Rackspace Technology, Inc. (RXT): Results of Operations and Financial Condition
Rackspace Technology, Inc. (RXT) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Rackspace Technology Reports Second Quarter 2026 Results • Revenue of $670 million in the Second Quarter, up 1% Year-over-Year • Private Cloud Revenue was $263 million, up 5% Year-over-Year • Public Cloud Revenue was $407 million, down 2% Year-over-Year • Second Quar
How this was made
The 30-second read
Why it matters
The guidance ranges for FY 2026 revenue, private/public cloud, and non-GAAP operating profit create a concrete benchmark for positioning into the next quarter and the Aug 11 call.
Market read
This is a primary earnings-and-guidance disclosure with specific numeric ranges, making it actionable for traders repricing forward expectations.
What to watch
Traders may underweight the cash flow and liquidity details (operating cash flow trend and $202M total liquidity) and overfocus on revenue growth rates.
Rackspace Technology Reports Second Quarter 2026 Results
Revenue increased 0.6% year over year, supported by 5.5% Private Cloud growth, but Public Cloud declined 2.3%, gross margin fell to 17.1%, and GAAP operating and net losses widened.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $670.1 million | – | $3.8 million; 0.6% |
| Cost of revenueGAAP | $(555.3) million | – | $(18.2) million; 3.4% |
| Gross profitGAAP | $114.8 million | – | $(14.4) million; (11.1)% |
| Gross marginGAAP | 17.1% | – | – |
| Selling, general and administrative expensesGAAP | $(148.0) million | – | $6.3 million; (4.1)% |
| Loss from operationsGAAP | $(33.2) million | – | $(8.1) million; 32.3% |
| Interest expenseGAAP | $(34.2) million | – | $(12.9) million; 60.6% |
| Gain on investments, netGAAP | $0.1 million | – | $(0.2) million; (66.7)% |
| Gain on debt extinguishmentGAAP | $6.7 million | – | $6.7 million; 100.0% |
| Other expense, netGAAP | $(5.1) million | – | $(1.3) million; 34.2% |
| Total other expenseGAAP | $(32.5) million | – | $(7.7) million; 31.0% |
| Loss before income taxesGAAP | $(65.7) million | – | $(15.8) million; 31.7% |
| Provision for income taxesGAAP | $(1.8) million | – | $2.8 million; (60.9)% |
| Net lossGAAP | $(67.5) million | – | $(13.0) million; 23.9% |
| Net loss per share: Basic and dilutedGAAP | $(0.27) | – | – |
| Weighted average number of shares outstanding: Basic and dilutedGAAP | 250.1 million | – | – |
| Non-GAAP Operating Profitnon-GAAP | $27 million | – | – |
| Non-GAAP Loss Per Sharenon-GAAP | $(0.08) | – | 33% decline |
| Capital expendituresother | $28 million | – | – |
| Six Months Ended June 30, 2026: RevenueGAAP | $1,348.2 million | – | $16.5 million; 1.2% |
| Six Months Ended June 30, 2026: Cost of revenueGAAP | $(1,114.3) million | – | $(38.7) million; 3.6% |
| Six Months Ended June 30, 2026: Gross profitGAAP | $233.9 million | – | $(22.2) million; (8.7)% |
| Six Months Ended June 30, 2026: Gross marginGAAP | 17.3% | – | – |
| Six Months Ended June 30, 2026: Selling, general and administrative expensesGAAP | $(284.9) million | – | $34.7 million; (10.9)% |
| Six Months Ended June 30, 2026: Loss from operationsGAAP | $(51.0) million | – | $12.5 million; (19.7)% |
| Six Months Ended June 30, 2026: Interest expenseGAAP | $(60.4) million | – | $(19.7) million; 48.4% |
| Six Months Ended June 30, 2026: Gain on investments, netGAAP | — | – | $(0.2) million; (100.0)% |
| Six Months Ended June 30, 2026: Gain on debt extinguishmentGAAP | $62.5 million | – | $62.5 million; 100.0% |
| Six Months Ended June 30, 2026: Other expense, netGAAP | $(8.6) million | – | $0.6 million; (6.5)% |
| Six Months Ended June 30, 2026: Total other expenseGAAP | $(6.5) million | – | $43.2 million; (86.9)% |
| Six Months Ended June 30, 2026: Loss before income taxesGAAP | $(57.5) million | – | $55.7 million; (49.2)% |
