Rackspace Technology, Inc.

What they do

Rackspace designs, integrates and operates infrastructure, data foundations and software platforms for regulated and mission-critical customers, from edge to core to cloud. It reports through two segments: Public Cloud, a capital-light managed services model on AWS, Microsoft Azure and Google Cloud, and Private Cloud, a capital-intensive model hosting customer environments in its own or third-party data centers. The company employs about 5,000 people, has a presence in more than 60 cities, and serves enterprise, mid-market and commercial customers.

Revenue drivers

• Public Cloud — Services-centric, capital-light segment delivering managed services, Elastic Engineering and professional services on AWS, Azure and Google Cloud; contracts typically run on a consumption model and can be canceled at any time without penalty. Generated $407 million in Q2 2026, down 2.3% year over year, and is guided to $1,450-$1,500 million for FY 2026.
• Private Cloud — Technology-forward, capital-intensive segment providing managed services in Rackspace, customer or colocation data centers, plus the legacy OpenStack Public Cloud business ceased active marketing in 2017. Arrangements generally have 12-to-36-month fixed terms with monthly recurring fees. Generated $263 million in Q2 2026, up 5.5% year over year, and is guided to $1,000-$1,050 million for FY 2026.
• Consumption-based recurring contracts — The company states it generates revenue primarily through consumption-based service contracts that are recurring in nature, supplemented by non-recurring professional services for designing and building customer solutions.
• Managed Compute and Inference Platform — Launched in Q2 2026 with partners including AMD and Palantir, positioned as part of the full enterprise AI stack offering now marketed to regulated industries.

Recent performance

Q2 2026 revenue was $670 million, up 0.6% reported and 0.4% constant currency versus $666 million in Q2 2025. Private Cloud revenue was $263 million, up 5.5%, while Public Cloud revenue was $407 million, down 2.3%. Loss from operations widened to $(33) million from $(25) million, and net loss was $(68) million, or $(0.27) per diluted share, versus $(55) million and $(0.23) a year earlier. Non-GAAP operating profit was $27 million in both periods, and Non-GAAP loss per share was $(0.08) versus $(0.06). Cash flow used in operating activities was $32 million in the quarter, with $104 million from operations on a trailing-twelve-month basis.

Strategy

Management positions Rackspace as the operator of the full enterprise AI stack, from governed private cloud to AI inference and agents in production, under an 'Outcomes-as-a-Service' model. The company cites strategic partnership agreements with AMD, VMware by Broadcom, Palantir, Uniphore, Rubrik and Dell Technologies, and premier consulting and managed services relationships with AWS, Microsoft Azure, Google Cloud, Oracle, SAP and VMware. Stated priorities include moving customers from AI experimentation to production, expanding work across the installed base, and disciplined execution. It also cites over $1 billion of cumulative investment in proprietary technology and a team of about 5,000 consultants and engineers as differentiators.

Risks

• Customer acquisition and retention — The company lists attracting new customers, retaining existing customers and selling additional comparable-gross-margin services among its most significant challenges.
• Substantial indebtedness — Total liabilities were $4.03 billion against $2.75 billion of total assets at 2026-06-30, with long-term debt of $2.76 billion and shareholder equity of negative $1.28 billion.
• Nasdaq minimum bid price — The company disclosed that failure to maintain compliance with Nasdaq's $1.00 per share minimum bid price requirement could result in delisting, affecting market price, liquidity and access to capital markets.
• Mix shift to lower-margin offerings — The risk factors cite the trend toward lower-gross-margin offerings and the company's ability to adapt to evolving customer demands.

Outlook

For FY 2026, management guides total revenue of $2,450-$2,550 million, split between Private Cloud at $1,000-$1,050 million and Public Cloud at $1,450-$1,500 million. Guidance also includes Non-GAAP operating profit of $125-$135 million, Adjusted EBITDA of $285-$295 million, Non-GAAP loss per share of $(0.25)-$(0.30), Non-GAAP other expense of $(220)-$(230) million, a 26% Non-GAAP tax rate and 250-260 million Non-GAAP weighted average shares, excluding any ATM dilution. Management said it remains focused on disciplined execution as it builds the full enterprise AI stack.