Rackspace Technology Reports Third Quarter 2026 Results
Third-quarter capital expenditures increased to $104 million from $34 million a year earlier.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Summary
Rackspace Technology (Nasdaq: RXT) reported third-quarter 2026 revenue of $609 million, down year over year, while narrowing its net loss.
For the quarter ended September 30, revenue fell 9%. Private Cloud revenue rose 4% to $260 million, while Public Cloud revenue fell 17% to $349 million. Net loss narrowed to $53.5 million from $67.1 million a year earlier; diluted loss per share improved to $0.21 from $0.28. Non-GAAP operating profit rose 12% to $36 million. Operating cash flow was $36 million for the quarter, but fell to $9.3 million from $91.7 million for the first nine months.
The company raised its full-year revenue outlook by $35 million at the midpoint to $2,510–$2,560 million. It maintained forecasts for non-GAAP operating profit of $125–$135 million and adjusted EBITDA of $285–$295 million. September 30 cash was $108 million, with total liquidity of $170 million including its revolving credit facility.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- Major point. Forward-looking: it has not happened yet and may not happen.2026 revenue guidance raised $35 million at the midpoint to $2,510–$2,560 million.
- Major pointNine-month long-term borrowings provided $330.0 million in funding. 51% of market cap
- Moderate pointPrivate Cloud revenue rose 4% year over year to $260 million in the third quarter.
- Moderate pointQuarterly net loss narrowed to $53.5 million from $67.1 million; diluted loss per share improved to $0.21 from $0.28.
- Moderate pointQuarterly operating loss narrowed to $12.5 million from $33.9 million a year earlier.
- Moderate pointQuarterly non-GAAP operating profit increased 12% year over year to $36 million.
- Moderate pointQuarterly operating cash flow was positive at $36 million; trailing-twelve-month operating cash flow was $69 million.
- Moderate pointNine-month debt-extinguishment gain was $62.5 million, compared with none a year earlier. 9.7% of market cap
- Moderate pointNine-month common-stock issuance generated $11.6 million in proceeds, net of offering costs. 1.8% of market cap
8 minor points
- Minor pointQuarterly selling, general and administrative expenses fell 23.3% year over year to $125.6 million.
- Minor pointQuarterly cost of revenue fell 8.4% year over year to $496.0 million.
- Minor point. Forward-looking: it has not happened yet and may not happen.2026 profit outlook maintained: non-GAAP operating profit of $125–$135 million and adjusted EBITDA of $285–$295 million.
- Minor point. Forward-looking: it has not happened yet and may not happen.2026 segment revenue outlook: Private Cloud of $995–$1,015 million; Public Cloud of $1,515–$1,545 million.
- Minor pointNine-month net loss narrowed to $112.7 million from $193.1 million; diluted loss per share improved to $0.45 from $0.82.
- Minor pointNine-month operating loss narrowed to $63.5 million from $97.4 million a year earlier.
- Minor pointNine-month selling, general and administrative expenses fell 15.1% year over year to $410.5 million.
- Minor pointCash and equivalents increased to $108.0 million at September 30, 2026, from $105.8 million at December 31, 2025.
Negative
- Moderate pointQuarterly revenue fell 9% year over year to $609 million.
- Moderate pointPublic Cloud revenue fell 17% year over year to $349 million in the third quarter.
- Moderate pointQuarterly gross profit fell 12.9% to $113.1 million; gross margin declined to 18.6% from 19.4%.
- Moderate pointQuarterly interest expense increased 67.5% year over year to $35.5 million.
- Moderate pointQuarterly capital expenditures increased to $104 million from $34 million a year earlier.
- Moderate pointNine-month operating cash flow fell to $9.3 million from $91.7 million a year earlier.
- Moderate point. Forward-looking: it has not happened yet and may not happen.2026 non-GAAP loss-per-share guidance remains a loss of $0.25–$0.30.
- Moderate point. Forward-looking: it has not happened yet and may not happen.2026 non-GAAP other expense guidance is $220–$230 million.
- Moderate pointCommon shares outstanding increased to 259.2 million at September 30, 2026, from 245.3 million at December 31, 2025.
10 minor points
- Minor pointQuarterly non-GAAP loss per share worsened to $0.06 from $0.05 a year earlier.
- Minor pointNine-month revenue declined 2.3% year over year to $1,957.3 million.
- Minor pointNine-month gross profit fell 10.1% to $347.0 million; gross margin declined to 17.7% from 19.3%.
- Minor pointNine-month interest expense increased 54.9% year over year to $95.9 million.
- Minor point. Forward-looking: it has not happened yet and may not happen.Share-count guidance excludes ATM dilution; future issuance depends on prevailing share price and market conditions.
- Minor pointNon-current debt rose to $2,770.2 million at September 30, 2026, from $2,718.7 million at December 31, 2025.
- Minor pointStockholders' deficit widened to $1,307.3 million at September 30, 2026, from $1,219.5 million at December 31, 2025.
- Minor pointNine-month stock-funded asset purchases issued $14.0 million of common stock for property, equipment and software.
- Minor pointNine-month cash purchases of property, equipment and software increased to $65.8 million from $57.1 million.
- Minor pointNine-month non-cash purchases of property, equipment and software increased to $101.4 million from $34.5 million.
News Explained
Rackspace’s full-year weighted-average-share guidance of 265–275 million excludes ATM dilution; future issuance depends on share prices and market conditions, and an ATM sells new shares gradually into the market, reducing existing holders’ ownership percentages if shares are issued (absent offsetting changes).
