Core Insights - Rackspace Technology has appointed Lata Varghese as Senior Vice President of Business Transformation and Phani Kishore Burre as Senior Vice President of Services and Delivery for the Public Cloud business unit, aiming to enhance growth and customer success [1] Leadership Experience - Lata Varghese has extensive leadership experience in technology services, having managed global P&L responsibilities at Cognizant and led the growth of emerging technology consulting practices, with expertise in financial services, digital banking, payments, blockchain, and digital assets [2] - Phani Kishore Burre brings over two decades of experience in IT transformation for Fortune 100 clients, having served as Managing Director and Global Practice Head for Digital Infrastructure at Brillio, where he facilitated significant growth and cloud adoption [3] Strategic Focus - The new leadership is expected to strengthen Rackspace's operating model, improve execution, and turn AI and hybrid cloud into practical outcomes for clients, aligning with the company's goal to deliver speed, innovation, and certainty [4] - Rackspace Technology aims to advance its transformation and deliver value across core, cloud, and edge services [4] Company Overview - Rackspace Technology is recognized as a leading end-to-end hybrid and AI solutions company, capable of designing, building, and operating cloud environments across all major technology platforms [5]

Core Insights - Rackspace Technology has launched the Rackspace AI launchpad, a secure managed service aimed at facilitating the evaluation, piloting, and deployment of AI workloads across various industries, including healthcare and finance [1][8] - The service offers a phased, guided approach to AI adoption, addressing the complexities of infrastructure, tooling selection, and performance benchmarking [2][8] - The Rackspace AI launchpad is designed to eliminate the paralysis many enterprises face regarding AI implementation, providing a fast track from AI ambition to production with necessary security and governance [3][8] Company Offerings - Rackspace AI launchpad leverages Rackspace's AI Anywhere, a private cloud solution that integrates advanced AI/ML capabilities with a focus on data security and privacy [3][4] - The service includes managed infrastructure for AI workloads, featuring secure, fully managed GPU infrastructure powered by NVIDIA GPUs [6] - It provides onboarding and operational support, including technical documentation and assistance from AI infrastructure experts [6] Case Study - Compass, a U.S.-based healthcare provider, utilized Rackspace's AI launchpad to enhance care delivery by implementing a private cloud-hosted AI solution [4][5] - The AI solution enabled natural language querying and automated documentation analysis, resulting in an 80% reduction in manual review time and improved documentation quality [5] Importance of AI Adoption - AI adoption is framed as a competitive imperative, with Rackspace AI launchpad transforming AI from a strategic ambition into a tangible business advantage [8]

