Rackspace Technology reported third-quarter revenue of $609 million, down 9.3% from a year earlier, as growth in private cloud was more than offset by a sharp decline in public cloud. The company raised the midpoint of its full-year 2026 revenue outlook by $35 million, while keeping its outlook for non-GAAP operating profit and adjusted EBITDA unchanged.
The results showed improvement in several operating-loss measures, alongside higher capital spending. CEO Gajen Kandiah said the company is now focused on converting its enterprise AI strategy and existing capacity into customer commitments, deployments and higher-margin operations.
Key details
- Revenue: Third-quarter revenue was $609 million, compared with $671 million a year earlier. The decline was 9.2% on a constant-currency basis.
- Private cloud: Revenue increased 4.2% to $260 million from $250 million.
- Public cloud: Revenue fell 17.2% to $349 million from $422 million.
- Profit and loss: Rackspace’s operating loss narrowed to $13 million from $34 million, while its net loss narrowed to $54 million from $67 million. Net loss per diluted share was 21 cents, compared with 28 cents a year earlier.
- Non-GAAP results: Non-GAAP operating profit rose 12% to $36 million from $32 million. Non-GAAP loss per share widened to 6 cents from 5 cents.
- Cash flow and spending: Cash flow from operating activities was $36 million for the quarter and $69 million over the trailing 12 months. Capital expenditures were $104 million, up from $34 million in the year-earlier quarter.
- 2026 outlook: The company increased its full-year revenue outlook by $35 million at the midpoint. It maintained its outlook for non-GAAP operating profit and adjusted EBITDA.
- Strategy: Kandiah said Rackspace has moved from setting its enterprise AI strategy and execution framework to pursuing customer commitments and faster deployments using its existing capacity.
The revenue decline was concentrated in public cloud, while private cloud grew. Operating and net losses narrowed, and non-GAAP operating profit increased; meanwhile, non-GAAP loss per share widened and quarterly capital expenditures were substantially higher.