Rackspace Technology, Inc. Q3 FY2025 earnings call

• Amar highlighted three strengths: a record culture blending deep engineering with customer outcome focus, a portfolio built for regulated environments, and significant growth potential in healthcare, sovereign, and AI markets. • Q3 results met or beat expectations across key metrics; sales momentum strong with bookings (annual contract value) up 5% year over year. • Private cloud won large long-term enterprise deals, signed a leading global telecommunications provider and a sovereign government customer, and had eight new releases in Q3. • Public cloud bookings grew 2% sequentially led by The Americas, signed services engagements with a leading global e-commerce platform and a financial services firm, and introduced product launches to expand portfolio capabilities.

Private Cloud: Q3 GAAP revenue was $250 million, meeting the midpoint of guidance, down 3% year over year. Non-GAAP gross margin was 38.1%, down 50 basis points year over year but up 130 basis points sequentially. Non-GAAP segment operating margin was 26.9%, down 180 basis points year over year but up 230 basis points sequentially. Public Cloud: GAAP revenue was $422 million, surpassing the high end of guidance, up 1% year over year and 1% sequentially. Non-GAAP gross margin was 9.2%, down 110 basis points year over year. Non-GAAP segment operating margin was 3.3%, down 40 basis points year over year.

• Expect fourth quarter GAAP revenue of $664 to $678 million, flat sequentially and down 2% year over year at midpoint. • Private cloud expected revenue of $244 million to $252 million, down 1% sequentially at midpoint. • Public cloud expected revenue of $420 million to $426 million, flat sequentially at midpoint. • Total non-GAAP operating profit expected to be $32 million to $34 million and non-GAAP loss per share in range of $0.03 to $0.05. • Non-GAAP tax rate expected to be 26% and non-GAAP share count between 242 million and 244 million shares.