Revenue and Profitability - Revenue for the three months ended September 30, 2025, was $671.2 million, a slight decrease of 0.9% compared to $675.8 million in the same period of 2024[14] - Gross profit for the three months ended September 30, 2025, was $129.9 million, down from $137.5 million in the prior year, reflecting a gross margin of approximately 19.3%[14] - Net loss for the three months ended September 30, 2025, was $67.1 million, compared to a net loss of $186.6 million in the same period of 2024, indicating a significant improvement[14] - Total consolidated revenue for the three months ended September 30, 2024, was $675.8 million, slightly higher than $671.2 million in 2025, with nine-month revenue at $2,051.5 million compared to $2,002.9 million[168] - The company reported a total consolidated loss before income taxes of $174.6 million for the three months ended September 30, 2024, compared to a loss of $59.0 million in 2025, with a nine-month loss of $824.8 million versus $172.2 million[168] Assets and Liabilities - Total assets as of September 30, 2025, were $2,845.0 million, a decrease from $3,054.1 million as of December 31, 2024[13] - Total liabilities as of September 30, 2025, were $4,032.2 million, slightly down from $4,058.3 million at the end of 2024[13] - Cash and cash equivalents at the end of September 30, 2025, were $99.5 million, down from $144.0 million at the end of 2024[13] - As of September 30, 2025, the company had $2,434.3 million in outstanding debt, including various senior secured notes and term loan facilities[30] - Total debt as of September 30, 2025, was $2,772.5 million, down from $2,785.6 million as of December 31, 2024[70] Cash Flow and Liquidity - Operating cash flow for the nine months ended September 30, 2025, was $91.7 million, a significant increase compared to a cash outflow of $14.4 million in the same period of 2024[17] - The company reported cash and cash equivalents of $99.5 million as of September 30, 2025, indicating sufficient liquidity for at least the next twelve months[30] - Total cash, cash equivalents, and restricted cash amounted to $160.1 million, up from $101.3 million, reflecting a 58.0% increase[19] Shareholder Equity and Stock Performance - The weighted average number of shares outstanding for the three months ended September 30, 2025, was 240.4 million, compared to 226.4 million in the same period of 2024[14] - The company’s total stockholders' deficit reached $949.7 million as of September 30, 2024, compared to $756.2 million at June 30, 2024, marking an increase of 25.6%[21] - Basic net loss per share improved to $(0.28) for the three months ended September 30, 2025, compared to $(0.82) for the same period in 2024[61] Impairment and Goodwill - The company incurred impairment of goodwill of $141.7 million in the three months ended September 30, 2024, with no such impairment reported in 2025[14] - Goodwill, net as of September 30, 2025, was $739.7 million, with accumulated impairment charges totaling $2,305.6 million[66] - The company recognized impairment charges of $20.0 million related to its trade name indefinite-lived intangible asset during the nine months ended September 30, 2024[68] Segment Performance - The company has organized its operations into two segments: Public Cloud and Private Cloud, focusing on different service offerings and operational strategies[162] - Public Cloud revenue for the three months ended September 30, 2024, was $418.3 million, a slight increase from $421.6 million in 2025, while the nine-month revenue was $1,265.6 million compared to $1,253.8 million[168] - Private Cloud revenue for the three months ended September 30, 2024, was $257.5 million, up from $249.6 million in 2025, with nine-month revenue at $785.9 million compared to $749.1 million[168] Debt and Financing - The New Revolving Credit Facility allows for borrowings up to $375.0 million, with $65.0 million drawn as of September 30, 2025[30] - The New Borrower issued $1,687.2 million in the FLSO Term Loan Facility, which matures on May 15, 2028, with a contractual interest rate of 7.04% as of September 30, 2025[82][83] - The company completed a private debt exchange on March 12, 2024, involving $331.4 million of Existing Secured Notes and $1,588.8 million of Existing Term Loans[72] Tax and Regulatory Matters - The effective tax rate for the three months ended September 30, 2025, was lower than the U.S. federal statutory rate of 21% due to various factors including changes in valuation allowance and nondeductible executive compensation[138] - The company is currently evaluating the impact of ASU No. 2023-09 on income tax disclosures, effective for the 2025 Form 10-K[45] Compensation and Employee Costs - Total share-based compensation expense for the three months ended September 30, 2025, was $18.2 million, compared to $15.5 million for the same period in 2024[137] - The company recorded an increase in expense of $10.0 million due to the accelerated vesting of awards related to the former CEO's departure[135] - As of September 30, 2025, there was $28.7 million of total unrecognized compensation cost related to RSUs, PSUs, stock options, and the ESPP[137]

Core Viewpoint - Rackspace Technology held its Q3 2025 Earnings Conference Call, indicating a focus on financial performance and business updates [2]. Group 1: Business Updates - Gajen Kandiah, the Chief Executive Officer, provided an update on the business during the earnings call [4]. Group 2: Financial Reporting - The company emphasized that certain comments made during the call would be forward-looking, involving risks and uncertainties that could lead to actual results differing from expectations [2]. - Rackspace Technology stated that it assumes no obligation to update the information presented on the call, except as required by law [3]. - The presentation included non-GAAP financial measures and adjustments, which the company believes provide useful information to investors, with reconciliations to GAAP measures available on their Investor Relations website [3].

Financial Data and Key Metrics Changes - Total company GAAP revenue for Q3 2025 was $671 million, up 1% sequentially but down 1% year over year, exceeding the midpoint of guidance [12] - Non-GAAP gross profit margin was 19.9% of GAAP revenue, slightly up sequentially but down 120 basis points year over year [12] - Non-GAAP operating profit was $32 million, up 17% sequentially, meeting the high end of guidance [12] - Non-GAAP loss per share was $0.05, at the midpoint of the guided range of $0.04-$0.06 [12] - Cash flow from operations was $71 million, and free cash flow was $43 million [12] - The company ended the quarter with $100 million in cash and $386 million of total liquidity [13] Business Line Data and Key Metrics Changes - **Private Cloud**: Revenue was $250 million, meeting guidance but down 3% year over year; non-GAAP gross margin was 38.1%, down 50 basis points year over year [13][14] - **Public Cloud**: Revenue totaled $422 million, up 1% year over year and sequentially, driven by a 3% rise in services revenue [9][15] Market Data and Key Metrics Changes - Bookings measured by annual contract value grew 5% year over year, primarily driven by private cloud [6] - Public cloud bookings grew 2% sequentially, led by the Americas [8] Company Strategy and Development Direction - The company aims to be a leading hybrid multi-cloud partner for regulated, sovereign, and mission-critical workloads [17] - Focus on leveraging AI advancements to capture external opportunities and improve internal efficiencies [4] - Emphasis on building trust with customers and partners, and executing with precision to enhance reliability and security [5][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting or exceeding expectations across all key metrics for Q3 2025 [5] - The enterprise market is shifting towards production in AI, with increasing complexity due to data sovereignty and security requirements [5] - Future growth is anticipated in healthcare, sovereign markets, and AI, with a focus on expanding relationships with enterprise customers [6][10] Other Important Information - The company introduced several new solutions, including Rackspace Electronic Health Record Cloud Enterprise and AI Launchpad, aimed at enhancing customer capabilities in healthcare and AI [8][10] - The company will participate in the UBS Global Technology and AI Conference on December 3 [18] Q&A Session Summary - No questions were asked during the Q&A session, and the call concluded without any inquiries from participants [19][20]

