RXT 10-K & 10-Q changes, risk factors and insider trading
Rackspace Technology, Inc. · Nasdaq · Services-Computer Programming, Data Processing, Etc. · CIK 1810019 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our common stock has previously traded below Nasdaq’s $1.00 minimum bid price requirement. If we fail to maintain compliance with Nasdaq’s continued listing requirements, our common stock could be delisted, which could adversely affect the liquidity and market price of our common stock.”
Largest changes
“Our common stock has previously traded below Nasdaq’s $1.00 minimum bid price requirement. If we fail to maintain compliance with Nasdaq’s continued listing requirements, our common stock could be delisted, which could adversely affect the liquidity and market price of our common stock.”see in full comparison
“Like many companies, we have experienced these attacks, including a ransomware incident that caused service disruptions for our Hosted Exchange customers, as previously disclosed in December 2022 and another incident where a malicious actor publicly claimed to have accessed our systems, which claim was repudiated through internal investigations and forensic analysis. …”see in full comparison
“If we fail to maintain compliance with Nasdaq’s continued listing requirements, Nasdaq may initiate procedures to delist our common stock. …”see in full comparison
“•our failure to maintain compliance with Nasdaq’s continued listing requirements, including the $1.00 per share minimum bid price requirement, could result in our common stock’s delisting from Nasdaq, negatively impacting its market price, liquidity and our ability to access capital markets;”see in full comparison
Cyber-attacks have become more prevalent in our industry, and the techniques used to sabotage or obtain unauthorized access to systems are constantly expanding andsee in full comparisonevolving.evolving, including with the availability of AI and GenAI tools and technologies. Malicious actors are increasingly sophisticated in their methods, tactics, techniques and procedures, seeking to steal money, gain unauthorized access to, destroy or manipulate data, and disrupt operations, and some of their attacks may not be recognized or discovered until launched or after initial entry into the environment, such as novel or zero-day attacks that are launched before patches are available and defenses can be readied. Malicious actors are also increasingly developing methods to avoid prevention, detection and alerting capabilities, including employing counter-forensic tactics, making response activities more difficult.LikeInmanycertaincompanies, we have experienced these attacks, including a ransomware incident that caused service disruptions forcases, ourHostedcustomersExchange customers, as previously disclosed in December 2022. When these cyber-attacks occur, we respondchoose tothesehostincidentstechnologiespursuant towithin ourcybersecurityinfrastructurepolicies and procedures and in accordance with the law. Our cybersecurity policies and procedureswhich aredesignednot capable of being updated to protect againstandcyber-attacks,mitigateareharmnot timely updated due to operational constraints or other business decisions, or reach end-of-life status where security patches are no longer available fromunauthorized access, infrastructure attacks, malicious file attacks, ransomware, data theft, bugs, worms, malicious software programs, remnant data exposure, computer viruses, denial-of-service attacks, accidents, employee error or malfeasance, intentional misconduct by computer “hackers,” state-sponsored cyber-attacks and attempts by outside parties to fraudulently induce our employees or customers to disclose or grant access to our data or our customers’ data. Our current cybersecurity framework is governed and overseen bytheChief Security Officer (“CSO”). The Audit Committee of our Board receives regular cybersecurity updates. When necessary, our internal incident response team engages with external advisors, including outside counsel or outside cybersecurity firms to investigate and remediate.vendor.
“The market price of our common stock has experienced significant volatility and has previously traded below $1.00 per share. Although the closing bid price of our common stock was above $1.00 per share as of the date of this filing, there can be no assurance that it will remain at or above that level. If our stock price were to decline and remain below $1.00 per share for 30 consecutive business days, we would not be in compliance with Nasdaq’s minimum bid price requirement and could become subject to Nasdaq’s deficiency procedures. …”see in full comparison
Full comparison: every changed paragraph (29)
Our ability to execute our strategies is subject to certain risks.risks Theand uncertainties, including but not limited to the risks described under the heading “Risk Factors” immediately following this summarysummary. These risks and uncertainties could adversely affect our business, reputation, financial condition, results of operations, cash flows and the trading price of our common stock and may cause us not to realize the full benefits of our competitive strengths or may cause us to be unable to successfully execute all or part of our strategies. Some of the more significant challenges and risks we face include the following:
•our failure to maintain compliance with Nasdaq’s continued listing requirements, including the $1.00 per share minimum bid price requirement, could result in our common stock’s delisting from Nasdaq, negatively impacting its market price, liquidity and our ability to access capital markets;
Our ability to maintain or increase our revenues and profit may be impacted by a number of factors, including our ability to attract new customers, retain existing customers and sell additional products and services to our customers at comparable gross margins to our customers.margins. In addition, as we seekhave and expect to grow our customer base increasingly through outbound sales, we expectcontinue to incur higher customer acquisition and retention costs and, to the extent we are unable to retain and sell additional services to existing customers, our revenue and results of operations may decrease.
•our inability to develop and/or provide compelling services or effectively market them to new and existing customers;
•loss of our favorable relationships with our third-party cloud serviceplatform providers;
•past or future cybersecurity-related incidents targeting us, our customers or our critical suppliers; and
Moreover, we mayhave faced and expect to continue to face difficulty retaining certain existing customers over the long term. Certain customer contracts, particularly within our Private Cloud segment, frequently have initial terms (typically from 12 to 36 months) and, unless terminated, may be renewed or automatically extended for shorter, rolling periods after the initial term. Our customers have no obligation to renew their services after their initial contract periods expire and any termination fees associated with an early termination may not be sufficient to recover our costs associated with such contracts. New and evolving laws and regulations, including the E.U. Data Act and similar legislation, may limit our ability to negotiate, structure, or enforce long-term contractual arrangements with customers, which could result in increased compliance costs, contract renegotiations, reduced revenue visibility, or adverse impacts on our business, results of operations, and financial condition. In addition, most of our services within our Public Cloud segment and legacy OpenStack business are based on a consumption model and can be canceled at any time without penalty. As a result, we may face high rates of customer churn if we are unable to meet our customer needs, requirements and preferences.