| Six Months Ended June 30, 2026: Provision for income taxesGAAP | $(1.7) million | – | $11.1 million; (86.7)% |
| Six Months Ended June 30, 2026: Net lossGAAP | $(59.2) million | – | $66.8 million; (53.0)% |
| Six Months Ended June 30, 2026: Net loss per share: Basic and dilutedGAAP | $(0.24) | – | – |
| Six Months Ended June 30, 2026: Weighted average number of shares outstanding: Basic and dilutedGAAP | 248. | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Private CloudManagement said it continued to expand work across its installed base and launched its Managed Compute and Inference Platform. | $263 million | – | 5.5% on a reported basis and 5.2% on a constant currency basis |
| Public CloudNo segment-specific operating driver was quantified in the filing. | $407 million | – | (2.3)% on a reported basis and (2.5)% on a constant currency basis |
FY 2026 Guidance outlook
- Revenue$2,450 - $2,550 million
- Tax rate26%
- NotePrivate Cloud Revenue: $1,000 - $1,050 million
- NotePublic Cloud Revenue: $1,450 - $1,500 million
- NoteNon-GAAP Operating Profit: $125 - $135 million
- NoteAdjusted EBITDA: $285 - $295 million
- NoteNon-GAAP Loss Per Share: ($0.25) - ($0.30)
- NoteNon-GAAP Other Income (Expense): ($220) – ($230) million
- NoteNon-GAAP Weighted Average Shares: 250 - 260 million
What drove it
- Total revenue increased 0.6% on a reported basis and 0.4% on a constant currency basis year over year.
- Private Cloud revenue increased 5.5% on a reported basis and 5.2% on a constant currency basis year over year.
- The company launched its Managed Compute and Inference Platform, backed by partners including AMD and Palantir.
- Management stated that enterprises in regulated industries are moving AI from experimentation into production.
Concerns
- Public Cloud revenue decreased 2.3% on a reported basis and 2.5% on a constant currency basis year over year.
- Gross margin was 17.1%, compared with 19.4% in the second quarter of 2025.
- Loss from operations was $(33.2) million, compared with $(25.1) million in the second quarter of 2025.
- Net loss was $(67.5) million, compared with $(54.5) million in the second quarter of 2025.
- Interest expense was $(34.2) million, compared with $(21.3) million in the second quarter of 2025.
- Cash Flow Used in Operating Activities was $32 million in the Second Quarter 2026.
What to watch
- Private Cloud Revenue guidance of $1,000 - $1,050 million for FY 2026.
- Public Cloud Revenue guidance of $1,450 - $1,500 million for FY 2026.
- Non-GAAP Operating Profit guidance of $125 - $135 million and Adjusted EBITDA guidance of $285 - $295 million for FY 2026.
- The execution of the Managed Compute and Inference Platform and continued expansion across the installed base.
- Cash Flow From Operating Activities, which was $104 million on a Trailing-Twelve-Month Basis, following $32 million of Cash Flow Used in Operating Activities in the Second Quarter 2026.
Balance sheet and cash flow
- Cash Flow Used in Operating Activities was $32 million in the Second Quarter 2026.
- Cash Flow From Operating Activities was $104 million on a Trailing-Twelve-Month Basis.
- Capital expenditures were $28 million in the second quarter of 2026, compared to $31 million in the second quarter of 2025.
- As of June 30, 2026, cash and cash equivalents were $111 million.
- As of June 30, 2026, total liquidity was $202 million, including the Revolving Credit Facility.
Analysis
Second-quarter revenue was $670.1 million, up 0.6% year over year on a reported basis and 0.4% on a constant currency basis. Private Cloud revenue of $263 million grew 5.5% on a reported basis, while Public Cloud revenue of $407 million declined 2.3%. The results therefore show modest overall growth driven by the Private Cloud business, with Public Cloud remaining a drag on consolidated growth.
