Overview

• US hybrid cloud and AI provider's Q1 revenue rose 2% yr/yr, beating analyst expectations

• Net income turned positive at $8 mln after a loss in prior year

• Company signed MOU with AMD to develop governed enterprise AI infrastructure

Outlook

• Rackspace Technology sees FY 2026 revenue between $2.6 bln and $2.7 bln

• Company expects FY 2026 public cloud revenue of $1.575 bln to $1.625 bln

• Rackspace Technology expects FY 2026 non-GAAP loss per share of ($0.15) to ($0.20)

Result Drivers

• PUBLIC CLOUD GROWTH - Public Cloud revenue rose 7% yr/yr, offsetting Private Cloud declines

• REGULATED ENTERPRISE AI FOCUS - Co said results reflect its strategy to serve regulated enterprises seeking governed AI infrastructure, per CEO Gajen Kandiah

• PRIVATE CLOUD WEAKNESS - Private Cloud revenue fell 6% yr/yr, weighing on overall growth

Company press release: ID:nGNX30SmTt

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q1 Revenue	Beat	$678.10 mln	$660.83 mln (3 Analysts)
Q1 Adjusted EPS	Miss	-$0.06	-$0.04 (2 Analysts)
Q1 Net Income		$8.30 mln
Q1 Adjusted Operating Income		$31 mln
Q1 Capex		$35 mln
Q1 Gross Profit		$119.10 mln

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is no "strong buy" or "buy", 3 "hold" and no "sell" or "strong sell"

• Wall Street's median 12-month price target for Rackspace Technology Inc is $2.00, about 11.9% below its May 6 closing price of $2.27

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