Details
Market Reaction – RXT
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Key Figures
- Q3 revenue
- $609.1 million; down 9.3% year-over-year
- Third quarter 2026
- Private Cloud revenue
- $260.0 million; up 4.2% year-over-year
- Third quarter 2026
- Public Cloud revenue
- $349.1 million; down 17.2% year-over-year
- Third quarter 2026
- Loss from operations
- $(13) million vs. $(34) million
- Third quarter 2026 vs. third quarter 2025
- Non-GAAP Operating Profit
- $36 million; up 12% from $32 million
- Third quarter 2026 vs. third quarter 2025
- Cash flow from operating activities
- $36 million
- Third quarter 2026
- FY 2026 revenue outlook
- $2,510 million–$2,560 million
- Full-year 2026 guidance
- Revenue outlook increase
- $35 million at the midpoint
- Full-year 2026 outlook
Previous Earnings Reports
-
Q2 revenue rose 0.6%; full-year revenue guidance was $2.45–$2.55 billion.
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Key Terms
constant currency financial
non-gaap financial
adjusted ebitda financial
atm program financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
- Revenue of
$609 million in the Third Quarter, down9% Year-over-Year - Private Cloud Revenue was
$260 million , up4% Year-over-Year - Public Cloud Revenue was
$349 million , down17% Year-over-Year - Third Quarter 2026 Cash Flow From Operating Activities was
$36 million ; Cash Flow From Operating Activities was$69 million on a Trailing-Twelve-Month Basis - Raising full-year 2026 revenue outlook by
$35 million at the midpoint - Maintaining full-year 2026 Non-GAAP Operating Profit and Adjusted EBITDA outlook
SAN ANTONIO, Nov. 09, 2026 (GLOBE NEWSWIRE) -- Rackspace Technology, Inc. (Nasdaq: RXT), a global enterprise AI infrastructure and solutions provider, today announced results for its third quarter ended September 30, 2026.
Gajen Kandiah, Chief Executive Officer, stated, “This quarter we continued to execute on our business and financial plan and reaffirm our profit outlook for the full year while modestly increasing our revenue outlook.”
Mr. Kandiah added, “As I enter my second year as CEO, we have moved from establishing our strategy to become the operator of the full enterprise AI stack and creating the framework to execute it, to now translating our go-to-market efforts and large existing capacity footprint into further commitments, rapid deployments and high margin operations.”
Third Quarter 2026 Results
Revenue was
Private Cloud revenue was
Public Cloud revenue was
Loss from operations was
Net loss was
Net loss per diluted share was
Non-GAAP Operating Profit was
Non-GAAP Loss Per Share was
Capital expenditures were
As of September 30, 2026, we had cash and cash equivalents of
| (1 | ) | Constant currency revenue and certain other measures in this release are non-GAAP financial measures. See “Non-GAAP Financial Measures” and the tables that accompany this release for definitions and reconciliations of these non-GAAP measures to the most comparable GAAP measures. |
Financial Outlook
Rackspace Technology is providing guidance as follows:
| FY 2026 Guidance | |
| Total Revenue | |
| Private Cloud Revenue | |
| Public Cloud Revenue | |
| Non-GAAP Operating Profit | |
| Adjusted EBITDA | |
| Non-GAAP Loss Per Share | ( |
| Non-GAAP Other Income (Expense) | ( |
| Non-GAAP Tax Expense Rate | |
| Non-GAAP Weighted Average Shares(1) | 265 - 275 million |
| (1) | Non-GAAP Weighted Average Shares guidance excludes any dilution from the ATM program, as future issuance under the program will depend on prevailing share price and market conditions. |
Information about Rackspace Technology’s use of non-GAAP financial measures is provided below under “Non-GAAP Financial Measures”.
Definitions of non-GAAP financial measures and the reconciliations to the most directly comparable measures in accordance with generally accepted accounting principles in the United States (“GAAP”) are provided in subsequent sections of this press release narrative and supplemental schedules. Rackspace Technology has not reconciled Non-GAAP Operating Profit, Adjusted EBITDA, Non-GAAP Loss Per Share, Non-GAAP Other Income (Expense) or Non-GAAP Tax Expense Rate guidance to the most directly comparable GAAP measure because it does not provide guidance on GAAP net income (loss) or the reconciling items between these Non-GAAP measures and GAAP net income (loss) as a result of the uncertainty regarding, and the potential variability of, certain of these items, such as share-based compensation expense. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort. With respect to Non-GAAP Operating Profit, Adjusted EBITDA, Non-GAAP Loss Per Share, Non-GAAP Other Income (Expense) and Non-GAAP Tax Expense Rate guidance, adjustments in future periods are generally expected to be similar to the kinds of charges and costs excluded from these Non-GAAP measures in prior periods, but the impact of such adjustments could be significant.
Conference Call and Webcast
Rackspace Technology will hold a conference call, November 10, 2026, at 7:30am CT / 8:30am ET to discuss its third quarter 2026 results.
Interested parties may access the conference call as follows:
To listen to the live webcast or access the replay following the webcast, please visit our investor relations website at the following link: https://ir.rackspace.com/news-and-events/events-and-presentations.
To obtain a dial-in number, please pre-register at the following link:
https://register-conf.media-server.com/register/BI0b0c05e627404fb498019571d04fbeb0.
Registrants will receive dial-in information and a PIN allowing them to access the live call.
