Key Highlights

  • Rackspace Technology (NASDAQ:RXT) reported third-quarter 2026 Revenue of USD 609.1 million on November 9, 2026, down 9.3% from a year earlier but above the roughly USD 574.0 million expected.
  • The company raised its 2026 revenue outlook by USD 35 million at the midpoint, to USD 2.51 billion to USD 2.56 billion, while keeping its profit guidance unchanged.
  • Private cloud revenue grew 4.2% to USD 260.0 million, while public cloud revenue fell 17.2% to USD 349.1 million.
  • The net loss narrowed to USD 53.5 million, or USD 0.21 per share, from USD 67.1 million a year earlier, and non-GAAP operating profit rose 12% to USD 36 million.

What the Quarter Showed

The report from Rackspace Technology (NASDAQ:RXT) shows a Business in transition. Revenue is still shrinking overall, but the decline is concentrated in public cloud, where Rackspace resells and manages capacity on hyperscale platforms and faces Margin pressure. Private cloud, where it runs dedicated infrastructure for customers, returned to growth, and this is where management is focusing investment. The company launched Rackspace Cloud on VMware Cloud Foundation 9.1 in August and joined a major chipmaker's cloud partner program in September, positioning private cloud for AI workloads. Cost control helped: selling, general and administrative expenses fell 23.3% to USD 125.6 million, and the operating loss shrank to USD 12.5 million from USD 33.9 million. Gross margin slipped to 18.6% from 19.4%. Chief executive Gajen Kandiah said the company continued to execute on its business and financial plan and reaffirmed its profit outlook. Public cloud revenue has been hurt by changes in how hyperscale providers pay partners, which has reduced the Economics of reselling.

The Guidance Raise and Its Limits

Raising the revenue range by USD 35 million at the midpoint suggests the decline is easing faster than management expected earlier in the year. The new range splits into USD 995 million to USD 1,015 million for private cloud and USD 1,515 million to USD 1,545 million for public cloud. Profit guidance was held at USD 125 million to USD 135 million of non-GAAP operating profit and USD 285 million to USD 295 million of adjusted EBITDA, so the higher revenue is not yet flowing through to earnings. The company still expects a non-GAAP loss of USD 0.25 to USD 0.30 per share for the year. Capital spending rose sharply to USD 104 million in the quarter from USD 34 million a year earlier, as Rackspace builds out private cloud capacity. The jump in Investment shows management is committing capital to the private cloud strategy even while overall revenue is falling.

Risks and What to Watch

The Balance Sheet is the main constraint. Rackspace Technology (NASDAQ:RXT) had USD 108 million in cash and total Liquidity of USD 170 million at September 30, while interest expense rose 67.5% to USD 35.5 million in the quarter. Operating Cash Flow was USD 36 million in the quarter but only USD 9.3 million over nine months, against USD 91.7 million a year earlier. Higher capital spending and interest costs leave little room for error, and the company may issue shares through its at-the-market program. Investors should watch the conference call on November 10, private cloud growth, cash flow trends and any refinancing of its debt. The stock trades at only a few dollars a share, which reflects how much uncertainty investors still attach to the turnaround.

Where Things Stand

Rackspace beat revenue expectations with USD 609.1 million in the third quarter and raised its 2026 outlook by USD 35 million at the midpoint, as private cloud returned to growth and public cloud continued to shrink. Profit guidance was unchanged, and high interest costs and capital spending strain cash flow. Private cloud momentum and the balance sheet will decide the turnaround's pace.