Rackspace (RXT) Q3 2025 earnings summary

Executive summary

• Q3 2025 revenue was $671 million, up 1% sequentially but down 1% year-over-year, with results at or above expectations and strong cash flow generation.

• Non-GAAP operating profit was $32 million, up 17% sequentially, flat year-over-year, and at the high end of guidance.

• Net loss improved to $67 million from $187 million year-over-year; net loss per share was $(0.28) versus $(0.82) last year.

• Company is leveraging AI for growth, focusing on regulated verticals like healthcare and sovereign markets, and positioning as a trusted partner for mission-critical workloads.

Financial highlights

• Public Cloud revenue grew 1% year-over-year to $422 million, while Private Cloud revenue declined 3% to $250 million.

• Non-GAAP gross profit margin was 19.9%, down 1.2 points year-over-year; gross profit for Q3 2025 was $130 million.

• Adjusted EBITDA for Q3 2025 was $69.3 million, up from $65.8 million in Q3 2024.

• Cash flow from operations was $71 million; free cash flow was $43 million.

• Capital expenditures were $34 million in Q3 2025.

Outlook and guidance

• Q4 2025 revenue guidance: $664–$678 million; Private Cloud: $244–$252 million; Public Cloud: $420–$426 million.

• Q4 non-GAAP operating profit expected at $32–$34 million; non-GAAP loss per share of $0.03–$0.05.

• Non-GAAP tax rate expected at 26%; share count between 242–244 million.

• Management expects continued focus on cost optimization and margin improvement, particularly in Public Cloud services.