Financial Data and Key Metrics Changes - Total company GAAP revenue for Q2 2025 was $666 million, down 3% year over year but slightly up sequentially, exceeding guidance due to solid performance across both business units [18] - Non-GAAP operating profit was $27 million, up 34% year over year, driven by operational efficiencies [18] - Non-GAAP loss per share was $0.06, at the lower end of the guided range, primarily due to higher expenses related to data center leases [19] Business Line Data and Key Metrics Changes - Private Cloud bookings grew 24% sequentially and 42% year over year, with revenue at $250 million, down 4% year over year [6][20] - Public Cloud bookings grew 1% year over year, with revenue totaling $417 million, down 2% year over year [11][21] - Non-GAAP gross margin for Private Cloud was 36.8%, down 50 basis points year over year, while Public Cloud's was 9.6%, down 20 basis points year over year [20][21] Market Data and Key Metrics Changes - Private Cloud saw double-digit year-over-year bookings growth in The Americas and EMEA, indicating broad-based strength [6] - Public Cloud services revenue grew 3% sequentially, remaining flat year over year, with a focus on higher-margin services [12][21] Company Strategy and Development Direction - The company is focused on building a sustainable business model that consistently delivers revenue, profit, and cash flow growth [17] - Strategic expansion into mid-market and enterprise segments is underway, with a strong emphasis on private cloud solutions [7][10] - The company is also investing in AI capabilities, with initiatives aimed at becoming a private AI infrastructure provider [50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the private cloud business and the positive trajectory of bookings performance [31] - The company anticipates a flat revenue outlook for private cloud in Q3, while expecting growth in public cloud services [28][34] - Management highlighted the importance of operational discipline and working capital performance in driving free cash flow improvements [29] Other Important Information - The company launched several new products and enhancements, including Rackspace OpenStack and Rackspace CloudOps, aimed at improving service offerings [10][12] - A strategic alliance with Semaphore.ai was announced to enhance AI capabilities across business functions [15][54] Q&A Session Summary Question: Discussion on guidance and free cash flow - Management indicated that Q3 guidance is expected to be flat sequentially for private cloud, with an uptick anticipated in public cloud services [28][29] Question: Insights on private cloud services and public cloud performance - Management noted a favorable mix in private cloud bookings, with a shift towards larger deals and longer contract lengths [32][33] - Public cloud services are expected to grow in the second half of 2025, with a projected year-over-year growth of 10% to 20% in Q4 [34][35] Question: Investments in market traction and AI partnerships - Management stated that investments in mid-market and enterprise segments have already been made, with a focus on success-based CapEx [49] - The company is seeing traction in AI across both private and public cloud, with successful implementations in healthcare and retail sectors [51][54]

Financial Performance - Q2 2025 - Total revenue was $666 million, flat quarter-over-quarter (Q/Q) and down 3% year-over-year (Y/Y) [7] - Non-GAAP gross profit was $132 million, essentially flat Q/Q and down 5% Y/Y [7] - Non-GAAP gross margin was 198%, down 01 percentage points Q/Q and 04 percentage points Y/Y [7] - Non-GAAP operating profit was $27 million, up 7% Q/Q and 34% Y/Y [7] - Non-GAAP operating margin was 41%, up 03 percentage points Q/Q and 11 percentage points Y/Y [7] - Non-GAAP loss per share was ($006), an increase of $003 Y/Y [7] Segment Performance - Q2 2025 - Total Rackspace revenue was $666 million, with Private Cloud at $250 million and Public Cloud at $417 million [8] - Private Cloud revenue decreased by 4% Y/Y, while Public Cloud revenue decreased by 2% Y/Y [8] - Segment operating profit was $78 million, with Private Cloud contributing $62 million and Public Cloud $16 million [8] - Corporate functions resulted in a loss of $50 million [8] Cash Flow and Capital Expenditures - Cash provided by operating activities was $8 million for Q2 2025 [9] - Free cash flow was ($12) million for Q2 2025 [9] - Total capital expenditures were $31 million, with cash capital expenditures at $21 million [9] - As of June 30, 2025, cash and cash equivalents were $104 million, with $310 million available under the revolving credit facility, resulting in total liquidity of $414 million [9] Q3 2025 Guidance - Total revenue is expected to be between $660 million and $674 million [12] - Private Cloud revenue is projected to be between $246 million and $254 million [12] - Public Cloud revenue is expected to be between $414 million and $420 million [12] - Non-GAAP operating profit is guided to be between $30 million and $32 million [12] - Non-GAAP loss per share is expected to be between ($004) and ($006) [12]

