Rackspace Technology (RXT, Financial) has received a price target adjustment from RBC Capital, now set at $2, down from a previous target of $3. Despite this revision, the firm maintains a Sector Perform rating on Rackspace shares.
The company has showcased robust performance by exceeding expectations on both revenue and profit metrics. This marks the 11th quarter in a row where Rackspace has met or outperformed its financial guidance, demonstrating consistent operational success.
Analysts note that Rackspace has a solid base to support efforts aimed at enhancing the company's operations. The firm's continued ability to meet guidance suggests resilience and a strong operational framework.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 6 analysts, the average target price for Rackspace Technology Inc (RXT, Financial) is $2.15 with a high estimate of $3.25 and a low estimate of $1.00. The average target implies an upside of 68.63% from the current price of $1.28. More detailed estimate data can be found on the Rackspace Technology Inc (RXT) Forecast page.
Based on the consensus recommendation from 6 brokerage firms, Rackspace Technology Inc's (RXT, Financial) average brokerage recommendation is currently 3.0, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Rackspace Technology Inc (RXT, Financial) in one year is $2.17, suggesting a upside of 70.2% from the current price of $1.275. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Rackspace Technology Inc (RXT) Summary page.
RXT Key Business Developments
Release Date: May 08, 2025
- Total Revenue: $665 million, down 4% year-over-year.
- Non-GAAP Gross Profit Margin: Approximately 20% of GAAP revenue, down 1.5 percentage points year-over-year.
- Non-GAAP Operating Profit: $26 million, up 83% year-over-year.
- Non-GAAP Loss Per Share: $0.06, an improvement of $0.05 year-over-year.
- Cash Flow from Operations: $13 million.
- Free Cash Flow: $4 million.
- Cash on Hand: $128 million.
- Total Liquidity: $473 million.
- Private Cloud Revenue: $250 million, down 7% year-over-year.
- Private Cloud Non-GAAP Gross Margin: 37.1%, down 1.8 points year-over-year.
- Public Cloud Revenue: $416 million, down 2% year-over-year.
- Public Cloud Non-GAAP Gross Margin: 9.5%, up 1 point year-over-year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rackspace Technology Inc (RXT, Financial) exceeded expectations across all key metrics for the first quarter of 2025, with revenue at the high end of guidance and profit and EPS surpassing guidance range.
- The company achieved an 11th consecutive quarter of meeting or exceeding guidance, indicating strong operational performance.
- Bookings measured by annual contract value grew 9% year-over-year, with a notable 13% increase in the Americas.
- Rackspace Technology Inc (RXT) announced a strategic partnership with Rubrik to launch the Cyber Recovery Cloud, enhancing cyber resiliency for customers.
- Public cloud bookings grew 16% year-over-year, driven by strong execution in the Americas, reflecting successful land and expand strategies.
Negative Points
- Total company GAAP revenue of $665 million was down 4% year-over-year, indicating a decline in overall revenue.
- Non-GAAP gross profit margin decreased by 1.5 percentage points year-over-year, primarily due to declines in private cloud.
- Private cloud revenue decreased by 7% year-over-year due to customers rolling off older generation offerings.
- The macroeconomic environment remains uncertain, potentially impacting onboarding timelines for recently closed deals and customer decision cycles.
- Infrastructure resale in public cloud is expected to continue declining by low-to-mid single digits, which could affect revenue growth.
