Financial Performance - Revenue for the three months ended March 31, 2025, was $665.4 million, a decrease of 3.9% compared to $690.8 million for the same period in 2024[14] - Gross profit for the same period was $126.9 million, down from $132.8 million, reflecting a gross margin of approximately 19.1%[14] - Net loss for the three months ended March 31, 2025, was $71.5 million, significantly improved from a net loss of $640.6 million in the prior year[14] - The company reported a basic and diluted net loss per share of $0.31 for the three months ended March 31, 2025, compared to a loss of $2.91 per share in the prior year[14] - Rackspace Technology's comprehensive income for the three months ended March 31, 2025, included a loss of $5.0 million[21] - The company reported a net loss attributable to common stockholders of $71.5 million for the three months ended March 31, 2025, compared to a net loss of $640.6 million for the same period in 2024[53] Assets and Liabilities - Total assets decreased to $2,966.1 million as of March 31, 2025, down from $3,054.1 million at the end of 2024[13] - Total liabilities slightly decreased to $4,039.2 million from $4,058.3 million[13] - Cash and cash equivalents at the end of the period were $128.0 million, down from $144.0 million at the end of 2024[13] - As of March 31, 2025, Rackspace Technology had an accumulated deficit of $3,753.9 million, reflecting a net loss of $71.5 million for the quarter[29] - The company reported a total stockholders' deficit of $1,073.1 million as of March 31, 2025, with total paid-in capital of $2,690.3 million[21] - Rackspace Technology's total debt outstanding was $2,444.4 million as of March 31, 2025, including various senior secured notes and term loan facilities[29] Cash Flow and Expenses - Operating cash flow for the three months ended March 31, 2025, was $12.6 million, a significant recovery from a cash outflow of $90.3 million in the same period of 2024[17] - The company incurred $19.4 million in interest expense for the three months ended March 31, 2025, down from $43.7 million in the same period of 2024[14] - The company recognized $49.6 million in revenue from amounts included in deferred revenue as of the beginning of the period for the three months ended March 31, 2025[44] - The company incurred third-party fees of $28.4 million related to the refinancing transactions[71] - The company expensed approximately $9 million for utility companies to power its data centers in the three months ended March 31, 2025, representing about 1% of total revenue[295] Debt and Financing - The New Revolving Credit Facility allowed for up to $375.0 million in borrowings, with $30.0 million drawn as of March 31, 2025[29] - 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[64] - The new FLSO Term Loan Facility issued amounted to $1,687.2 million, with a contractual interest rate of 7.19% as of March 31, 2025[74][75] - The FLFO Term Loan Facility was issued for $275.0 million, with a contractual interest rate of 10.69% as of March 31, 2025[81][82] - The company was in compliance with all covenants under the New Senior Facilities as of March 31, 2025[91] - The company was in compliance with all covenants under the 5.375% Notes Indenture as of March 31, 2025[116] Segment Performance - Public Cloud segment revenue for the three months ended March 31, 2024, was $422.4 million, which slightly decreased to $415.6 million in 2025, a decline of about 1.9%[154] - Private Cloud segment revenue decreased from $268.4 million in Q1 2024 to $249.8 million in Q1 2025, representing a decline of approximately 6.9%[154] - Segment operating profit for the Public Cloud increased from $8.2 million in Q1 2024 to $17.3 million in Q1 2025, showing a significant improvement of 110.4%[154] - Segment operating profit for the Private Cloud decreased from $71.1 million in Q1 2024 to $61.0 million in Q1 2025, a decline of about 14.5%[154] - Total consolidated segment operating profit slightly decreased from $79.3 million in Q1 2024 to $78.3 million in Q1 2025, a decline of approximately 1.3%[154] Share-Based Compensation - The company reported share-based compensation expense of $7.6 million for equity classified awards during the same period[21] - Total share-based compensation expense for the three months ended March 31, 2025, was $12.0 million, down from $12.8 million in the same period of 2024, with equity classified awards decreasing from $13.0 million to $7.6 million[123] - As of March 31, 2025, there was $24.9 million of total unrecognized compensation cost related to RSUs, performance stock units, and the ESPP[123] - The total share-based compensation expense recognized in selling, general and administrative expenses for the three months ended March 31, 2025, was $10.2 million[123] Impairment and Valuation - Goodwill impairment charges of $385.4 million and $187.8 million were recorded for the Public Cloud and Private Cloud reporting units, respectively, in the first quarter of 2024[35] - The fair value of the company's goodwill as of March 31, 2025, was $3,042.9 million, with net goodwill of $737.3 million after accumulated impairment charges of $2,305.6 million[58] - The company recorded a non-cash impairment charge of $20.0 million related to its indefinite-lived intangible asset, the Rackspace trade name, as of February 29, 2024[37] Tax and Compliance - The effective tax rate for the three months ended March 31, 2025, was lower than the U.S. federal statutory rate of 21% primarily due to the tax impact associated with changes in valuation allowance and nondeductible share-based compensation[124] - The company is not a party to any litigation that would materially affect its business or financial position[121]