We must adapt to rapidly changing customer demands and preferences in order to successfully execute our strategies. This requires us to anticipate and respond to customer demands and preferences, address business model shifts, optimize our go-to-market execution by improving our cost structure, align sales coverage with strategic goals, improve channel execution and strengthen our services and capabilities in our areas of strategic focus. As an example, we have made and expect to continue to make investments in new technologies, including AI and GenAI. The adoption and use of new technologies that are still in their early stages involve significant risks and uncertainties. In addition, investments in technology systems, capabilities, talent and resources may not deliver the benefits or perform as expected, may be replaced or become obsolete more quickly than expected or may reduce or replace some of our current services and offerings. Any failure to successfully execute our strategies, including any failure to invest in strategic growth areas,areas or for those strategic growth areas to fail to perform as anticipated, could adversely affect our business, financial condition and results of operations.
We expect the implementation of our strategies to require significant investments,investments (including investments in AI and GenAI), and the investments we must make could result in lower gross margins and raise our operating expenses and capital expenditures. The risks and challenges we face in connection with our strategies include upgrading and integrating our service offerings, expanding our professional services capability, expanding into new geographies, growing in geographies where we currently have an existing presence and ensuring that the performance, features and reliability of our service offerings and our customer service remain competitive in a rapidly changing technological environment. These investments may adversely affect our near-term revenue growth and results of operations, and we cannot assure that they will ultimately be successful.
Our business is highly dependent on our ability to maintain favorable relationships with our third-party cloud infrastructureplatform providers and the ability of those third-party cloud infrastructure providers to provide the services and features that our customers desire.
We have non-exclusive managed service provider relationships with AWS, Microsoft, Google, and VMware by Broadcom, among others. Some of our customers first select their cloud platform and then engage us to provide the managed services and support for the selected environment. In most cases, we also resell the cloud infrastructure from AWS, Microsoft, and Google, or VMware licenses, to the customer (although some customers may elect to purchase the cloud infrastructure or licenses directly from the providers).
We have non-exclusive managed service provider relationships with AWS, Microsoft and Google. Some of our customers first select their cloud infrastructure platform provider and then engage us to provide the managed services for the selected platform and, more often than not, we resell the cloud infrastructure to the customer (although some customers may elect to purchase the cloud infrastructure directly from the providers). Our agreements with AWS, MicrosoftMicrosoft, Google, and GoogleVMware by Broadcom may generally be modified or terminated at will or with limited notice by the counterparty. If we are unable to maintain these relationships on favorable terms, or at all, we may not be able to retain our current customers or attract new customers, which could have a material and adverse effect on our business, financial condition and results of operations. Further, if ourthe cloud infrastructureplatform providers are unable to provide the types of services and features that meet customer needs, our customers may migrate to alternative cloud infrastructureplatform providers that we may not have the ability to resell and/or support or may not be able to support on a competitive cost structure, which could have a material and adverse effect on our business, financial condition and results of operations.
Our ability to resell licenses, cloud infrastructure, and deliver managed services for these platforms depends on maintaining our applicable partner statuses and related technical certifications. We rely heavily on our relationships with third-party cloud infrastructureplatform providers to help drive revenue to our business. Most of these providers offer services that are complementary to our services; however, some may compete with us in one or more of our service offerings. These providers may decide in the future to terminate their agreements with us and/or to market and sell a competitor’s or their own services rather than ours, which could cause our revenue to decline. Also, we derive incentives and other tangible and intangible benefits from our association with some of these providers, particularly high-profile providers that reach a large number of companies through the Internet. If any provider terminates all or a substantialsignificant numberportion of these providers terminate theirits relationship with us, chooses to pursue relationships with all or a portion of our customers directly, or limits or eliminates our participation in preferred partner programs or similar, our business, financial condition and results of operations couldwould be adversely affected.
We are materially dependent upon our networks, information technology infrastructure and related technology systems to provide services to our customers, manage our internal operations and support our strategic objectives. Many of our customers require access to our services on a continuous basis and may be materially impaired by interruptions in our or our third-party service providers’ infrastructure. The services we offer also involve the transmission of large amounts of sensitive and proprietary information over public communications networks, as well as the processing and storage of confidential customer information, which may include information subject to stringent domestic and foreign data protection laws, including those governing personally identifiable information, protected health information or other types of sensitive data. Many of our customers use our products and services in heavily regulated industries, including banking, financial services, insurance, healthcare, critical infrastructure and government sectors, among others. We also process, store and transmit our own data as part of our business and operations, which may include personally identifiable, confidential or proprietary information.
Cyber-attacks have become more prevalent in our industry, and the techniques used to sabotage or obtain unauthorized access to systems are constantly expanding and evolving.evolving, including with the availability of AI and GenAI tools and technologies. Malicious actors are increasingly sophisticated in their methods, tactics, techniques and procedures, seeking to steal money, gain unauthorized access to, destroy or manipulate data, and disrupt operations, and some of their attacks may not be recognized or discovered until launched or after initial entry into the environment, such as novel or zero-day attacks that are launched before patches are available and defenses can be readied. Malicious actors are also increasingly developing methods to avoid prevention, detection and alerting capabilities, including employing counter-forensic tactics, making response activities more difficult. LikeIn manycertain companies, we have experienced these attacks, including a ransomware incident that caused service disruptions forcases, our Hostedcustomers Exchange customers, as previously disclosed in December 2022. When these cyber-attacks occur, we respondchoose to thesehost incidentstechnologies pursuant towithin our cybersecurityinfrastructure policies and procedures and in accordance with the law. Our cybersecurity policies and procedureswhich are designednot capable of being updated to protect against andcyber-attacks, mitigateare harmnot timely updated due to operational constraints or other business decisions, or reach end-of-life status where security patches are no longer available from unauthorized access, infrastructure attacks, malicious file attacks, ransomware, data theft, bugs, worms, malicious software programs, remnant data exposure, computer viruses, denial-of-service attacks, accidents, employee error or malfeasance, intentional misconduct by computer “hackers,” state-sponsored cyber-attacks and attempts by outside parties to fraudulently induce our employees or customers to disclose or grant access to our data or our customers’ data. Our current cybersecurity framework is governed and overseen by the Chief Security Officer (“CSO”). The Audit Committee of our Board receives regular cybersecurity updates. When necessary, our internal incident response team engages with external advisors, including outside counsel or outside cybersecurity firms to investigate and remediate.vendor.
Like many companies, we have experienced these attacks, including a ransomware incident that caused service disruptions for our Hosted Exchange customers, as previously disclosed in December 2022 and another incident where a malicious actor publicly claimed to have accessed our systems, which claim was repudiated through internal investigations and forensic analysis. Our dependence upon third-parties for delivery of services introduces additional risks, such as those associated with the ScienceLogic breach which exposed some customer information to unauthorized individuals (but which did not result in a material impact to our customers’ operations). When these cyber-attacks occur, we respond to these incidents pursuant to our cybersecurity policies and procedures and in accordance with the law. Our cybersecurity policies and procedures are designed to protect against and mitigate harm from unauthorized access, infrastructure attacks, malicious file attacks, ransomware, data theft, bugs, worms, malicious software programs, remnant data exposure, computer viruses, denial-of-service attacks, accidents, employee error or malfeasance, intentional misconduct by computer “hackers,” state-sponsored cyber-attacks and attempts by outside parties to fraudulently induce our employees or customers to disclose or grant access to our data or our customers’ data. Our current cybersecurity framework is governed and overseen by a team of cybersecurity professionals led by our Chief Information Security Officer, working together with our executive leadership team and other cross-functional leaders. The Audit Committee of our Board receives regular cybersecurity updates. When necessary, our internal incident response team engages with external advisors, including outside counsel or outside cybersecurity firms to investigate and remediate.
Our current security measures are monitored and periodically reviewed. Nevertheless, our security measures have in the past and may continue to be circumvented or fail to defeat or mitigate cybersecurity attacks. Additionally, other disruptions can occur, such as infrastructure gaps, hardware and software vulnerabilities, inadequate or missing security controls, exposed or unprotected customer data and the accidental or intentional disclosure of source code or other confidential information by former or current employees. In some cases, some legacy or end-of-life technology equipment may be utilized which is not capable of being updated to protect against certain attacks and deploy compensating controls to manage cybersecurity risks as appropriate. Any such incidents could (i) interfere with the delivery of services to our customers, (ii) impede our customers’ ability to do business, (iii) compromise the security of infrastructure, systems and data, (iv) lead to the dissemination to third parties of proprietary information or sensitive, personal, or confidential data about us, our employees or our customers, including personally identifiable information of individuals involved with our customers and their end users and (v) impact our ability to do business in the ordinary course. Each of these risks could further intensify as we maintain information in digital form stored on servers connected to the Internet, especially in light of the growing frequency, scope and well-documented sophistication of cyber-attacks and intrusions. Some of our systems or vendors’ systems have experienced past security breaches, and, although they did not have a material adverse effect on our operating results, there can be no assurance of a similar result in the future. Cyber breaches and other security incidents may expose us to increased risk of claims and liability, including litigation, regulatory enforcement, notification obligations and indemnity obligations, as well as loss of existing or potential customers, harm to our reputation, increases in our security costs (including spending material resources to investigate or correct the breach or incident and to prevent future security breaches and incidents), disruption of normal business operations, the impairment or loss of industry certifications and government sanctions (including debarment), all of which could have a material and adverse effect on our business, financial condition and results of operations.
The security of our services is important in our customers’ decisions to purchase or use our services. Threats to our infrastructure may not only affect the data that we own but also the data belonging to our customers. When customers use our services, they rely on the security of our infrastructure, including hardware and other elements provided by third parties, to ensure the reliability of our services and the protection of their data. In most cases, the security of customers’ technology and data relies on a shared responsibility model in which we must coordinate appropriate cybersecurity controls with the customer. We also offer professional services to our customers where we consult on data center solutions and assist with implementations. We offer managed services domestically and in some jurisdictions outside of the U.S. An actual or perceived breach of, or other security incident relating to, our cloud storage systems and networks could result in significant loss. In the event of a claim, we could be liable for substantial damage awards that may significantly exceed our liability insurance coverage by unknown but significant amounts, which could have a material and adverse effect on our financial condition and results of operations. Additionally, we cannot be certain that our insurance coverage will cover any claims against us relating to any such incident, will continue to be available to us on economically reasonable terms, or at all, or that our insurers will not deny coverage as to any such claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our reputation, business, financial condition and results of operations. The costs could be exacerbated by regulatory fines and penalties, notification costs and the loss of revenue due to brand and reputational harm.
Similar security risks exist with respect to our business partners and the third-party vendors that we rely on for aspects of our IT support services and administrative functions, including the systems owned, operated or controlled by other unaffiliated operators to the extent we rely on such other systems to deliver services to our customers. Our cybersecurity policies and procedures are designed to vet third-party providers and provide for adequate oversight and cooperation regarding cybersecurity incidents with respect to our third-party vendors, but our ability to monitor our third-party service providers’ data security is limited.limited, consistent with industry constraints. As a result, we are subject to the risk that cyber-attacks on, or other security incidents affecting, our business partners and third-party vendors may adversely affect our business even if an attack or breach does not directly impact our systems. It is also possible that security breaches sustained by, or other security incidents affecting, our competitors could result in negative publicity for our entire industry that indirectly harms our reputation and diminishes demand for our services.
In addition, our customers require and expect that we maintain industry-related compliance certifications, such as International Organization for Standardization ("ISO") 27001, Service Organization Controls ("SOC 1, 2, 3") and Payment Card Industry ("PCI"), Federal Information Security Management Act ("FISMA"), Federal Risk and Authorization Management Program ("FedRAMP") and Health Information Trust Alliance (“HITRUST”) in the U.S., Information Security Registered Assessors Program ("IRAP") in Australia and Public Services Network ("PSN") in the U.K. ThereThese certifications and attestations apply to specified systems, services or processes and do not eliminate cybersecurity risk. In addition, they are point-in-time references and do not guarantee future performance.There are significant costs associated with maintaining existing and implementing any newly-adopted industry-related compliance certifications, including costs associated with retroactivelyenhancing buildingor implementing additional security controls into services which may involve re-engineering technology, processes and staffing. The inability to maintain applicable compliance certifications could result in monetary fines, disruptive participation in forensic audits due to a breach, security-related control failures, customer contract breaches, customer churn and brand and reputational harm. In some cases, customers may host regulated computing workloads which could fall under infrastructure protection mandates that have not been communicated to us. We work together with our customers in good faith to identify those situations and ensure appropriate regulatory compliance programs and controls are in place where appropriate.
We are a highly leveraged company. As of December 31, 2024,2025, we had $2,449.4$2,429.2 million face value of outstanding indebtedness, in addition to $375.0 million of undrawn commitments under the New Revolving Credit Facility and $23.5 million of letters of credit issued thereunder.indebtedness. Our outstanding indebtedness as of December 31, 20242025 included $272.9$270.2 million of borrowings under the FLFO Term Loan Facility, $1,626.8$1,610.0 million of borrowings under the FLSO Term Loan Facility, $61.8$61.1 million of borrowings under the Term Loan Facility, $318.6 million of 3.50% FLSO Senior Secured Notes, $125.4 million of 5.375% Senior Notes, and $43.9 million of 3.50% Senior Secured Notes. In addition, as of December 31, 2025, the New Revolving Credit Facility had total commitments of $375.0 million, $60.0 million of outstanding borrowings, and $23.5 million of letters of credit issued thereunder. For the years ended December 31, 20232024 and 2024,2025, we made total debt service payments, consisting of required principal and interest payments, of approximately $200.7$162.1 million and $162.1$150.1 million, respectively, which represented 53.5%406.2% and 406.2%,99.2%, respectively, of our cash flow from operations (or 36.3%88.9% and 88.9%,53.4%, respectively, of our cash flow from operations calculated prior to any deductions for cash interest payments).
As of December 31, 2024,2025, we had $375.0$291.5 million available for additional borrowing under the New Revolving Credit Facility portion of our New Senior Facilities (withincluding $23.5 million of letters of credit issued thereunder), all of which would be secured.
Our common stock has previously traded below Nasdaq’s $1.00 minimum bid price requirement. If we fail to maintain compliance with Nasdaq’s continued listing requirements, our common stock could be delisted, which could adversely affect the liquidity and market price of our common stock.
Our common stock is currently listed on the Nasdaq Global Select Market, which imposes certain continued listing requirements, including a minimum bid price requirement of $1.00 per share, requirements relating to minimum market value of securities, stockholders’ equity, and corporate governance standards.
If we fail to maintain compliance with Nasdaq’s continued listing requirements, Nasdaq may initiate procedures to delist our common stock. A delisting of our common stock could materially and adversely affect our business and investors by, among other things, reducing the liquidity and market price of our common stock, limiting our ability to raise additional capital and access the public equity markets, reducing analyst coverage, impairing our ability to use equity-based compensation to attract and retain employees, increasing volatility in the trading price of our common stock, and generating negative publicity.
The market price of our common stock has experienced significant volatility and has previously traded below $1.00 per share. Although the closing bid price of our common stock was above $1.00 per share as of the date of this filing, there can be no assurance that it will remain at or above that level. If our stock price were to decline and remain below $1.00 per share for 30 consecutive business days, we would not be in compliance with Nasdaq’s minimum bid price requirement and could become subject to Nasdaq’s deficiency procedures. If we are unable to regain compliance during any applicable cure period, we could face potential delisting.
The market price of our common stock could vary significantly as a result of a number of factors, some of which are beyond our control. The following is a non-exhaustive list of additional factors that could affect our stock price:
•our failure to maintain compliance with Nasdaq’s continued listing requirements, including but not limited to the $1.00 minimum bid price requirement;
As of December 31, 2024,2025, we had 232.2248.4 million shares of common stock issued and approximately 28.615.7 million shares of common stock underlying outstanding options and restricted stock under the 2017 Incentive Plan and the 2020 Incentive Plan, and we have reserved an additional 42.138.5 million shares of common stock for issuance under the 2020 Incentive Plan and 8.37.8 million shares of common stock for issuance under the ESPP and we may be required to issue additional shares of common stock to an affiliate of ABRY under the merger agreement related to the acquisition of Datapipe. Also, during the year ended December 31, 2025, we registered 10.0 million shares of common stock for 4.0 million and 6.0 million RSUs and stock options, respectively, granted to our new chief executive officer outside of the 2020 Incentive Plan. In addition, certain of our existing stockholders, including Apollo and ABRY, have certain rights to require us to register the sale of common stock held by them including in connection with underwritten offerings. Additionally, we filed a registration statement in respect of all shares of common stock that we may issue under the 2017 Incentive Plan, the 2020 Incentive Plan and the ESPP. After registration, these shares can be freely sold in the public market upon issuance. Sales of significant amounts of stock in the public market upon expiration of applicable lock-up agreements, the perception that such sales may occur, or early release of any lock-up agreements, could adversely affect prevailing market prices of our common stock or make it more difficult for you to sell your shares of common stock at a time and price that you deem appropriate.
Management's Discussion & Analysis (MD&A)
New heading “Year Ended December 31, 2024 Compared to Year Ended December 31, 2025”
New heading “Gain on Debt Extinguishment, Net of Debt Modification Costs”
New heading “Benefit (Provision) for Income Taxes”
New heading “October 1, 2025 Assessment”
Removed heading “Year Ended December 31, 2022 Compared to Year Ended December 31, 2023”
Removed heading “Gain on Debt Extinguishment”
Removed heading “Benefit for Income Taxes”
Removed heading “Update to Non-GAAP Financial Measures”
Removed heading “September 1, 2022 Assessment”
Removed heading “October 1, 2022 Assessment”
Removed heading “December 31, 2022 Assessment”
Removed heading “Year Ended December 31, 2022”
Largest changes
“During the third quarter of 2022, we experienced a sustained decline in our stock price resulting in our market capitalization being less than the carrying value of our combined reporting units. …”see in full comparison
“During the fourth quarter of 2022, subsequent to our annual goodwill impairment analysis, we experienced decline in our market capitalization following a ransomware incident in early December which caused service disruptions on our Hosted Exchange email business which was included in our former Apps & Cross Platform reporting unit. …”see in full comparison
“During the fourth quarter of 2022, subsequent to our annual goodwill impairment analysis, we experienced a decline in our market capitalization following a ransomware incident in early December which caused service disruptions on our Hosted Exchange email business. We therefore determined it appropriate to perform an interim quantitative assessment of our reporting units as of December 31, 2022. …”see in full comparison
“In connection with the March 2024 Refinancing Transactions that were completed in March and April 2024, as further described in Item 8 of Part II, Financial Statements and Supplementary Data - Note 7, "Debt", we updated our internal forecasts. …”see in full comparison
“During the first quarter of 2023, we experienced a sustained decline in our stock price resulting in our market capitalization being less than the carrying value of our combined reporting units. …”see in full comparison
“We performed an interim goodwill impairment analysis as of September 30, 2024 based on our assessment of several events and circumstances that could affect the significant inputs used to determine the fair value of our reporting units, including the significance of the amount, if any, of excess carrying value over fair value, consistency of our current and forecasted operating margins and cash flows, budgeted-to-actual performance, timing of the expected effects of our strategic initiatives, overall change in economic climate, changes in the industry and competitive environment, changes to …”see in full comparison
Full comparison: every changed paragraph (139)
We are a leading end-to-end,end-to-end hybrid cloud and AI solutions company. We serve as a trusted operator of the full technology stack, from governed private cloud infrastructure to AI deployed in production environments. From edge to core to cloud, we design, buildintegrate and operate ourthe customers’infrastructure, clouddata foundations and software platforms required to deliver business outcomes with predictable cost, resilience, security and compliance. Our solutions are purpose-built for regulated and mission-critical environments acrosswhere alluptime, majordata technology platforms, irrespective of technology stack or deployment model. We partner with our customers at every stage of their cloud journey, enabling them to modernize applications, build new productssovereignty and adoptoperational innovativeaccountability technologies.are essential. We serve our customers with a unique combination of proprietary technology resulting from over $1 billion of investment and services expertise from a team of highly skilled consultants and engineers. AndWe wealso provide our customers with unbiased expertise and technology solutions, delivered over the world’s leading cloud services, all wrapped in Fanatical Experience.
Our team of 5,000 highly skilled Rackers, including consultants and engineers, partners with companies at every stage of their cloud transformation journey.
Our team of 5,100 highly skilled Rackers, including consultants and engineers, partners with companies at every stage of their cloud transformation journey We deliver our services to a global customer base through an integrated service delivery model. We have a presence in more than 60 cities around the world. This footprint allows us to better serve customers based in various countries, especially multinational companies requiring cross-border solutions. We have a strong presence with customers of all sizes, including enterprise businesses (revenue in excess of $3 billion), mid-market businesses (revenue of $300 million to $3 billion) and commercial customers (revenue less than $300 million).
Effective on January 1, 2023, we reorganized around a two-business unit operating model, Public Cloud and Private Cloud. This two-business unit operating model ensures increased focus, delivery, and service quality for our customers. Beginning in 2023, we changed our segment reporting to reflect this reorganization under two reportable segments: Public Cloud and Private Cloud. We have reflected this change in all historical comparative periods presented within this MD&A.
We operate our business and report our results through two reportable segments: Public Cloud and Private Cloud. Our Public Cloud segment is a services-centric, capital-light model providing value-added cloud solutions through managed services, Elastic Engineering and professional services offerings for customer environments hosted on the AWS, Microsoft Azure and Google Cloud public cloud platforms. Our Private Cloud segment is a technology-forward, capital-intensive model providing managed service offerings for customer environments hosted in one of our data centers as well as in those owned by customers or by third parties such as colocation providers. Private Cloud also includes our legacy OpenStack Public Cloud business that we ceased to actively market to customers in 2017. See Item 8 of Part II, Financial Statements and Supplementary Data - Note 16, "Segment Reporting" for additional information about our segments.
We generate revenue primarily through the sale of consumption-based contracts for our services offerings, which are recurring in nature. We also generate revenue from the sale of professional services related to designing and building customer solutions, which are non-recurring in nature. Arrangements within our Private Cloud segment generally have a fixed term, typically from 12 to 36 months, with a monthly recurring fee based on the computing resources provided to and utilized by the customer, the complexity of the underlying infrastructure and the level of support we provide. Our other primary sourcessource of revenue areis for services within our Public Cloud segment and legacy OpenStack business.segment. Contracts for these arrangements typically operate on a consumption model and can be canceled at any time without penalty.
We believe our combination of proprietary technology, automation capabilities and technical expertise creates a value proposition for our customers that is hard to replicate for both competitors and in-house IT departments. We and our customers face a variety of challenges, including evolving technologies (including AI and GenAI) and an uncertain regulatory landscape, including international trade policies and tariffs, as well as other macroeconomic and geopolitical factors. These factors have and will continue to affect demand for our products and services. Our continued success depends to a significant extent on our ability to meetrespond theto these and other challenges presented by our highly competitive and dynamic market, including the following key factors:
Our income tax benefit (provision) and deferred tax assets and liabilities reflect management’s best assessment of estimated current and future taxes to be paid. ToDuring date,2025 we have recorded consolidated tax benefits,expense, reflectingdespite our net losses, thoughdue certainto the recording of valuation allowances against our deferred tax assets. Certain of our non-U.S. subsidiaries havecontinue incurredto incur corporate tax expense or benefit according to the relevant taxing jurisdictions. We are under certain domestic and foreign tax audits. Due to the complexity involved with certain tax matters, there is the possibility that the various taxing authorities may disagree with certain tax positions filed on our income tax returns. We believe we have made adequate provision for all uncertain tax positions. See Item 8 of Part II, Financial Statements and Supplementary Data - Note 13, "Taxes."
Year Ended December 31, 2024 Compared to Year Ended December 31, 2025
Revenue decreased $51 million, or 1.9%, to $2,686 million in 2025 from $2,737 million in 2024. Revenue declined primarily due to a decrease in Private Cloud revenue, as discussed below.
