Rackspace Technology Q3 2026: Beat on Both Lines, Guidance Raised

Rackspace Technology reported Q3 2026 revenue of $609.1 million, clearing the consensus estimate of roughly $574 million by about 6%. Adjusted non-GAAP loss per share came in at $0.06, beating the $0.08 estimate by nearly 25%. The double beat came even as total revenue fell 9.3% year over year, so the company outperformed a lowered bar.

Public Cloud revenue declined 17.2% to $349.1 million, while its operating profit rose 94.3% to $27.2 million and the segment margin expanded to 7.8% from 3.3% a year ago. Private Cloud grew 4.2% to $260.0 million, though its segment operating profit fell 20.5% and its margin compressed from 26.9% to 20.5%. Cost discipline helped as well: SG&A expenses fell 23.3% to $125.6 million.

Management raised its full-year revenue outlook to a range of $2.51 billion to $2.56 billion, a $35 million increase at the midpoint, while holding its Adjusted EBITDA guidance steady at $285 million to $295 million. The full-year non-GAAP loss per share outlook is $0.25 to $0.30. CEO Gajen Kandiah framed the raise as a reflection of translating go-to-market efforts and existing capacity into further commitments and rapid deployments.

Total liabilities of roughly $4.06 billion exceed total assets of roughly $2.75 billion, leaving shareholders' equity at negative $1.31 billion. Interest expense rose to $35.5 million in the quarter from $21.2 million a year earlier, and capital expenditures jumped to $104 million from $34 million. Operating cash flow over the first nine months of 2026 was $9.3 million, a thin cushion against a heavier investment cycle.

With the stock up roughly 143% year to date heading into the report, the market had already priced in a meaningful recovery narrative. Shares pulled back sharply around the earnings release, suggesting investors are wrestling with how much of the AI infrastructure opportunity Rackspace can convert into durable, top-line growth beyond margin recovery.