Education
About Us
Working with TipRanks
Follow Us
Rackspace Technology (RXT)
NASDAQ:RXT
Top Page
Rackspace Technology
(NASDAQ:RXT)
Select Model
Select Model
Rating:47Neutral
Price Target:
$0.96
▼(-1.44% Downside)
Rackspace Technology's overall stock score is primarily impacted by its challenging financial performance, characterized by declining revenues and negative profitability margins. While the earnings call highlighted some strategic initiatives and sales momentum, these were not enough to offset the financial and valuation concerns. Technical analysis provides a mixed outlook, with some potential for upward movement but prevailing bearish trends.
Positive Factors
Recurring managed services revenue
A large, contract-based managed services base creates predictable, multi-year recurring revenue and higher customer lifetime value. That steadies cash flows, enables upsell of adjacent services (security, AI), and supports long-term planning even if project sales fluctuate.
Bookings (ACV) growth
Sustained ACV growth indicates improving sales effectiveness and a strengthening pipeline converting into multi-year contracts. This durable momentum supports revenue visibility, enables capacity planning, and gives leverage to expand platform and service offerings over time.
Public cloud revenue expansion
Steady growth in public cloud services aligns Rackspace with secular cloud adoption trends and hyperscaler workloads. Expanding public-cloud operations can scale managed services, deepen partner integration, and offer cross-sell opportunities that sustainably lift top-line and long-term relevance.
Negative Factors
High leverage & negative equity
Negative shareholders' equity and elevated leverage reduce financial flexibility, increase refinancing and covenant risk, and limit capacity for strategic investments. Over months, this can constrain R&D, M&A, or pricing flexibility and raise borrowing costs during cyclical stress.
Declining revenues and weak margins
A contracting top line and negative margins signal core competitiveness and pricing issues. Persistent revenue erosion and compressed gross margins undermine reinvestment capacity, limit operating leverage, and make it harder to achieve sustainable profitability over the medium term.
Private cloud contraction & margin pressure
Declines in private-cloud revenue tied to legacy transitions reduce high-margin work and impair cost absorption. Structural customer migrations off legacy platforms can shrink a core revenue pool and sustain margin pressure unless replaced by higher-value modernization and AI services.
Rackspace Technology (RXT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$242.15M
Dividend YieldN/A
Average Volume (3M)1.07M
Price to Earnings (P/E)―
Beta (1Y)1.76
Revenue Growth-2.98%
EPS Growth69.09%
CountryUS
Employees5,100
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-0.05
Shares Outstanding243,592,120
10 Day Avg. Volume831,011
30 Day Avg. Volume1,071,789
Financial Highlights & Ratios
PEG Ratio0.32
Price to Book (P/B)-0.49
Price to Sales (P/S)0.18
P/FCF Ratio-6.98
Enterprise Value/Market Cap14.52
Enterprise Value/Revenue1.31
Enterprise Value/Gross Profit6.79
Enterprise Value/Ebitda21.38
Forecast
1Y Price Target
$1.48Price Target Upside52.92% Upside
Rating ConsensusHold
Number of Analyst Covering3
EPS Forecast (FY)-0.03
Revenue Forecast (FY)$2.72B
Rackspace Technology Business Overview & Revenue Model
Company DescriptionRackspace Technology, Inc. operates as a multi cloud technology services company worldwide. It operates through Multicloud Services and Apps & Cross Platform segments. The company's Multicloud Services segment provides public and private cloud managed services, which allow customers to determine, manage, and optimize the right infrastructure, platforms, and services; and professional services related to designing and building multi cloud solutions and cloud-native applications. Its Apps & Cross Platform segment includes managed applications; managed security services in the areas of security threat assessment and prevention, threat detection and response, rapid remediation, governance, and risk and compliance assistance across multiple cloud platforms, as well as privacy and data protection services, including detailed access restrictions and reporting; data services; and professional services related to designing and implementing application, security, and data services. Rackspace Technology, Inc. was founded in 1998 and is headquartered in San Antonio, Texas.
How the Company Makes MoneyRackspace generates revenue primarily through its subscription-based model, charging customers for managed cloud services and solutions. Key revenue streams include fees for cloud infrastructure, managed services, consulting, and support services. The company has established strategic partnerships with major cloud providers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud, which enhance its service offerings and enable cross-selling opportunities. Additionally, Rackspace benefits from long-term contracts with its clients, providing a stable revenue base, and it focuses on upselling value-added services to existing customers to drive growth.
Rackspace Technology Earnings Call Summary
Earnings Call Date:Nov 06, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 25, 2026
Earnings Call Sentiment Neutral
The earnings call presented a balanced overview with notable achievements in sales momentum, revenue growth, and innovative product launches. However, these positives were offset by revenue declines in the private cloud sector and decreased profit margins.Q3-2025 Updates
Positive Updates
Strong Sales Momentum
Bookings, as measured by annual contract value, grew 5% year over year, driven primarily by private cloud, which secured several key wins.
Exceeding Revenue Expectations
Total company GAAP revenue of $671 million was up 1% sequentially, surpassing the midpoint of guidance.
Innovative Product Launches
Introduced eight new releases in private cloud, including the electronic health record Cloud Enterprise and AI LaunchPack, showcasing innovation in cloud, AI, and security.
Successful Major Client Engagements
Signed significant deals with a leading global telecommunications provider and a sovereign government customer, enhancing Rackspace Technology's market reputation.
Public Cloud Revenue Growth
Public cloud revenues totaled $422 million, exceeding guided range, with a 1% increase year over year and sequentially.
