Rackspace (RXT) Q3 2025 earnings summary

Executive summary

• Q3 2025 revenue was $671 million, up 1% sequentially but down up to 1% year-over-year, meeting or exceeding expectations.

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

• Non-GAAP operating profit was $32 million, up 17% sequentially and stable year-over-year; non-GAAP loss per share was $(0.05).

• Strong sales momentum with annual contract value bookings up 5% year-over-year, driven by private cloud wins and new deals in healthcare, sovereign, and AI markets.

• Focus on regulated, sovereign, and AI-driven markets, leveraging strengths in security, compliance, and customer outcomes.

Financial highlights

• Public Cloud revenue was $422 million, up 1% year-over-year; Private Cloud revenue was $250 million, down 3% year-over-year.

• 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; cash and cash equivalents at quarter end were $100 million, with total liquidity of $386 million.

• Capital expenditures for Q3 2025 were $34 million.

Outlook and guidance

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

• Non-GAAP operating profit expected at $32–$34 million; non-GAAP loss per share at $(0.03)–$(0.05); non-GAAP tax rate expected at 26%.

• Share count expected between 242–244 million.

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