About Rackspace Technology
Rackspace Technology is the operator of the full enterprise AI stack from governed private cloud to AI inference and agents in production. With an Outcomes-as-a-Service model built on secure infrastructure, data foundations, and forward-deployed engineering, Rackspace delivers business results for regulated and mission-critical industries where governance, sovereignty, and uptime are non-negotiable.
Forward-looking Statements
Rackspace Technology has made statements in this press release and other reports, filings, and other public written and verbal announcements that are forward-looking and therefore subject to risks and uncertainties. All statements, other than statements of historical fact, included in this press release are, or could be, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are made in reliance on the safe harbor protections provided thereunder. These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions, and other matters. Any forward-looking statement made in this press release speaks only as of the date on which it is made. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. Forward-looking statements can be identified by various words such as “expects,” “intends,” “will,” “anticipates,” “believes,” “confident,” “continue,” “propose,” “seeks,” “could,” “may,” “should,” “estimates,” “forecasts,” “might,” “goals,” “objectives,” “targets,” “planned,” “projects,” and similar expressions. These forward-looking statements are based on management’s current beliefs and assumptions and on information currently available to management. Rackspace Technology cautions that these statements are subject to risks and uncertainties, many of which are outside of our control, and could cause future events or results to be materially different from those stated or implied in this press release, including among others, risk factors that are described in Rackspace Technology, Inc.’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the Securities and Exchange Commission, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein.
Non-GAAP Financial Measures
This press release includes several non-GAAP financial measures such as constant currency revenue, Non-GAAP Gross Profit, Non-GAAP Net Income (Loss), Non-GAAP Operating Profit, Adjusted EBITDA and Non-GAAP Earnings (Loss) Per Share. These non-GAAP financial measures exclude the impact of certain costs, losses and gains that are required to be included in our profit and loss measures under GAAP. Although we believe these measures are useful to investors and analysts for the same reasons they are useful to management, as described in the accompanying pages, these measures are not a substitute for, or superior to, GAAP financial measures or disclosures. Other companies may calculate similarly-titled non-GAAP measures differently, limiting their usefulness as comparative measures. We have reconciled each of these non-GAAP measures to the applicable most comparable GAAP measure in the accompanying pages.
Investor Relations Contact
Rackspace Technology Investor Relations
ir@rackspace.com
Media Contact
Gracie LePere
Rackspace Technology Media Relations
publicrelations@rackspace.com
| RACKSPACE TECHNOLOGY, INC. CONSOLIDATED RESULTS OF OPERATIONS (Unaudited) | ||||||||||||||||||||
| Three Months Ended September 30, | Year-Over-Year Comparison | |||||||||||||||||||
| 2025 | 2026 | |||||||||||||||||||
| (In millions, except % and per share data) | Amount | % Revenue | Amount | % Revenue | Amount | % Change | ||||||||||||||
| Revenue | $ | 671.2 | 100.0 | % | $ | 609.1 | 100.0 | % | $ | (62.1 | ) | (9.3)% | ||||||||
| Cost of revenue | (541.3 | ) | (80.6)% | (496.0 | ) | (81.4)% | 45.3 | (8.4)% | ||||||||||||
| Gross profit | 129.9 | 19.4 | % | 113.1 | 18.6 | % | (16.8 | ) | (12.9)% | |||||||||||
| Selling, general and administrative expenses | (163.8 | ) | (24.4)% | (125.6 | ) | (20.6)% | 38.2 | (23.3)% | ||||||||||||
| Loss from operations | (33.9 | ) | (5.1)% | (12.5 | ) | (2.1)% | 21.4 | (63.1)% | ||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest expense | (21.2 | ) | (3.2)% | (35.5 | ) | (5.8)% | (14.3 | ) | 67.5 | % | ||||||||||
| Gain on investments, net | 0.1 | 0.0 | % | 0.1 | 0.0 | % | — | — | % | |||||||||||
| Other expense, net | (4.0 | ) | (0.6)% | (1.8 | ) | (0.3)% | 2.2 | (55.0)% | ||||||||||||
| Total other expense | (25.1 | ) | (3.7)% | (37.2 | ) | (6.1)% | (12.1 | ) | 48.2 | % | ||||||||||
| Loss before income taxes | (59.0 | ) | (8.8)% | (49.7 | ) | (8.2)% | 9.3 | (15.8)% | ||||||||||||
| Provision for income taxes | (8.1 | ) | (1.2)% | (3.8 | ) | (0.6)% | 4.3 | (53.1)% | ||||||||||||
| Net loss | $ | (67.1 | ) | (10.0)% | $ | (53.5 | ) | (8.8)% | $ | 13.6 | (20.3)% | |||||||||
| Net loss per share: | ||||||||||||||||||||
