Rackspace (RXT) Guidance summary

Opening remarks and agenda

• Call opened with introductions, a reminder of forward-looking statements and associated risks, and plans to accelerate enterprise AI growth with preliminary Q2 2026 results and updated FY26 outlook.

• Scheduled an investor call for July 9, 2026, to discuss strategy and financials.

Guidance on key objectives

• Strategy centers on becoming the operator of the full enterprise AI stack, focusing on regulated and sovereign markets needing data control and governance.

• Targeting ramp-up to 30 MW of GPU capacity by end of 2028, with $450M–$600M annual revenue potential and 50%+ EBITDA margins at scale; ramp to 15 MW by end of 2027, with $15–20M annual revenue per MW.

• Announced a $250M at-the-market equity offering to fund GPU initiatives and growth capital.

• Updated FY 2026 revenue guidance to $2.45B–$2.55B, down 7% at midpoint, and EBITDA to $285M–$295M, reflecting a shift away from low-margin revenue; FY26 outlook revised downward by $150M in revenue and $20M in EBITDA due to strategic shifts and supply constraints.

• Prioritizing high-return activities and reserving capacity for enterprise AI, exiting low-margin and basic hosting segments.

Market trends and strategic opportunities

• Enterprise AI demand is accelerating, especially in regulated and sovereign sectors; clients seek flexible, fractional AI capacity.

• Partnerships with Palantir, Uniphore, VMware, Rubrik, and AMD underpin the AI strategy and ecosystem, with Palantir named as a preferred partner for regulated and sovereign markets.

• Shift in enterprise AI from foundational training to context-specific inference aligns with evolving hardware procurement.