Rackspace Technology (RXT) opened 2026 with Q1 revenue of US$678.1 million and basic EPS of US$0.03, compared to a trailing 12 month basic EPS loss of US$0.60 on revenue of US$2.7 billion. The company has seen quarterly revenue move from US$685.6 million in Q4 2024 to US$665.4 million in Q1 2025 and US$678.1 million in Q1 2026. Basic EPS shifted from a loss of US$0.25 in Q4 2024 to a loss of US$0.31 in Q1 2025 and then to a small profit in the latest quarter. This sets up a results season where investors are likely to focus on how sustainable this shift in margins is.

See our full analysis for Rackspace Technology.

With the headline numbers on the table, the next step is to set these results against the widely followed Rackspace Technology narratives to see which views are supported by the data and which might need a rethink.

TTM loss of US$146 million still sits behind new quarterly profit

• On a trailing 12 month basis, Rackspace Technology reported US$2.7b of revenue and a net loss of US$146 million, compared with Q1 2026 net income of US$8.3 million on US$678.1 million of revenue, so the single profitable quarter sits against a still loss-making year.
• Consensus narrative expects ongoing pressure from declining GAAP revenues in both Private Cloud and Public Cloud segments, and the latest trailing 12 month revenue of US$2.7b vs US$2.7b to US$2.8b in prior periods fits that slow top line pattern even as Q1 2026 swung to a quarterly profit.
• Analysts highlight that margins in both business units have been under pressure, which aligns with the trailing 12 month loss of US$146 million despite several quarters of broadly similar revenue around US$2.7b.
• The consensus view also points to negative free cash flow concerns, and the fact that the company remains unprofitable over the year supports that focus on earnings quality rather than just one profitable quarter.

Share price and P/S contrast with modest 1.5% growth outlook

• With the stock at US$3.52 and a price to sales ratio of 0.3x against a peer average of 4.2x and US IT industry at 2.1x, the market is pricing Rackspace well below those groups while revenue is forecast to grow about 1.5% per year versus an 11.4% US market forecast.
• Bulls argue that larger recurring deals and AI focused services could support stronger revenue and margin trends, yet the current 1.5% revenue growth forecast and low P/S ratio indicate that recent financial history of losses and slow revenue movement is still front and center for investors weighing that optimistic view.
• Supporters point to expectations of 2.2% annual revenue growth in more optimistic scenarios, but that is still close to the modest base forecast and far from the broader US market growth estimate of 11.4%.
• The bullish view looks for margin uplift over time, however the latest trailing 12 month basic EPS of a loss of US$0.60 and net loss of US$146 million set a relatively low profitability starting point for that thesis.

Bulls watching this margin turnaround often compare it with their longer term growth thesis, so it can be useful to see how their full argument lines up against the numbers in one place 🐂 Rackspace Technology Bull Case.

Ongoing unprofitability and negative equity keep bears focused on risk

• Rackspace was unprofitable over the last 12 months with a loss of US$146 million and is expected to remain unprofitable over the next three years, while risks flagged include forecast earnings decline of about 5.9% per year, recent share price volatility, and negative shareholders’ equity.
• Bears argue that secular pressure from hyperscalers, margin compression and cash constraints could limit long term earnings stability, and the combination of ongoing forecast losses plus negative equity strongly supports their focus on balance sheet and earnings risk even though the current P/S multiple is well below peers.
• The expectation that earnings will decline by around 5.9% annually over the next three years lines up with the company still posting a trailing loss despite recent quarter to quarter EPS improvement.
• Concerns about financial flexibility are reinforced by the history of trailing 12 month net losses between about US$146 million and US$858.2 million across recent periods, which suggests that one profitable quarter has not yet translated into a consistently profitable profile.

Skeptics often focus on these earnings and balance sheet pressures, and you can see how that full cautious case stacks up against the latest figures in context 🐻 Rackspace Technology Bear Case.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Rackspace Technology on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

If this combination of risks and potential rewards seems finely balanced, you may want to review the data yourself and form a clear view promptly, starting with 2 key rewards and 4 important warning signs

See What Else Is Out There

Rackspace Technology still carries a trailing 12 month loss of US$146 million, negative equity and expectations of earnings decline, keeping financial risk firmly in focus.

If that level of uncertainty feels uncomfortable, you can quickly shift your attention to companies with sturdier finances by checking the solid balance sheet and fundamentals stocks screener (44 results) and see how they compare today.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.