| Basic and diluted | $ | (0.28 | ) | $ | (0.21 | ) | ||||||||||||||
| Weighted average number of shares outstanding: | ||||||||||||||||||||
| Basic and diluted | 240.4 | 256.3 | ||||||||||||||||||
| RACKSPACE TECHNOLOGY, INC. CONSOLIDATED RESULTS OF OPERATIONS (Unaudited) | ||||||||||||||||||||
| Nine Months Ended September 30, | Year-Over-Year Comparison | |||||||||||||||||||
| 2025 | 2026 | |||||||||||||||||||
| (In millions, except % and per share data) | Amount | % Revenue | Amount | % Revenue | Amount | % Change | ||||||||||||||
| Revenue | $ | 2,002.9 | 100.0 | % | $ | 1,957.3 | 100.0 | % | $ | (45.6 | ) | (2.3)% | ||||||||
| Cost of revenue | (1,616.9 | ) | (80.7)% | (1,610.3 | ) | (82.3)% | 6.6 | (0.4)% | ||||||||||||
| Gross profit | 386.0 | 19.3 | % | 347.0 | 17.7 | % | (39.0 | ) | (10.1)% | |||||||||||
| Selling, general and administrative expenses | (483.4 | ) | (24.1)% | (410.5 | ) | (21.0)% | 72.9 | (15.1)% | ||||||||||||
| Loss from operations | (97.4 | ) | (4.9)% | (63.5 | ) | (3.2)% | 33.9 | (34.8)% | ||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest expense | (61.9 | ) | (3.1)% | (95.9 | ) | (4.9)% | (34.0 | ) | 54.9 | % | ||||||||||
| Gain on investments, net | 0.3 | 0.0 | % | 0.1 | 0.0 | % | (0.2 | ) | (66.7)% | |||||||||||
| Gain on debt extinguishment | — | — | % | 62.5 | 3.2 | % | 62.5 | 100.0 | % | |||||||||||
| Other expense, net | (13.2 | ) | (0.7)% | (10.4 | ) | (0.5)% | 2.8 | (21.2)% | ||||||||||||
| Total other expense | (74.8 | ) | (3.7)% | (43.7 | ) | (2.2)% | 31.1 | (41.6)% | ||||||||||||
| Loss before income taxes | (172.2 | ) | (8.6)% | (107.2 | ) | (5.5)% | 65.0 | (37.7)% | ||||||||||||
| Provision for income taxes | (20.9 | ) | (1.0)% | (5.5 | ) | (0.3)% | 15.4 | (73.7)% | ||||||||||||
| Net loss | $ | (193.1 | ) | (9.6)% | $ | (112.7 | ) | (5.8)% | $ | 80.4 | (41.6)% | |||||||||
| Net loss per share: | ||||||||||||||||||||
| Basic and diluted | $ | (0.82 | ) | $ | (0.45 | ) | ||||||||||||||
| Weighted average number of shares outstanding: | ||||||||||||||||||||
| Basic and diluted | 236.8 | 251.0 | ||||||||||||||||||
| RACKSPACE TECHNOLOGY, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||||
| (In millions, except per share data) | December 31, 2025 | September 30, 2026 | |||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 105.8 | $ | 108.0 | |||
| Accounts receivable, net of allowance for credit losses and accrued customer credits of | 266.5 | 212.3 | |||||
| Prepaid expenses | 84.4 | 80.7 | |||||
| Other current assets | 61.1 | 94.3 | |||||
| Total current assets | 517.8 | 495.3 | |||||
| Property, equipment and software, net | 596.3 | 638.1 | |||||
| Goodwill, net | 740.1 | 738.7 | |||||
| Intangible assets, net | 698.3 | 604.6 | |||||
| Operating right-of-use assets | 144.6 | 117.4 | |||||
| Other non-current assets | 102.7 | 157.0 | |||||
| Total assets | $ | 2,799.8 | $ | 2,751.1 | |||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||||
| Current liabilities: | |||||||
| Accounts payable and accrued expenses | $ | 413.9 | $ | 444.7 | |||
| Accrued compensation and benefits | 85.4 | 68.2 | |||||
| Deferred revenue | 94.6 | 69.3 | |||||
| Debt | 27.3 | 22.4 | |||||
| Accrued interest | 5.4 | 6.1 | |||||
| Operating lease liabilities | 54.7 | 48.7 | |||||
| Finance lease liabilities | 48.0 | 73.7 | |||||
| Financing obligations | 14.0 | 9.7 | |||||
| Other current liabilities | 23.4 | 18.3 | |||||
| Total current liabilities | 766.7 | 761.1 | |||||
| Non-current liabilities: | |||||||
| Debt | 2,718.7 | 2,770.2 | |||||
| Operating lease liabilities | 84.2 | 64.9 | |||||
| Finance lease liabilities | 297.7 | 312.7 | |||||
| Financing obligations | 39.3 | 35.4 | |||||
| Deferred income taxes | 34.7 | 28.8 | |||||
| Other non-current liabilities | 78.0 | 85.3 | |||||
| Total liabilities | 4,019.3 | 4,058.4 | |||||
| Commitments and Contingencies | |||||||
| Stockholders' deficit: | |||||||
| Preferred stock, | — | — | |||||
| Common stock, | 2.5 | 2.6 | |||||
| Additional paid-in capital | 2,709.7 | 2,745.5 | |||||
| Accumulated other comprehensive income (loss) | 7.5 | (3.5 | ) | ||||
| Accumulated deficit | (3,908.2 | ) | (4,020.9 | ) | |||
| Treasury stock, at cost; 3.1 shares held | (31.0 | ) | (31.0 | ) | |||
| Total stockholders' deficit | (1,219.5 | ) | (1,307.3 | ) | |||
| Total liabilities and stockholders' deficit | $ | 2,799.8 | $ | 2,751.1 | |||
| RACKSPACE TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||
| Nine Months Ended September 30, | |||||||
| (In millions) | 2025 | 2026 | |||||
| Cash Flows From Operating Activities | |||||||
| Net loss | $ | (193.1 | ) | $ | (112.7 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 224.0 | 212.2 | |||||
| Reduction in carrying amount of operating right-of-use assets | 48.5 | 46.9 | |||||