After removing the impact from foreign currency fluctuations, on a constant currency basis, revenue decreased 2.1%. The following table presents revenue by segment:
Public Cloud revenue in 2025 increased 0.8% on an actual basis and 0.7% on a constant currency basis, from 2024. The increase was driven by higher services revenue, partially offset by a reduction in infrastructure volumes.
Private Cloud revenue in 2025 decreased 6.1% on an actual basis and 6.7% on a constant currency basis, from 2024, reflecting customer transitions off legacy platforms, partially offset by revenue from new bookings, including revenue related to certain customer contracts that include embedded sales-type lease arrangements for hardware.
Cost of revenue decreased $24 million, or 1%, to $2,179 million in 2025 from $2,204 million in 2024. The largest drivers of the decrease were a reduction in license expense, due to decreased usage between periods, and a reduction in data center expense as a result of continued optimization initiatives. Also contributing to the overall decrease in cost of revenue was a decline in personnel costs, driven by a reduction in headcount and severance expense between periods. These decreases were partially offset by higher expense for hardware mainly related to certain customer contracts that include embedded sales-type lease arrangements and an increase in depreciation expense.
As a percentage of revenue, cost of revenue increased 60 basis points in 2025 to 81.1% from 80.5% in 2024, as the decline in revenue outpaced the decrease in cost of revenue.
Our gross profit was $506 million in 2025, a decrease of $27 million from $533 million in 2024. Our gross margin was 18.9% in 2025, a decrease of 60 basis points from 19.5% in 2024.
SG&A expenses decreased $101 million, or 14%, to $607 million in 2025 from $708 million in 2024, primarily due to a reduction in personnel costs. The decrease in personnel costs was largely due to a decline in headcount between periods and a reduction in share-based compensation and non-equity incentive compensation, partially offset by an increase in severance expense driven by the departure of our former chief executive officer. Also driving the overall decrease in selling, general and administrative expenses was a $9 million early termination fee associated with the sale of our corporate headquarters in the first quarter of 2024 and a decrease in other business optimization related expenses between periods. Insurance recovery proceeds related to the Hosted Exchange incident received in the prior period partially offset the overall reduction in selling, general and administrative expenses year-over-year.
As a percentage of revenue, SG&A expenses decreased 330 basis points in 2025 to 22.6% from 25.9% in 2024 for the reasons discussed above.
Our loss from operations was $101 million in 2025 compared to $909 million in 2024. Our Non-GAAP Operating Profit was $126 million in 2025, an increase of $21 million from $106 million in 2024. Non-GAAP Operating Profit is a non-GAAP financial measure. See “Non-GAAP Financial Measures” below for more information.
Public Cloud operating profit increased 53% in 2025 from 2024. Segment operating profit as a percentage of segment revenue increased by 140 basis points, reflecting a 1% increase in segment revenue and a 1% decrease in segment operating expenses. The decrease in expenses was mainly driven by operational improvements and cost optimization initiatives.
Private Cloud operating profit decreased 14% in 2025 from 2024. Segment operating profit as a percentage of segment revenue decreased by 240 basis points, due to a 6% decrease in segment revenue, partially offset by a 3% decrease in segment operating expenses. The decrease in expenses was mainly driven by cost optimization activities.
Centralized corporate functions that provide services to the segments in areas such as accounting, information technology, marketing, legal and human resources are not allocated to the segments and are included in "corporate functions" in the table above. This expense decreased 17% in 2025 due to our continued focus on cost management.
We recorded a total of $715 million in non-cash goodwill impairment charges in 2024.
In connection with the March 2024 Refinancing Transactions that were completed in March and April 2024, as further described in Item 8 of Part II, Financial Statements and Supplementary Data - Note 7, "Debt", we updated our internal forecasts. As of February 29, 2024, we assessed our Board approved 2024 internal budget along with several events and circumstances that could affect the significant inputs used to determine the fair value of our reporting units, including the significance of the amount, if any, of excess carrying value over fair value, consistency of our current and forecasted operating margins and cash flows, budgeted-to-actual performance, timing of the expected effects of our strategic initiatives, overall change in economic climate, changes in the industry and competitive environment, changes to our risk-adjusted discount rates and earnings quality and sustainability. After considering all available evidence in our evaluation of goodwill impairment indicators, we determined it appropriate to perform an interim quantitative assessment of our reporting units as of February 29, 2024. The results of this goodwill impairment analysis indicated an impairment of goodwill within our Public Cloud and Private Cloud reporting units of $385 million and $188 million, respectively, recorded in the first quarter of 2024.
We performed an interim goodwill impairment analysis as of September 30, 2024 based on our assessment of several events and circumstances that could affect the significant inputs used to determine the fair value of our reporting units, including the significance of the amount, if any, of excess carrying value over fair value, consistency of our current and forecasted operating margins and cash flows, budgeted-to-actual performance, timing of the expected effects of our strategic initiatives, overall change in economic climate, changes in the industry and competitive environment, changes to our risk-adjusted discount rates and earnings quality and sustainability. The results of this goodwill impairment analysis indicated an impairment of goodwill within our Public Cloud and Private Cloud reporting units of $69 million and $73 million, respectively, recorded in the third quarter of 2024.
There was no such impairment in 2025.
We evaluated our indefinite-lived intangible asset for impairment as of February 29, 2024. As a result of this evaluation, we recorded a $20 million impairment of our indefinite-lived intangible asset in the first quarter of 2024.
There was no such impairment in 2025.
See Item 8 of Part II, Financial Statements and Supplementary Data - Note 6, "Goodwill and Intangible Assets" for further discussion.
Interest expense decreased $15 million, or 16%, to $83 million in 2025 from $98 million in 2024, primarily due to the accounting for contractual interest payments on debt instruments entered into as part of the March 2024 Refinancing Transactions, portions of which are recorded as a reduction of related premiums and not as interest expense, which reduces interest expense relative to contractual interest cost.
