a percentage. It's a calculation that depends on a portion on how much infrastructure spend and then a portion on what service levels you're buying from us. But it's very transparent and readily available. If you have any follow-on questions, we'd be happy to take you through that during our interactions in the quarter here.

Steven M. Milunovich - UBS Securities LLC

Thanks.

Operator

Our last question comes from the line of Jonathan Schildkraut from Evercore. Please go head, sir.

Jonathan Schildkraut - Evercore Group LLC

Hi. Great. Thank you for squeezing me in on the questions. I guess just one strategic and then a few on the financials, if I may. Taylor, you gave us some really good color about AWS and wins around that business. I guess in our conversations we more and more hear how AWS is key for driving wins in sort of the other sort of managed areas of the business. And you gave some good stats about six-figure customer, mostly new. But could you give us a sense of whether these customers are also taking other services from you or if they're focused purely on the AWS support side of the business? And then I'll follow up with some financial questions?

Taylor Rhodes - President, Chief Executive Officer & Director

Sure. I would caveat the answer is that the data we shared with you is less than four months old, right. So very early days. I think one of the things we're seeing though is that, I'll give you an example. In addition to talking about AWS support, many of these customers want to talk about Managed Security. We've developed an offer that allows the security posture from an application down into the infrastructure to be materially different and better than a customer has to manage complexity terms and cost terms on his or her own.

So a good example is being able to say, we have built value around the AWS cloud in two ways – three ways really. One is through proprietary software development where if you go to our website, you'll see products like Compass and others that help customers manage things that are hard for them around the AWS cloud. That's software that makes the AWS cloud more valuable and easier to use.

Second is, the world has a scarcity of AWS experts. We've already, as I mentioned, gotten over 230 technical certifications, which are very hard to achieve and from our anecdotal evidence puts us already in the very top. And we've already also earned over 1,100 business accreditations and technical accreditations around the AWS cloud, so that our commercial people, our account managers, et cetera, are fluent on the product. So we are producing expertise at scale which we believe will also be a huge advantage in this early, nascent, balkanized managed service ecosystem.

And then the third is the cross-sell and upsell of additional products. So security is a great example. Early anecdotal evidence, but we're also seeing an interest in being able to leverage dedicated servers or bare metal as a complement to the AWS cloud enabled through Direct Connect, as another example. So we actually have high ambitions and we hear feedback from the field that one of the differentiators is having this portfolio of options. So a lot of medium and large size enterprises view AWS as an amazing part of their cloud infrastructure, but it's a component of it, it is not the entire solution, and hence our commentary around multi-cloud buyers.

Jonathan Schildkraut - Evercore Group LLC

All right. Awesome. I guess the last or final question I have has a little bit to do with some of the other metrics that you've put out there. Karl, you talked a little bit about transitioning some assets into the new London facility; and, Taylor, you talked about moving some folks off of the older infrastructure onto some of the newer options. I did notice the server count came down, and I'm wondering if one or both of those things is tied to that reduction in server count.

But even as I think about that server count falling down – not falling down, but coming down, it sort of begs the question around what's going on with your sort of power commitments? You guys have obviously committed to a significant amount of megawatts. You've launched about 90% of those megawatts, but you're really only occupying about half; a number which has been somewhat consistent. And I'm just wondering if you've over-committed on the data center side for what the business is going to look like in the future?

Karl Pichler - Senior Vice President, Chief Financial Officer & Treasurer

Yeah. Okay. So let me take that one. So the server count came down in Q4 mainly for the reasons that we've already talked about, or at least touched upon. There are two main reasons. One is, we have still customers on our pre-OpenStack public cloud variation, so to speak, that we're actively migrating all now to the OpenStack control plane, which basically increases their features, makes it more attractive for them and allows us to really decommission gear that has reached its end of life.

So we have decommissioned thousands of servers from old capacity pools from pre-OpenStack cloud that have been fully depreciated. So that frees up not so much capital, because they're fully depreciated, but it certainly frees up power and data center space to be deployed again.

The second thing that we more explicitly touched upon was the consolidation. So we had two facilities in the UK that we've decommissioned and migrated into London. That is the main reason why we had to take bigger capacity than we wanted. This is not a perfectly granular world where you can take 0.5 megawatt or 0.25 megawatt chunks. They come in certain minimal sizes. In the UK situation it is 2 megawatts. And so the marginal rate or the marginal capacity step-up is 2 megawatts, and it comes in those chunks.

And so when we did the planning for the migrations and the initial pickup of what we have and the demand for dedicated and private clouds, et cetera, we determined that the best way of proceeding here is to accelerate the second pickup and really commission a little bit more than we want to facilitate all the migrations and consolidation. So we feel pretty good about that. Again, we have a long-term expectation of growth that is related to dedicated and single tenancy and our own deployment. And so, therefore, we are not really concerned about our data center commitments at this point.

Jonathan Schildkraut - Evercore Group LLC

Awesome. Thanks for taking those questions. Did you guys break out what you got paid for Jungle Disk, or what you expect to get paid?

Karl Pichler - Senior Vice President, Chief Financial Officer & Treasurer

We will provide all the detail exposure in our Q1 call.

Jonathan Schildkraut - Evercore Group LLC

Awesome. Thank you for taking the questions. Appreciate it.