| Deferred income taxes | (2.2 | ) | (10.7 | ) | |||
| Share-based compensation expense | 40.2 | 21.0 | |||||
| Gain on debt extinguishment | — | (62.5 | ) | ||||
| Gain on investments, net | (0.3 | ) | (0.1 | ) | |||
| Provision for bad debts and accrued customer credits | 8.3 | 3.3 | |||||
| Amortization of debt issuance costs and debt discount and premium | 4.5 | 4.7 | |||||
| Non-cash fair value adjustments | (2.1 | ) | (3.2 | ) | |||
| Other operating activities | (0.3 | ) | (3.3 | ) | |||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | 17.8 | 68.5 | |||||
| Prepaid expenses and other current assets | (14.4 | ) | (13.8 | ) | |||
| Accounts payable, accrued expenses, and other current liabilities | 7.5 | (19.8 | ) | ||||
| Deferred revenue | (10.9 | ) | (24.4 | ) | |||
| Operating lease liabilities | (52.1 | ) | (45.0 | ) | |||
| Other non-current assets and liabilities | 16.3 | (51.8 | ) | ||||
| Net cash provided by operating activities | 91.7 | 9.3 | |||||
| Cash Flows From Investing Activities | |||||||
| Purchases of property, equipment and software | (57.1 | ) | (65.8 | ) | |||
| Other investing activities | 1.7 | (4.5 | ) | ||||
| Net cash used in investing activities | (55.4 | ) | (70.3 | ) | |||
| Cash Flows From Financing Activities | |||||||
| Proceeds from issuance of common stock, net of offering costs | — | 11.6 | |||||
| Proceeds from employee stock plans | 0.3 | 0.2 | |||||
| Shares of common stock withheld for employee taxes | (2.0 | ) | (0.3 | ) | |||
| Proceeds from borrowings under long-term debt arrangements | 130.0 | 330.0 | |||||
| Payments on long-term debt | (143.4 | ) | (220.4 | ) | |||
| Payments on financing component of interest rate swap | (13.0 | ) | (3.0 | ) | |||
| Principal payments of finance lease liabilities | (43.3 | ) | (40.6 | ) | |||
| Principal payments of financing obligations | (13.2 | ) | (11.9 | ) | |||
| Net cash provided by (used in) financing activities | (84.6 | ) | 65.6 | ||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 2.6 | (1.9 | ) | ||||
| Increase (decrease) in cash, cash equivalents, and restricted cash | (45.7 | ) | 2.7 | ||||
| Cash, cash equivalents, and restricted cash at beginning of period | 147.0 | 108.0 | |||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 101.3 | $ | 110.7 | |||
| Supplemental Cash Flow Information | |||||||
| Cash payments for interest, net of amount capitalized | $ | 62.7 | $ | 97.9 | |||
| Cash payments for income taxes, net of refunds | $ | 2.7 | $ | 8.7 | |||
| Non-cash Investing and Financing Activities | |||||||
| Acquisition of property, equipment and software by finance leases | $ | 29.9 | $ | 46.6 | |||
| Acquisition of property, equipment and software by financing obligations | — | 3.7 | |||||
| Increase in property, equipment and software accrued in liabilities | 5.6 | 52.3 | |||||
| Acquisition of property, equipment and software through issuance of common stock | — | 14.0 | |||||
| Other non-cash activity | (1.0 | ) | (15.2 | ) | |||
| Non-cash purchases of property, equipment and software | $ | 34.5 | $ | 101.4 | |||
| Offering costs included in accrued liabilities | $ | — | $ | 0.5 | |||
| SEGMENT DATA | ||||||||||||
| (In millions, except %) | Three Months Ended September 30, | % Change | ||||||||||
| Revenue by segment: | 2025 | 2026 | Actual | Constant Currency(a) | ||||||||
| Public Cloud | $ | 421.6 | $ | 349.1 | (17.2)% | (17.2)% | ||||||
| Private Cloud | 249.6 | 260.0 | 4.2 | % | 4.2 | % | ||||||
| Total consolidated revenue | $ | 671.2 | $ | 609.1 | (9.3)% | (9.2)% | ||||||
| (In millions, except %) | Nine Months Ended September 30, | % Change | ||||||||||
| Revenue by segment: | 2025 | 2026 | Actual | Constant Currency(a) | ||||||||
| Public Cloud | $ | 1,253.8 | $ | 1,199.3 | (4.3)% | (4.6)% | ||||||
| Private Cloud | 749.1 | 758.0 | 1.2 | % | 0.6 | % | ||||||
| Total consolidated revenue | $ | 2,002.9 | $ | 1,957.3 | (2.3)% | (2.6)% | ||||||
| (a) | Refer to "Non-GAAP Financial Measures" in this section for further explanation and reconciliation. |
| Three Months Ended September 30, | Year-Over-Year Comparison | |||||||||||||||||||
| (In millions, except %) | 2025 | 2026 | ||||||||||||||||||
| Segment operating profit(a): | Amount | % of Segment Revenue | Amount | % of Segment Revenue | Amount | % Change | ||||||||||||||
| Public Cloud | $ | 14.0 | 3.3 | % | $ | 27.2 | 7.8 | % | $ | 13.2 | 94.3 | % | ||||||||
| Private Cloud | 67.2 | 26.9 | % | 53.4 | 20.5 | % | (13.8 | ) | (20.5)% | |||||||||||
| Corporate functions(b) | (49.2 | ) | (44.7 | ) | 4.5 | (9.1)% | ||||||||||||||
| Non-GAAP Operating Profit(c) | $ | 32.0 | $ | 35.9 | $ | 3.9 | 12.2 | % | ||||||||||||
| Nine Months Ended September 30, | Year-Over-Year Comparison | |||||||||||||||||||
| (In millions, except %) | 2025 | 2026 | ||||||||||||||||||
