Rackspace Technology Reports Third Quarter 2026 Results
Rackspace Technology, Inc. (RXT) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Rackspace Technology Reports Third Quarter 2026 Results • Revenue of $609 million in the Third Quarter, down 9% Year-over-Year • Private Cloud Revenue was $260 million, up 4% Year-over-Year • Public Cloud Revenue was $349 million, down 17% Year-over-Year • Third Quar
How this was made
The 30-second read
Why it matters
The mixed results and guidance raise questions on growth trajectory, especially the 17% drop in public‑cloud revenue versus a 4% rise in private‑cloud revenue.
Market read
First‑hand earnings and guidance release provides fresh data for traders to assess Rackspace's valuation and sector positioning.
What to watch
Capital expenditures jumped to $104M, indicating potential future capacity expansion.
Rackspace Q3 2026 revenue fell 9.3% to $609.1 million while non-GAAP operating profit rose 12.2% to $35.9 million; full-year revenue outlook raised by $35 million at the midpoint
Reported revenue fell 9.3% year over year, with Public Cloud down 17.2%, and nine-month operating cash flow fell to $9.3 million from $91.7 million. Offsetting this, non-GAAP operating profit rose 12.2%, GAAP loss from operations narrowed, Private Cloud revenue grew 4.2%, and the company raised its full-year revenue outlook by $35 million at the midpoint while maintaining its profit outlook.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenue, Q3 2026 (three months ended September 30, 2026)GAAP | $609.1M | – | (9.3)% |
| Total revenue in constant currency, Q3 2026non-GAAP | $609.3M | – | (9.2)% constant currency |
| Private Cloud revenue, Q3 2026other | $260M | – | 4.2% |
| Public Cloud revenue, Q3 2026other | $349.1M | – | (17.2)% |
| Cost of revenue, Q3 2026GAAP | −$496M | – | (8.4)% |
| Gross profit, Q3 2026GAAP | $113.1M | – | (12.9)% |
| Gross margin, Q3 2026GAAP | 18.6% | – | – |
| Non-GAAP Gross Profit, Q3 2026non-GAAP | $118.7M | – | – |
| Selling, general and administrative expenses, Q3 2026GAAP | −$125.6M | – | (23.3)% |
| Loss from operations, Q3 2026GAAP | −$12.5M | – | (63.1)% |
| Interest expense, Q3 2026GAAP | −$35.5M | – | 67.5% |
| Total other expense, Q3 2026GAAP | −$37.2M | – | 48.2% |
| Loss before income taxes, Q3 2026GAAP | −$49.7M | – | (15.8)% |
| Provision for income taxes, Q3 2026GAAP | −$3.8M | – | (53.1)% |
| Net loss, Q3 2026GAAP | −$53.5M | – | (20.3)% |
| Net loss per share, basic and diluted, Q3 2026GAAP | $(0.21) | – | – |
| Non-GAAP Operating Profit, Q3 2026non-GAAP | $35.9M | – | 12.2% |
| Non-GAAP Net Loss, Q3 2026non-GAAP | −$17.5M | – | – |
| Non-GAAP Loss Per Share, Q3 2026non-GAAP | $(0.06) | – | decline of 20% |
| Adjusted EBITDA, Q3 2026non-GAAP | $75.2M | – | – |
| Segment operating profit, Public Cloud, Q3 2026other | $27.2M | – | 94.3% |
| Segment operating profit, Private Cloud, Q3 2026other | $53.4M | – | (20.5)% |
| Net cash provided by operating activities, Q3 2026GAAP | $36M | – | – |
| Net cash provided by operating activities, trailing twelve months to Q3 2026other | $69M | – | – |
| Capital expenditures, Q3 2026other | $104M | – | – |
| Cash and cash equivalents, September 30, 2026GAAP | $108M | – | – |
| Total liquidity including Revolving Credit Facility, September 30, 2026other | $170M | – | – |
| Total revenue, nine months ended September 30, 2026GAAP | $1.96B | – | (2.3)% |
| Public Cloud revenue, nine months ended September 30, 2026other | $1.20B | – | (4.3)% |
| Private Cloud revenue, nine months ended September 30, 2026other | $758M | – | 1.2% |
| Gross profit, nine months ended September 30, 2026GAAP | $347M | – | (10.1)% |
| Gross margin, nine months ended September 30, 2026GAAP | 17.7% | – | – |
| Interest expense, nine months ended September 30, 2026GAAP | −$95.9M | – | 54.9% |
| Gain on debt extinguishment, nine months ended September 30, 2026GAAP | $62.5M | – | 100.0% |
