Rackspace Technology(RXT) - 2025 Q3 - Earnings Call Transcript

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]