Core Viewpoint - Rackspace Technology, Inc. reported strong performance in Q1 2025, exceeding expectations across all key metrics [5]. Financial Performance - Revenue for Q1 2025 was reported, indicating positive growth compared to previous periods [5]. - The company provided non-GAAP financial measures and adjustments, which are believed to offer useful insights for investors [4]. Management Commentary - Amar Maletira, the CEO, expressed optimism about the company's performance and highlighted the exceeded expectations [5]. - Sagar Hebbar, Head of Investor Relations, introduced the call and emphasized the presence of key executives [2].

Core Insights - Rackspace (RXT) reported a quarterly loss of $0.06 per share, better than the Zacks Consensus Estimate of a loss of $0.08, and an improvement from a loss of $0.11 per share a year ago, indicating a 25% earnings surprise [1] - The company achieved revenues of $665.4 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.93%, although this represents a decline from $690.8 million in the same quarter last year [2] - Rackspace has consistently exceeded consensus EPS estimates over the last four quarters, indicating a positive trend in earnings performance [2] Financial Performance - The company has shown a significant earnings surprise of 50% in the previous quarter, where it reported a loss of $0.02 per share against an expected loss of $0.04 [1] - Rackspace shares have declined approximately 35.3% since the beginning of the year, contrasting with the S&P 500's decline of 4.3% [3] Future Outlook - The future performance of Rackspace's stock will largely depend on management's commentary during the earnings call and the subsequent revisions of earnings estimates [3][4] - Current consensus EPS estimate for the upcoming quarter is $0.01 on revenues of $672.9 million, and for the current fiscal year, it is also $0.01 on revenues of $2.72 billion [7] - The Zacks Industry Rank places Technology Services in the top 27% of over 250 Zacks industries, suggesting a favorable outlook for the sector [8] Industry Context - The performance of Rackspace's stock may be influenced by the overall outlook of the Technology Services industry, which has shown strong performance relative to lower-ranked industries [8] - Another company in the same industry, Blade Air Mobility, Inc. (BLDE), is expected to report a quarterly loss of $0.11 per share, reflecting a year-over-year change of -83.3% [9]

Financial Data and Key Metrics Changes - Revenue for the first quarter of 2025 was $665 million, down 4% year over year, but met the high end of guidance [19] - Non-GAAP operating profit grew 83% year over year to $26 million, exceeding guidance [19] - Non-GAAP loss per share improved to $0.06 compared to a guided range of $0.07 to $0.09 [19] - Cash flow from operations was $13 million, and free cash flow was $4 million, showing significant improvement from the previous year [19] Business Line Data and Key Metrics Changes Private Cloud - Private cloud revenue for Q1 was $250 million, in line with guidance, but down 7% year over year [20] - Bookings in private cloud remained flat year over year, but would have grown 20% if not for the slippage of large deals into Q2 [8][20] - Non-GAAP gross margin for private cloud was 37.1%, down 1.8 points year over year [21] Public Cloud - Public cloud revenue reached $416 million, exceeding guidance, but down 2% year over year [21] - Public cloud bookings grew 16% year over year, driven by a 26% increase in The Americas [13] - Non-GAAP gross margin for public cloud was 9.5%, up 1 point year over year [21] Market Data and Key Metrics Changes - Strong performance in The Americas contributed to overall growth, with bookings in this region increasing by 13% [6] - Federal contracts accounted for only 1% of 2024 revenue, indicating minimal exposure to federal cost-cutting measures [7] Company Strategy and Development Direction - The company is focused on digital transformation, cloud, and AI, with a strategic partnership with Rubrik to enhance cyber resiliency [6][7] - Emphasis on expanding into regulated industries such as healthcare and energy, with notable wins in these sectors [10][55] - The company aims to build a sustainable business model that consistently delivers revenue, profit, and cash flow growth [18] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the macroeconomic environment, which may impact onboarding timelines and customer decision cycles [7][30] - Despite macro uncertainties, the company remains confident in its strong sales pipeline and execution [29] - The focus is on transitioning from low-margin infrastructure resale to high-margin services, with expectations for operating profit growth in public cloud [44] Other Important Information - The company launched several new products, including Rackspace AI Business and modern operations for data and AI, to enhance service offerings [17] - The company is actively working on CapEx efficiency and inventory reutilization to optimize capital structure [52] Q&A Session Summary Question: What are the macro perspectives affecting customer behavior? - Management noted that while there are some delays in onboarding, overall bookings remain strong and customers are not delaying transformational projects [28][30] Question: How has the sales pipeline evolved? - The sales pipeline has remained strong, with improved win rates and a focus on higher value, long-term contracts [34][35] Question: What is the outlook for public cloud services? - The company is seeing good wins in the services business, with a focus on managed services and data services [42][44] Question: Are larger customers still interested in upfront CapEx payments? - Yes, there is continued interest from larger customers in paying upfront CapEx for lower OpEx over the life of the deal [51] Question: How is the company performing in regulated industries? - The company is seeing good traction in regulated industries, particularly in healthcare and energy, with significant deals being closed [55][57]