| Loss from operations, nine months ended September 30, 2026GAAP | −$63.5M | – | (34.8)% |
| Net loss, nine months ended September 30, 2026GAAP | −$112.7M | – | (41.6)% |
| Net loss per share, basic and diluted, nine months ended September 30, 2026GAAP | $(0.45) | – | – |
| Non-GAAP Operating Profit, nine months ended September 30, 2026non-GAAP | $94M | – | 10.7% |
| Non-GAAP Net Loss, nine months ended September 30, 2026non-GAAP | −$52.9M | – | – |
| Non-GAAP Loss Per Share, nine months ended September 30, 2026non-GAAP | $(0.20) | – | – |
| Adjusted EBITDA, nine months ended September 30, 2026non-GAAP | $212.3M | – | – |
| Net cash provided by operating activities, nine months ended September 30, 2026GAAP | $9.3M | – | – |
| Purchases of property, equipment and software, nine months ended September 30, 2026GAAP | −$65.8M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Public CloudThe release does not explain the driver. It reports Public Cloud revenue of $349.1 million against $421.6 million, and segment operating profit of $27.2 million against $14.0 million, a segment operating margin of 7.8% against 3.3%. | $349.1 million (Q3 2026) | – | (17.2)% |
| Private CloudThe release does not explain the driver. It reports Private Cloud revenue of $260.0 million against $249.6 million, and segment operating profit of $53.4 million against $67.2 million, a segment operating margin of 20.5% against 26.9%. | $260.0 million (Q3 2026) | – | 4.2% |
Amounts quoted below without a unit are in millions, as in the filing’s tables. Per-share figures are as printed.
FY 2026 outlook
- RevenueTotal revenue $2,510 - $2,560 million; Private Cloud revenue $995 - $1,015 million; Public Cloud revenue $1,515 - $1,545 million
- Tax rateNon-GAAP Tax Expense Rate 26%
- 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) to ($230) million
- NoteNon-GAAP Weighted Average Shares 265 - 275 million, excluding any dilution from the ATM program
- NoteRelease states the revenue outlook is raised by $35 million at the midpoint and the Non-GAAP Operating Profit and Adjusted EBITDA outlook is maintained
Capital returns
- The release does not report any share repurchases or dividends for the periods presented.
- Nine months ended September 30, 2026: proceeds from issuance of common stock, net of offering costs, of $11.6 million, against none in the prior-year period.
- Non-GAAP weighted average share guidance of 265 - 275 million excludes any dilution from the ATM program, which the release says depends on prevailing share price and market conditions.
- Shares outstanding were 259.2 million at September 30, 2026, against 245.3 million at December 31, 2025, per the balance sheet.
What drove it
- Revenue: total revenue declined 9.3% year over year to $609.1 million, with Public Cloud revenue down 17.2% to $349.1 million and Private Cloud revenue up 4.2% to $260.0 million. The release does not state a cause for these changes.
- Non-GAAP Operating Profit rose 12.2% to $35.9 million. Segment data show Public Cloud segment operating profit up to $27.2 million from $14.0 million, while Private Cloud segment operating profit fell to $53.4 million from $67.2 million and corporate functions cost $(44.7) million against $(49.2) million.
- GAAP loss from operations narrowed to $(12.5) million from $(33.9) million. The reconciliation shows restructuring and transformation expenses of $13.1 million in Q3 2026 against $10.0 million, and amortization of intangible assets of $31.2 million against $37.5 million. The release does not state these as causes of the change in operating loss.
- Interest expense rose to $(35.5) million from $(21.2) million. The release's non-GAAP reconciliation adds back an interest expense impact from the March 2024 Refinancing Transactions of $18.2 million in Q3 2026 against $21.1 million in the prior-year quarter.