[Executive Summary](index=1&type=section&id=Executive%20Summary) Rackspace Technology's Q2 2025 results **exceeded** guidance, with **16%** bookings growth and **34%** Non-GAAP Operating Profit increase [Q2 2025 Performance Highlights](index=1&type=section&id=Q2%202025%20Performance%20Highlights) Rackspace Technology reported Q2 2025 results with revenue and operating profit **exceeding** guidance midpoints. Bookings **grew 16%** year-over-year, and Non-GAAP Operating Profit **increased 34%**. The company also **delivered positive** operating cash flow - Revenue and operating profit **exceeded** the midpoint of guidance, and EPS was within the guided range[1](index=1&type=chunk) - Bookings **grew 16%** year-over-year[1](index=1&type=chunk) - Operating profit **increased 34%** year-over-year[1](index=1&type=chunk) - **Delivered positive** operating cash flow[1](index=1&type=chunk) [Second Quarter 2025 Financial Results](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results) Rackspace Technology's Q2 2025 financial results show revenue declines and a net loss, offset by **improved** non-GAAP operating profit [Consolidated Financial Performance](index=1&type=section&id=Consolidated%20Financial%20Performance) Rackspace Technology's Q2 2025 revenue **decreased by 3%** year-over-year to **$666 million**. The company reported a net loss of **$(55) million**, a **significant decline** from a net income of **$25 million** in Q2 2024, resulting in a diluted net loss per share of **$(0.23)** Q2 2025 Consolidated Financial Highlights | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change (%) | | :----------------------- | :------------------ | :------------------ | :------------- | | Revenue | $666 | $685 | (3)% | | Loss from operations | $(25) | $(54) | 53.7% (Improvement) | | Net loss (income) | $(55) | $25 | NM (Significant decline) | | Net loss per diluted share | $(0.23) | $0.11 | NM (Significant decline) | [Segment Performance](index=1&type=section&id=Segment%20Performance) Both Public Cloud and Private Cloud segments **experienced revenue declines** in Q2 2025. Public Cloud revenue **decreased by 2%** to **$417 million**, while Private Cloud revenue saw a **4% decrease** to **$250 million** Q2 2025 Segment Revenue | Segment | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change (%) | | :------------ | :------------------ | :------------------ | :------------- | | Private Cloud | $250 | $260 | (4)% | | Public Cloud | $417 | $425 | (2)% | [Non-GAAP Financial Performance](index=1&type=section&id=Non-GAAP%20Financial%20Performance) Non-GAAP Operating Profit **significantly increased by 34%** year-over-year to **$27 million** in Q2 2025, indicating **improved** operational efficiency. Non-GAAP Loss Per Share also **improved by 33%** to **$(0.06)** Q2 2025 Non-GAAP Financial Highlights | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change (%) | | :---------------------- | :------------------ | :------------------ | :------------- | | Non-GAAP Operating Profit | $27 | $20 | 34% | | Non-GAAP Loss Per Share | $(0.06) | $(0.09) | 33% (Improvement) | [Liquidity and Capital Expenditures](index=1&type=section&id=Liquidity%20and%20Capital%20Expenditures) As of June 30, 2025, Rackspace Technology maintained **$104 million** in cash and cash equivalents and **$414 million** in total liquidity. Capital expenditures for Q2 2025 were **$31 million**, a **slight decrease** from the prior year Q2 2025 Liquidity and Capital Expenditures | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | | :-------------------------- | :------------------ | :------------------ | | Capital expenditures | $31 | $33 | | Cash and cash equivalents (as of June 30, 2025) | $104 | N/A | | Total liquidity (as of June 30, 2025) | $414 | N/A | - Cash Flow From Operating Activities was **$8 million** in Q2 2025, and **$127 million** on a Trailing-Twelve-Month Basis[6](index=6&type=chunk) [Financial Outlook](index=2&type=section&id=Financial%20Outlook) Rackspace Technology provides Q3 2025 guidance, projecting total revenue between **$660 million** and **$674 million**, and non-GAAP profit ranges [Q3 2025 Guidance](index=2&type=section&id=Q3%202025%20Guidance) Rackspace Technology provided guidance for Q3 2025, projecting total revenue between **$660 million** and **$674 million**. Non-GAAP Operating Profit is expected to be in the range of **$30 million** to **$32 million**, with Non-GAAP Loss Per Share between **$(0.04)** and **$(0.06)** Q3 2025 Financial Guidance | Metric | Q3 2025 Guidance (Millions) | | :-------------------------- | :-------------------------- | | Total Revenue | $660 - $674 | | Private Cloud Revenue | $246 - $254 | | Public Cloud Revenue | $414 - $420 | | Non-GAAP Operating Profit | $30 - $32 | | Non-GAAP Loss Per Share | $(0.04) - $(0.06) | | Non-GAAP Other Income (Expense) | $(47) – $(51) | | Non-GAAP Tax Expense Rate | 26% | | Non-GAAP Weighted Average Shares | 239 - 241 | [Non-GAAP Guidance Disclaimer](index=2&type=section&id=Non-GAAP%20Guidance%20Disclaimer) The company **does not provide** GAAP net income (loss) guidance or a reconciliation for its Non-GAAP guidance due to the **inherent uncertainty** and **potential variability** of certain reconciling items, such as share-based compensation expense, which would require