Rackspace cuts FY26 revenue outlook by $150M, expands AI plans

Rackspace Technology (NASDAQ: RXT) lowered its fiscal year 2026 revenue outlook by $150 million and reduced its adjusted EBITDA forecast by $20 million, according to a press release issued July 9, 2026. The company cited supply constraints, geopolitical factors, and a deliberate exit from lower-margin business lines as the primary drivers.

The new full-year revenue guidance range is $2.45 billion to $2.55 billion, down from a prior range of $2.6 billion to $2.7 billion. Adjusted EBITDA guidance was revised to $285 million to $295 million, from $305 million to $315 million previously. The adjusted EBITDA margin is expected to remain at approximately 12% under both the prior and revised outlooks.

The public cloud segment accounts for $125 million of the revenue reduction, driven by an exit from low-margin resale as hyperscalers move customers to direct contracts. The private cloud segment was lowered by $25 million, reflecting an exit from colocation and basic hosting to reserve capacity for enterprise AI workloads.

For the second quarter of 2026, the company provided preliminary results showing revenue of $641 million to $649 million, a GAAP net loss of $91 million to $62 million, and adjusted EBITDA of $58 million to $62 million.

Separately, Rackspace and Palantir announced a definitive agreement establishing an operating framework to deploy Palantir Foundry and AIP in mid-market, regulated, and sovereign environments, with Rackspace named a preferred partner. Rackspace said it has approximately 400 Palantir certifications across its workforce. The companies reported their first joint deployment was completed in under two months at a U.S.-based solar tracking manufacturer.

Rackspace also announced a capital raise, the terms of which were not detailed in this release, and outlined plans to reach 15 megawatts of cumulative enterprise AI capacity by end of 2027 and 30 megawatts by end of 2028. At full 30 MW deployment, the company projects annual enterprise AI revenue of $450 million to $600 million, with adjusted EBITDA margins above 50%.

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