Gain on Debt Extinguishment, Net of Debt Modification Costs
We recorded an $80 million gain on debt extinguishment, net of debt modification costs in 2024 related to the March 2024 Refinancing Transactions. In addition, we recorded $67 million total gain on debt extinguishment related to repurchases of an aggregate $92 million principal amount of 3.50% FLSO Senior Secured Notes, FLSO Term Loan Facility, and 5.375% Senior Notes in 2024.
Other expense, net decreased $3 million, or 14%, to $19 million in 2025 from $22 million in 2024, primarily due to foreign currency transactions gains between periods and upfront transaction costs incurred in 2024 related to the Receivables Purchase Facility.
Benefit (Provision) for Income Taxes
Our income tax expense was $24 million in 2025 compared to $23 million income tax benefit in 2024. Our effective tax rate decreased from 2.6% in 2024 to (11.9)% in 2025. The decrease in the effective tax rate year-over-year is primarily due to the tax impact associated with changes in the valuation allowance, geographic distribution of profits, the tax impact associated with goodwill impairments recorded in both the first and third quarters of 2024, the majority of which were nondeductible for income tax purposes, and the income tax benefit related to the March 2024 Refinancing Transactions. The difference between the effective tax rate and the statutory rate in 2025 is primarily due to the tax impact associated with changes in valuation allowance, executive compensation that is non-deductible under IRC Section 162(m), the net impact of the geographic distribution of our earnings, and tax effects from non-deductible share-based compensation.
For a full reconciliation of our effective tax rate to the U.S. federal statutory rate and further explanation of our income tax expense, see Item 8 of Part II, Financial Statements and Supplementary Data - Note 13, "Taxes."
After removing the impact from foreign currency fluctuations, on a constant currency basis, revenue decreased 7.7%. The following table presents revenue growth by segment:
Private Cloud revenue in 2024 decreased 13.2% on an actual basis and 13.6% on a constant currency basis, from 2023, duereflecting tocustomer customers rollingtransitions off legacy private cloud offerings.platforms.
Cost of revenue decreased $125 million, or 5%, to $2,204 million in 2024 from $2,328 million in 2023. The decrease in cost of revenue was primarily due to an increase in the useful life of certain customer gear assets, as discussed in Item 8 of Part II, Financial Statements and Supplementary Data - Note 1, "Company Overview, Basis of Presentation, and Summary of Significant Accounting Policies",assets which resulted in a decline in depreciation expense between periods. Additionally, a reduction in headcount drove a decrease in personnel costs. Also contributing to the reduction in cost of revenue was license expense due to decreased usage between periods.
SG&A expenses decreased $60 million, or 8%, to $708 million in 2024 from $767 million in 2023. 2023 includes $12 million of expense recognized for a UK office that we exited in the second quarter of 2023, prior to the lease end date. Further contributing to the decrease year-over-year was additional insurance recovery proceeds related to the Hosted Exchange incident received in the current period.2024. In addition, personnel costs decreased due to a reduction in salaries driven by lower headcount and decreases in severance and commissions expense, partially offset by an increase in non-equity incentive compensation. Other non-personnel cost fluctuations included lower professional fees, a reduction in depreciation and amortization expense, and business optimization related expenses between periods. We also had an increase in the gain on sale of certain assets which further contributed to the reduction in SG&A expenses.
Private Cloud operating profit decreased 14% in 2024 from 2023. Segment operating profit as a percentage of segment `revenue decreased by 30 basis points, due to a 13% decrease in segment revenue; inline with a 13% decrease in segment operating expenses. The decrease in operating expenses was largely driven by a reduction in depreciation expense due to an increase in the useful life of certain customer gear assets, as discussed in “Cost of Revenue” above. Also contributing to the reduction in Private Cloud operating expenses was a decrease in license expense and personnel costs between periods.
In connection with the preparation of the March 2024 Refinancing Transactions that were completed in March and April 2024, as further described in Item 8 of Part II, Financial Statements and Supplementary Data - Note 7, "Debt", we updated our internal forecasts. As of February 29, 2024, we assessed our Board approved 2024 internal budget along with several events and circumstances that could affect the significant inputs used to determine the fair value of our reporting units, including the significance of the amount, if any, of excess carrying value over fair value, consistency of our current and forecasted operating margins and cash flows, budgeted-to-actual performance, timing of the expected effects of our strategic initiatives, overall change in economic climate, changes in the industry and competitive environment, changes to our risk-adjusted discount rates and earnings quality and sustainability. After considering all available evidence in our evaluation of goodwill impairment indicators, we determined it appropriate to perform an interim quantitative assessment of our reporting units as of February 29, 2024. The results of this goodwill impairment analysis indicated an impairment of goodwill within our Public Cloud and Private Cloud reporting units of $385 million and $188 million, respectively, recorded in the first quarter of 2024.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2023
Revenue decreased $165 million, or 5.3%, to $2,957 million in 2023 from $3,122 million in 2022. Revenue declined primarily due to Private Cloud, partially offset by growth in Public Cloud, as discussed below.
Revenue was not materially impacted by foreign currency fluctuations as revenue on a constant currency basis also declined 5.3%. The following table presents revenue growth by segment:
Public Cloud revenue in 2023 increased 0.2% on an actual basis and 0.3% on a constant currency basis, from 2022. Underlying growth was driven by both the acquisition of new customers and increased spend by existing customers, partially offset by cancellations by existing customers. Offerings in this segment with the strongest growth include infrastructure resale on AWS, Microsoft Azure and Google Cloud.
Private Cloud revenue in 2023 decreased 12.2% on an actual basis and 12.3% on a constant currency basis, from 2022, due to customers rolling off old generation private cloud offerings, expected decline in legacy OpenStack offerings, and the impact from the December 2022 Hosted Exchange ransomware incident.
Cost of revenue increased $63 million, or 3%, to $2,328 million in 2023 from $2,265 million in 2022, primarily due to an increase in usage charges for third-party infrastructure associated with growth in these offerings. Consulting professional fees and data center costs increased primarily to support growth for certain large customers. Personnel costs declined between periods due to lower headcount and a decrease in non-equity incentive compensation, partially offset by higher severance expense in 2023.