unreasonable effort to forecast - Rackspace Technology **does not reconcile** Non-GAAP Operating Profit, Non-GAAP Loss Per Share, Non-GAAP Other Income (Expense), or Non-GAAP Tax Expense Rate guidance to the most directly comparable GAAP measure due to the **uncertainty** and **potential variability** of certain items like share-based compensation expense[9](index=9&type=chunk) [Company Information](index=3&type=section&id=Company%20Information) This section provides company details, including conference call, business overview, forward-looking statements, non-GAAP explanations, and contacts [Conference Call and Webcast](index=3&type=section&id=Conference%20Call%20and%20Webcast) Rackspace Technology hosted a conference call on August 7, 2025, to discuss its second quarter 2025 results, with webcast and dial-in options available for interested parties - A conference call was held on August 7, 2025, at 4:00pm CT / 5:00pm ET to discuss Q2 2025 results[10](index=10&type=chunk) - Webcast replay and dial-in information were provided via the company's IR website and a pre-registration link[10](index=10&type=chunk)[11](index=11&type=chunk) [About Rackspace Technology](index=3&type=section&id=About%20Rackspace%20Technology) Rackspace Technology is a **leading provider** of end-to-end, hybrid cloud and AI solutions, specializing in designing, building, and operating cloud environments across various technology platforms and deployment models for its customers - Rackspace Technology is a **leading** end-to-end, hybrid cloud and AI solutions company[12](index=12&type=chunk) - The company designs, builds, and operates customers' cloud environments across all major technology platforms, irrespective of technology stack or deployment model[12](index=12&type=chunk) [Forward-looking Statements](index=3&type=section&id=Forward-looking%20Statements) The press release contains forward-looking statements subject to risks and uncertainties, as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on management's current beliefs and are not guarantees of future performance, with actual results potentially differing materially due to various risk factors - All statements, other than statements of historical fact, are 'forward-looking statements' subject to risks and **uncertainties**[13](index=13&type=chunk) - These statements relate to anticipated financial performance, management's plans, business prospects, and market conditions[13](index=13&type=chunk) - The company undertakes **no obligation** to publicly update or revise any forward-looking statement[13](index=13&type=chunk) [Non-GAAP Financial Measures Explanation](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) Rackspace Technology utilizes several non-GAAP financial measures, such as constant currency revenue, Non-GAAP Gross Profit, Non-GAAP Net Income (Loss), Non-GAAP Operating Profit, Adjusted EBITDA, and Non-GAAP Earnings (Loss) Per Share, to provide investors and analysts with a **clearer view** of **underlying business trends** by **excluding** certain non-recurring or non-cash items. The presentation of these measures was **updated** in Q4 2024 to **no longer exclude** certain cash compensation - The press release includes non-GAAP financial measures like constant currency revenue, Non-GAAP Gross Profit, Non-GAAP Net Income (Loss), Non-GAAP Operating Profit, Adjusted EBITDA, and Non-GAAP Earnings (Loss) Per Share[14](index=14&type=chunk) - These non-GAAP measures **exclude** certain costs, losses, and gains to provide a **better understanding** of **underlying, recurring performance**[14](index=14&type=chunk) - Beginning in Q4 2024, the presentation of non-GAAP financial measures was **updated** to **no longer exclude** certain cash compensation previously included in 'special bonuses and other compensation expenses' and 'restructuring and transformation expenses'[15](index=15&type=chunk) [Investor Relations & Media Contacts](index=4&type=section&id=Investor%20Relations%20%26%20Media%20Contacts) Contact information for Rackspace Technology's Investor Relations and Media Relations departments is provided for inquiries - Investor Relations contact: Sagar Hebbar at ir@rackspace.com[16](index=16&type=chunk) - Media Relations contact: Cheryl Amerine at publicrelations@rackspace.com[16](index=16&type=chunk) [Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) This section presents Rackspace Technology's unaudited consolidated financial statements, including results of operations, balance sheets, and cash flows [Consolidated Results of Operations (Three Months)](index=5&type=section&id=Consolidated%20Results%20of%20Operations%20(Three%20Months)) For the three months ended June 30, 2025, Rackspace Technology reported a revenue of **$666.3 million**, a **2.7% decrease** year-over-year. The company's net income **shifted** from a **$25.0 million** profit in Q2 2024 to a **$(54.5) million** loss in Q2 2025, **primarily due to the absence of a significant gain** on debt extinguishment recorded in the prior year Consolidated Results of Operations (Three Months Ended June 30) | Metric (in millions) | 2024 Amount | 2024 % Revenue | 2025 Amount | 2025 % Revenue | YoY Change Amount | YoY % Change | | :---------------------------------- | :---------- | :------------- | :---------- | :------------- | :---------------- | :----------- | | Revenue | $684.9 | 100.0% | $666.3 | 100.0% | $(18.6) | (2.7)% | | Gross profit | $131.4 | 19.2% | $129.2 | 19.4% | $(2.2) | (1.7)% | | Loss from operations | $(53.8) | (7.9)% | $(25.1) | (3.8)% | $28.7 | (53.3)% | | Total other income (expense) | $48.9 | 7.2% | $(24.8) | (3.7)% | $(73.7) | NM | | Net income (loss) | $25.0 | 3.7% | $(54.5) | (8.2)% | $(79.5) | NM | | Net earnings (loss) per share: Diluted | $0.11 | | $(0.23) | | | | [Consolidated Results of Operations (Six Months)](index=6&type=section&id=Consolidated%20Results%20of%20Operations%20(Six%20Months)) For the six months ended June 30, 2025, total revenue was **$1,331.7 million**, a **3.2% decrease** from the prior year. The net loss **significantly improved by 79.5%** to **$(126.0) million**, **primarily due to the absence of goodwill and asset impairment charges** that **impacted the prior year**, despite a **decrease** in gain on debt extinguishment Consolidated Results of Operations (Six Months Ended June 30) | Metric (in millions) | 2024 Amount | 2024 % Revenue | 2025 Amount | 2025 % Revenue | YoY Change Amount | YoY % Change | | :---------------------------------- | :---------- | :------------- | :---------- | :------------- | :---------------- | :----------- | | Revenue | $1,375.7 | 100.0% | $1,331.7 | 100.0% | $(44.0) | (3.2)% | | Gross profit | $264.2 | 19.2% | $256.1 | 19.2% | $(8.1) | (3.1)% | | Impairment of goodwill | $(573.2) | (41.7)% | — | —% | $573.2 | (100.0)% | | Loss from operations | $(706.6) | (51.4)% | $(63.5) | (4.8)% | $643.1 | (91.0)% | | Total other income (expense) | $56.4 | 4.1% | $(49.7) | (3.7)% | $(106.1) | NM | | Net loss | $(615.6) | (44.7)% | $(126.0) | (9.5)% | $489.6 | (79.5)% | | Net loss per share: Basic and diluted | $(2.77) | | $(0.54) | | | | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets **decreased** to **$2,894.9 million** from **$3,054.1 million** at December 31, 2024, **primarily driven by a reduction** in cash and accounts receivable. Total liabilities also **decreased slightly** to **$4,013.9 million**, while stockholders' deficit **widened** to **$(1,119.0) million** Consolidated Balance Sheet Highlights (in millions) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------- | :------------------ | :------------ | | Cash and cash equivalents | $144.0 | $103.9 | | Total current assets | $618.8 | $548.4 | | Total assets | $3,054.1 | $2,894.9 | | Total current liabilities | $766.6 | $715.4 | | Total liabilities | $4,058.3 | $4,013.9 | | Total stockholders' deficit | $(1,004.2) | $(1,119.0) | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities was **$21.0 million**, a **significant improvement** from a net cash outflow of **$(66.2) million** in the prior year. Net cash used in investing activities **decreased** to **$(29.9) million**, while financing activities resulted in a net cash outflow of **$(35.7) million**, compared to an inflow in the prior year Consolidated Statements of Cash Flows (Six Months Ended June 30, in millions) | Metric | 2024 | 2025 | | :------------------------------------------ | :----- | :----- | | Net cash provided by (used in) operating activities | $(66.2) | $21.0 | | Net cash used in investing activities | $(49.5) | $(29.9) | | Net cash provided by (used in) financing activities | $110.4 | $(35.7) | | Decrease in cash, cash equivalents, and restricted cash | $(6.6) | $(41.3) | | Cash, cash equivalents, and restricted cash at end of period | $193.1 | $105.7 | Supplemental Cash Flow Information (Six Months Ended June 30, in millions) | Metric | 2024 | 2025 | | :------------------------------------------------ | :----- | :----- | | Cash payments for interest, net of amount capitalized | $70.1 | $41.0 | | Cash payments for income taxes, net of refunds | $6.8 | $1.3 | | Non-cash purchases of property, equipment and software | $11.9 | $28.5 | [Segment Data](index=10&type=section&id=Segment%20Data) This section details Rackspace Technology's revenue and operating profit performance by segment, including Public Cloud and Private Cloud [Revenue by Segment](index=10&type=section&id=Revenue%20by%20Segment) Both Public Cloud and Private Cloud segments **experienced revenue declines** for both the three and six months ended June 30, 2025. Public Cloud revenue **decreased by 2.0%** (actual) and **2.2%** (constant currency) for the quarter, while Private Cloud revenue **decreased by 4.0%** (actual) and **4.8%** (constant currency) Revenue by Segment (Three Months Ended June 30, in millions) | Segment | 2024 | 2025 | Actual % Change | Constant Currency % Change | | :------------ | :----- | :----- | :-------------- | :------------------------- | | Public Cloud | $424.9 | $416.6 | (2.0)% | (2.2)% | | Private Cloud | $260.0 | $249.7 | (4.0)% | (4.8)% | | Total | $684.9 | $666.3 | (2.7)% | (3.2)% | Revenue by Segment (Six Months Ended June 30, in millions) | Segment | 2024 | 2025 | Actual % Change | Constant Currency % Change | | :------------ | :------- | :------- | :-------------- | :------------------------- | | Public Cloud | $847.3 | $832.2 | (1.8)% | (1.7)% | | Private