| Segment operating profit(a): | Amount | % of Segment Revenue | Amount | % of Segment Revenue | Amount | % Change | ||||||||||||||
| Public Cloud | $ | 47.5 | 3.8 | % | $ | 66.9 | 5.6 | % | $ | 19.4 | 40.8 | % | ||||||||
| Private Cloud | 189.7 | 25.3 | % | 168.8 | 22.3 | % | (20.9 | ) | (11.0)% | |||||||||||
| Corporate functions(b) | (152.3 | ) | (141.7 | ) | 10.6 | (7.0)% | ||||||||||||||
| Non-GAAP Operating Profit(c) | $ | 84.9 | $ | 94.0 | $ | 9.1 | 10.7 | % | ||||||||||||
| (a) | Segment revenue less expenses directly attributable to running the respective segments’ business. These expenses exclude centralized corporate function costs. |
| (b) | Costs that are not allocated to segments. These costs are related to centralized corporate functions that provide services to the segments in areas such as accounting, information technology, marketing, legal and human resources. |
| (c) | Refer to "Non-GAAP Financial Measures" in this section for further explanation and reconciliation. |
NON-GAAP FINANCIAL MEASURES
Constant Currency Revenue
We use constant currency revenue as an additional metric for understanding and assessing our growth excluding the effect of foreign currency rate fluctuations on our international business operations. Constant currency information compares results between periods as if exchange rates had remained constant period over period and is calculated by translating the non-U.S. dollar income statement balances for the most current period to U.S. dollars using the average exchange rate from the comparative period rather than the actual exchange rates in effect during the respective period. We also believe this is an important metric to help investors evaluate our performance in comparison to prior periods.
| Three Months Ended September 30, 2025 | Three Months Ended September 30, 2026 | % Change | ||||||||||||||||
| (In millions, except %) | Revenue | Revenue | Foreign Currency Translation(a) | Revenue in Constant Currency | Actual | Constant Currency | ||||||||||||
| Public Cloud | $ | 421.6 | $ | 349.1 | $ | 0.1 | $ | 349.2 | (17.2)% | (17.2)% | ||||||||
| Private Cloud | 249.6 | 260.0 | 0.1 | 260.1 | 4.2 | % | 4.2 | % | ||||||||||
| Total | $ | 671.2 | $ | 609.1 | $ | 0.2 | $ | 609.3 | (9.3)% | (9.2)% | ||||||||
| Nine Months Ended September 30, 2025 | Nine Months Ended September 30, 2026 | % Change | |||||||||||||||||
| (In millions, except %) | Revenue | Revenue | Foreign Currency Translation(a) | Revenue in Constant Currency | Actual | Constant Currency | |||||||||||||
| Public Cloud | $ | 1,253.8 | $ | 1,199.3 | $ | (3.0 | ) | $ | 1,196.3 | (4.3)% | (4.6)% | ||||||||
| Private Cloud | 749.1 | 758.0 | (4.3 | ) | 753.7 | 1.2 | % | 0.6 | % | ||||||||||
| Total | $ | 2,002.9 | $ | 1,957.3 | $ | (7.3 | ) | $ | 1,950.0 | (2.3)% | (2.6)% | ||||||||
| (a) | The effect of foreign currency is calculated by translating current period results using the average exchange rate from the prior comparative period. |
Non-GAAP Gross Profit
We present Non-GAAP Gross Profit because we believe the measure is useful in analyzing trends in our underlying, recurring gross margins. We define Non-GAAP Gross Profit as gross profit, adjusted to exclude the impact of share-based compensation expense, purchase accounting-related effects, and certain business transformation-related costs.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
| (In millions) | 2025 | 2026 | 2025 | 2026 | |||||||
| Gross profit | $ | 129.9 | $ | 113.1 | $ | 386.0 | $ | 347.0 | |||
| Share-based compensation expense | 1.2 | 0.7 | 4.3 | 2.8 | |||||||
| Purchase accounting impact on expense(a) | 0.2 | 0.2 | 0.6 | 0.6 | |||||||
| Restructuring and transformation expenses(b) | 2.3 | 4.7 | 6.7 | 16.5 | |||||||
| Non-GAAP Gross Profit | $ | 133.6 | $ | 118.7 | $ | 397.6 | $ | 366.9 | |||
| (a) | Adjustment for the impact of purchase accounting from the November 2016 merger on expenses. |
| (b) | Adjustment for the impact of business transformation and optimization activities, as well as associated severance, certain facility closure costs and lease termination expenses. Also includes payroll taxes associated with the exercise of stock options and vesting of restricted stock. |
Non-GAAP Net Income (Loss), Non-GAAP Operating Profit and Adjusted EBITDA
We present Non-GAAP Net Income (Loss), Non-GAAP Operating Profit and Adjusted EBITDA because they are a basis upon which management assesses our performance and we believe they are useful to evaluating our financial performance. We believe that excluding items from net income that may not be indicative of, or are unrelated to, our core operating results, and that may vary in frequency or magnitude, enhances the comparability of our results and provides a better baseline for analyzing trends in our business.
