Overall though, Walravens says Rackspace has been a "home run" of a company and he sees plenty of upside as OpenStack continues to gain prominence as a market alternative to Amazon Web Services. The more companies coalesce around OpenStack, the more opportunity down the line Rackspace will have to provide support services around the project. Eventually, he says, Rackspace data centers could be an option for smaller companies within the OpenStack ecosystem to host their services from, creating an ongoing revenue stream for Rackspace. Meanwhile, as Rackspace has embraced OpenStack on its back end, Walravens says it has now increased its capacity to handle large-scale cloud computing projects that may have been typically only handled by Amazon Web Services. Bigger deals mean more revenue, and more opportunity to continue its M&A strategy.
But while M&A has been an important way of supplementing its internal development and service offerings, Rackspace does not appear to invest a significant portion of its annual revenues on M&A. The company does not disclose the cost of the acquisitions, but in its latest quarterly report to the U.S. Securities and Exchange Commission, the company notes that previous acquisitions have combined a one-time payment, plus ongoing payments. Rackspace expects to pay about $7.4 million on those ongoing expenses from its three acquisitions this year, but it does not disclose how much the initial payments were. That's out of the more than $1 billion in revenue the company recorded last fiscal year.