Cloud | $528.4 | $499.5 | (5.5)% | (5.7)% | | Total | $1,375.7 | $1,331.7 | (3.2)% | (3.3)% | [Segment Operating Profit](index=10&type=section&id=Segment%20Operating%20Profit) For Q2 2025, Public Cloud segment operating profit **increased significantly by 51.4%** to **$16.2 million**, while Private Cloud operating profit **decreased by 10.6%** to **$61.5 million**. Non-GAAP Operating Profit for the consolidated entity **grew by 34.5%** for the quarter and **54.2%** for the six-month period, **driven by improved performance** in Public Cloud and **reduced corporate function costs** Segment Operating Profit (Three Months Ended June 30, in millions) | Segment | 2024 Amount | 2024 % of Segment Revenue | 2025 Amount | 2025 % of Segment Revenue | YoY Change Amount | YoY % Change | | :-------------------- | :---------- | :------------------------ | :---------- | :------------------------ | :---------------- | :----------- | | Public Cloud | $10.7 | 2.5% | $16.2 | 3.9% | $5.5 | 51.4% | | Private Cloud | $68.8 | 26.5% | $61.5 | 24.6% | $(7.3) | (10.6)% | | Corporate functions | $(59.2) | | $(50.4) | | $8.8 | (14.9)% | | Non-GAAP Operating Profit | $20.3 | | $27.3 | | $7.0 | 34.5% | Segment Operating Profit (Six Months Ended June 30, in millions) | Segment | 2024 Amount | 2024 % of Segment Revenue | 2025 Amount | 2025 % of Segment Revenue | YoY Change Amount | YoY % Change | | :-------------------- | :---------- | :------------------------ | :---------- | :------------------------ | :---------------- | :----------- | | Public Cloud | $18.9 | 2.2% | $33.5 | 4.0% | $14.6 | 77.2% | | Private Cloud | $139.9 | 26.5% | $122.5 | 24.5% | $(17.4) | (12.4)% | | Corporate functions | $(124.5) | | $(103.1) | | $21.4 | (17.2)% | | Non-GAAP Operating Profit | $34.3 | | $52.9 | | $18.6 | 54.2% | [Non-GAAP Financial Measures](index=11&type=section&id=Non-GAAP%20Financial%20Measures) This section provides detailed reconciliations and explanations for Rackspace Technology's key non-GAAP financial measures [Constant Currency Revenue](index=11&type=section&id=Constant%20Currency%20Revenue) Constant currency revenue is used to **assess growth by excluding** foreign currency fluctuations. For Q2 2025, total revenue **decreased by 3.2%** on a constant currency basis, **slightly more** than the actual **2.7% decrease**, indicating a **minor positive foreign currency translation impact** - Constant currency revenue is a non-GAAP metric used to **understand growth by excluding** foreign currency rate fluctuations[32](index=32&type=chunk) Constant Currency Revenue (Three Months Ended June 30, in millions) | Segment | 2024 Revenue | 2025 Revenue | Foreign Currency Translation | Revenue in Constant Currency | Actual % Change | Constant Currency % Change | | :------------ | :----------- | :----------- | :--------------------------- | :--------------------------- | :-------------- | :------------------------- | | Public Cloud | $424.9 | $416.6 | $(0.8) | $415.8 | (2.0)% | (2.2)% | | Private Cloud | $260.0 | $249.7 | $(2.2) | $247.5 | (4.0)% | (4.8)% | | Total | $684.9 | $666.3 | $(3.0) | $663.3 | (2.7)% | (3.2)% | Constant Currency Revenue (Six Months Ended June 30, in millions) | Segment | 2024 Revenue | 2025 Revenue | Foreign Currency Translation | Revenue in Constant Currency | Actual % Change | Constant Currency % Change | | :------------ | :----------- | :----------- | :--------------------------- | :--------------------------- | :-------------- | :------------------------- | | Public Cloud | $847.3 | $832.2 | $0.3 | $832.5 | (1.8)% | (1.7)% | | Private Cloud | $528.4 | $499.5 | $(1.4) | $498.1 | (5.5)% | (5.7)% | | Total | $1,375.7 | $1,331.7 | $(1.1) | $1,330.6 | (3.2)% | (3.3)% | [Non-GAAP Gross Profit](index=11&type=section&id=Non-GAAP%20Gross%20Profit) Non-GAAP Gross Profit for Q2 2025 was **$131.9 million**, a **4.8% decrease** from **$138.6 million** in Q2 2024. This measure **excludes** share-based compensation, purchase accounting impacts, and restructuring/transformation expenses to provide a **clearer view of recurring gross margins** - Non-GAAP Gross Profit **excludes** share-based compensation expense, purchase accounting-related effects, and certain business transformation-related costs[34](index=34&type=chunk) Non-GAAP Gross Profit Reconciliation (in millions) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross profit | $131.4 | $129.2 | $264.2 | $256.1 | | Share-based compensation expense | $2.0 | $1.3 | $3.9 | $3.1 | | Purchase accounting impact on expense | $0.6 | $0.2 | $1.2 | $0.4 | | Restructuring and transformation expenses | $4.6 | $1.2 | $9.6 | $4.4 | | **Non-GAAP Gross Profit** | **$138.6** | **$131.9** | **$278.9** | **$264.0** | [Non-GAAP Net Income (Loss), Operating Profit and Adjusted EBITDA](index=12&type=section&id=Non-GAAP%20Net%20Income%20(Loss),%20Operating%20Profit%20and%20Adjusted%20EBITDA) These non-GAAP measures are **key management metrics for assessing performance** by **excluding** non-cash, non-recurring, or non-core items. Non-GAAP Operating Profit for Q2 2025 was **$27.3 million**, a **34.5% increase** year-over-year, while Adjusted EBITDA **increased by 16.9%** to **$64.4 million**. Non-GAAP Net Loss **improved** to **$(15.0) million** from **$(21.3) million** in Q2 2024 - Non-GAAP Net Income (Loss), Non-GAAP Operating Profit, and Adjusted EBITDA are **management's principal metrics** for measuring **underlying financial performance**[37](index=37&type=chunk)[41](index=41&type=chunk) - These measures **exclude non-cash charges** (share-based compensation, amortization of acquired intangibles), **transaction-related costs**, **restructuring charges**, **impairment charges**, and certain other **non-operating gains/losses**[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - The non-GAAP tax rate is an **estimated structural long-term rate of 26%** for all periods, **adjusted to remove** non-recurring tax adjustments[48](index=48&type=chunk) [Net Income (Loss) Reconciliation to Non-GAAP Net Loss](index=13&type=section&id=Net%20Income%20(Loss)%20Reconciliation%20to%20Non-GAAP%20Net%20Loss) For Q2 2025, the GAAP net loss of **$(54.5) million** was adjusted to a Non-GAAP Net Loss of **$(15.0) million**, reflecting **exclusions** such as share-based compensation, amortization of intangible assets, and the interest expense impact from the March 2024 Refinancing Transactions Net Income (Loss) Reconciliation to Non-GAAP Net Loss (in millions) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $25.0 | $(54.5) | $(615.6) | $(126.0) | | Share-based compensation expense | $19.5 | $10.0 | $32.3 | $22.0 | | Amortization of intangible assets | $38.6 | $37.6 | $77.3 | $75.0 | | Interest expense impact from March 2024 Refinancing | $(25.6) | $(21.1) | $(25.6) | $(42.1) | | Tax effect of non-GAAP adjustments | $(22.4) | $10.0 | $(18.0) | $23.3 | | **Non-GAAP Net Loss** | **$(21.3)** | **$(15.0)** | **$(47.1)** | **$(29.7)** | [Loss from Operations Reconciliation to Non-GAAP Operating Profit](index=13&type=section&id=Loss%20from%20Operations%20Reconciliation%20to%20Non-GAAP%20Operating%20Profit) The GAAP loss from operations of **$(25.1) million** in Q2 2025 was reconciled to a Non-GAAP Operating Profit of **$27.3 million**, **primarily by adding back** share-based compensation, restructuring expenses, and amortization of intangible assets Loss from Operations Reconciliation to Non-GAAP Operating Profit (in millions) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Loss from operations | $(53.8) | $(25.1) | $(706.6) | $(63.5) | | Share-based compensation expense | $19.5 | $10.0 | $32.3 | $22.0 | | Restructuring and transformation expenses | $14.5 | $4.4 | $35.4 | $17.5 | | Amortization of intangible assets | $38.6 | $37.6 | $77.3 | $75.0 | | **Non-GAAP Operating Profit** | **$20.3** | **$27.3** | **$34.3** | **$52.9** | [Net Income (Loss) Reconciliation to Adjusted EBITDA](index=14&type=section&id=Net%20Income%20(Loss)%20Reconciliation%20to%20Adjusted%20EBITDA) Adjusted EBITDA for Q2 2025 was **$64.4 million**, an **increase** from **$55.1 million** in Q2 2024. This reconciliation adds back interest expense, income taxes, depreciation and amortization, and other non-GAAP adjustments to net income (loss) Net Income (Loss) Reconciliation to Adjusted EBITDA (in millions) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $25.0 | $(54.5) | $(615.6) | $(126.0) | | Share-based compensation expense | $19.5 | $10.0 | $32.3 | $22.0 | | Interest expense | $18.4 | $21.3 | $62.1 | $40.7 | | Provision (benefit) for income taxes | $(29.9) | $4.6 | $(34.6) | $12.8 | | Depreciation and amortization | $73.4 | $74.7 | $148.3 | $147.8 | | **Adjusted EBITDA** | **$55.1** | **$64.4** | **$105.3** | **$125.7** | [Non-GAAP Earnings (Loss) Per Share](index=15&type=section&id=Non-GAAP%20Earnings%20(Loss)%20Per%20Share) Non-GAAP Loss Per Share **improved** to **$(0.06)** in Q2 2025 from **$(0.09)** in Q2 2024. This metric **adjusts GAAP diluted shares outstanding** for **anti-dilutive securities** and **uses Non-GAAP Net Loss** to **provide a comparable performance measure** - Non-GAAP Earnings (Loss) Per Share is **defined as** Non-GAAP Net Income (Loss) divided by GAAP weighted average diluted shares, **adjusted for anti-dilutive securities**[50](index=50&type=chunk) Non-GAAP Earnings (Loss) Per Share Reconciliation (in millions, except per share amounts) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to common stockholders | $25.0 | $(54.5) | $(615.6) | $(126.0) | | Non-GAAP Net Loss | $(21.3) | $(15.0) | $(47.1) | $(29.7) | | Weighted average number of shares - Diluted | 229.6 | 238.0 | 222.2 | 235.0 | | Non-GAAP weighted average number of shares - Diluted | 229.6 | 239.3 | 229.5 | 242.1 | | Net earnings (loss) per share - Diluted | $0.11 | $(0.23) | $(2.77) | $(0.54) | | **Non-GAAP Loss Per Share** | **$(0.09)** | **$(0.06)** | **$(0.21)** | **$(0.12)** |

