Rackspace Technology Inc (NASDAQ:RXT) Reports Q3 2025 Earnings, Matching Profit Expectations Despite Slight Revenue Dip

Rackspace Technology Inc (NASDAQ:RXT) reported financial results for the third quarter of 2025, delivering a performance that largely aligned with analyst expectations on profitability while showing a slight revenue decline. The company's latest earnings reveal a mixed financial picture, with the market showing modest initial approval in after-hours trading.

Earnings and Revenue Performance

The hybrid cloud solutions provider posted revenue of $671 million for the quarter ended September 30, 2025, representing a 1% decrease compared to the same period last year. This figure came in slightly below analyst estimates of $673.5 million. On the profitability front, the company reported a non-GAAP loss per share of $0.05, essentially matching the analyst consensus estimate of a $0.0505 loss per share.

Key financial metrics from the quarter include:

• Total Revenue: $671.2 million (vs. $675.8 million in Q3 2024)
• Public Cloud Revenue: $422 million (up 1% year-over-year)
• Private Cloud Revenue: $250 million (down 3% year-over-year)
• Net Loss: $67 million (improved from $187 million in Q3 2024)
• Cash Flow from Operations: $71 million for the quarter

The company's performance demonstrates ongoing challenges in its Private Cloud segment while showing modest growth in Public Cloud services. The significant reduction in net loss compared to the prior year period indicates progress in controlling costs and improving operational efficiency.

Market Reaction and Price Action

Following the earnings release, Rackspace Technology shares experienced a positive after-market movement of approximately 0.68%. This initial response suggests investor relief that the company met profitability expectations despite the slight revenue miss. The stock's recent performance has been volatile, with declines of 9.57% over the past week and 19.95% over the past two weeks, though it has managed to maintain a slight gain of 0.34% over the past month.

The market's tempered positive reaction reflects acknowledgment of the company's improved loss position and strong cash flow generation, while remaining cautious about the overall revenue trajectory and the challenging competitive landscape in cloud services.

Financial Outlook and Guidance

Looking ahead, Rackspace Technology provided guidance for the fourth quarter of 2025 that generally aligns with analyst expectations. The company anticipates revenue between $664 million and $678 million, compared to the analyst sales estimate of $683.4 million for Q4 2025. On the bottom line, management projected a non-GAAP loss per share between $0.03 and $0.05, which compares favorably to the analyst EPS estimate of a $0.0404 loss.

The company's full-year 2025 guidance appears more challenging, with current analyst estimates projecting an EPS of -$0.212 and sales of $2.7 billion. Rackspace's performance through the first three quarters and its Q4 outlook suggest the company may fall short of these full-year sales projections while potentially exceeding profitability expectations.

Strategic Direction and Operational Highlights

Chief Executive Officer Gajen Kandiah emphasized the company's focus on building "a trusted compute fabric for hybrid multicloud across private, public, and edge environments." The company continues to deepen its work with VMware Cloud Foundation while expanding services for AI, data, and security across hybrid cloud environments.

Operational improvements were evident in several areas:

• Significant reduction in operating loss to $34 million from $174 million in the prior year quarter
• Strong cash flow generation with $146 million in operating cash flow over the trailing twelve months
• Maintained non-GAAP operating profit of $32 million
• Total liquidity of $386 million as of September 30, 2025

The company's balance sheet shows $100 million in cash and cash equivalents, though it continues to carry substantial debt of approximately $2.77 billion.

For detailed historical earnings data and future analyst estimates, review the complete earnings and estimates information for Rackspace Technology.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any securities. The information presented should not be used as the sole basis for making investment decisions. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions.