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1. Company Snapshot

1.a. Company Description

Rackspace Technology, Inc.operates as a multi cloud technology services company worldwide.It operates through Multicloud Services and Apps & Cross Platform segments.


The company's Multicloud Services segment provides public and private cloud managed services, which allow customers to determine, manage, and optimize the right infrastructure, platforms, and services; and professional services related to designing and building multi cloud solutions and cloud-native applications.Its Apps & Cross Platform segment includes managed applications; managed security services in the areas of security threat assessment and prevention, threat detection and response, rapid remediation, governance, and risk and compliance assistance across multiple cloud platforms, as well as privacy and data protection services, including detailed access restrictions and reporting; data services; and professional services related to designing and implementing application, security, and data services.Rackspace Technology, Inc.


was founded in 1998 and is headquartered in San Antonio, Texas.

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1.b. Last Insights on RXT

Rackspace Technology's recent performance was negatively impacted by a decline across segments, resulting in a fall in the company's top line in the fourth quarter of 2024. The company's Q4 loss of $0.02 per share, although better than the Zacks Consensus Estimate of a loss of $0.04, indicates a continued struggle to achieve profitability.

1.c. Company Highlights

2. Rackspace Technology's Q3 2025 Earnings: A Mixed Bag

Rackspace Technology, Inc.'s Q3 2025 earnings report presented a mixed picture, with revenue coming in at $671 million, up 1% sequentially but down 1% year over year. Non-GAAP gross profit margin was 19.9% of GAAP revenue, and non-GAAP operating profit was $32 million, meeting the high end of the guided range and up 17% sequentially. The company's EPS was -$0.05, missing estimates of -$0.02889. The revenue performance was largely driven by the Public Cloud segment, which reported revenue of $422 million, up 1% year over year and sequentially.

Publication Date: Nov -30

📋 Highlights
  • Revenue Performance:: Q3 revenue reached $671M, +1% sequentially but -1% YoY.
  • Private Cloud Segment:: Generated $250M revenue (-3% YoY) with 26.9% non-GAAP operating margin.
  • Public Cloud Segment:: Revenue grew to $422M (+1% YoY) but with lower margins (9.2% non-GAAP gross margin, 3.3% operating margin).
  • Non-GAAP Operating Profit:: $32M, up 17% sequentially and at the high end of guidance, with $32–$34M expected for Q4.
  • Bookings Growth:: +5% YoY driven by private cloud wins, including telecom and sovereign government contracts.

Segment Performance

The Private Cloud segment reported revenue of $250 million, down 3% year over year, with a non-GAAP gross margin of 38.1% and a non-GAAP segment operating margin of 26.9%. The Public Cloud segment, on the other hand, reported a non-GAAP gross margin of 9.2% and a non-GAAP segment operating margin of 3.3%. As per the CEO, Amar Maletira, the company is focusing on its hybrid multi-cloud capabilities, securing several key wins in the Private Cloud segment, including a leading global telecommunications provider and a sovereign government customer.

Bookings and Guidance

Bookings grew 5% year over year, driven by private cloud, with the company launching innovative solutions such as Rackspace Technology's electronic health record Cloud Enterprise and AI LaunchPack, a fully managed service for AI. For Q4, the company guided GAAP revenue of $664 to $678 million, flat sequentially and down 2% year over year at the midpoint, with non-GAAP operating profit expected to be $32 million to $34 million. Analysts estimate revenue growth of 1.6% for next year.

Valuation

With a P/S Ratio of 0.1 and an EV/EBITDA of 19.24, the market seems to be pricing in a challenging growth outlook for Rackspace Technology. The company's negative ROIC of -5.95% and high Net Debt / EBITDA of 17.79 indicate significant leverage and potential profitability challenges. The Free Cash Flow Yield of 26.72% is a positive, but it's essential to monitor the company's ability to sustain this.

3. NewsRoom

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Rackspace Technology Receives 2025 AWS Collaboration Partner of the Year Award

Dec -02

Source: globenewswire.com

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Rackspace Technology Appoints Lata Varghese and Phani Kishore Burre to Senior Leadership Roles Driving Cloud and AI Transformation

Nov -17

Source: globenewswire.com

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Rackspace Technology Unveils AI Launchpad Service - Accelerating AI Adoption and Time to Value

Nov -12

Source: globenewswire.com

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Rackspace Technology, Inc. (RXT) Q3 2025 Earnings Call Prepared Remarks Transcript

Nov -07

Source: seekingalpha.com

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Rackspace Technology Reports Third Quarter 2025 Results

Nov -06

Source: globenewswire.com

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Rackspace Technology Releases 2025 Sustainability Report

Oct -21

Source: globenewswire.com

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Rackspace Technology to Announce Third Quarter 2025 Earnings on November 6th, 2025

Oct -17

Source: globenewswire.com

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Total Wine & More Partners with Rackspace Technology to Optimize Performance and Accelerate Innovation Across Its Retail Operations

Oct -15

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (12.95%)

6. Segments

Public Cloud

Expected Growth: 15%

Rackspace Technology's Public Cloud growth is driven by increasing demand for scalable infrastructure, accelerated digital transformation, and adoption of hybrid and multi-cloud strategies. Additionally, the company's expertise in cloud migration, management, and security, as well as its strong partnerships with leading cloud providers, contribute to its 15% growth.

Private Cloud

Expected Growth: 10%

Rackspace Technology's Private Cloud growth is driven by increasing demand for secure, compliant, and customized cloud solutions. Enterprises seek to reduce costs, enhance agility, and improve data control, leading to adoption of private cloud services. Additionally, Rackspace's expertise in managed services, hybrid cloud integration, and strong partnerships with leading technology vendors contribute to its growth.

7. Detailed Products

Managed Cloud

Rackspace Technology's Managed Cloud provides a fully managed cloud environment, allowing customers to focus on their business while Rackspace handles the underlying infrastructure and operations.

Managed Hosting

Rackspace Technology's Managed Hosting provides a customized, dedicated hosting solution, offering a high level of control, security, and performance.

Cloud Native Applications

Rackspace Technology's Cloud Native Applications provide a modern, cloud-native approach to application development and deployment, leveraging containerization and serverless technologies.

Data and Analytics

Rackspace Technology's Data and Analytics services help customers extract insights and value from their data, using advanced analytics, AI, and machine learning.

Cybersecurity

Rackspace Technology's Cybersecurity services provide comprehensive security solutions, including threat detection, incident response, and compliance management.

Professional Services

Rackspace Technology's Professional Services provide expert consulting, migration, and implementation services for cloud, applications, and data analytics.

Managed Security Services

Rackspace Technology's Managed Security Services provide 24/7 monitoring, threat detection, and incident response, ensuring the security and compliance of customers' environments.

Cloud Migration

Rackspace Technology's Cloud Migration services help customers migrate their applications and data to the cloud, ensuring minimal disruption and optimal performance.

8. Rackspace Technology, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Rackspace Technology, Inc. faces moderate threat from substitutes, as customers have limited alternatives for cloud infrastructure and managed services. However, the company's strong brand reputation and customer loyalty mitigate this threat.

Bargaining Power Of Customers

Rackspace Technology, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's customized solutions and strong relationships with customers further reduce this threat.

Bargaining Power Of Suppliers

Rackspace Technology, Inc. relies on a few large suppliers for its infrastructure and technology needs. While the company has some bargaining power, suppliers may still exert some pressure on prices and terms.

Threat Of New Entrants

Rackspace Technology, Inc. operates in a highly competitive market, but the barriers to entry are relatively high due to the need for significant investments in infrastructure and technology. New entrants may struggle to replicate the company's scale and expertise.

Intensity Of Rivalry

Rackspace Technology, Inc. operates in a highly competitive market with several established players. The company faces intense rivalry from competitors such as Amazon Web Services, Microsoft Azure, and Google Cloud Platform, which may lead to pricing pressure and increased marketing expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 105.43%
Debt Cost 7.79%
Equity Weight -5.43%
Equity Cost 13.10%
WACC 7.51%
Leverage -1940.71%

11. Quality Control: Rackspace Technology, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Consensus Cloud Solutions

A-Score: 5.1/10

Value: 8.6

Growth: 2.4

Quality: 7.6

Yield: 0.0

Momentum: 8.0

Volatility: 3.7

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NetScout Systems

A-Score: 5.0/10

Value: 5.5

Growth: 1.7

Quality: 7.5

Yield: 0.0

Momentum: 8.0

Volatility: 7.0

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Priority Technology Holdings

A-Score: 4.7/10

Value: 7.4

Growth: 7.0

Quality: 4.8

Yield: 0.0

Momentum: 6.5

Volatility: 2.7

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SecureWorks

A-Score: 4.0/10

Value: 7.6

Growth: 1.1

Quality: 4.8

Yield: 0.0

Momentum: 6.0

Volatility: 4.7

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Rekor Systems

A-Score: 3.6/10

Value: 6.4

Growth: 3.3

Quality: 3.5

Yield: 0.0

Momentum: 8.0

Volatility: 0.3

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Stock-Card
Rackspace Technology

A-Score: 2.8/10

Value: 9.2

Growth: 1.6

Quality: 3.7

Yield: 0.0

Momentum: 1.0

Volatility: 1.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.02$

Current Price

1.02$

Potential

0.00%

Expected Cash-Flows