Core Insights - Rackspace Technology reported second quarter 2025 results with revenue of $666 million, a decrease of 3% year-over-year from $685 million in Q2 2024 [2][6] - Private Cloud revenue was $250 million, down 4% from $260 million in Q2 2024, while Public Cloud revenue was $417 million, down 2% from $425 million in Q2 2024 [2][3] - The company achieved a 34% increase in Non-GAAP Operating Profit, reaching $27 million compared to $20 million in Q2 2024 [4][41] - Net loss for Q2 2025 was $(55) million, a significant decline from net income of $25 million in Q2 2024, resulting in a net loss per diluted share of $(0.23) compared to earnings of $0.11 in the prior year [3][4] Financial Performance - Total revenue for the first half of 2025 was $1.3317 billion, down 3.2% from $1.3757 billion in the same period of 2024 [20][30] - Operating cash flow for Q2 2025 was $8 million, with a trailing twelve-month cash flow from operating activities of $127 million [6][5] - Capital expenditures were $31 million in Q2 2025, slightly down from $33 million in Q2 2024 [5] Segment Analysis - Public Cloud segment revenue decreased by 2% year-over-year, while Private Cloud segment revenue saw a 4% decline [2][30] - Non-GAAP Operating Profit for the Public Cloud segment increased by 51.4%, while the Private Cloud segment experienced a 10.6% decrease [32][41] Guidance and Outlook - The company provided guidance for total revenue in Q3 2025 to be between $660 million and $674 million, with Private Cloud revenue expected between $246 million and $254 million, and Public Cloud revenue between $414 million and $420 million [7][6] - Non-GAAP Loss Per Share is projected to be between $(0.04) and $(0.06) for the upcoming quarter [7]

Core Insights - Rackspace Technology has launched the Rackspace Cloud Management Platform, enhancing its Managed Cloud offering with next-gen upgrades that streamline workload operations and optimize cloud infrastructure through AI-enabled tools [1][3] Group 1: Platform Features - The new platform provides full-stack observability, intelligent application optimization, and compliance with stringent Service Level Agreements (SLAs) [2] - It offers a flexible consumption-based model, lowering the barrier to entry for customers [2] - The platform integrates agile and DevOps methodologies to enhance operational efficiency, scalability, and resilience in hybrid cloud environments [2] Group 2: Customer Benefits - The upgrades provide customers with greater insight into their cloud environments, improved efficiency, and the ability to innovate without fear [3] - Customers can choose to use their own IT tooling solutions or leverage the new platform for operations, dashboards, and tracking [3] - The Rackspace Managed Cloud delivers enterprise-grade SLAs and fully outsourced cloud operations, helping customers maximize their cloud investments [3] Group 3: Company Expertise - Rackspace Technology has over 25 years of experience in integrating emerging technologies and managing cloud operations, which is central to its business model [4] - The company emphasizes the importance of providing clients with tools, flexibility, and power to leverage cloud technology for competitive advantage [4] Group 4: Operational Efficiency - The platform ensures proactive management of all aspects of the cloud environment, allowing businesses to scale seamlessly [5] - It offers a structured approach to service integration and management, ensuring efficient IT service delivery across various cloud environments [5] - Cost efficiency is achieved through optimized resource usage and automated controls to minimize unnecessary spending [5]

Core Insights - Rackspace Technology has received approval from the Science Based Targets Initiative (SBTi) for its emissions reduction goals, which include a commitment to reduce emissions by 50% by 2032 and 90% by 2045, aligning with the goal of limiting global warming to 1.5°C [1][2][3] Group 1: Sustainability Goals - The company aims to achieve net-zero carbon emissions by 2045, positioning itself ahead of many peers in the cloud services sector [1] - Rackspace currently powers approximately 80% of its global data centers with renewable energy and is working towards 100% through strategic partnerships [2] Group 2: Impact on Customers - Rackspace's Workload Aware Modernization program helps customers reduce their cloud carbon footprint by identifying wasted resources and transitioning to more sustainable cloud architectures [3] - The company emphasizes that its commitment to aggressive sustainability goals not only minimizes its own environmental impact but also aids customers in achieving their sustainability objectives [3] Group 3: Industry Context - Global energy consumption from data centers is expected to more than double by 2030, driven largely by AI, leading to increased regulatory pressure for companies to disclose and reduce carbon emissions [2]

Core Viewpoint - Rackspace Technology will release its second quarter 2025 financial results on August 7, 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 the second quarter of 2025 will be announced after market close on August 7, 2025 [1]. - Amar Maletira, the CEO, and Mark Marino, the CFO, will host a conference call at 5:00 PM ET on the release day to discuss the financial results [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 a dial-in number, and registrants will receive a PIN for accessing the live call [2]. Group 3: Company Overview - Rackspace Technology is recognized as a leading end-to-end hybrid cloud and AI solutions provider [3]. - The company offers services to design, build, and operate cloud environments across all major 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].

