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]

Core Viewpoint - Rackspace Technology will release its third quarter 2025 financial results on November 6, 2025, after market close, with a conference call scheduled for the same day to discuss the results [1]. Group 1: Financial Results Announcement - The financial results for Q3 2025 will be announced after market close on November 6, 2025 [1]. - The conference call to discuss the financial results will be hosted by CEO Gajen Kandiah and CFO Mark Marino at 5:00 PM ET on November 6, 2025 [1]. Group 2: Accessing the Conference Call - Interested parties can access the live webcast or replay through the company's Investor Relations website [2]. - Pre-registration is required to obtain the dial-in number for the conference call, and registrants will receive a PIN for access [2]. Group 3: Company Overview - Rackspace Technology is recognized as a leading end-to-end hybrid cloud and AI solutions provider [3]. - The company specializes in designing, building, and operating cloud environments across various technology platforms, regardless of the technology stack or deployment model [3]. - Rackspace Technology partners with customers throughout their cloud journey, assisting in application modernization, new product development, and the adoption of innovative technologies [3].