Rackspace confirmed a Hosted Exchange ransomware attack has knocked out email service to customers. The attack "may result in a loss of revenue for the Hosted Exchange business, which generates approximately $30 million of annual revenue," Rackspace disclosed on December 6 -- four days after the ransomware attack occurred.
Rackspace is a multi-cloud MSP. As of December 9, 2022 at 8:20 a.m. ET, the company is "unable to provide any timeline or expectations for restoration to the Hosted Exchange environment."
The security incident comes at a critical time for Rackspace. The San Antonio, Texas-based company ranks among the world's Top 250 Public Cloud MSPs. Still, Rackspace faces growth challenges on multiple business fronts. The evidence: Rackspace's market valuation is roughly $1.02 billion as of December 4, 2022 -- down roughly 65% over the past year, according to SeekingAlpha. Amid that backdrop, the company has overhauled its executive team, reorganized and considered potential asset sales over the past year.
Rackspace Hosted Exchange Outage: Microsoft 365 Workaround
As a workaround, the company is offering free Microsoft 365 subscriptions as a workaround to impacted customers. Moreover, Rackspace has mobilized 1,000 support professionals to help Hosted Exchange customers with the migrations to Microsoft 365 -- but that migration process involves manual tasks that have frustrated some customers.
To help mitigate the migration challenges, Rackspace is partnering with "Microsoft's Fast Track team to add resources to our extended team to better assist customers with troubleshooting and any technical questions."
Rackspace ($RXT) has hired "world-class external expertise" to assist with the security incident investigation, the company said, though specific MSSP and incident response company names were not disclosed. The incident started early on December 2. As of early December 6, Rackspace does not have an ETA for Hosted Exchange system recovery.
Rackspace Hosted Exchange Security Incident Timeline
Here is a timeline of the Rackspace Hosted Exchange security incident, investigation and email recovery efforts:
Rackspace Business Evolution
Rackspace was an early leader in the hosting market. But an ill-fated shift to OpenStack failed to compete against public cloud providers such as Amazon Web Services, Microsoft Azure and Google Cloud. In a major business pivot, Rackspace has spent recent years offering multi-cloud managed services and security services for customers that run AWS, Azure and Google Cloud workloads.
Note: Blog originally posted December 4, 2022. Updated regularly thereafter.
