Rackspace Reports Q3 2026 Results with Revenue Decline Amid AI Infrastructure Pivot
Rackspace (RXT) reported third-quarter revenue of $609.1 million, a 9.3% year-over-year decline attributed to lower Public Cloud infrastructure revenue and the nonrenewal of a state government contract. Despite the top-line contraction, the company saw an 8.5% increase in adjusted EBITDA to $75.2 million, driven by aggressive cost-reduction measures including workforce reductions and decreased marketing spend. The company is aggressively pivoting toward AI-driven infrastructure, highlighted by significant new agreements with Together AI ($380 million) and Blacksmith ($230 million). Management also provided an upward revision to full-year revenue guidance, now targeting $2.51 billion to $2.56 billion, as they scale high-performance AI compute capacity toward a target of 22 megawatts by the end of 2027.
Topics: cloud revenue EBITDA growth financial guidance revenue decline