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Rackspace Technology
(NASDAQ:RXT)
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Rating:54Neutral
Price Target:
$4.00
▲(1.52% Upside)
Action:Reiterated
Date:07/10/26
The score is held back primarily by balance-sheet weakness (negative equity) and still-negative profitability, despite improving operational trajectory and positive TTM cash generation. Technicals are supportive with price above key moving averages and a positive MACD, but valuation remains constrained by losses and no dividend. Earnings-call and corporate updates are mixed: guidance was reaffirmed and partnerships/deleveraging continue, yet margin pressure, weak near-term cash flow, and the ATM-related dilution/guidance changes add risk.
Positive Factors
Positive Cash Generation
Sustained positive TTM operating cash flow (~$144M) and FCF (~$77M) show the services model can produce real cash even while GAAP losses persist. Durable cash generation supports liquidity, deleveraging, reinvestment in AI infrastructure, and reduces dependence on near-term external equity.
Negative Factors
Negative Equity & Leverage
Deep negative shareholders' equity (~-$1.22B) is a structural constraint on financial flexibility, increasing creditor and refinancing risk. Even with lower nominal debt, negative equity raises the cost of capital, limits balance‑sheet capacity for large AI capex, and makes the firm more vulnerable to macro or execution shocks.
Read all positive and negative factors
Positive Factors
Negative Factors
Positive Cash Generation
Sustained positive TTM operating cash flow (~$144M) and FCF (~$77M) show the services model can produce real cash even while GAAP losses persist. Durable cash generation supports liquidity, deleveraging, reinvestment in AI infrastructure, and reduces dependence on near-term external equity.
Read all positive factors
Rackspace Technology (RXT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.05B
Dividend YieldN/A
Average Volume (3M)20.01M
Price to Earnings (P/E)―
Beta (1Y)3.72
Revenue Growth-0.49%
EPS Growth52.70%
CountryUS
Employees5,000
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-0.61
Shares Outstanding253,908,600
10 Day Avg. Volume11,704,590
30 Day Avg. Volume20,007,882
Financial Highlights & Ratios
PEG Ratio0.01
Price to Book (P/B)-0.19
Price to Sales (P/S)0.09
P/FCF Ratio2.56
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$4.90Price Target Upside24.37% Upside
Rating ConsensusHold
Number of Analyst Covering3
EPS Forecast (FY)-0.17
Revenue Forecast (FY)$2.55B
Rackspace Technology Business Overview & Revenue Model
Company Description
Rackspace Technology, Inc. is a global provider specializing in multi-cloud technology services. The company organizes its business into two primary divisions: Multicloud Services and Apps & Cross Platform. Through its Multicloud Services division...
How the Company Makes Money
Rackspace Technology makes money primarily by selling services that help customers adopt, run, and optimize cloud and IT environments.
1) Managed services (recurring revenue)
- A major portion of revenue is generated from ongoing managed services...
Rackspace Technology Earnings Call Summary
Earnings Call Date:May 07, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 11, 2026
Earnings Call Sentiment Neutral
The call conveyed a balance of strategic progress and execution momentum alongside near-term financial pressures. Highlights include multi-pronged partnerships (AMD, Palantir, Uniphore), notable customer and sovereign wins, Public Cloud growth (+7% YoY) and a 20% increase in non-GAAP operating profit. Lowlights include gross margin compression (-160 bps overall), a 6% YoY decline in Private Cloud revenue driven by timing, weak operating and free cash flow (operating cash flow $5M; FCF -$9M), and that the AMD collaboration remains a nonbinding MOU with financing and timing risks. Management reaffirmed full-year guidance and is actively deleveraging, but the financial trade-offs and execution/timing risks keep the tone mixed.Positive Updates
Revenue Growth and Services Momentum
Total GAAP revenue of $678 million, up 2% year-over-year. Public Cloud revenue of $443 million, up 7% year-over-year, with services revenue growing 10% year-over-year, reflecting a shift toward higher-value engagements.
Negative Updates
Gross Margin Compression
Non-GAAP gross profit margin was 18.3% of GAAP revenue, down 160 basis points year-over-year. Private Cloud non-GAAP gross margin was 36%, down 110 basis points YoY; Public Cloud non-GAAP gross margin was 8.9%, down 60 basis points YoY. Management cites timing dynamics and higher infrastructure costs as drivers.
Read all updates
Q1-2026 Updates
Positive
Negative
Revenue Growth and Services Momentum
Total GAAP revenue of $678 million, up 2% year-over-year. Public Cloud revenue of $443 million, up 7% year-over-year, with services revenue growing 10% year-over-year, reflecting a shift toward higher-value engagements.
