Rackspace Technology (RXT, Financial) has entered into a strategic partnership with Sema4.ai, a leader in enterprise AI agents. This collaboration aims to blend Rackspace’s Foundry for AI services and its application management prowess with Sema4.ai’s cutting-edge ‘SAFE’ AI Agent Platform. By combining their expertise in artificial intelligence, cloud, and systems integration, the two companies strive to speed up the adoption of secure and enterprise-level AI solutions.
The alliance is designed to facilitate the swift deployment of scalable AI agents that are ready for production across various enterprise applications. A key focus of this partnership is ensuring that these solutions are governed by strong transparency and security measures, providing solid governance frameworks for users.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 4 analysts, the average target price for Rackspace Technology Inc (RXT, Financial) is $1.60 with a high estimate of $2.00 and a low estimate of $1.00. The average target implies an upside of 25.00% 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 5 brokerage firms, Rackspace Technology Inc's (RXT, Financial) average brokerage recommendation is currently 3.2, 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 $2.01, suggesting a upside of 57.03% from the current price of $1.28. 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.
