Rackspace (RXT) Q4 2024 earnings summary

Executive summary

• Q4 2024 revenue was $686M, up 1% sequentially but down 5% year-over-year; full-year 2024 revenue was $2,737M, down 7% year-over-year.

• Q4 results exceeded guidance for revenue, profit, and EPS, marking the 10th consecutive quarter of meeting or beating expectations, with record-breaking quarterly sales bookings.

• Fiscal 2024 bookings grew 14% year-over-year, with second-half bookings up 32% over the first half, driven by strong Americas performance and hybrid cloud adoption.

• CEO highlighted progress on operational turnaround, innovation in hybrid cloud and AI, and capital structure optimization.

• FY 2024 non-GAAP operating profit was $106M, down 33% year-over-year.

Financial highlights

• Q4 2024 non-GAAP gross profit was $141M, down 1% sequentially and 10% year-over-year; gross margin was 20.6%.

• Q4 2024 non-GAAP operating profit was $39M, a 21% increase sequentially but 13% lower year-over-year; margin was 5.7%.

• Q4 2024 non-GAAP loss per share was $(0.02), improved from $(0.04) in Q4 2023.

• Q4 2024 cash flow from operations was $54M; free cash flow was $34M.

• Year-end cash on hand was $144M, with $519M total liquidity including $375M undrawn commitments.

Outlook and guidance

• Q1 2025 GAAP revenue expected at $653–$665M, with private cloud $247–$253M and public cloud $406–$412M.

• Q1 2025 non-GAAP operating profit expected at $19–$21M; non-GAAP loss per share $(0.07)–$(0.09); tax expense rate set at 26%.

• Positive operating and free cash flow anticipated for 2025, driven by margin improvements and efficiency.

• Private Cloud revenues expected to show only modest declines in 2025, with flattish performance in the second half.

• Weighted average shares for Q1 2025 projected at 245M.