Rackspace (RXT) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenue was $670 million, up 1% year-over-year, driven by Private Cloud growth of 5–5.5%, while Public Cloud declined 2–2.3%.

• Expanded partnerships with AMD and Palantir, launching new enterprise AI platforms and managed services.

• Net loss widened to $67.5–$68 million, reflecting higher interest expense and lower gross margin.

• Announced a workforce realignment plan in June 2026, targeting a 15% reduction to accelerate the Enterprise AI strategy.

• Emphasis on regulated industries, with notable wins in healthcare and financial services.

Financial highlights

• Q2 2026 GAAP revenue: $670–$670.1 million (+0.6–1% year-over-year); Private Cloud: $263–$263.3 million (+5–5.5%); Public Cloud: $406.8–$407 million (−2–2.3%).

• Non-GAAP operating profit was $27–$27.4 million, flat year-over-year; non-GAAP loss per share was $(0.08), up from $(0.06).

• Gross margin declined to 17.1–18.6% from 19.4% year-over-year.

• Adjusted EBITDA for Q2 2026 was $65.9 million; for six months: $137.1 million.

• Cash and cash equivalents as of June 30, 2026, were $110.6–$111 million; total liquidity was $202 million.

Outlook and guidance

• Full-year 2026 GAAP revenue guidance: $2.45–$2.55 billion, a 7% decline year-over-year at midpoint.

• Private Cloud revenue expected at $1.0–$1.05 billion (+4% year-over-year); Public Cloud: $1.45–$1.5 billion (−13%).

• Adjusted EBITDA guidance: $285–$295 million, up 5% at midpoint; non-GAAP operating profit: $125–$135 million.

• Non-GAAP loss per share projected at $(0.25)–$(0.30); positive free cash flow of $50–$70 million expected for the full year.

• Management expects near-term margin pressure due to upfront capital investments in Enterprise AI.