Rackspace Technology — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue was $609 million for the quarter, a 9.3% decrease year-over-year from $671 million.
• Private Cloud revenue was $260 million, up 4.2% year-over-year from $250 million.
• Public Cloud revenue was $349 million, down 17.2% year-over-year from $422 million.
• Loss from operations was $13 million, an improvement from a $34 million loss in the prior year quarter.
• Net loss was $54 million, narrowing from a $67 million loss in the prior year quarter.
• Net loss per diluted share was $0.21, compared to $0.28 in the prior year quarter.
• Non-GAAP Operating Profit was $36 million, a 12% increase from $32 million in the prior year quarter.
• Non-GAAP Loss Per Share was $0.06, a 20% increase in loss from $0.05 in the prior year quarter.
• Cash flow from operating activities was $36 million for the quarter; trailing-twelve-month cash flow from operating activities was $69 million.
• Capital expenditures were $104 million, compared to $34 million in the prior year quarter.
• Cash and cash equivalents were $108 million as of September 30, 2026, with total liquidity of $170 million including the Revolving Credit Facility.
• Deferred revenue decreased to $69.3 million from $94.6 million at December 31, 2025.
• Total debt was $2,792.6 million ($22.4 million current + $2,770.2 million non-current) as of September 30, 2026, compared to $2,746.0 million at December 31, 2025.

Guidance and Future Outlook:

• Raised full-year 2026 total revenue outlook by $35 million at the midpoint to $2,510–$2,560 million.
• Maintained full-year 2026 Non-GAAP Operating Profit outlook of $125–$135 million.
• Maintained full-year 2026 Adjusted EBITDA outlook of $285–$295 million.
• Provided full-year 2026 Private Cloud revenue guidance of $995–$1,015 million.
• Provided full-year 2026 Public Cloud revenue guidance of $1,515–$1,545 million.
• Provided full-year 2026 Non-GAAP Loss Per Share guidance of ($0.25)–($0.30).
• Provided full-year 2026 Non-GAAP Weighted Average Shares guidance of 265–275 million.

Business Segments and Product Lines:

• Public Cloud segment operating profit was $27.2 million, up 94.3% from $14.0 million in the prior year quarter, with margins improving to 7.8% from 3.3%.
• Private Cloud segment operating profit was $53.4 million, down 20.5% from $67.2 million in the prior year quarter, with margins declining to 20.5% from 26.9%.
• Corporate functions operating loss was $44.7 million, an improvement from $49.2 million in the prior year quarter.
• Nine-month Public Cloud revenue was $1,199.3 million, down 4.3% year-over-year.
• Nine-month Private Cloud revenue was $758.0 million, up 1.2% year-over-year.

Market and Competitive Landscape:

• Management stated the company is moving from establishing strategy to translating go-to-market efforts and large existing capacity footprint into commitments, rapid deployments, and high-margin operations.
• The company positions itself as the operator of the full enterprise AI stack, delivering outcomes for regulated and mission-critical industries where governance, sovereignty, and uptime are non-negotiable.

Risks and Challenges:

• Forward-looking statements are subject to risks and uncertainties, including market conditions, regulatory proceedings, and risk factors detailed in SEC filings.
• Non-GAAP guidance excludes share-based compensation and other items due to uncertainty and potential variability, meaning GAAP results may differ significantly.
• Foreign currency translation impacts revenue, with Public Cloud revenue down 17.2% on both reported and constant currency bases.

Management Commentary and Tone:

• CEO Gajen Kandiah stated the company continued to execute on its business and financial plan while reaffirming the profit outlook and modestly increasing the revenue outlook.
• Management noted the transition from strategy establishment to execution, focusing on converting capacity into high-margin operations.

Other Key Points:

• A gain on debt extinguishment of $62.5 million was recognized in the nine-month period ended September 30, 2026.
• Proceeds from the issuance of common stock were $11.6 million in the nine-month period.
• Proceeds from borrowings under long-term debt arrangements were $330.0 million in the nine-month period, with payments on long-term debt of $220.4 million.
• Acquisition of property, equipment, and software through issuance of common stock was $14.0 million in the nine-month period.
• Non-GAAP tax expense rate guidance is set at 26% for the full year.
• The company holds a conference call on November 10, 2026, to discuss results.