We define Non-GAAP Net Income (Loss) as net income (loss) adjusted to exclude the impact of non-cash charges for share-based compensation, transaction-related costs and adjustments, restructuring and transformation charges, the amortization of acquired intangible assets, goodwill and asset impairment charges, the interest expense impact from the refinancing transactions announced in March 2024 (the "March 2024 Refinancing Transactions"), and certain other non-operating, non-recurring or non-core gains and losses, as well as the tax effects of these non-GAAP adjustments.
We define Non-GAAP Operating Profit as income (loss) from operations adjusted to exclude the impact of non-cash charges for share-based compensation, transaction-related costs and adjustments, restructuring and transformation charges, the amortization of acquired intangible assets, goodwill and asset impairment charges, and certain other non-operating, non-recurring or non-core gains and losses.
We define Adjusted EBITDA as net income (loss) adjusted to exclude the impact of non-cash charges for share-based compensation, transaction-related costs and adjustments, restructuring and transformation charges, certain other non-operating, non-recurring or non-core gains and losses, interest expense, expenses for our Receivables Purchase Agreement, income taxes, depreciation and amortization, and goodwill and asset impairment charges.
Non-GAAP Operating Profit and Adjusted EBITDA are management's principal metrics for measuring our underlying financial performance. Non-GAAP Operating Profit and Adjusted EBITDA, along with other quantitative and qualitative information, are also the principal financial measures used by management and our Board of Directors in determining performance-based compensation for our management and key employees.
These non-GAAP measures are not intended to imply that we would have generated higher income or avoided net losses if the November 2016 merger and the subsequent transactions and initiatives had not occurred. In the future we may incur expenses or charges such as those added back to calculate Non-GAAP Net Income (Loss), Non-GAAP Operating Profit or Adjusted EBITDA. Our presentation of Non-GAAP Net Income (Loss), Non-GAAP Operating Profit and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these items. Other companies, including our peer companies, may calculate similarly-titled measures in a different manner from us, and therefore, our non-GAAP measures may not be comparable to similarly-titled measures of other companies. Investors are cautioned against using these measures to the exclusion of our results in accordance with GAAP.
Net loss reconciliation to Non-GAAP Net Loss
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| (In millions) | 2025 | 2026 | 2025 | 2026 | |||||||||||
| Net loss | $ | (67.1 | ) | $ | (53.5 | ) | $ | (193.1 | ) | $ | (112.7 | ) | |||
| Share-based compensation expense | 18.2 | 4.0 | 40.2 | 21.0 | |||||||||||
| Transaction-related adjustments, net(a) | 0.2 | 0.1 | 2.1 | 2.2 | |||||||||||
| Restructuring and transformation expenses(b) | 10.0 | 13.1 | 27.5 | 40.5 | |||||||||||
| Net gain on divestiture and investments(c) | (0.1 | ) | (0.1 | ) | (0.3 | ) | (0.1 | ) | |||||||
| Gain on debt extinguishment | — | — | — | (62.5 | ) | ||||||||||
| Interest expense impact from the March 2024 Refinancing Transactions(d) | (21.1 | ) | (18.2 | ) | (63.2 | ) | (55.0 | ) | |||||||
| Other adjustments(e) | (1.2 | ) | (4.1 | ) | (2.3 | ) | (4.2 | ) | |||||||
| Amortization of intangible assets(f) | 37.5 | 31.2 | 112.5 | 93.8 | |||||||||||
| Tax effect of non-GAAP adjustments(g) | 12.1 | 10.0 | 35.4 | 24.1 | |||||||||||
| Non-GAAP Net Loss | $ | (11.5 | ) | $ | (17.5 | ) | $ | (41.2 | ) | $ | (52.9 | ) | |||
Loss from operations reconciliation to Non-GAAP Operating Profit
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| (In millions) | 2025 | 2026 | 2025 | 2026 | |||||||||||
| Loss from operations | $ | (33.9 | ) | $ | (12.5 | ) | $ | (97.4 | ) | $ | (63.5 | ) | |||
| Share-based compensation expense | 18.2 | 4.0 | 40.2 | 21.0 | |||||||||||
| Transaction-related adjustments, net(a) | 0.2 | 0.1 | 2.1 | 2.2 | |||||||||||
| Restructuring and transformation expenses(b) | 10.0 | 13.1 | 27.5 | 40.5 | |||||||||||
| Amortization of intangible assets(f) | 37.5 | 31.2 | 112.5 | 93.8 | |||||||||||
| Non-GAAP Operating Profit | $ | 32.0 | $ | 35.9 | $ | 84.9 | $ | 94.0 | |||||||
Net loss reconciliation to Adjusted EBITDA
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| (In millions) | 2025 | 2026 | 2025 | 2026 | |||||||||||
| Net loss | $ | (67.1 | ) | $ | (53.5 | ) | $ | (193.1 | ) | $ | (112.7 | ) | |||
| Share-based compensation expense | 18.2 | 4.0 | 40.2 | 21.0 | |||||||||||
| Transaction-related adjustments, net(a) | 0.2 | 0.1 | 2.1 | 2.2 | |||||||||||
| Restructuring and transformation expenses(b) | 10.0 | 13.1 | 27.5 | 40.5 | |||||||||||
| Net gain on divestiture and investments(c) | (0.1 | ) | (0.1 | ) | (0.3 | ) | (0.1 | ) | |||||||
| Gain on debt extinguishment | — | — | — | (62.5 | ) | ||||||||||
| Other expense, net(h) | 4.0 | 1.8 | 13.2 | 10.4 | |||||||||||
| Interest expense | 21.2 | 35.5 | 61.9 | 95.9 | |||||||||||
| Provision for income taxes | 8.1 | 3.8 | 20.9 | 5.5 | |||||||||||