Taylor Rhodes - President, Chief Executive Officer & Director

Thank you.

Operator

And we have time for one more question. It comes from the line of Gray Powell from Wells Fargo. Please go ahead.

Gray W. Powell - Wells Fargo Securities LLC

Great. Thank you very much. Yeah. I just wanted to follow up on the CapEx side of the equation. How much more leverage can you get on capital intensity? On the one hand, I am glad to see it improve in 2016. On the other hand, 8% growth, it's fairly close to what we consider a steady state. Do you see the potential for CapEx to trend into maybe the mid-to-high teens at some point? And then just in terms of 2016, how should we think about the different components between customer gear, base for builds, capitalized software and that sort of thing?

Karl Pichler - Senior Vice President, Chief Financial Officer & Treasurer

You want me to take it? Yeah, okay. So, look, I think the trend is clear, right. So there are two main factors that influence the trend. The one is the growth itself; obviously the – not obviously, but the majority of our CapEx is growth CapEx and is therefore related to the actual materialized growth. It is fairly tightly managed, maybe not on an in-quarter basis, but certainly over several quarters. And certainly for the year, as growth rates come down the growth success-based related CapEx component will just flex accordingly. So that is one component that is, I wouldn't say, automatic, because it has to be managed of course, but it is very tightly managed; and we've done this for years.

The second component is the revenue contribution that we get from dedicated or from our core business, so to speak, where we deploy the capital versus the third-party cloud business, so when we provide services on other people's cloud. So that's revenue mix where we still see again demand on both sides. That mix, which is very hard to predict on what specific percentages that comes in at, will determine the capital requirement of course of the business going forward.

The second component that we need to differentiate on is the growth CapEx, which I now touched on, versus the maintenance CapEx. So the existing business in order for it to basically be seen as a growing concern and continue to provide services as is today requires about 10% of revenue in terms of maintenance CapEx. So we are in this, I don't want to call transition, but we're in this phase where we basically have two contributors lowering the CapEx down to lower levels, but there will always be – as long as we are in the managed hosting business where we deploy capital ourselves, there will always be the maintenance CapEx requirement, which will somewhat provide a floor to the overall number.

Gray W. Powell - Wells Fargo Securities LLC

Got it. That's helpful. Thank you.

Taylor Rhodes - President, Chief Executive Officer & Director

Okay. So with that, we'll conclude the Q&A portion of our call. Thank you for the good questions. Before we wrap up, I'd like to share a personal statement with you and acknowledge and address the frustration that many of you may feel about Rackspace as we're making our way through these hard, but important changes. We certainly realize that 2015 was a tough year for our shareholders. We, on the leadership team, are very aligned and empathetic with you on the loss of valuation in the company; and we acknowledge that 2016 has started out that way as well.

The recent market turbulence has hit our stock very hard. And, look, while we can't control the day-to-day volatility of our share price, we are very focused on the things that we have more control over, issues that have slowed our growth, and going after the opportunities that are ahead of us.

As a reminder, coming out of the 2014 strategic review, we suffered some pretty big hits to our culture and our engagement; and the resultant employee turnover really affected our momentum. Since then, we've worked very hard to reengage our Rackers and our culture. We've hired aggressively to revitalize the organization.

Internally, I can tell you our engagement scores have rebounded; our attrition is trending back down; and those are good leading indicators for us. Racker belief in our mission of Fanatical Support for the world's leading clouds is getting stronger; and our customer loyalty is consistently strong.

We've shared with you the caliber of the new hires. I'm excited to be able to recruit to and work alongside veterans like Alex Pinchev to reaccelerate our growth; and we have high confidence in him.

But the other major factor that caused our growth to slow was our limited product portfolio. Frankly, until late last year, we weren't able to take advantage of the high-growth opportunities in adjacent markets. And it had been too long since we had launched new high-growth opportunities and new products that added value to customers who are moving out of data centers into the multi-cloud world.

We worked hard last year to put compelling new offers into the market. And now we can rather than getting fearful when AWS makes a price change, we see that as an accelerator on the overall size of the cloud pie, because it further stimulates customers coming out of their data centers; and many of those will want and need offers like managed services, Managed Security, et cetera, on top of their clouds.

In the meantime, we are very mindful of our need to be good stewards for our shareholders. We're managing our costs, we're managing our capital intensity, we're improving the free cash flow of our business. We're returning cash to our shareholders by our buyback program. We will win as the leader in managed services in the cloud age, where we will deliver Fanatical Support globally at scale and with an excellence that no one else in this industry can provide. And despite the really hard things we've had to do in the past couple of years to get ready for this opportunity, I and our leadership team are very energized, very excited and very optimistic about our future.

So we've never seen a market opportunity that is so large. We've never seen the dislocation that is happening in the market, from old tech to new tech; and that creates an opportunity for us to go in and lead. We feel like we are at that point now where the opportunity is a good fit for us. We've done the hard work around go-to-market and we've done the hard work around product. We've got some more roadmap in front of us in order to get to reaccelerated revenue growth rate, but we are going for it. And in this time, we want to thank our customers and our shareholders for their support. And we're working very, very hard to deliver for you.

And with that, we will conclude the call. Thank you for joining us.

Operator

This does conclude the conference today. We thank you for your participation.

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