Core Insights - Rackspace Technology has launched the Foundry for AI by Rackspace (FAIR) Model Context Protocol (MCP) Enterprise Accelerator on the AWS Marketplace, enhancing access to AI-driven solutions for customers [1][3] - The FAIR MCP Enterprise Accelerator on Amazon Bedrock enables organizations to scale deployments with enterprise-grade infrastructure, achieving over 70% reduction in legacy application integration for AI agents [2][3] Company Overview - Rackspace Technology is recognized as a leading end-to-end hybrid cloud and AI solutions provider, capable of designing, building, and operating cloud environments across various technology platforms [5] - The FAIR initiative focuses on advancing business transformation and improving customer experience through the responsible use of AI technologies, identifying over 500 use cases across multiple industries [6] Product Features - The MCP Enterprise Accelerator offers pre-configured server templates, zero-trust architecture, end-to-end encryption, and seamless integration with Amazon Bedrock agents, facilitating rapid deployment and scaling of AI agents [3] - Advanced observability, monitoring, and compliance tools are included to ensure consistent performance and improved decision-making, leading to faster returns on AI investments [3] Market Impact - The availability of AI agents and tools in the AWS Marketplace streamlines the procurement process, reducing the time for vendor evaluations and negotiations, while maintaining visibility and control over licensing and payments [4]

Core Insights - Rackspace Technology has launched Rackspace OpenStack Business, a dedicated private cloud solution designed for mission-critical and regulated workloads, emphasizing improved performance, enhanced security, and operational support without infrastructure management burdens [1][2][4] Group 1: Product Features - Rackspace OpenStack Business is built for scalability, offering a cost-effective cloud solution focused on privacy, security, and control, addressing the demand for dedicated, secure OpenStack infrastructure [2][5] - The solution supports a wide range of use cases, particularly for performance-sensitive applications and regulated industries requiring single-tenant environments for compliance [3][4] - Key benefits include rapid deployment, dedicated performance, cost efficiency, enterprise-level support, and freedom from vendor lock-in through open-source and full API access [6][7] Group 2: Strategic Positioning - The launch builds on the success of Rackspace OpenStack Flex, introduced in 2024, which serves as a flexible private cloud alternative to hyperscalers, providing a stable foundation for steady-state workloads while enabling rapid scaling during peak demand [4][5] - The combination of Rackspace OpenStack Flex and OpenStack Business creates a powerful foundation for scalable hybrid cloud environments, addressing IT challenges such as cost control, data privacy, and performance consistency [5][6]

Core Insights - Rackspace Technology has formed a strategic alliance with Sema4.ai to enhance enterprise AI solutions, integrating Rackspace's Foundry for AI (FAIR™) services with Sema4.ai's SAFE AI Agent Platform [1][5] - The collaboration aims to bridge the gap between AI experimentation and full-scale enterprise adoption, addressing the current statistic that only 24% of enterprises have AI agents in production [2][3] Company Overview - Rackspace Technology is a leading provider of hybrid cloud and AI solutions, focusing on the secure and responsible use of AI technologies to drive business transformation and improve customer experience [6][7] - Sema4.ai positions itself as an innovator in enterprise AI agents, emphasizing the importance of these agents in revolutionizing knowledge work and operational efficiency [9][10] Partnership Benefits - The partnership allows businesses to design and deploy custom AI agents tailored to specific use cases, with seamless integration across various functions such as HR, finance, and customer support [3][4] - The SAFE platform from Sema4 enables the integration of advanced AI capabilities into existing enterprise environments, promoting resilience and interconnectivity among AI agents [5][9] Market Context - Rackspace's AI research report highlights a critical gap in AI adoption, indicating a strong market opportunity for solutions that facilitate the transition from experimentation to enterprise-wide deployment [2] - The collaboration is expected to empower businesses to operationalize AI at scale, moving beyond testing to effective deployment of AI agents [4][5]