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Rackspace Technology (RXT)
NASDAQ:RXT
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Rackspace Technology
(NASDAQ:RXT)
Rating:48Neutral
Price Target:
$1.50
▲(0.00%Upside)
Positive Factors
Capital Funding
Rackspace does not need to raise additional capital to fund its business plan for the next 12-24 months.
Financial Guidance
Rackspace reported strong bookings and issued positive guidance for the second quarter.
Negative Factors
Contract Adjustments
The shift to larger contracts will take more time for Rackspace to adjust to, affecting its performance rating.
Growth and Cash Flow
Analyst downgrades Rackspace shares to Market Perform from Outperform due to longer-than-expected path to improved growth and free cash flow.
Revenue Building
Rackspace's recent bookings success is taking longer to build into revenue, impacting the perception of its turnaround.
Rackspace Technology (RXT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$351.34M
Dividend YieldN/A
Average Volume (3M)1.10M
Price to Earnings (P/E)―
Beta (1Y)1.60
Revenue Growth-6.14%
EPS Growth67.53%
CountryUS
Employees5,100
SectorTechnology
Sector Strength91
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-0.06
Shares Outstanding237,388,700
10 Day Avg. Volume1,053,453
30 Day Avg. Volume1,096,342
Financial Highlights & Ratios
PEG Ratio-0.02
Price to Book (P/B)-0.31
Price to Sales (P/S)0.00
P/FCF Ratio6.71
Enterprise Value/Market Cap2.01
Enterprise Value/Revenue0.06
Enterprise Value/Gross Profit1.34
Enterprise Value/Ebitda-0.91
Forecast
1Y Price Target
$1.93Price Target Upside28.67% Upside
Rating ConsensusHold
Number of Analyst Covering6
Rackspace Technology Business Overview & Revenue Model
Company DescriptionRackspace Technology (RXT) is a leading provider of managed cloud computing services. The company specializes in offering comprehensive cloud management solutions across public, private, and hybrid cloud environments. With a focus on helping businesses optimize their IT infrastructure, Rackspace delivers end-to-end solutions including cloud migration, cloud security, data management, and application services. The company is particularly known for its expertise in major cloud platforms such as AWS, Microsoft Azure, and Google Cloud.
How the Company Makes MoneyRackspace Technology makes money primarily through its suite of cloud management and professional services. The company generates revenue by offering subscription-based managed services, wherein clients pay for continuous support and management of their cloud environments. Additional revenue streams include consulting services for cloud strategy and implementation, as well as project-based engagements for cloud migrations and optimizations. Rackspace's partnerships with leading cloud providers like Amazon Web Services, Microsoft Azure, and Google Cloud also enhance its service offerings, allowing it to leverage these platforms to provide tailored solutions to its clients. Furthermore, Rackspace may earn revenue from reselling cloud infrastructure services and through its proprietary tools that help automate and optimize cloud operations.
Rackspace Technology Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: 4.17%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Positive
Rackspace's earnings call reflected a positive sentiment with strong performance across key metrics, successful strategic partnerships, and growth in important sectors like Public Cloud and regulated industries. However, challenges such as revenue declines in Private Cloud and macroeconomic uncertainties were noted.Q1-2025 Updates
Positive Updates
Exceeded Expectations Across All Key Metrics
Rackspace's first quarter 2025 results exceeded expectations for revenue, profit, and EPS, marking the 11th consecutive quarter of meeting or exceeding guidance.
Strategic Partnership with Rubrik
Rackspace announced a strategic partnership with Rubrik to launch the Cyber Recovery Cloud, expected to drive revenue starting in 2025.
Public Cloud Bookings Growth
Public Cloud bookings grew 16% year-over-year, driven by a 26% increase in The Americas.
Operational Turnaround and Efficiency Improvement
Non-GAAP operating profit grew 83% year-over-year, with significant growth in cash flow from operations and free cash flow.
Expansion in Regulated Industries
Rackspace secured wins in the healthcare and energy sectors, including a new deal with a healthcare provider and a European energy company.
Negative Updates
Revenue Decline in Private Cloud
Private Cloud revenue for the first quarter was $250 million, down single-digits year-over-year due to customers rolling off older generation offerings.
Macroeconomic Uncertainty
The broader macroeconomic environment may impact onboarding timelines for recently closed deals and customer decision cycles in the short term.
Decline in Total Company GAAP Revenue
Total company GAAP revenue was $665 million, down 4% year-over-year, meeting the high-end of guidance despite the decline.
