Rackspace Technology, Inc. (RXT) Market Cap
Rackspace Technology, Inc. has a market capitalization of $365.2M.
Financials based on reported quarter end 2025-12-31
Price: $1.48
▲ 0.03 (2.00%)
Market Cap: 365.19M
NASDAQ · time unavailable
CEO: Gajen Kandiah
Sector: Technology
Industry: Software - Infrastructure
IPO Date: 2020-08-05
Website: https://www.rackspace.com
Rackspace Technology, Inc. (RXT) - Company Information
Market Cap: 365.19M · Sector: Technology
Rackspace Technology, Inc. operates as a multi cloud technology services company worldwide. It operates through Multicloud Services and Apps & Cross Platform segments. The company's Multicloud Services segment provides public and private cloud managed services, which allow customers to determine, manage, and optimize the right infrastructure, platforms, and services; and professional services related to designing and building multi cloud solutions and cloud-native applications. Its Apps & Cross Platform segment includes managed applications; managed security services in the areas of security threat assessment and prevention, threat detection and response, rapid remediation, governance, and risk and compliance assistance across multiple cloud platforms, as well as privacy and data protection services, including detailed access restrictions and reporting; data services; and professional services related to designing and implementing application, security, and data services. Rackspace Technology, Inc. was founded in 1998 and is headquartered in San Antonio, Texas.
Analyst Sentiment
Based on 13 ratings
Analyst 1Y Forecast: $0.00
Average target (based on 2 sources)
Consensus Price Target
Low
$2
Median
$3
High
$5
Average
$3
Potential Upside: 125.2%
Price & Moving Averages
Related Companies in Technology
Fundamentals Overview
📊 AI Financial Analysis
Powered by StockMarketInfo"For the fiscal year ending December 31, 2025, RXT reported revenues of $682.8M, yet posted a net loss of $32.7M resulting in a negative EPS of $0.13. The company has total assets of $2.8B and liabilities of approximately $4.02B, leading to negative equity of around $1.22B. RXT's operating cash flow stood at $59.7M, while free cash flow approximated $56.0M, indicating the company is generating positive cash flow despite its net loss. The stock price is currently at $1.39, with a year-to-date change of 42.67%, although it is down 26.46% over the past year. There are no dividends paid, reflecting a focus on reinvestment. Despite the positive short-term stock performance, significant leverage may pose risks. Valuation metrics suggest a target price consensus of $3.33, indicating potential upside from the current price."
Revenue Growth
Revenue remains strong at $682.8M, showing healthy top-line figures.
Profitability
Negative net income reflects challenges in achieving profitability.
Cash Flow Quality
Positive free cash flow of $56.0M indicates solid cash management.
Leverage & Balance Sheet
High net debt relative to assets raises balance sheet concerns.
Shareholder Returns
Despite a significant year-to-date price increase, long-term returns are uncertain due to recent declines.
Analyst Sentiment & Valuation
Moderate upside potential indicated by price target consensus.
Disclaimer:This analysis is AI-generated for informational purposes only. Accuracy is not guaranteed and this does not constitute financial advice.
So What? RXT’s Q4 shows a clear pivot toward a public-cloud, services-led mix improvement while private cloud remains constrained by delayed health care ramp timing (deal fully executed; expected to begin Q2 2026). Despite revenue beat vs guidance, margins were pressured sequentially at the consolidated level (non-GAAP gross margin -180 bps) as private cloud under-delivered and public cloud infrastructure mix increased. The company partially offset this via disciplined OpEx and operational efficiencies: non-GAAP operating profit margin rose +120 bps sequentially to 6% of GAAP revenue, with Q4 EPS (non-GAAP) beating the guided range. The management narrative is anchored by an execution-heavy platform-engineering model with forward-deployed engineers embedded on Palantir Foundry/AIP, scaling from 30 to 250+ in 12 months, supported by VMware and Rubrik ecosystem commitments. 2026 outlook shifts to annual guidance: private cloud +6% YoY midpoint growth with public cloud revenue down ~6% due to government contract transitions, but services expected to grow mid- to high-teens excluding that contract.
