Rackspace Technology Reports Third Quarter 2026 Results

Rackspace narrows losses and boosts Private Cloud, but overall revenue declines persist.

What the company is saying

Rackspace Technology, Inc. positions itself as a global enterprise AI infrastructure provider, highlighting continued execution of its business and financial plan. CEO Gajen Kandiah states the company is transitioning from strategy-setting to operational execution, leveraging its AI stack and capacity footprint for higher-margin business. The company emphasizes reaffirmed profit outlook and a modestly increased revenue outlook for the full year 2026. The announcement foregrounds detailed GAAP and non-GAAP financials, segment performance, and guidance, while acknowledging ongoing net losses. Management provides explanations for segment trends, noting Private Cloud growth and Public Cloud contraction, but does not attribute these changes to external or one-off factors. The tone is measured, with confidence in operational progress but no overstatement of results.

What the data suggests

Third quarter 2026 revenue was $609 million, down 9.3% from $671 million in Q3 2025, with Private Cloud revenue rising 4.2% to $260 million and Public Cloud revenue falling 17.2% to $349 million. Loss from operations improved to $(13) million from $(34) million, and net loss narrowed to $(54) million from $(67) million year-over-year. Non-GAAP Operating Profit increased 12% to $36 million, but Non-GAAP Loss Per Share worsened to $(0.06) from $(0.05). Capital expenditures tripled to $104 million from $34 million, indicating heavy investment. As of September 30, 2026, cash and equivalents were $108 million and total liquidity was $170 million, while total liabilities stood at $4,058.4 million against assets of $2,751.1 million. For the nine months ended September 30, 2026, revenue was $1,957.3 million (down from $2,002.9 million), and net loss was $(112.7) million (improved from $(193.1) million). Full-year 2026 guidance projects total revenue of $2,510–$2,560 million, Non-GAAP Operating Profit of $125–$135 million, Adjusted EBITDA of $285–$295 million, and Non-GAAP Loss Per Share of $(0.25)–$(0.30). The data shows narrowing losses and operational improvement, but persistent revenue decline and high capital intensity.

Analysis

The announcement is factual and balanced, with no evidence of exaggerated or promotional language. The company discloses both realised results (Q3 and nine-month 2026 financials) and forward-looking guidance for the full year, with the majority of key claims supported by hard numbers. While revenue declined year-over-year, profitability metrics such as loss from operations and net loss improved, and non-GAAP operating profit increased. The forward-looking elements (guidance for FY 2026) are standard for a quarterly release and are not presented as guaranteed outcomes. Capital expenditures increased significantly ($104 million in Q3 2026 vs. $34 million in Q3 2025), but this is disclosed transparently and paired with improved operating metrics. There is no narrative inflation or overstatement; the tone is measured and consistent with the underlying data.

Risk flags

• ●Revenue contraction remains a core risk, with Q3 2026 revenue down 9.3% year-over-year and Public Cloud revenue declining 17.2%. Persistent top-line pressure could undermine efforts to achieve profitability.
• ●High capital expenditures—$104 million in Q3 2026 versus $34 million a year earlier—raise concerns about return on investment and cash burn, especially given ongoing net losses and a modest liquidity position ($108 million cash, $170 million total liquidity).
• ●The company’s balance sheet is highly leveraged, with total liabilities of $4,058.4 million far exceeding total assets of $2,751.1 million, increasing financial risk and limiting flexibility if operating improvements stall.
• ●Non-GAAP guidance is not reconciled to GAAP net income, and management acknowledges potential variability in adjustments, which could obscure the true underlying profitability and complicate investor assessment.
• ●Segment divergence, with Private Cloud growing and Public Cloud shrinking, signals possible challenges in adapting to shifting customer demand or competitive pressures, adding operational execution risk.

Bottom line

Rackspace’s Q3 2026 results show progress in narrowing losses and improving non-GAAP operating profit, but overall revenue continues to decline, especially in Public Cloud. Heavy capital spending and a highly leveraged balance sheet amplify execution risk, with only modest liquidity to buffer setbacks. Management’s reaffirmed profit outlook and increased revenue guidance for 2026 hinge on successful conversion of strategic investments into tangible growth and margin gains. Investors should focus on whether the company can reverse revenue declines and deliver on guidance without further straining liquidity. The most important takeaway is that while operational improvements are evident, the path to sustainable profitability remains uncertain and dependent on near-term execution.

Announcement summary

(NASDAQ:RXT) Rackspace Technology, Inc. reported third quarter 2026 revenue of $609 million, a decrease of 9.3% from $671 million in the third quarter of 2025. Private Cloud revenue was $260 million in Q3 2026, up 4.2% from $250 million in Q3 2025. Public Cloud revenue was $349 million in Q3 2026, down 17.2% from $422 million in Q3 2025. Loss from operations was $(13) million in Q3 2026, compared to $(34) million in Q3 2025. Net loss was $(54) million in Q3 2026, compared to $(67) million in Q3 2025. Net loss per diluted share was $(0.21) in Q3 2026, compared to $(0.28) in Q3 2025. Non-GAAP Operating Profit was $36 million in Q3 2026, up 12% from $32 million in Q3 2025. Non-GAAP Loss Per Share was $(0.06) in Q3 2026, compared to $(0.05) in Q3 2025. Capital expenditures were $104 million in Q3 2026, compared to $34 million in Q3 2025. As of September 30, 2026, cash and cash equivalents were $108 million and total liquidity was $170 million. For full year 2026, Rackspace Technology provided guidance of total revenue between $2,510 million and $2,560 million, Private Cloud revenue between $995 million and $1,015 million, and Public Cloud revenue between $1,515 million and $1,545 million. Non-GAAP Operating Profit is guided between $125 million and $135 million, Adjusted EBITDA between $285 million and $295 million, and Non-GAAP Loss Per Share between $(0.25) and $(0.30). Non-GAAP Other Income (Expense) is expected to be between $(220) million and $(230) million, with a Non-GAAP Tax Expense Rate of 26%. Non-GAAP Weighted Average Shares are expected to be between 265 million and 275 million. For the nine months ended September 30, 2026, revenue was $1,957.3 million, compared to $2,002.9 million for the same period in 2025. Net loss for the nine months ended September 30, 2026 was $(112.7) million, compared to $(193.1) million for the same period in 2025. Net loss per share for the nine months ended September 30, 2026 was $(0.45), compared to $(0.82) for the same period in 2025. As of September 30, 2026, total assets were $2,751.1 million and total liabilities were $4,058.4 million. Accounts payable and accrued expenses were $444.7 million as of September 30, 2026. The company will hold a conference call on November 10, 2026, at 7:30am CT / 8:30am ET to discuss its third quarter 2026 results. Gajen Kandiah is Chief Executive Officer of Rackspace Technology, Inc.

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