Rackspace Technology (RXT) AI Stock Analysis

• Market Cap: $275.26M
• Dividend Yield: N/A
• Average Volume (3M): 1.19M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.83
• Revenue Growth: -2.98%
• EPS Growth: 69.09%
• Country: US
• Employees: 5,100
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): -0.05
• Shares Outstanding: 243,592,120
• 10 Day Avg. Volume: 1,453,224
• 30 Day Avg. Volume: 1,187,148
• PEG Ratio: 0.32
• Price to Book (P/B): -0.49
• Price to Sales (P/S): 0.18
• P/FCF Ratio: -6.98
• Enterprise Value/Market Cap: 12.78
• Enterprise Value/Revenue: 1.31
• Enterprise Value/Gross Profit: 6.79
• Enterprise Value/Ebitda: 21.38
• 1Y Price Target: $1.48
• Price Target Upside: 30.97% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 3
• EPS Forecast (FY): -0.21
• Revenue Forecast (FY): $2.67B

• Rating: 47 Neutral
• Price Target: $1.00 ▼(-11.50% 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

Strategic Partnerships

The partnership with Niterra EMEA for Google Cloud migration underscores Rackspace's expertise in cloud services, enhancing its market position and potential for cross-selling opportunities, which can drive long-term revenue growth.

Innovative Product Launches

Launching innovative products like AI LaunchPack demonstrates Rackspace's commitment to technological advancement, potentially attracting new customers and retaining existing ones, thus supporting sustained revenue growth.

Public Cloud Revenue Growth

Exceeding revenue guidance in the public cloud segment indicates strong demand and effective market strategies, contributing to a more stable and growing revenue base.

Negative Factors

Declining Revenue

A significant decline in revenue growth reflects challenges in maintaining market share and competitiveness, potentially impacting long-term financial stability and investor confidence.

High Leverage

A high leverage ratio indicates financial risk, limiting Rackspace's ability to invest in growth opportunities and increasing vulnerability to economic downturns.

Decreased Profit Margins

Decreasing profit margins suggest operational inefficiencies and cost management issues, which could hinder profitability and cash flow generation over the long term.

Rackspace Technology Business Overview & Revenue Model

Company Description

Rackspace 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 Money

Rackspace 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 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.

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.

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.

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

• Technical Analysis Sentiment: Neutral
• Last Price: 1.13
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RXT, the sentiment is Neutral. The current price of 1.13 is above the 20-day moving average (MA) of 1.06, below the 50-day MA of 1.31, and below the 200-day MA of 1.39, indicating a neutral trend. The MACD of -0.05 indicates Negative momentum. The RSI at 48.12 is Neutral, neither overbought nor oversold. The STOCH value of 76.58 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for RXT.

Rackspace Technology Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TUYA	65 Neutral	$1.36B	27.76	4.87%	4.64%	13.36%	―
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
BASE	60 Neutral	―	―	―	―	10.98%	11.62%
BLZE	50 Neutral	$276.96M	―	-55.03%	―	15.73%	40.14%
ZENV	49 Neutral	$63.98M	-3.12	-14.38%	―	9.16%	20.13%
RXT	47 Neutral	$275.26M	―	―	―	-2.98%	69.09%

Rackspace Technology Corporate Events

Rackspace Technology Announces Board Member Resignation

On September 26, 2025, Rackspace Technology announced the resignation of Mr. Vikram Mahidhar from its Board of Directors, effective September 30, 2025, following his departure from Apollo Global Management. His resignation was not due to any disagreements with the company. Additionally, on September 24, 2025, Mr. Srinivas Koushik resigned from his position as President, Technology, Sustainability, and Artificial Intelligence. He will receive a pro-rata bonus for 2025 in exchange for transition and advisory services.