Negative Updates
Private Cloud Revenue Decline
Private cloud revenue came in at $250 million, meeting guidance but down 3% year over year due to customer transitions off legacy platforms.
Decreased Gross Profit Margin
Non-GAAP gross profit margin was 19.9%, down 120 basis points year over year, driven by lower cost absorption in private cloud and higher infrastructure resale costs in public cloud.
Lower Non-GAAP Operating Margins
Private Cloud non-GAAP segment operating margin was down 180 basis points year over year, and Public Cloud non-GAAP operating margin was down 40 basis points year over year due to unfavorable product mix.
Company Guidance
During the Rackspace Technology, Inc. Q3 2025 earnings call, the company reported that their revenue, operating profit, and EPS met or exceeded the midpoint of their guided range. Private cloud revenue was $250 million, meeting the guidance midpoint but down 3% year over year. Public cloud revenue totaled $422 million, surpassing the high end of the guidance and increasing 1% both year over year and sequentially. The company's non-GAAP operating profit was $32 million, at the high end of the guided range, with a non-GAAP loss per share at $0.05. Looking ahead, Rackspace provided a Q4 revenue guidance range of $664 to $678 million, which is flat sequentially and down 2% year over year at the midpoint. Overall, the company is focusing on expanding AI offerings, modernizing critical workloads, and strengthening strategic partnerships, particularly in regulated and sovereign markets.Rackspace Technology Financial Statement Overview
Summary
Rackspace Technology faces significant financial challenges, with declining revenues, negative profitability margins, and a highly leveraged balance sheet. While there is some improvement in cash flow generation, the overall financial health remains precarious, requiring strategic adjustments to improve stability and profitability.Income Statement
Rackspace Technology's income statement shows declining revenue with a negative growth rate of -17.1% in TTM, indicating a challenging market environment. The gross profit margin has decreased to 19.26%, and the net profit margin is negative at -9.27%, reflecting ongoing profitability issues. EBIT and EBITDA margins are also negative, highlighting operational inefficiencies.45
Neutral
Balance Sheet
The balance sheet reveals a concerning financial structure with negative stockholders' equity and a high debt-to-equity ratio of -0.39 in TTM, indicating significant leverage and potential financial instability. Return on equity is positive at 22.73%, but this is due to negative equity, which distorts the metric. The equity ratio is negative, further emphasizing financial risk.30
Negative
Cash Flow
Cash flow analysis shows some positive trends, with a free cash flow growth rate of 28.73% in TTM. The operating cash flow to net income ratio is 0.19, indicating some ability to generate cash from operations despite net losses. However, the free cash flow to net income ratio of 0.47 suggests limited cash flow relative to net losses.55
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.69B | 2.74B | 2.96B | 3.12B | 3.01B | 2.71B |
| Gross Profit | 517.70M | 533.40M | 648.60M | 856.90M | 936.80M | 984.40M |
| EBITDA | 164.50M | -420.50M | -149.90M | -241.70M | 446.70M | 479.10M |
| Net Income | -249.10M | -858.20M | -837.80M | -804.80M | -218.30M | -245.80M |
Balance Sheet | ||||||
| Total Assets | 2.85B | 3.05B | 4.10B | 5.46B | 6.33B | 6.38B |
| Cash, Cash Equivalents and Short-Term Investments | 99.50M | 144.00M | 196.80M | 228.40M | 272.80M | 104.70M |
| Total Debt | 3.28B | 3.28B | 3.38B | 3.85B | 3.97B | 3.99B |
| Total Liabilities | 4.03B | 4.06B | 4.25B | 4.83B | 5.00B | 4.99B |
| Stockholders Equity | -1.19B | -1.00B | -154.50M | 629.50M | 1.33B | 1.38B |
Cash Flow | ||||||
| Free Cash Flow | 69.00M | -71.20M | 278.00M | 178.90M | 262.40M | 200.00K |
| Operating Cash Flow | 146.00M | 39.90M | 374.90M | 259.30M | 370.80M | 116.70M |
| Investing Cash Flow | -73.10M | -86.60M | -96.00M | -97.90M | -69.00M | -128.40M |
| Financing Cash Flow | -130.60M | -3.00M | -312.80M | -187.00M | -132.20M | 29.90M |
Rackspace Technology Technical Analysis
Negative
0.97
Price Trends
1.07
Negative
1.26
Negative
1.28
Negative
Market Momentum
-0.03
Negative
41.91
Neutral
29.46
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RXT, the sentiment is Negative. The current price of 0.97 is below the 20-day moving average (MA) of 1.00, below the 50-day MA of 1.07, and below the 200-day MA of 1.28, indicating a bearish trend. The MACD of -0.03 indicates Negative momentum. The RSI at 41.91 is Neutral, neither overbought nor oversold. The STOCH value of 29.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RXT.
Rackspace Technology Risk Analysis
Rackspace Technology disclosed 57 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)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $1.38B | 27.88 | 4.87% | 4.71% | 13.36% | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
50 Neutral | $282.15M | -7.31 | -55.03% | ― | 15.73% | 40.14% | |
48 Neutral | $46.79M | -2.26 | -14.38% | ― | 9.16% | 20.13% | |
47 Neutral | $242.15M | -0.90 | ― | ― | -2.98% | 69.09% |
* Technology Sector Average
RXT
Rackspace Technology
0.97
-1.50
-60.69%
TUYA
Tuya
2.25
0.45
24.86%
ZENV
Zenvia
0.89
-1.45
-62.02%
CISO
Cerberus Cyber Sentinel Corp
0.51
-0.52
-50.49%
BLZE
Backblaze
4.86
-1.25
-20.46%
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.