November 6, 2025 Disclaimer Forward-Looking Statements Rackspace Technology has made statements in this presentation and other reports, filings, and other public written and verbal announcements that are forward-looking and therefore subject to risks and uncertainties. All statements, other than statements of historical fact, included in this presentation are, or could be, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are made in reliance on the ...

Revenue Performance - Revenue for Q3 2025 was $671 million, a decrease of 1% year-over-year from $676 million in Q3 2024[3] - Private Cloud revenue was $250 million, down 3% year-over-year from $258 million in Q3 2024[3] - Public Cloud revenue increased to $422 million, up 1% year-over-year from $418 million in Q3 2024[4] - Total revenue for the nine months ended September 30, 2024, was $2,051.5 million, a decrease of 2.4% compared to $2,002.9 million in 2025[21] - Public Cloud revenue for the nine months ended September 30, 2024, was $1,265.6 million, a decrease of 0.9% from $1,253.8 million in 2025[28] - Private Cloud revenue decreased by 4.7% to $785.9 million compared to $749.1 million[28] Profit and Loss - Loss from operations improved to $(34) million in Q3 2025, compared to a loss of $(174) million in Q3 2024[4] - Net loss was $(67) million in Q3 2025, significantly reduced from a net loss of $(187) million in Q3 2024[4] - Net loss for the nine months ended September 30, 2024, was $802.2 million, compared to a net loss of $193.1 million in 2025, representing a 75.9% increase in losses[21] - Basic and diluted net loss per share was $3.59 for 2024, compared to $0.82 for 2025[21] - The company reported a net loss of $186.6 million for the three months ended September 30, 2024, compared to a net loss of $67.1 million in 2025[43] Cash Flow and Capital Expenditures - Cash flow from operating activities was $71 million in Q3 2025, with a trailing twelve-month cash flow of $146 million[6] - Capital expenditures were $34 million in Q3 2025, compared to $31 million in Q3 2024[7] - Net cash provided by operating activities was $(14.4) million for 2024, contrasting with $91.7 million for 2025[25] - Cash and cash equivalents at the end of the period were $160.1 million, down from $199.7 million at the beginning of the period[25] Guidance and Projections - Guidance for Q4 2025 projects total revenue between $664 million and $678 million[9] - Non-GAAP Operating Profit is expected to be between $32 million and $34 million for Q4 2025[9] - Non-GAAP Loss Per Share is projected to be between $(0.03) and $(0.05) for Q4 2025[9] Assets and Liabilities - Total assets increased to $3,054.1 million as of December 31, 2024, compared to $2,845.0 million as of September 30, 2025[23] - Total liabilities stood at $4,058.3 million, slightly up from $4,032.2 million[23] Operating Profit - Public Cloud segment operating profit decreased by 9.1% year-over-year to $15.4 million for the three months ended September 30, 2024[29] - Private Cloud segment operating profit also fell by 9.1% year-over-year to $73.9 million for the same period[29] - Non-GAAP Operating Profit for the three months ended September 30, 2024, was $32.2 million, a slight decrease of 0.6% compared to $32.0 million in 2025[29] - Non-GAAP Operating Profit for the nine months ended September 30, 2024, was $66.5 million, an increase of 27.7% compared to $84.9 million in 2025[29] Impairment and Expenses - The company experienced a significant impairment of goodwill amounting to $141.7 million for the three months ended September 30, 2024[43] - Impairment of goodwill for the nine months ended September 30, 2024, was $714.9 million, with no impairment recorded for the same period in 2025[45] - Interest expense for the nine months ended September 30, 2024, was $80.1 million, compared to $61.9 million in 2025[45] - Share-based compensation expense for the three months ended September 30, 2024, was $15.5 million, compared to $18.2 million in 2025[45] Tax and Fees - The structural non-GAAP tax rate is estimated at 26% for all periods, subject to change based on various factors[48] - The company incurred $9.0 million in early termination fees related to the Master Economic Incentives Agreement in March 2024[46]