Company Guidance
In the first quarter of 2025, Rackspace Technology exceeded expectations across all key metrics, with revenue at the high-end of guidance and profit and EPS surpassing the guidance range. The company reported a 9% year-over-year growth in bookings, measured by annual contract value, notably achieving a 13% increase in The Americas. Non-GAAP operating profit saw an impressive 83% year-over-year growth, accompanied by significant growth in cash flow from operations and free cash flow. The company also highlighted its strategic partnership with Rubrik to launch Cyber Recovery Cloud, which is expected to drive revenue starting in 2025. Despite macroeconomic uncertainties, Rackspace remains poised to capitalize on secular trends with its strategic focus on Private Cloud and AI, evidenced by a 20% hypothetical growth in Private Cloud bookings if certain deals closed earlier, and a 16% year-over-year increase in Public Cloud bookings. Guidance for the second quarter projects GAAP revenue between $653 million and $665 million, with total non-GAAP operating profit expected to be between $25 million and $27 million, and a non-GAAP loss per share forecasted at $0.04 to $0.06.Rackspace Technology Financial Statement Overview
Summary
Rackspace Technology's financials are concerning, with declining revenues, negative profitability, and high leverage. Despite some positive trends in cash flow, the overall financial health remains weak and poses long-term sustainability risks.Income Statement
Rackspace Technology's income statement shows declining revenue and profitability. The TTM revenue growth rate is negative, reflecting a decrease from the previous year. The gross profit margin has also decreased over time, indicating a squeeze on profitability. EBIT and net profit margins are negative, highlighting ongoing operational challenges and losses.45
Neutral
Balance Sheet
The balance sheet reveals significant weaknesses, with negative stockholders' equity indicating financial distress. The debt-to-equity ratio is not applicable due to negative equity, but high total debt poses a risk. The equity ratio is negative, emphasizing financial instability and high leverage.30
Negative
Cash Flow
Despite negative net income, Rackspace Technology shows some positive cash flow trends. The operating cash flow to net income ratio is positive, indicating better cash generation relative to accounting losses. Free cash flow has improved in the TTM period, although past trends show volatility.50
Neutral
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 2.74B | 2.96B | 3.12B | 3.01B | 2.71B |
| Gross Profit | 533.40M | 648.60M | 856.90M | 936.80M | 984.40M |
| EBITDA | -362.90M | -149.90M | -248.20M | 421.40M | 479.10M |
| Net Income | -858.20M | -837.80M | -804.80M | -218.30M | -245.80M |
Balance Sheet | |||||
| Total Assets | 3.05B | 4.10B | 5.47B | 6.33B | 6.38B |
| Cash, Cash Equivalents and Short-Term Investments | 144.00M | 196.80M | 241.00M | 272.80M | 104.70M |
| Total Debt | 3.28B | 3.38B | 3.90B | 4.03B | 4.02B |
| Total Liabilities | 4.06B | 4.25B | 4.84B | 5.00B | 4.99B |
| Stockholders Equity | -1.00B | -154.50M | 629.50M | 1.33B | 1.38B |
Cash Flow | |||||
| Free Cash Flow | -71.20M | 278.00M | 178.90M | 262.40M | 200.00K |
| Operating Cash Flow | 39.90M | 374.90M | 259.30M | 370.80M | 116.70M |
| Investing Cash Flow | -86.60M | -96.00M | -97.90M | -69.00M | -128.40M |
| Financing Cash Flow | -3.00M | -312.80M | -187.00M | -132.20M | 29.90M |
Rackspace Technology Technical Analysis
Positive
1.50
Price Trends
1.29
Positive
1.48
Positive
2.02
Negative
Market Momentum
0.06
Negative
58.66
Neutral
57.15
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 1.5 is above the 20-day moving average (MA) of 1.39, above the 50-day MA of 1.29, and below the 200-day MA of 2.02, indicating a neutral trend. The MACD of 0.06 indicates Negative momentum. The RSI at 58.66 is Neutral, neither overbought nor oversold. The STOCH value of 57.15 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 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
Overall Rating
UnderperformOutperform
Sector (50)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $1.06B | ― | -15.69% | ― | 8.38% | -278.88% | |
67 Neutral | $465.49M | ― | -0.32% | ― | 18.51% | 97.57% | |
66 Neutral | $4.09B | ― | -12.09% | ― | 11.79% | 35.35% | |
61 Neutral | $407.23M | 4.82 | -94.58% | ― | -2.75% | -4.13% | |
50 Neutral | C$3.03B | 2.29 | -63.12% | 2.26% | 4.49% | -6.07% | |
48 Neutral | $351.34M | ― | 81.52% | ― | -6.14% | 67.53% |
* Technology Sector Average
Performance Comparison
RXT
Rackspace Technology
1.50
-0.78
-34.21%
YEXT
Yext
8.64
2.88
50.00%
BAND
Bandwidth
15.91
-5.86
-26.92%
TENB
Tenable Holdings
33.44
-9.46
-22.05%
CCSI
Consensus Cloud Solutions
21.59
-0.90
-4.00%
Rackspace Technology Corporate Events
Executive/Board ChangesShareholder Meetings
Rackspace Technology Holds Annual Stockholder Meeting
Neutral
Jun 20, 2025
On June 20, 2025, Rackspace Technology held its annual meeting of stockholders, where 85.72% of shares were represented. During the meeting, stockholders elected four directors to the board, ratified KPMG LLP as the independent accounting firm for 2025, and approved executive compensation in an advisory vote.
The most recent analyst rating on (RXT) stock is a Hold with a $2.50 price target. To see the full list of analyst forecasts on Rackspace Technology stock, see the RXT Stock Forecast page.
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.