Concerns
- Public Cloud revenue fell 17.2% in Q3 2026 and 4.3% over nine months, against Private Cloud growth of 4.2% in the quarter and 1.2% over nine months.
- Gross margin was 18.6% in Q3 2026 against 19.4% in Q3 2025, and 17.7% for nine months against 19.3%.
- Interest expense rose 67.5% in Q3 2026 and 54.9% over nine months.
- Net cash provided by operating activities was $9.3 million for nine months, against $91.7 million a year earlier, and the release reports $36 million for Q3 2026 without a prior-year quarter comparison.
- Non-GAAP Net Loss widened to $(17.5) million from $(11.5) million in Q3, and Non-GAAP Loss Per Share widened to $(0.06) from $(0.05).
- Total stockholders' deficit grew to $(1,307.3) million from $(1,219.5) million at December 31, 2025.
- Capital expenditures were $104 million in Q3 2026 against $34 million a year earlier, and non-cash purchases of property, equipment and software were $101.4 million for nine months against $34.5 million.
What to watch
- Whether the full-year revenue outlook of $2,510 to $2,560 million is delivered, given the nine-month revenue of $1,957.3 million and the Public Cloud decline.
- Public Cloud revenue trajectory against the FY 2026 range of $1,515 to $1,545 million, and Private Cloud revenue against $995 to $1,015 million.
- Operating cash flow after the nine-month figure of $9.3 million, against the trailing-twelve-month figure of $69 million.
- Interest expense and the refinancing-related adjustment that the release excludes from non-GAAP net loss.
- Share count growth and any ATM program issuance, which the guidance excludes from the 265 to 275 million weighted average share range.
- Commentary on the November 10, 2026 conference call at 8:30am ET, which the release announces.
Balance sheet and cash flow
- Cash and cash equivalents: $108.0 million at September 30, 2026, against $105.8 million at December 31, 2025. Total liquidity including the Revolving Credit Facility was $170 million at September 30, 2026.
- Total assets: $2,751.1 million at September 30, 2026, against $2,799.8 million at December 31, 2025.
- Total liabilities: $4,058.4 million at September 30, 2026, against $4,019.3 million at December 31, 2025.
- Total stockholders' deficit: $(1,307.3) million at September 30, 2026, against $(1,219.5) million at December 31, 2025.
- Debt: current debt of $22.4 million at September 30, 2026 (December 31, 2025: $27.3 million); non-current debt of $2,770.2 million (December 31, 2025: $2,718.7 million).
- Accounts receivable, net: $212.3 million at September 30, 2026, against $266.5 million at December 31, 2025.
- Nine months ended September 30, 2026: net cash provided by operating activities of $9.3 million (2025: $91.7 million); net cash used in investing activities of $(70.3) million (2025: $(55.4) million); net cash provided by financing activities of $65.6 million (2025: $(84.6) million).
- Nine months ended September 30, 2026: proceeds from borrowings under long-term debt arrangements of $330.0 million (2025: $130.0 million); payments on long-term debt of $(220.4) million (2025: $(143.4) million).
- Nine months ended September 30, 2026: cash payments for interest, net of amount capitalized, of $97.9 million (2025: $62.7 million).
- Nine months ended September 30, 2026: a gain on debt extinguishment of $62.5 million is included in other income, and the release excludes it from non-GAAP net loss.
Analysis
Rackspace reported third-quarter 2026 revenue of $609.1 million, down 9.3% from $671.2 million, with constant currency revenue down 9.2%. The decline sits in Public Cloud, where revenue fell 17.2% to $349.1 million, while Private Cloud grew 4.2% to $260.0 million. Over nine months, Public Cloud fell 4.3% and Private Cloud rose 1.2%, so the mix has shifted toward Private Cloud within a shrinking total. The release does not explain the causes of these movements, and the analysis here relies on the printed figures.
