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

Total Company GAAP Revenue $671 million, up 1% sequentially but down 1% year-over-year. The year-over-year decline was attributed to customer transitions off legacy platforms in Private Cloud, partially offset by new bookings.

Non-GAAP Gross Profit Margin 19.9% of GAAP revenue, up slightly sequentially but down 120 basis points year-over-year. The year-over-year decline was due to lower cost absorption in Private Cloud and slightly higher infrastructure resale costs in Public Cloud.

Non-GAAP Operating Profit $32 million, meeting the high end of the guided range and up 17% sequentially. The sequential increase was driven by cost efficiencies in Private Cloud and lower corporate expenses.

Non-GAAP Loss Per Share $0.05, at the midpoint of the guided range of $0.04 to $0.06 loss per share.

Cash Flow from Operations $71 million.

Free Cash Flow $43 million.

Cash on Hand $100 million.

Total Liquidity $386 million.

Private Cloud GAAP Revenue $250 million, meeting the midpoint of guidance and down 3% year-over-year. The decline was due to customer transitions off legacy platforms, partially offset by new bookings.

Private Cloud Non-GAAP Gross Margin 38.1%, down 50 basis points year-over-year but up 130 basis points sequentially. The year-over-year decline was driven by lower volumes and modestly higher operating expenses.

Private Cloud Non-GAAP Segment Operating Margin 26.9%, down 180 basis points year-over-year due to lower volumes and modestly higher operating expenses, but up 230 basis points sequentially due to improved cost management.

Public Cloud GAAP Revenue $422 million, surpassing the high end of guidance, up 1% year-over-year and 1% sequentially. The increase was driven by higher services revenue and increased volumes across infrastructure resale.

Public Cloud Non-GAAP Gross Margin 9.2%, down 110 basis points year-over-year due to unfavorable product mix.

Public Cloud Non-GAAP Segment Operating Margin 3.3%, down 40 basis points year-over-year due to unfavorable product mix, partially offset by lower operating expenses.