Financial Data and Key Metrics Changes - Total company GAAP revenue for Q1 2025 was $665 million, down 4% year over year, but met the high end of guidance [18] - Non-GAAP operating profit was $26 million, exceeding guidance and up 83% year over year, largely due to operational efficiencies [18] - Non-GAAP loss per share improved to $0.06 compared to the guided range of $0.07 to $0.09 [18] - Cash flow from operations was $13 million, and free cash flow was $4 million, showing significant improvement from the previous year [18] Business Line Data and Key Metrics Changes - Private Cloud revenue for Q1 was $250 million, in line with guidance, but down 7% year over year due to customers transitioning from older offerings [19] - Public Cloud revenue reached $416 million, surpassing guidance, but was down 2% year over year due to declines in infrastructure volumes and services [20] - Private Cloud bookings remained flat year over year, but would have grown 20% if not for the slippage of large deals into Q2 [7] - Public Cloud bookings grew 16% year over year, driven by strong performance in The Americas, which saw a 26% increase [12] Market Data and Key Metrics Changes - Federal contracts comprised only 1% of 2024 revenue, indicating minimal exposure to federal agency cost-cutting measures [6] - The company is seeing strong demand in regulated industries, particularly healthcare and energy, with significant new contracts secured [9][56] Company Strategy and Development Direction - The company is focused on driving digital transformation for customers through cloud and AI solutions, while also enhancing cyber resiliency [5] - A strategic partnership with Rubrik was announced to launch the Cyber Recovery Cloud, aimed at improving customer recovery capabilities post-cybersecurity breaches [6] - The company is expanding its offerings in private cloud, including new products like OpenStack Flex and UK Sovereign Secure, to meet compliance and security needs [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the macroeconomic environment, which may impact onboarding timelines and customer decision cycles [6] - Despite macro uncertainties, the company remains well-positioned to capitalize on long-term trends in public cloud, private cloud, and AI [6] - The company aims to maintain a sustainable business model that consistently delivers revenue, profit, and cash flow growth in 2025 [17] Other Important Information - The company has made significant progress in stabilizing private cloud revenue, with a focus on higher value, long-term contracts [8] - The company is pivoting towards managed services and high-margin offerings, moving away from low-margin infrastructure resale [44] Q&A Session Summary Question: Changes in customer behavior due to macroeconomic factors - Management noted that while there are some delays in onboarding contracts, overall bookings remain strong and customers are not delaying decisions on transformational projects [25][28] Question: Evolution of the sales pipeline and win rates - The sales pipeline has remained strong, with improved win rates and a focus on higher value, long-term contracts in both public and private cloud segments [30][34] Question: Trends in public cloud services and infrastructure resale - The company is seeing good wins in services, particularly in data services driven by AI, while infrastructure resale is expected to decline purposefully to maintain profitability [42][44] Question: Upfront CapEx payments from larger customers and regulated industries - There is continued interest from large customers in upfront CapEx payments for lower OpEx, and traction in regulated industries is strong, particularly in healthcare and energy [52][56]

Financial Performance - Total revenue for Q1 2025 was $665 million, a decrease of 3% quarter-over-quarter and 4% year-over-year[7] - Non-GAAP gross profit was $132 million, down 6% both quarter-over-quarter and year-over-year[7] - Non-GAAP operating profit was $26 million, a decrease of 35% quarter-over-quarter but an increase of 83% year-over-year[7] - Non-GAAP loss per share was $(006), compared to $(002) in Q4 2024 and $005 in Q1 2024[7, 25] - Cash provided by operating activities was $13 million in Q1 2025[9] - Free cash flow was $4 million in Q1 2025[9] Segment Performance - Total Rackspace revenue was $665 million, with Private Cloud contributing $250 million and Public Cloud $416 million[8] - Private Cloud revenue decreased by 7% year-over-year, while Public Cloud revenue decreased by 2% year-over-year[8] - Private Cloud Non-GAAP gross margin was 371%, while Public Cloud Non-GAAP gross margin was 95%[8] Debt and Liquidity - Total principal balance of debt as of March 31, 2025, was $2474 billion[10] - Total debt, including unamortized debt issuance costs, debt premium, and debt discount, was $2787 billion[10] - Total liquidity, including cash and cash equivalents and the revolving credit facility, was $473 million[9] Outlook - Q2 2025 revenue is expected to be between $653 million and $665 million[16] - Q2 2025 Non-GAAP operating profit is expected to be between $25 million and $27 million[16] - Q2 2025 Non-GAAP loss per share is expected to be between $(004) and $(006)[16]

Exhibit 99.1 Rackspace Technology Reports First Quarter 2025 Results SAN ANTONIO, May 8, 2025 – Rackspace Technology, Inc. (Nasdaq: RXT), a leading end-to-end, hybrid cloud and AI solutions company, today announced results for its first quarter ended March 31, 2025. Amar Maletira, Chief Executive Officer, stated, "Results in the first quarter of 2025 exceeded our expectations across all key metrics. Revenue was at the high end of our guidance while profit and EPS exceeded our guidance range. This marks the ...

Core Insights - Rackspace Technology, Inc. reported first quarter 2025 results that exceeded expectations across key metrics, with revenue at the high end of guidance and profit and EPS surpassing guidance ranges [2][3][5] Financial Performance - Total revenue for Q1 2025 was $665 million, a decrease of 4% year-over-year from $691 million in Q1 2024 [3][7] - Private Cloud revenue was $250 million, down 7% year-over-year from $268 million in Q1 2024 [3][4] - Public Cloud revenue was $416 million, a decrease of 2% year-over-year from $422 million in Q1 2024 [4][28] - Non-GAAP operating profit increased by 83% year-over-year to $26 million from $14 million in Q1 2024 [5][46] - Net loss for Q1 2025 was $(72) million, significantly improved from a net loss of $(641) million in Q1 2024 [5][50] Operational Metrics - Sales bookings grew by 9% in Q1 2025, indicating a strengthening sales pipeline across business units [2] - Cash flow from operating activities was $13 million for Q1 2025, compared to $143 million on a trailing twelve-month basis [7] Guidance - For Q2 2025, the company provided revenue guidance of $653 - $665 million, with Private Cloud revenue expected between $247 - $253 million and Public Cloud revenue between $406 - $412 million [8]

Rackspace Cyber Recovery Cloud powered by Rubrik Enables Organizations to Restore Critical Operations Faster and More Securely than Traditional Offerings in the Event of a Cyber AttackSAN FRANCISCO, April 30, 2025 (GLOBE NEWSWIRE) -- LIVE! from RSAC, Rubrik (NYSE: RBRK), a leading cybersecurity company, and Rackspace Technology® (NASDAQ: RXT), a leading end-to-end hybrid cloud and AI solutions company, today announced a strategic partnership. The two companies will collaborate to deliver a fully managed iso ...

SAN ANTONIO, April 15, 2025 (GLOBE NEWSWIRE) -- Rackspace Technology® (NASDAQ: RXT), a leading end-to-end hybrid cloud and AI solutions company, today announced that it will release its first quarter 2025 financial results after the market closes on Thursday, May 8, 2025. Amar Maletira, Chief Executive Officer, and Mark Marino, Chief Financial Officer, will host a conference call on the day of the release (May 8, 2025) at 5:00 PM ET to discuss the Company’s financial results. Interested parties may access t ...