Margins moved in both directions. Gross margin was 18.6% against 19.4% a year earlier, and 17.7% for nine months against 19.3%. Against this, Public Cloud segment operating profit rose to $27.2 million from $14.0 million, with segment operating margin of 7.8% against 3.3%. Private Cloud segment operating profit fell to $53.4 million from $67.2 million, with margin of 20.5% against 26.9%. Non-GAAP Operating Profit increased 12.2% to $35.9 million, and GAAP loss from operations narrowed to $(12.5) million from $(33.9) million. Net loss narrowed to $(53.5) million from $(67.1) million. Non-GAAP Net Loss widened to $(17.5) million from $(11.5) million, and Non-GAAP Loss Per Share was $(0.06) against $(0.05).
Cash generation and the balance sheet deserve close attention. Net cash provided by operating activities was $9.3 million for the nine months, against $91.7 million in the prior-year period. The release reports $36 million of operating cash flow for Q3 2026 and $69 million on a trailing-twelve-month basis, without a prior-year quarter comparison. Capital expenditures were $104 million in Q3 2026 against $34 million. Cash was $108.0 million at September 30, 2026, with total liquidity of $170 million. Total stockholders' deficit widened to $(1,307.3) million from $(1,219.5) million at December 31, 2025. Interest expense rose to $(35.5) million from $(21.2) million in the quarter, and the nine-month period includes a $62.5 million gain on debt extinguishment.
On guidance, the company raised its FY 2026 total revenue outlook by $35 million at the midpoint, to a range of $2,510 to $2,560 million, and maintained its Non-GAAP Operating Profit ($125 to $135 million) and Adjusted EBITDA ($285 to $295 million) outlook. Non-GAAP Loss Per Share is guided to ($0.25) to ($0.30). The prior revenue range is not included in the filing, so the size of the change beyond the stated $35 million midpoint cannot be assessed here. Non-GAAP guidance excludes dilution from the ATM program, which the release ties to share price and market conditions. The CEO describes the year as a move toward operating the full enterprise AI stack, but the filing gives no quantified bookings or pipeline figures to test that statement.
Management, verbatim
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.
Gajen Kandiah, Chief Executive Officer
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.
Gajen Kandiah, Chief Executive Officer
Not in the filing
stated, not guessed- Prior-period FY 2026 outlook was not provided, so the prior revenue range and the change in midpoint beyond the stated $35 million cannot be compared; vs_prior_guidance is empty.
- Prior-year quarter operating cash flow for Q3 2025 is not printed.
- Year-over-year percentage change for gross margin, Non-GAAP Net Loss, net loss per share, Non-GAAP Loss Per Share (nine months), Adjusted EBITDA, GAAP EPS and Q3 operating cash flow is not printed.
- Prior-quarter (Q2 2026) figures are not included in the release, so qoq_change is null throughout.
- The causes of revenue, margin, interest expense and operating loss changes are not stated in the release.
- Segment drivers are not explained; the release provides only segment revenue and segment operating profit figures.
- Balance sheet comparisons are against December 31, 2025, not a prior-year period, and no balance sheet change percentages are printed.
- Nine-month 2025 gain on debt extinguishment is printed as a dash, so no prior-year figure is given.
- Stock repurchase and dividend activity: none is reported in the filing.
- Q3 2026 quarterly cash flow statement is not provided; only nine-month cash flow and the Q3 operating cash flow figure in the headline are available.
- Full-year FY 2026 gross margin and operating expense guidance are not provided.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. 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
The filing is a primary 8‑K disclosure of Rackspace Technology's Q3 2026 financials and guidance.
Ticker impact
Rackspace Technology reported Q3 2026 results with revenue down 9% YoY and raised full-year revenue outlook by $35 million.
likely pressure as investors digest revenue decline despite raised outlook
Revenue fell 9% YoY, but the company reaffirmed profit outlook and raised revenue guidance, creating uncertainty about near-term price direction.
Market effects
Cloud services sector may see modest re‑rating as private‑cloud growth offsets public‑cloud decline.
US tech market may experience slight pullback in cloud‑related stocks.
Limited, primarily impacts US‑listed cloud infrastructure players.
Counterpoint
Despite revenue decline, the raised outlook could signal upside if private‑cloud momentum accelerates.
Key entities
- companyRackspace Technology, Inc.
Global enterprise AI infrastructure and solutions provider.
