Revenue growth remains stagnant at 1.9% in 2026Q1, while gross margins have contracted significantly from 21.4% in 2023Q4 to 12.9% due to rising pass-through infrastructure costs.
| Sales/Revenue | 2.7B | 2.69B | 2.74B | 2.96B | 3.12B | 3.01B | 2.71B | 2.44B | 2.45B |
| Revenue Growth % | -0.49% | -1.88% | -7.44% | -5.29% | 3.75% | 11.17% | 11.03% | -0.6% | - |
| Cost of Goods Sold | 2.36B | 2.33B | 2.2B | 2.31B | 2.27B | 2.07B | 1.72B | 1.43B | 1.45B |
| COGS % of Revenue | - | 86.61% | 80.51% | 78.07% | 72.56% | 68.87% | 63.64% | 58.53% | 58.94% |
| Gross Profit | 336.5M | 359.5M | 533.4M | 648.6M | 856.9M | 936.8M | 984.4M | 1.01B | 1.01B |
| Gross Margin % | 12.47% | 13.39% | 19.49% | 21.93% | 27.44% | 31.13% | 36.36% | 41.47% | 41.06% |
| Gross Profit Growth % | - | -32.6% | -17.76% | -24.31% | -8.53% | -4.84% | -2.65% | 0.41% | - |
| Operating Expenses | 388.4M | 427.9M | 1.44B | 1.55B | 1.54B | 939.3M | 959.7M | 909.6M | 949.3M |
| OpEx % of Revenue | - | 15.93% | 52.7% | 52.35% | 49.19% | 31.21% | 35.45% | 37.31% | 38.7% |
| Selling, General & Admin | 388.4M | 388.8M | 707.6M | 660M | 855.3M | 906.8M | 959.7M | 911.7M | 949.3M |
| SG&A % of Revenue | - | 14.48% | 25.85% | 22.32% | 27.39% | 30.13% | 35.45% | 37.39% | 38.7% |
| Research & Development | 0 | 39.1M | 0 | 43.7M | 0 | 0 | 36.7M | 0 | 74.7M |
| R&D % of Revenue | - | 1.46% | - | 1.48% | - | - | 1.36% | - | 3.05% |
| Other Operating Expenses | 0 | 0 | 734.9M | 844.3M | 680.6M | 32.5M | -36.7M | -2.1M | 12.7M |
| Operating Income | -51.9M | -68.4M | -909.1M | -899.4M | -679M | -2.5M | 24.7M | 101.6M | 70.5M |
| Operating Margin % | -1.92% | -2.55% | -33.21% | -30.41% | -21.75% | -0.08% | 0.91% | 4.17% | 2.87% |
| Operating Income Growth % | - | 92.48% | -1.08% | -32.46% | -27060% | -110.12% | -75.69% | 44.11% | - |
| EBITDA | 308.4M | 294.2M | -546.1M | -456.5M | -231.5M | 488.2M | 561.6M | 668.1M | 681.5M |
| EBITDA Margin % | 11.43% | 10.95% | -19.95% | -15.44% | -7.41% | 16.22% | 20.75% | 27.4% | 27.78% |
| EBITDA Growth % | 390.3% | 153.87% | -19.63% | -97.19% | -147.42% | -13.07% | -15.94% | -1.97% | - |
| D&A (Non-Cash Add-back) | 360.3M | 362.6M | 363M | 442.9M | 447.5M | 490.7M | 536.9M | 566.5M | 611M |
| EBIT | -51.9M | -68.4M | -783.5M | -592.8M | -689.2M | -44M | -57.8M | 207.6M | -219.4M |
| Net Interest Income | -126.9M | -127.5M | -98M | -221.6M | -208.5M | -205.1M | -268.4M | -329.9M | -281.1M |
| Interest Income | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest Expense | 126.9M | 127.5M | 98M | 221.6M | 208.5M | 205.1M | 268.4M | 329.9M | 281.1M |
| Other Income/Expense | -78.4M | -133.4M | 27.6M | 45M | -218.7M | -246.6M | -336.7M | -223.9M | -263.3M |
| Pretax Income | -130.3M | -201.8M | -881.5M | -854.4M | -897.7M | -249.1M | -312M | -122.3M | -500.5M |
| Pretax Margin % | -4.83% | -7.51% | -32.21% | -28.89% | -28.75% | -8.28% | -11.53% | -5.02% | -20.41% |
| Income Tax | 15.7M | 24M | -23.3M | -16.6M | -92.9M | -30.8M | -66.2M | -20M | -29.9M |
| Effective Tax Rate % | -12.05% | -11.89% | 2.64% | 1.94% | 10.35% | 12.36% | 21.22% | 16.35% | 5.97% |
| Net Income | -146M | -225.8M | -858.2M | -837.8M | -804.8M | -218.3M | -245.8M | -102.3M | -470.6M |
| Net Margin % | -5.41% | -8.41% | -31.35% | -28.33% | -25.78% | -7.25% | -9.08% | -4.2% | -19.19% |
| Net Income Growth % | 49.5% | 73.69% | -2.43% | -4.1% | -268.67% | 11.19% | -140.27% | 78.26% | - |
| Net Income (Continuing) | -146M | -225.8M | -858.2M | -837.8M | -804.8M | -218.3M | -245.8M | -102.3M | -470.6M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | -0.58 | -0.95 | -3.82 | -3.89 | -3.81 | -1.05 | -1.37 | -6.24 | -28.70 |
| EPS Growth % | 52.22% | 75.13% | 1.8% | -2.1% | -262.86% | 23.36% | 78.04% | 78.26% | - |
| EPS (Basic) | - | -0.95 | -3.82 | -3.89 | -3.81 | -1.05 | -1.37 | -6.24 | -28.70 |
| Diluted Shares Outstanding | 249.7M | 238.7M | 224.8M | 215.3M | 211.2M | 208M | 179.6M | 16.4M | 16.4M |
