Rackspace Technology narrows losses as cloud shift and AI strategy shape 2026 outlook
February 26, 2026 10:51 AM
IH Market News
Rackspace Technology (NASDAQ:RXT) reported fourth-quarter and full-year 2025 results highlighting improving profitability and a strategic pivot toward enterprise cloud and artificial intelligence services, as the hybrid cloud provider positions itself for renewed growth in 2026.
Chief Executive Officer Gajen Kandiah said the latest quarter marked a turning point for the company’s transformation efforts.
“Q4 capped a year of meaningful progress and marks a clear inflection point for Rackspace. We made the structural decisions that position us to win — a sharpened focus, the right leadership team, anchor partnerships, and a platform engineering model purpose-built for enterprise AI in regulated environments,” Kandiah stated.
He added that the company’s forward outlook reflects accelerating momentum across its core platforms. “Our 2026 outlook reflects that transition taking hold. Private Cloud is expected to grow year-over-year for the first time in years, and Public Cloud services continue to expand as we deliberately shift toward higher-value enterprise engagements. Together, they form the foundation on which AI is emerging as a tangible and self-reinforcing growth vector. We do not just advise on the journey. We build it, run it, and stay accountable for outcomes. That is what makes Rackspace different, and that is exactly the partner enterprises need right now.”
Fourth-quarter performance
Revenue for the fourth quarter totaled $683 million, broadly stable year over year, slipping 0.4% on a reported basis from $686 million in the same period of 2024 and declining 1% in constant currency terms.
Private Cloud revenue fell 10% year over year to $241 million, reflecting continued pressure in legacy offerings, while Public Cloud revenue rose 6% to $442 million, driven by expanding enterprise engagements and ongoing demand for cloud modernization services.
Operating losses narrowed significantly to $(3) million from $(29) million a year earlier. Net loss improved to $(33) million compared with $(56) million in the prior-year quarter, while diluted loss per share improved to $(0.13) from $(0.25).
Non-GAAP operating profit increased to $41 million from $39 million, and non-GAAP loss per share improved to $(0.01) from $(0.02). Capital expenditures rose to $48 million, up from $27 million in the fourth quarter of 2024.
Full-year 2025 results
For the full year, Rackspace generated revenue of $2.69 billion, down 2% from $2.74 billion in 2024.
Private Cloud revenue declined 6% to $990 million, while Public Cloud revenue edged 1% higher to $1.70 billion, reflecting the company’s ongoing transition toward higher-value cloud services.
Operating loss improved sharply to $(101) million from $(909) million in 2024, while net loss narrowed to $(226) million from $(858) million the prior year. Diluted loss per share improved to $(0.95) compared with $(3.82) in 2024.
Non-GAAP operating profit rose 19% year over year to $126 million, and non-GAAP loss per share improved to $(0.18) from $(0.27). Capital expenditures totaled $139 million, broadly in line with the prior year’s $136 million.
Balance sheet and liquidity
As of December 31, 2025, Rackspace held $106 million in cash and cash equivalents and total liquidity of $397 million, including availability under its new revolving credit facility, providing financial flexibility as the company continues investing in enterprise cloud and AI capabilities.
Rackspace Technology stock price
Original: Rackspace Technology narrows losses as cloud shift and AI strategy shape 2026 outlook
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