Rackspace Technology (NASDAQ:RXT) Releases Quarterly Earnings Results, Misses Expectations By $0.03 EPS

Key Points

• Rackspace missed earnings expectations, reporting a quarterly loss of $0.06 per share versus the expected $0.03 loss, even though revenue came in above estimates at $678.1 million.
• The company raised interest in its AI strategy by announcing an AMD memorandum of understanding to build a governed enterprise AI stack, alongside progress in its Palantir partnership and FDE sales model.
• Mixed business trends and cautious guidance continued, with public cloud revenue rising 7% year over year while private cloud revenue fell 6%; management also updated FY2026 EPS guidance to a loss of $0.20 to $0.15.

Rackspace Technology (NASDAQ:RXT - Get Free Report) issued its quarterly earnings data on Thursday. The company reported ($0.06) EPS for the quarter, missing the consensus estimate of ($0.03) by ($0.03), Zacks reports. The company had revenue of $678.10 million during the quarter, compared to the consensus estimate of $660.83 million. Rackspace Technology updated its FY 2026 guidance to -0.200--0.150 EPS.

Here are the key takeaways from Rackspace Technology's conference call:

• AMD MoU announced to integrate Instinct GPUs, EPYC CPUs and ROCm into a fully managed, governed enterprise AI stack (definitive agreement expected near term), creating a managed alternative to commodity GPU rental.
• Palantir partnership and FDE model is accelerating sales and deployment — first joint deal closed in 41 days and a customer case reduced quoting time by 94%, with the model expanding into EMEA and being used internally.
• Public Cloud momentum — Q1 public cloud revenue was $443M, up 7% YoY, with services revenue up 10%, and Rackspace positioning to operate production inference and governed AI workloads.
• Private Cloud revenue timing — Q1 Private Cloud revenue was $235M, down 6% YoY due to timing of a large healthcare onboarding, though segment operating margin improved and management reaffirmed full‑year guidance.
• Capital and cash flow — company repurchased ~$96M of debt and emphasizes deleveraging ahead of 2028 maturities, but ended Q1 with $94M cash, $295M total liquidity and free cash flow of -$9M.

Rackspace Technology Stock Performance

Shares of RXT stock traded up $1.98 during mid-day trading on Friday, reaching $5.50. 151,627,549 shares of the company's stock traded hands, compared to its average volume of 23,086,412. Rackspace Technology has a 12 month low of $0.39 and a 12 month high of $6.00. The firm has a 50 day moving average price of $1.61 and a two-hundred day moving average price of $1.24. The firm has a market capitalization of $1.37 billion, a PE ratio of -5.79 and a beta of 2.23.

Insiders Place Their Bets

In related news, CFO Mark A. Marino sold 234,683 shares of Rackspace Technology stock in a transaction on Monday, February 23rd. The stock was sold at an average price of $1.63, for a total transaction of $382,533.29. Following the transaction, the chief financial officer directly owned 2,193,115 shares in the company, valued at approximately $3,574,777.45. The trade was a 9.67% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through the SEC website. Also, EVP Dharmendra Kumar Sinha sold 188,123 shares of the business's stock in a transaction dated Wednesday, March 18th. The shares were sold at an average price of $1.81, for a total value of $340,502.63. Following the sale, the executive vice president directly owned 2,276,057 shares of the company's stock, valued at $4,119,663.17. This represents a 7.63% decrease in their position. The disclosure for this sale is available in the SEC filing. Over the last ninety days, insiders sold 502,440 shares of company stock worth $867,173. 2.90% of the stock is owned by insiders.

Institutional Inflows and Outflows

A number of hedge funds have recently made changes to their positions in RXT. Janus Henderson Group PLC raised its stake in Rackspace Technology by 70.7% during the 4th quarter. Janus Henderson Group PLC now owns 1,050,353 shares of the company's stock worth $1,020,000 after acquiring an additional 435,113 shares during the period. Bridgeway Capital Management LLC lifted its holdings in Rackspace Technology by 34.6% during the fourth quarter. Bridgeway Capital Management LLC now owns 350,000 shares of the company's stock valued at $340,000 after purchasing an additional 90,000 shares in the last quarter. Jump Financial LLC bought a new position in shares of Rackspace Technology in the fourth quarter worth approximately $34,000. Wells Fargo & Company MN boosted its position in shares of Rackspace Technology by 13.4% in the fourth quarter. Wells Fargo & Company MN now owns 244,939 shares of the company's stock worth $238,000 after purchasing an additional 28,885 shares during the period. Finally, Federated Hermes Inc. increased its stake in shares of Rackspace Technology by 4.4% in the fourth quarter. Federated Hermes Inc. now owns 719,747 shares of the company's stock worth $699,000 after purchasing an additional 30,024 shares in the last quarter. 82.48% of the stock is currently owned by institutional investors.

Analyst Ratings Changes

Several research analysts have issued reports on the company. Royal Bank Of Canada raised their target price on Rackspace Technology from $1.75 to $2.50 and gave the stock a "sector perform" rating in a research report on Friday, February 27th. Weiss Ratings reiterated a "sell (d-)" rating on shares of Rackspace Technology in a research note on Thursday, January 22nd. Four equities research analysts have rated the stock with a Hold rating and one has assigned a Sell rating to the company. According to data from MarketBeat, the stock currently has a consensus rating of "Reduce" and an average price target of $1.93.

Trending Headlines about Rackspace Technology

Here are the key news stories impacting Rackspace Technology this week:

• Positive Sentiment: Rackspace announced a memorandum of understanding with AMD to build an Enterprise AI Cloud for regulated and sovereign workloads, a partnership that could strengthen its position in enterprise AI infrastructure and drive future revenue growth. Rackspace Technology and AMD Sign Memorandum of Understanding to Establish New Category of Governed Enterprise AI Infrastructure
• Positive Sentiment: The company reported first-quarter revenue of $678 million, which topped expectations and was up 2% year over year, suggesting demand remains stable despite ongoing profitability challenges. Rackspace Technology Reports First Quarter 2026 Results
• Positive Sentiment: Trading interest surged, with unusually large call option activity indicating that some investors are betting on further upside in RXT shares.
• Neutral Sentiment: Rackspace’s earnings per share came in at a loss of $0.06, worse than the consensus loss of $0.03, which tempers enthusiasm around the quarter. Rackspace Technology earnings report and conference call
• Neutral Sentiment: Management’s FY2026 guidance calls for adjusted EPS of -$0.20 to -$0.15 and revenue of $2.6 billion to $2.7 billion, which was roughly in line on sales but still points to continued losses. Rackspace Technology Reports First Quarter 2026 Results
• Negative Sentiment: Private cloud revenue declined 6% year over year, showing that some parts of the business remain under pressure even as public cloud improved. Rackspace Technology Reports First Quarter 2026 Results

Rackspace Technology Company Profile

Rackspace Technology NASDAQ: RXT is a leading provider of managed multi-cloud solutions and services, specializing in the deployment, management and optimization of public and private cloud environments. The company helps organizations design and operate applications across platforms such as Amazon Web Services (AWS), Microsoft Azure, Google Cloud and its own private cloud infrastructure. Rackspace's core offerings include cloud migration, application modernization, data protection, security services and 24x7x365 operational support.

Beyond cloud hosting, Rackspace offers a range of professional services designed to accelerate digital transformation initiatives.

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