| Basic Shares Outstanding | 246.3M | 238.7M | 224.8M | 215.3M | 211.2M | 208M | 179.6M | 16.4M | 16.4M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - |
Structural margin erosion
According to recent financial disclosures, Rackspace Technology's revenue growth has remained largely stagnant, with the most recent quarter showing a modest 1.9% increase following a prolonged period of year-over-year declines that bottomed out at -8.9% in the first quarter of 2024.
The return to positive growth in 2026Q1 appears fragile and may reflect easier year-over-year comparisons rather than a fundamental shift in demand. Investors should monitor whether this trajectory can be sustained as the company continues to navigate the transition from legacy private cloud hosting to lower-margin public cloud reselling.
As reported in quarterly filings, gross margins have experienced significant compression, falling from 21.4% in 2023Q4 to 12.9% in 2026Q1, reflecting the increasing weight of pass-through cloud infrastructure costs within the company's total revenue mix.
This downward trend suggests that the company's value-add services are not scaling sufficiently to offset the commoditization of its infrastructure reselling business. The inability to maintain gross margins above 15% in recent periods indicates a potential lack of pricing power in a highly competitive managed services landscape.
Based on the provided income statement data, Rackspace Technology has struggled to achieve positive operating leverage, with operating margins fluctuating between -3.8% and 0.2% over the last five quarters, highlighting the difficulty of scaling SG&A expenses against a volatile revenue base.
The persistent inability to generate consistent operating income suggests that the current cost structure is too heavy for the company's existing revenue scale. Management's efforts to streamline operations appear to be offset by the ongoing need for high-cost technical labor, which prevents meaningful bottom-line expansion.
Financial statements indicate that net income remains highly volatile, swinging from a $640.6 million loss in 2024Q1 to a $28.0 million profit in 2023Q4, largely driven by non-operating items and significant fluctuations in stock-based compensation expenses.
The inconsistency in net income suggests that reported earnings are not a reliable proxy for operational health, as they are frequently distorted by restructuring charges and accounting adjustments. Investors should look past the headline EPS figures to focus on the underlying cash-generating capacity of the core service segments.
Data from recent periods suggests that the company's reliance on low-margin cloud reselling may be unsustainable, as evidenced by the -2.55% average operating margin and the ongoing contraction of the legacy private cloud business which historically provided higher-margin stability.
Short-term improvements in revenue growth may mask a deeper structural risk where the company is trading high-quality, sticky legacy revenue for lower-quality, pass-through public cloud volume. This shift warrants further investigation into whether the company can successfully pivot to higher-value data and security services before its liquidity position deteriorates further.
Quick answers to the most common questions about buying RXT stock.
For fiscal year 2025, Rackspace Technology, Inc. (RXT) reported total revenue of $2.69B. This represents a 9.5% increase compared to $2.45B in 2018.
Rackspace Technology, Inc. (RXT) reported a net loss of $225.8M for the fiscal year ending 2025.
Rackspace Technology, Inc. (RXT) reported an operating income of $-68.4M, resulting in an operating profit margin of -2.5%. This margin reflects the operational efficiency of the business before interest and taxes.
Rackspace Technology, Inc. (RXT) generated $359.5M in gross profit for the year, representing a gross profit margin of 13.4%. This demonstrates the company's core pricing power and production efficiency.