Profitability weakened despite the revenue increase. Gross profit was $114.8 million, down 11.1%, and gross margin was 17.1%, compared with 19.4% a year earlier. Selling, general and administrative expenses declined to $(148.0) million from $(154.3) million, but this reduction did not offset the gross-profit decline. GAAP loss from operations widened to $(33.2) million from $(25.1) million, while Non-GAAP Operating Profit was unchanged at $27 million.
Below operating income, interest expense increased to $(34.2) million from $(21.3) million. A $6.7 million gain on debt extinguishment was recorded in the quarter, but net loss still widened to $(67.5) million from $(54.5) million, and diluted loss per share was $(0.27), compared with $(0.23). Non-GAAP Loss Per Share was $(0.08), compared with $(0.06). For the six months ended June 30, 2026, net loss improved to $(59.2) million from $(126.0) million, reflecting a $62.5 million gain on debt extinguishment.
Cash Flow Used in Operating Activities was $32 million in the second quarter, while Cash Flow From Operating Activities was $104 million on a Trailing-Twelve-Month Basis. Capital expenditures were $28 million, down from $31 million. The company ended the period with $111 million of cash and cash equivalents and $202 million of total liquidity, including its Revolving Credit Facility. No prior-quarter outlook was provided, so the filing does not permit a comparison of reported results with prior guidance. The FY 2026 guide calls for $2,450 - $2,550 million of total revenue, $125 - $135 million of Non-GAAP Operating Profit, and $285 - $295 million of Adjusted EBITDA.
Management, verbatim
Enterprises in regulated industries are moving AI from experimentation into production, and they are choosing partners who can be accountable for it.
Gajen Kandiah, Chief Executive Officer
This quarter, we continued to expand work across our installed base and launched our Managed Compute and Inference Platform, backed by partners including AMD and Palantir. We remain focused on disciplined execution as we build the full enterprise AI stack our customers can trust.
Gajen Kandiah, Chief Executive Officer
Not in the filing
stated, not guessed- Previous-quarter financial metrics and quarter-over-quarter comparisons were not provided.
- Previous-quarter outlook was not provided.
- Free cash flow was not reported.
- Debt balance was not reported.
- Share repurchases and dividends were not reported.
- GAAP revenue, gross margin, operating expense, tax-rate, earnings, or EPS guidance was not provided.
- Quarterly Non-GAAP Gross Profit, Non-GAAP Net Income (Loss), and Adjusted EBITDA values were not provided in the supplied filing text.
- Segment profit, segment margin, and segment operating-income metrics were not reported.
- The six-month 2026 weighted-average-share figure is displayed as "248." in the supplied filing text, with no further digits or unit shown on that row.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Rackspace filed an SEC 8-K with Q2 2026 results and FY 2026 guidance, including segment revenue trends and profitability metrics.
Ticker impact
Rackspace reported Q2 2026 revenue of $670M, private cloud up 5.5% YoY, and issued FY 2026 guidance for revenue and non-GAAP operating profit.
Likely moderate volatility around the guidance and segment mix, with traders focusing on whether private cloud growth offsets public cloud declines.
The filing includes specific Q2 datapoints (revenue, segment revenue, losses) and explicit FY 2026 ranges (revenue, private/public cloud, non-GAAP operating profit, adjusted EBITDA, non-GAAP EPS).
Market effects
Enterprise AI infrastructure providers may see read-across on demand durability in private cloud versus softness in public cloud.
Limited direct regional impact; primarily US-listed enterprise IT/AI infrastructure sentiment.
Global enterprise cloud spending signals, especially for regulated-industry AI deployments, may influence broader AI infrastructure positioning.
Counterpoint
Despite private cloud growth, public cloud revenue declined and GAAP losses widened, so the guidance could be viewed as cautious rather than accelerating.
Key entities
- public_companyRackspace Technology, Inc.
Subject of the SEC 8-K, reporting Q2 2026 results and providing FY 2026 guidance.
- executiveGajen Kandiah
CEO quoted on AI production adoption and Rackspace’s managed compute and inference platform.
