Rackspace Technology Reports 2.7% Revenue Decline and $54.5 Million Net Loss in Q2 2025

Rackspace Technology, Inc. reported a decline in financial performance for the second quarter of 2025, with total revenue of $666.3 million, down 2.7% from $684.9 million in the same period last year. The decrease was attributed to declines in both its Public Cloud and Private Cloud segments, with Public Cloud revenue falling to $416.6 million and Private Cloud revenue decreasing to $249.7 million. The company also experienced a net loss of $54.5 million for the quarter, compared to a net income of $25 million in the prior year, reflecting a significant shift in profitability.

In terms of operational metrics, Rackspace's gross profit for the quarter was $129.2 million, slightly down from $131.4 million a year earlier, while gross margin improved marginally to 19.4%. Selling, general and administrative expenses decreased by 17% to $154.3 million, primarily due to reduced personnel costs and a decrease in share-based compensation. The company reported a loss from operations of $25.1 million, a notable improvement from a loss of $53.8 million in the same quarter of 2024.

The company’s balance sheet as of June 30, 2025, showed total assets of $2.89 billion, down from $3.05 billion at the end of 2024. Current liabilities decreased to $715.4 million, while total liabilities stood at $4.01 billion. Rackspace's stockholders' deficit widened to $1.12 billion, primarily due to accumulated losses. The company had $103.9 million in cash and cash equivalents, a decrease from $144 million at the end of 2024, indicating tighter liquidity conditions.

Strategically, Rackspace has focused on optimizing its service offerings and reducing operational costs. The company has been actively managing its debt, with a total outstanding debt of $2.8 billion as of June 30, 2025. This includes various refinancing transactions completed in March 2024, which have altered the structure of its debt instruments. The company has also emphasized its commitment to enhancing customer relationships and expanding its service portfolio, particularly in the Public Cloud segment, which is expected to drive future growth.

Looking ahead, Rackspace anticipates continued challenges in the competitive cloud services market, but remains optimistic about its ability to leverage its technology and expertise to improve customer retention and attract new clients. The company expects to maintain sufficient liquidity over the next twelve months, although it acknowledges the risks associated with market conditions and operational performance that could impact future cash flows.