| Depreciation and amortization(i) | 74.8 | 70.5 | 222.6 | 212.1 | |||||||||||
| Adjusted EBITDA | $ | 69.3 | $ | 75.2 | $ | 195.0 | $ | 212.3 | |||||||
| (a) | Includes purchase accounting adjustments, exploratory acquisition and divestiture costs, and expenses related to financing activities. |
| (b) | Includes consulting and advisory fees related to business transformation and optimization activities, as well as associated severance, certain facility closure costs, and lease termination expenses. Also includes payroll taxes associated with the exercise of stock options and vesting of restricted stock. |
| (c) | Includes gains and losses on investment and from dispositions. |
| (d) | Interest expense impact due to the accounting for contractual interest payments on debt instruments entered into as part of the March 2024 Refinancing Transactions, which reduced interest expense relative to contractual interest cost. |
| (e) | Primarily consists of foreign currency gains and losses. |
| (f) | All of our intangible assets are attributable to acquisitions, including the November 2016 merger. |
| (g) | We utilize an estimated structural long-term non-GAAP tax rate in order to provide consistency across reporting periods, removing the effect of non-recurring tax adjustments, which include but are not limited to tax rate changes, U.S. tax reform, share-based compensation, audit conclusions and changes to valuation allowances. When computing this long-term rate for the 2025 and 2026 interim periods, we based it on an average of the 2024 and estimated 2025 tax rates and 2025 and estimated 2026 tax rates, respectively, recomputed to remove the tax effect of non-GAAP pre-tax adjustments and non-recurring tax adjustments, resulting in a structural non-GAAP tax rate of |
| (h) | Primarily consists of foreign currency gains and losses and expense related to our Receivables Purchase Agreement. |
| (i) | Excludes accelerated depreciation expense related to facility closures. |
Non-GAAP Earnings (Loss) Per Share
We define Non-GAAP Earnings (Loss) Per Share as Non-GAAP Net Income (Loss) divided by our GAAP weighted average number of shares outstanding for the period on a diluted basis and further adjusted for the weighted average number of shares associated with securities which are anti-dilutive to GAAP loss per share. Management uses Non-GAAP Earnings (Loss) Per Share to evaluate the performance of our business on a comparable basis from period to period, including by adjusting for the impact of the issuance of shares.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| (In millions, except per share amounts) | 2025 | 2026 | 2025 | 2026 | |||||||||||
| Net loss attributable to common stockholders | $ | (67.1 | ) | $ | (53.5 | ) | $ | (193.1 | ) | $ | (112.7 | ) | |||
| Non-GAAP Net Loss | $ | (11.5 | ) | $ | (17.5 | ) | $ | (41.2 | ) | $ | (52.9 | ) | |||
| Weighted average number of shares - Diluted | 240.4 | 256.3 | 236.8 | 251.0 | |||||||||||
| Effect of dilutive securities(a) | 1.8 | 14.2 | 6.5 | 13.5 | |||||||||||
| Non-GAAP weighted average number of shares - Diluted | 242.2 | 270.5 | 243.3 | 264.5 | |||||||||||
| Net loss per share - Diluted | $ | (0.28 | ) | $ | (0.21 | ) | $ | (0.82 | ) | $ | (0.45 | ) | |||
| Per share impacts of adjustments to net loss(b) | 0.23 | 0.14 | 0.64 | 0.24 | |||||||||||
| Per share impacts of shares after adjustments to net loss(a) | 0.00 | 0.01 | 0.01 | 0.01 | |||||||||||
| Non-GAAP Loss Per Share | $ | (0.05 | ) | $ | (0.06 | ) | $ | (0.17 | ) | $ | (0.20 | ) | |||
| (a) | Potential common share equivalents consist of shares issuable upon the exercise of stock options, vesting of restricted stock units (including performance-based restricted stock units) or purchases under the Employee Stock Purchase Plan as well as contingent shares associated with our acquisition of Datapipe Parent, Inc. Certain of our potential common share equivalents are contingent on certain investment funds managed by affiliates of Apollo Global Management, Inc. achieving pre-established performance targets based on a multiple of their invested capital, which are included in the denominator for the entire period if such shares would be issuable as of the end of the reporting period assuming the end of the reporting period was the end of the contingency period. |
| (b) | Reflects the aggregate adjustments made to reconcile Non-GAAP Net Loss to our net loss, as noted in the above table, divided by the GAAP diluted number of shares outstanding for the relevant period. |
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were Rackspace Technology's third-quarter 2026 revenue and earnings?
Rackspace reported $609 million in revenue and a $53.5 million net loss for the quarter ended September 30, 2026. Revenue fell 9% year over year, while net loss narrowed from $67.1 million. Diluted loss per share improved to $0.21 from $0.28.
What is Rackspace Technology's updated full-year 2026 outlook?
Rackspace raised its 2026 revenue outlook by $35 million at the midpoint to $2,510–$2,560 million. It maintained non-GAAP operating profit guidance of $125–$135 million and adjusted EBITDA guidance of $285–$295 million. Non-GAAP loss-per-share guidance is $0.25–$0.30.