Rackspace Technology Reports $665.4 Million Revenue in Q1 2025, Net Loss of $71.5 Million

Rackspace Technology, Inc. reported a revenue of $665.4 million for the first quarter of 2025, a decrease of 3.7% compared to $690.8 million in the same period of the previous year. The decline in revenue was attributed to decreases in both its Public Cloud and Private Cloud segments, with Public Cloud revenue falling by 1.6% to $415.6 million and Private Cloud revenue decreasing by 6.9% to $249.8 million. The company's gross profit also declined, totaling $126.9 million, down from $132.8 million a year earlier, resulting in a gross margin of 19.1%.

In terms of profitability, Rackspace reported a net loss of $71.5 million for the quarter, significantly improved from a net loss of $640.6 million in the prior year, which included substantial impairment charges. The previous year's figures were heavily impacted by a goodwill impairment of $573.2 million. The loss from operations for the first quarter of 2025 was $38.4 million, a notable recovery from the $652.8 million loss reported in the same quarter of 2024. The reduction in losses was aided by a decrease in selling, general, and administrative expenses, which fell to $165.3 million from $192.4 million.

Operationally, Rackspace's total assets decreased to $2.966 billion as of March 31, 2025, down from $3.054 billion at the end of 2024. The company’s cash and cash equivalents also saw a decline, totaling $128 million compared to $144 million at the end of the previous year. The company’s total liabilities were reported at $4.039 billion, slightly down from $4.058 billion. The company’s employee headcount increased to 2,800 as of March 31, 2025, up from 2,700 a year earlier, reflecting ongoing investments in talent to support its service offerings.

Strategically, Rackspace has focused on optimizing its operations and reducing costs, which has contributed to improved financial performance. The company has also engaged in significant debt refinancing activities, including the issuance of new debt instruments and the establishment of a new revolving credit facility. As of March 31, 2025, Rackspace had $2.444 billion in aggregate principal amount outstanding under its debt instruments. The company believes that its current liquidity position, with $128 million in cash and cash equivalents, will be sufficient to meet its operational needs over the next twelve months.

Looking ahead, Rackspace Technology anticipates continued challenges in the competitive cloud services market but remains focused on enhancing its service offerings and customer relationships. The company aims to leverage its partnerships with major cloud providers and expand its market share while managing costs effectively. The outlook for the remainder of 2025 will depend on the successful execution of its strategic initiatives and the overall economic environment.