Core Insights - Rackspace Technology reported third quarter 2025 results, achieving revenue of $671 million, a slight decrease of 1% year-over-year compared to $676 million in Q3 2024 [2][7] - The company emphasized its role as a trusted partner in navigating hybrid multicloud complexities, focusing on AI, data, and security services [1][12] Financial Performance - Private Cloud revenue was $250 million, down 3% year-over-year from $258 million in Q3 2024 [2][30] - Public Cloud revenue increased to $422 million, up 1% from $418 million in Q3 2024 [3][30] - Loss from operations improved to $(34) million in Q3 2025, significantly better than the $(174) million loss in Q3 2024 [3][19] - Net loss narrowed to $(67) million in Q3 2025, compared to $(187) million in Q3 2024 [3][19] - Net loss per diluted share was $(0.28), an improvement from $(0.82) in the same quarter last year [4][19] Cash Flow and Liquidity - Cash flow from operating activities was $71 million for Q3 2025, with a trailing twelve-month cash flow of $146 million [7][27] - As of September 30, 2025, the company had cash and cash equivalents of $100 million and total liquidity of $386 million [5][27] Guidance and Outlook - For Q4 2025, Rackspace provided revenue guidance of $664 to $678 million, with Private Cloud revenue expected between $244 to $252 million and Public Cloud revenue between $420 to $426 million [8][30] - Non-GAAP Operating Profit is projected to be between $32 to $34 million, with Non-GAAP Loss Per Share expected to range from $(0.03) to $(0.05) [8][30]

Core Insights - Rackspace Technology, Inc. (NASDAQ:RXT) is a prominent player in the cloud computing sector, focusing on managed services across various cloud platforms, helping businesses optimize their cloud environments [1] - RXT is currently trading at $1.7167 with a target price of $1.92, indicating a growth potential of approximately 11.96% [2][6] - In comparison to its competitors, RXT's growth potential is moderate, with Materialise N.V. (MTLS) showing the highest growth potential of 25.52% [5][6] Company Performance - RXT's current stock price is $1.71, with a target price of $1.92, reflecting a growth potential of about 11.96% [2][6] - Stem, Inc. (STEM) is trading at $21.01 but has a negative growth potential of -102.72%, indicating significant risk for investors [3][6] - Repay Holdings Corporation (RPAY) has a stock price of $4.45 and a slight negative growth potential of -6.22%, suggesting lower risk compared to STEM [4][6] Competitive Landscape - Among RXT's peers, Materialise N.V. (MTLS) stands out with a trading price of $5.93 and the highest growth potential of 25.52%, making it an attractive investment option [5][6] - The competitive landscape includes major players like Amazon Web Services, Microsoft Azure, and Google Cloud, which present stiff competition for Rackspace [1]

Core Insights - Rackspace Technology has made significant progress towards its net-zero carbon emissions targets, showcasing its commitment to sustainability and alignment with the United Nations Sustainable Development Goals (SDGs) [1][2][14] Sustainability Achievements - In 2025, Rackspace achieved a 10% reduction in total emissions from its 2023 baseline, with a notable 20% decrease in Scope 1 and Scope 2 emissions, and a 9% reduction in Scope 3 emissions [2][11] - The relocation of its headquarters in San Antonio, Texas, resulted in an 80% reduction in facility emissions, saving 6,007 tons of CO₂e from 2023 to 2024 [11] - Approximately 80% of Rackspace's global data centers are powered by renewable energy, with plans to reach 100% through initiatives like RE100 and strategic energy partnerships [11] Operational Efficiency - Upgrades at the Dallas/Fort Worth data center improved energy performance, reducing power consumption by approximately 1,700 MWh between 2023 and 2024 [11] - The company has implemented a circular IT lifecycle policy to promote recycling, upcycling, and waste reduction [11] Employee Engagement and Community Impact - Rackspace has empowered its workforce with over 13,000 technical certifications in cloud and sustainability skills since 2023, with 95% of employees AI-ready certified [11] - The company has raised over $8 million for education through the Rackspace Foundation, supporting more than 10,000 students with STEM and holistic programs [11]