Rackspace (RXT) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue was $666 million, down 2.7–3% year-over-year, but met or exceeded guidance and was flat sequentially.

• Non-GAAP operating profit reached $27 million, up 34–35% year-over-year and 7% quarter-over-quarter.

• Net loss for Q2 2025 was $54.5–$55 million, compared to net income of $25 million in Q2 2024; EPS was $(0.23) versus $0.11.

• Bookings grew 16% year-over-year, with Private Cloud as the main driver.

• Cash flow from operations was $8 million for Q2 2025, with cash and cash equivalents at $104 million and total liquidity at $414 million as of June 30, 2025.

Financial highlights

• Gross profit for Q2 2025 was $129–$132 million, with a gross margin of 19.4–19.8%, nearly flat year-over-year.

• Adjusted EBITDA for Q2 2025 was $64.4 million, up from $55.1 million in Q2 2024.

• Free cash flow for Q2 2025 was negative $12–$12.4 million; LTM free cash flow was $54 million.

• Capital expenditures for Q2 2025 were $31 million; CAPEX intensity at 5%.

• Net loss margin for Q2 2025 was (8.2)%, compared to net income margin of 3.7% in Q2 2024.

Outlook and guidance

• Q3 2025 revenue guidance: $660–$674 million; Private Cloud $246–$254 million; Public Cloud $414–$420 million.

• Non-GAAP operating profit expected at $30–$32 million; non-GAAP loss per share at $0.04–$0.06.

• Non-GAAP tax expense rate set at 26%; weighted average shares projected at 239–241 million.

• Strong free cash flow generation expected in the second half of 2025, with $70–$80 million projected by year-end.

• Management focus remains on cost optimization and margin improvement, especially in Public Cloud.