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what it is
Rackspace helps companies run, secure, and fix cloud systems without building the whole team in-house.
how it gets paid
FY2025 revenue was $2,686M (−2% vs. prior year). Public Cloud was $1,696M (~63% of revenue); Private Cloud was $990M (~37%).
why growth slowed
FY2025 GAAP loss from operations was $(101)M vs $(909)M in 2024 (prior year included large impairments). Non-GAAP operating profit was $126M (+19% vs. prior year).
what just happened
Q4 2025 revenue $683M (−0.4% vs. prior year). GAAP net loss $(0.13)/share; non-GAAP loss $(0.01)/share vs ~$(0.03) consensus.
At a glance
C balance sheet — red flag territory — real financial stress
35/100 earnings predictability — expect surprises
FY2025 GAAP net loss $(0.95)/share · non-GAAP $(0.18)/share
$126M non-GAAP operating profit FY25 (+19% vs. prior year)
GAAP operating loss (~4% of revenue FY25) — use non-GAAP for run-rate ops
xvary composite: 26/100 — weak
What they do
Rackspace helps companies run, secure, and fix cloud systems without building the whole team in-house.
Rackspace sells hands-on hybrid cloud and AI operations — switching means migrating workloads and re-staffing processes, not just swapping SaaS logins. FY2025 revenue ~$2.69B; Dec 31, 2025 total debt ~$2.75B sat on negative book equity (about $1.22B stockholders’ deficit in the release tables).
How they make money
$2.69B
FY2025 revenue · −1.9% vs. prior year (reported) · segment mix is Private vs Public Cloud only in the Feb 26, 2026 release
Public Cloud
$1.70B
+1%
Private Cloud
$0.99B
−6%
FY2025 segment revenue and growth rates per Rackspace Q4/FY2025 press release (Feb 26, 2026).
The products that matter
managed infrastructure services
Private Cloud
$990M FY25 · −6% vs. prior year
Management’s FY2026 guide implies private cloud revenue about $1,025M–$1,075M — the first vs. prior year growth after multiple down years if they execute.
turnaround line
multi-cloud management and support
Public Cloud
$1.70B FY25 · +1% vs. prior year
Larger revenue bucket than private cloud; Q4 2025 public revenue grew 6% vs. prior year while private fell 10% — mix within the year still matters.
larger bucket
AI and strategic partnerships
Enterprise AI narrative
guidance + OCF
FY2026 revenue guide $2.60B–$2.70B and adjusted EBITDA $305M–$315M frame the bet — partnership headlines can move a thin float; verify with filings and quarters.
prove in print
Key numbers
$2.69B
FY2025 revenue
Scale is still there, but revenue was down ~2% vs. prior year — you are not buying a growth compounding story yet.
18.9%
gross margin (FY25)
FY2025 gross profit ~18.9% of revenue (~506M on ~2,686M) — thin before SG&A; Q4 2025 was ~17.6%.
$2.75B
total debt
Dec 31, 2025: ~$2.72B non-current debt plus ~$27M current (per tables) — interest expense was ~$83M FY25.
$126M
non-GAAP op profit
~4.7% of FY revenue on a non-GAAP basis; GAAP loss from operations was ~$(101)M — read both.
Financial health
C
strength
- balance sheet grade C — very weak — significant financial distress
- risk rank 5 — safer than 5% of stocks
- price stability 5 / 100
- long-term debt ~$2.72B non-current + ~$27M current (Dec 31, 2025)
- stockholders’ equity deficit ~$(1.22)B — negative book value
- liquidity ~$397M total liquidity (incl. revolver) · cash ~$106M
C — balance sheet grade and long-term debt are flagged. this stock carries more risk than average.
Total return vs. market
Return history isn't available for RXT right now.
source: institutional data · return history unavailable
What just happened
beat on adj.
Q4 revenue $683M (−0.4% vs. prior year); GAAP net loss $(0.13)/share vs $(0.25) prior-year quarter.
Non-GAAP loss $(0.01)/share beat roughly $(0.03) consensus; non-GAAP operating profit $41M (+5% vs. prior year). FY2025 operating cash flow $151M.
$683M
Q4 revenue
$(0.01)
non-GAAP EPS
$151M
FY25 OCF
the number that mattered
FY2026 guidance: revenue $2.60B–$2.70B; adjusted EBITDA $305M–$315M; non-GAAP EPS loss $(0.15)–$(0.20) — sets the bar for the next four quarters.
source: Rackspace Technology press release, Feb 26, 2026 (Q4 & FY2025)
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What could go wrong
the #1 risk here is ~$2.75B of debt against negative book equity and a small market cap — refinancing and cash generation matter as much as revenue.
med
debt can outrun the turnaround
Total debt ~$2.75B (Dec 31, 2025) with stockholders’ deficit ~$1.22B — traditional equity cushion is gone; covenants and liquidity (~$397M) do the work.
Impact: if OCF or EBITDA miss guidance, the conversation shifts to lenders, not multiples.
med
service quality can leak into renewals
Public complaints around billing, support, and degraded service are not just reputation problems. In managed services, bad service becomes churn risk.
Impact: with ~19% gross margins and GAAP still in operating-loss territory, there is little room for execution slips.
med
the turnaround may be narrower than it looks
FY2026 guide has private cloud growing off a $990M base while public cloud revenue is expected to shrink (midpoint ~$1.60B vs $1.70B FY25) — mixed trajectory, not a single clean line.
Impact: if the growth shows up in one segment but not across the business, the market can keep treating this as a shrinking company with too much debt.
With ~19% gross margins, GAAP operating losses, ~$2.75B debt, and negative book equity, RXT punishes mediocre execution quickly.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
private cloud guide vs $990M FY25
FY2026 guidance $1,025M–$1,075M private revenue is the explicit recovery line — execution there offsets modeled public-cloud shrinkage.
risk
debt versus equity value
~$2.75B debt vs ~$250M equity market cap and negative book value — track liquidity, covenants, and OCF each quarter.
trend
public cloud cannot keep shrinking forever
Public Cloud was $1.70B FY25 (+1% vs. prior year) but FY2026 guidance implies a smaller public-cloud revenue base — watch whether enterprise mix offsets the decline.
calendar
Form 10-K + next quarter
Use the annual report and the next earnings cycle after Feb 26, 2026 to reconcile GAAP losses, non-GAAP targets, and debt terms — not headlines alone.
Analyst rankings
earnings predictability
35 / 100
Low predictability means the reported numbers tend to move around more than investors want. In human-speak, analysts do not trust this business to print steady quarters.
risk rank
5
This sits near the risky end of the scale. You are not buying safety here. You are buying a turnaround attempt.
price stability
5 / 100
A 5 out of 100 stability score means the stock tends to move like a stressed small cap, not a dependable compounder.
source: institutional data
Institutional activity
institutional ownership data for RXT is being compiled.
source: institutional data
Price targets
3-5 year target range
n/a
n/a
$1.03
current price
n/a
target midpoint · n/a from current
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