Rackspace Technology (NASDAQ:RXT) Releases Earnings Results, Beats Expectations By $0.01 EPS

Rackspace Technology (NASDAQ:RXT) announced its quarterly earnings results on Tuesday. The company reported ($0.08) earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of ($0.09) by $0.01, FiscalAI reports. The firm had revenue of $670.10 million during the quarter, compared to analysts’ expectations of $646.00 million.

Here are the key takeaways from Rackspace Technology’s conference call:

• Positive Sentiment: Rackspace is targeting enterprise AI infrastructure as a major growth vector, planning an initial 30-megawatt AMD-based compute footprint through 2028. Management expects $15 million–$20 million in annual revenue per megawatt and enterprise AI EBITDA margins above 50%, although the plan depends partly on hardware-backed financing.
• Positive Sentiment: The company reported continued traction in strategic partnerships with AMD and Palantir, with early enterprise AI engagements spanning healthcare, renewable energy, chemicals, and other industries. Rackspace said customers are increasingly seeking sovereign, governed, and model-agnostic AI deployments.
• Neutral Sentiment: Second-quarter revenue was $670 million, up 1% year over year, helped by an early recognition benefit from a Private Cloud contract. Private Cloud revenue rose 5% to $263 million, while Public Cloud revenue declined 2% to $407 million as Rackspace continues shifting away from lower-margin business.
• Negative Sentiment: Profitability and cash generation remained pressured: non-GAAP gross margin fell 120 basis points to 18.6%, operating cash flow was negative $32 million, and free cash flow was negative $48 million. Full-year revenue guidance remains down about 7% at the midpoint, primarily due to the planned exit from low-margin Public Cloud revenue.
• Positive Sentiment: Management maintained its outlook for $125 million–$135 million of non-GAAP operating profit, $285 million–$295 million of adjusted EBITDA, and $50 million–$70 million of positive full-year free cash flow. Rackspace also repurchased $11.2 million of senior notes, reducing future interest expense while continuing its deleveraging efforts.

Rackspace Technology Trading Up 6.7%

Shares of RXT stock opened at $4.64 on Thursday. Rackspace Technology has a 12 month low of $0.39 and a 12 month high of $8.60. The stock has a market cap of $1.18 billion, a P/E ratio of -7.14 and a beta of 3.05. The company has a 50 day simple moving average of $5.29 and a two-hundred day simple moving average of $3.23.

Wall Street Analysts Forecast Growth

A number of analysts recently weighed in on the company. Royal Bank Of Canada boosted their target price on Rackspace Technology from $2.50 to $4.00 and gave the stock a “sector perform” rating in a research report on Wednesday, June 17th. Weiss Ratings reiterated a “sell (d-)” rating on shares of Rackspace Technology in a report on Tuesday, June 2nd. One investment analyst has rated the stock with a Hold rating and one has issued a Sell rating to the stock. According to MarketBeat, the stock currently has an average rating of “Reduce” and a consensus price target of $4.00.

Insiders Place Their Bets

In other news, CFO Mark A. Marino sold 48,099 shares of Rackspace Technology stock in a transaction dated Thursday, June 4th. The stock was sold at an average price of $5.56, for a total transaction of $267,430.44. Following the transaction, the chief financial officer directly owned 3,370,431 shares of the company’s stock, valued at $18,739,596.36. The trade was a 1.41% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available at this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Company insiders own 2.30% of the company’s stock.

Institutional Inflows and Outflows

A number of large investors have recently added to or reduced their stakes in RXT. Janus Henderson Group PLC boosted its stake in Rackspace Technology by 70.7% in the 4th quarter. Janus Henderson Group PLC now owns 1,050,353 shares of the company’s stock worth $1,020,000 after purchasing an additional 435,113 shares during the period. Bridgeway Capital Management LLC lifted its holdings in shares of Rackspace Technology by 34.6% in the fourth quarter. Bridgeway Capital Management LLC now owns 350,000 shares of the company’s stock worth $340,000 after buying an additional 90,000 shares in the last quarter. Jump Financial LLC purchased a new position in shares of Rackspace Technology in the fourth quarter worth $34,000. Wells Fargo & Company MN boosted its position in shares of Rackspace Technology by 13.4% during the fourth quarter. Wells Fargo & Company MN now owns 244,939 shares of the company’s stock worth $238,000 after acquiring an additional 28,885 shares during the last quarter. Finally, Federated Hermes Inc. grew its stake in Rackspace Technology by 4.4% during the fourth quarter. Federated Hermes Inc. now owns 719,747 shares of the company’s stock valued at $699,000 after acquiring an additional 30,024 shares in the last quarter. 82.48% of the stock is owned by hedge funds and other institutional investors.

Rackspace Technology News Roundup

Here are the key news stories impacting Rackspace Technology this week:

• Positive Sentiment: Rackspace reported adjusted earnings of $0.08 per share versus the $0.09-per-share loss analysts expected, while revenue of $670.1 million topped the $646 million consensus estimate. The earnings beat appears to be the primary catalyst for the stock’s upward move. Rackspace Technology Shares Gap Up Following Earnings Beat
• Positive Sentiment: Management’s strategic shift toward enterprise artificial intelligence is attracting investor interest, with the company highlighting AI-related opportunities and initiatives during its earnings call. The pivot could support future growth if Rackspace converts demand into profitable contracts. Rackspace Technology Q2 2026 Earnings Call Highlights
• Negative Sentiment: Several law firms announced or promoted a securities-fraud class action against Rackspace and certain executives. The allegations reportedly involve material misstatements or omissions regarding the company’s enterprise AI efforts and previously reaffirmed revenue guidance. Investors who purchased shares between May 7 and July 8, 2026, face a September 28 deadline to seek lead-plaintiff status. The claims have not been proven, but the litigation creates legal, financial and reputational uncertainty. RXT Investors Securities Fraud Lawsuit
• Negative Sentiment: Analysts have raised concerns about Rackspace’s negative EBIT and approximately $2.8 billion debt burden. Those issues could limit financial flexibility and reduce the benefit of stronger revenue growth if profitability and cash generation do not improve. Rackspace Negative EBIT and Debt Burden

Rackspace Technology Company Profile

Rackspace Technology (NASDAQ: RXT) is a leading provider of managed multi-cloud solutions and services, specializing in the deployment, management and optimization of public and private cloud environments. The company helps organizations design and operate applications across platforms such as Amazon Web Services (AWS), Microsoft Azure, Google Cloud and its own private cloud infrastructure. Rackspace’s core offerings include cloud migration, application modernization, data protection, security services and 24x7x365 operational support.

Beyond cloud hosting, Rackspace offers a range of professional services designed to accelerate digital transformation initiatives.