Read all positive updates
Company Guidance
Rackspace reaffirmed its full‑year 2026 guidance in its entirety, saying revenue, EBITDA and cash‑flow outlooks are unchanged and that the Q1 Private Cloud timing is fully reflected in the annual plan with confidence the Private Cloud growth profile will materialize as large deals onboard. In Q1 the company reported total GAAP revenue of $678 million (up 2% YoY), company non‑GAAP gross profit margin of 18.3% of revenue (down 160 bps YoY), non‑GAAP operating profit of $31 million (up 20% YoY) and non‑GAAP loss per share of $0.06 (flat YoY); cash flow from operations was $5 million and free cash flow was negative $9 million. Segment metrics: Private Cloud GAAP revenue was $235 million (down 6% YoY) with non‑GAAP gross margin of 36% (down 110 bps) and segment operating margin of 24.7% (up 30 bps); Public Cloud GAAP revenue was $443 million (up 7% YoY) with services revenue up 10% YoY, non‑GAAP gross margin of 8.9% (down 60 bps) and segment operating margin of 4.7% (up 50 bps). The company ended the quarter with $94 million in cash, $295 million of total liquidity, repurchased about $96 million of debt, and noted the recently announced AMD partnership and related compute capacity are not materially factored into 2026 guidance given supply/delivery timing.Rackspace Technology Financial Statement Overview
Summary
Income Statement
32
Negative
Balance Sheet
18
Very Negative
Cash Flow
44
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.70B | 2.69B | 2.74B | 2.96B | 3.12B | 3.01B |
| Gross Profit | 336.50M | 359.50M | 533.40M | 648.60M | 856.90M | 936.80M |
| EBITDA | 356.90M | 288.30M | -420.50M | -149.90M | -241.70M | 446.70M |
| Net Income | -146.00M | -225.80M | -858.20M | -837.80M | -804.80M | -218.30M |
Balance Sheet | ||||||
| Total Assets | 2.77B | 2.80B | 3.05B | 4.10B | 5.46B | 6.33B |
| Cash, Cash Equivalents and Short-Term Investments | 93.60M | 105.80M | 144.00M | 196.80M | 228.40M | 272.80M |
| Total Debt | 3.23B | 3.28B | 3.28B | 3.38B | 3.85B | 3.97B |
| Total Liabilities | 3.98B | 4.02B | 4.06B | 4.25B | 4.83B | 5.00B |
| Stockholders Equity | -1.22B | -1.22B | -1.00B | -154.50M | 629.50M | 1.33B |
Cash Flow | ||||||
| Free Cash Flow | 76.90M | 90.60M | -71.20M | 278.00M | 178.90M | 262.40M |
| Operating Cash Flow | 143.90M | 151.40M | 39.90M | 374.90M | 259.30M | 370.80M |
| Investing Cash Flow | -61.10M | -58.40M | -86.60M | -96.00M | -97.90M | -69.00M |
| Financing Cash Flow | -118.10M | -134.60M | -3.00M | -312.80M | -187.00M | -132.20M |
Rackspace Technology Technical Analysis
Positive
3.94
Price Trends
5.24
Negative
3.71
Positive
2.44
Positive
Market Momentum
-0.43
Positive
43.23
Neutral
50.00
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RXT, the sentiment is Positive. The current price of 3.94 is below the 20-day moving average (MA) of 4.60, below the 50-day MA of 5.24, and above the 200-day MA of 2.44, indicating a neutral trend. The MACD of -0.43 indicates Positive momentum. The RSI at 43.23 is Neutral, neither overbought nor oversold. The STOCH value of 50.00 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RXT.
Rackspace Technology Risk Analysis
Rackspace Technology disclosed 58 risk factors in its most recent earnings report. Rackspace Technology reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Rackspace Technology Peers Comparison
UnderperformOutperform
Sector (61)
RXT
Rackspace Technology
4.13
2.91
238.52%
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1.68
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CISO
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0.26
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BLZE
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13.72
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Rackspace Technology Corporate Events
Business Operations and StrategyFinancial DisclosuresPrivate Placements and Financing
Rackspace Launches $250M ATM to Support AI Shift
Negative
Jul 9, 2026
On July 9, 2026, Rackspace Technology entered an at-the-market equity distribution agreement with Goldman Sachs that allows the company to sell up to $250 million of common stock, while on July 2, 2026 it amended and extended its accounts receivab...
Executive/Board ChangesShareholder Meetings
Rackspace Stockholders Approve Directors, Auditor and Equity Plan
Positive
Jun 18, 2026
At its annual meeting of stockholders held on June 18, 2026, Rackspace Technology, Inc. reported that 81.89% of its outstanding common shares were represented in person or by proxy, establishing a quorum for voting. Stockholders elected Gajen Kand...
Business Operations and Strategy
Rackspace Announces Workforce Cuts to Accelerate AI Transformation
Negative
Jun 16, 2026
On June 10, 2026, Rackspace Technology’s executive committee approved a workforce realignment plan aimed at accelerating its strategic transformation into an operator for governed enterprise AI, deemphasizing legacy public cloud services and...
Business Operations and StrategyProduct-Related Announcements
Rackspace Partners with AMD to Expand AI Infrastructure
Positive
Jun 16, 2026
On June 16, 2026, Rackspace Technology and AMD announced a definitive agreement for the phased deployment of an initial 30 MW of AMD-based AI compute capacity across Rackspace’s global data centers from late 2026 through 2028, formalizing a ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.