Growth Catalysts
- Private cloud: ramp of newly closed health care deal expected to begin in Q2 2026 (ramp timing impacted Q4)
- Private cloud: platform engineer-led deployments driving incremental infrastructure consumption across private/public/hybrid
- Public cloud: continued expansion of higher-value managed offerings (AIOps, SRE, governance, modernization, cost optimization)
- Public cloud: operationalizing AI moving from experimentation to production via governance/security/managed services
- 2026 platform-led growth model with forward-deployed engineers scaling AI into live workflows
Business Development
- Palantir: strategic partnership (Foundry and AIP) with data readiness, hosting, and ongoing managed operations; 30 Palantir-trained platform engineers, planning to scale to 250+ in next 12 months
- VMware: anchor partnership to power the control plane (compute/storage/networking/security) with native AI workload support and sovereign data residency controls
- Rubrik: anchor partnership anchoring cyber resilience via Rackspace Cyber Recovery Cloud (threat detection, data protection, workload recovery)
- European retail & commercial bank (top European bank): multiyear agreement for transformative migration, software-defined data center, managed services with expansion path into cyber recovery, public cloud, AI, and digital banking
- Global online trading/financial services platform: mission-critical workload win modernizing hundreds of bare-metal servers into virtualized software-defined infrastructure
- Fast-growing AI-enabled digital platform: agreement to host and manage next-generation human-in-the-loop architecture for real-time intelligent engagement at scale
- Major digital media & advertising consumer-facing company (Americas): AI-powered services transformation serving hundreds of millions of users (production-grade framework for ML deployment reliability/governance)
- Global aviation services provider: AI solutions enabling real-time operational data access, improving response times and measurable efficiency in regulated environments
- Leading European bank (EMEA): selected as strategic cloud managed services partner for round-the-clock monitoring/security/optimization for core banking systems
- Large diversified Middle East business (multi-industry): comprehensive enterprise data platform modernization enabling visibility across investment portfolio and faster time-to-insight
- Oracle PeopleTools: private cloud product expansion supporting latest release for embedded analytics and lifecycle management for enterprise ERP
- Partner Fabric: launched RackConnect Global Internet on Partner Fabric extending network edge into partner ecosystems
Financial Highlights
- Q4 total GAAP revenue: $683M beat guidance (exact guidance not provided); beat driven by public cloud outperformance
- Q4 GAAP gross margin (non-GAAP gross profit margin): 18.1% of GAAP revenue, down 180 bps sequentially (drivers: lower private cloud revenue; higher mix of public cloud infrastructure)
- Q4 non-GAAP operating profit: $41M above high end of range; non-GAAP operating profit margin: 6% of GAAP revenue, up 120 bps sequentially
- Q4 non-GAAP loss per share: $(0.01) vs guided range $(0.03) to $(0.05) (beat)
- Q4 operating profit: $41M; adjusted EBITDA: $81M
- Q4 private cloud: revenue $241M below guided range; private cloud non-GAAP gross margin 35.7%, down 240 bps sequentially; private cloud non-GAAP segment operating margin 26.1%, down 80 bps sequentially (less fixed cost absorption and lower revenue)
- Q4 public cloud: revenue $442M above guided range; non-GAAP gross margin 8.5%, down 70 bps sequentially (higher mix of infrastructure revenue); non-GAAP segment operating margin 4.5%, up 120 bps sequentially (improved operational efficiencies)
- Full year 2025 non-GAAP gross margin: 19.4%, down 120 bps YoY (private cloud revenue decline driver)
- Full year 2025 non-GAAP operating profit margin: 4.7%, up 80 bps YoY (lower OpEx cost optimization)
- Liquidity and cash: $397M total liquidity; Q4 cash on hand $106M; Q4 CFO $60M; Q4 free cash flow $56M; full-year CFO $151M; full-year free cash flow $91M
- No explicit tax/tariff bps impacts discussed; 2026 non-GAAP tax rate guided at 26%
Capital Funding
- Total liquidity: $397M at year-end (Q4)
- Cash on hand: $106M
- Q4 free cash flow: $56M; Q4 cash flow from operations: $60M
- No share repurchase amounts or debt level changes disclosed in transcript
Strategy & Ops
- Shift to platform engineering model using forward-deployed engineers embedded in customer environments (build and run accountable delivery model vs traditional stitching of partners)
- Scaling Palantir-trained platform engineers: 30 today; plan to scale to 250+ in next 12 months
- Quarter-to-quarter timing constrained by migration milestones and deployment schedules; move in 2026 to annual guidance framework
- Private cloud: launched support for latest Oracle PeopleTools release; launched RackConnect Global Internet on Partner Fabric for predictable high-performance connectivity
- Public cloud: launched Rackspace Managed Cloud Database Operations; introduced streamlined deployment options for enterprise software and AI-enabled managed services
- Proactively reduced exposure to lower-margin infrastructure resale engagements; services-led strategy emphasized
Market Outlook
- 2026 annual guidance framework (shift from quarterly guidance due to timing variability of large deals)
- Full-year 2026 GAAP revenue: $2.6B to $2.7B (down 1% YoY at midpoint)
- Full-year 2026 private cloud revenue: $1.025B to $1.075B (up 6% YoY at midpoint)
- Full-year 2026 public cloud revenue: $1.575B to $1.625B (down 6% YoY at midpoint)
- Public cloud: services revenue expected to grow mid- to high teens YoY excluding planned transition of a low-margin large-government contract
- Total non-GAAP operating profit (2026): $160M to $170M (growth 31% at midpoint)
- Adjusted EBITDA (2026): $305M to $315M (up 12% at midpoint)
- Non-GAAP loss per share (2026): $(0.15) to $(0.20)
- 2026 non-GAAP tax rate: 26%
- 2026 non-GAAP other expenses: $220M to $230M
- 2026 share count: 250M to 260M shares
- 2026 free cash flow: $90M to $110M
- Health care contract ramp expected to begin in Q2 2026 (guided cadence impact)
Risks & Headwinds
- Private cloud: health care contract ramping more slowly than initially expected; impacted Q4 results and guidance performance
- Migration complexity and implementation timing increasingly drive quarterly revenue timing variability (hence annual guidance shift)
- Public cloud: decline expected YoY at midpoint due to planned transition/exit of a large government contract (lower-margin work)
- Gross margin pressure sequentially: Q4 non-GAAP gross profit margin down 180 bps due to private cloud revenue decline and higher mix of public cloud infrastructure
- Private cloud profitability headwind: less fixed cost absorption drove private cloud gross margin down 240 bps sequentially
Sentiment: MIXED
Note: This summary was synthesized by AI from the RXT Q4 2025 earnings transcript. Financial data is complex; please verify all metrics against official SEC filings before making investment decisions.