As a percentage of revenue, cost of revenue increased 610 basis points in 2023 to 78.7% from 72.6% in 2022, primarily driven by a 440 basis point increase in usage charges for third-party infrastructure. Higher data center and professional fees also contributed to the increase in basis points between periods.
Our gross profit was $629 million in 2023, a decrease of $228 million from $857 million in 2022. Our gross margin was 21.3% in 2023, a decrease of 610 basis points from 27.4% in 2022.
SG&A expenses decreased $88 million, or 10%, to $767 million in 2023 from $855 million in 2022. Contributing to the reduction in expense was a wind down of certain business optimization initiatives between periods. In addition, personnel costs declined between periods due to lower headcount and decreases in non-equity incentive compensation and commissions, partially offset by higher severance expense. Other non-personnel costs fluctuations include lower marketing spend, professional fees, and depreciation and amortization expense, offset by higher office rent. The increase in office rent includes $12 million of expense recognized for a UK office that we exited in the second quarter of 2023, prior to the lease end date.
As a percentage of revenue, SG&A expenses decreased 150 basis points, to 25.9% in 2023 from 27.4% in 2022, for the reasons discussed above.
Our loss from operations was $899 million in 2023 compared to $679 million in 2022. Our Non-GAAP Operating Profit was $157 million in 2023, a decrease of $162 million from $319 million in 2022. Non-GAAP Operating Profit is a non-GAAP financial measure. See “Non-GAAP Financial Measures” below for more information.
Public Cloud operating profit decreased 32% in 2023 from 2022. Segment operating profit as a percentage of segment revenue decreased by 220 basis points, reflecting a 3% increase in segment operating expenses as segment revenue growth remained relatively flat. The increase in costs was mainly driven by higher third-party infrastructure costs due to the increase in revenue, partially offset by a decrease in personnel costs.
Private Cloud operating profit decreased 31% in 2023 from 2022. Segment operating profit as a percentage of segment revenue decreased by 770 basis points, due to a 12% decrease in segment revenue, partially offset by a 2% decrease in segment operating expenses. The decrease in costs was mainly driven by a reduction in personnel costs.
Centralized corporate functions that provide services to the segments in areas such as accounting, information technology, marketing, legal and human resources are not allocated to the segments and are included in "corporate functions" in the table above. This expense decreased 10% in 2023 primarily due to a decline in depreciation expense as certain property, equipment, and software reached the end of its useful life.
We recorded a total of $709 million and $535 million in non-cash goodwill impairment charges in 2023 and 2022, respectively.
Due to the change in our segment reporting as a result of the business reorganization as of January 1, 2023, we completed a quantitative goodwill impairment analysis both prior and subsequent to the aforementioned change. The results of the quantitative goodwill impairment analysis performed as of January 1, 2023, subsequent to the change, indicated an impairment within our Private Cloud reporting unit, and we recorded a non-cash impairment charge of $271 million in the first quarter of 2023.
During the first quarter of 2023, we experienced a sustained decline in our stock price resulting in our market capitalization being less than the carrying value of our combined reporting units. As of March 31, 2023, we assessed several events and circumstances that could affect the significant inputs used to determine the fair value of our reporting units, including the significance of the amount, if any, of excess carrying value over fair value, consistency of operating margins and cash flows, budgeted-to-actual performance for the first three months of the year, overall change in economic climate, changes in the industry and competitive environment, and earnings quality and sustainability. After considering all available evidence in our evaluation of goodwill impairment indicators, we determined it appropriate to perform an interim quantitative assessment of our reporting units as of March 31, 2023. The results of this quantitative goodwill impairment analysis indicated an impairment within our Private Cloud reporting unit, and we recorded an additional non-cash impairment charge of $272 million in the first quarter of 2023.
We performed an interim goodwill impairment analysis as of September 30, 2023 based on our assessment of several events and circumstances that affect the significant inputs used to determine the fair value of our reporting units, including the significance of the amount of excess carrying value over fair value, consistency of operating margins and cash flows, budgeted-to-actual performance, overall change in economic climate, changes in the industry and competitive environment, market capitalization and earnings quality and sustainability. As a result, we determined that the carrying value of our Private Cloud reporting unit exceeded its fair value and recorded a non-cash impairment of goodwill of $166 million in the third quarter of 2023.
What changed in the latest 10-Q
Risk Factors
New heading “We depend on AMD as well as other Key Partners for our Enterprise AI business.”
New heading “The debt we have incurred or may incur to deploy AI infrastructure could adversely affect our financial condition and results of operations.”
New heading “Our Enterprise AI business is capital-intensive and depends on recovering large investments in rapidly evolving GPU infrastructure, and if GPU utilization, customer demand, hardware residual values or other assumptions fall short of our expectations, our results of operations could be materially and adversely affected.”
Largest changes
“To fund the acquisition of GPU hardware and related AI infrastructure, we expect to incur substantial additional indebtedness, whether through equipment financing/leasing arrangements, secured term loans, vendor or OEM financing, or other instruments. Additional leverage will increase our overall debt service obligations, may impose restrictive covenants limiting our operational and financial flexibility, and increase our exposure to interest rate fluctuations and refinancing risk. …”see in full comparison
“Our Enterprise AI business is capital-intensive, and its profitability depends on maintaining sufficient utilization of deployed GPU infrastructure. Our expectations regarding the size, timing and growth of the Enterprise AI market, customer demand, utilization rates, pricing, financing availability, returns on invested capital and our ability to attach value-added services may prove inaccurate. …”see in full comparison
“Our Enterprise AI business is capital-intensive and depends on recovering large investments in rapidly evolving GPU infrastructure, and if GPU utilization, customer demand, hardware residual values or other assumptions fall short of our expectations, our results of operations could be materially and adversely affected.”see in full comparison
“The debt we have incurred or may incur to deploy AI infrastructure could adversely affect our financial condition and results of operations.”see in full comparison
“We depend on AMD as well as other Key Partners for our Enterprise AI business.”see in full comparison
“Each deployment under the GPUaaS Agreement is subject to agreement between the parties on the commercial terms applicable to such deployment, including pricing, term and financial parameters, and AMD has no obligation under the GPUaaS Agreement to agree to any particular deployment as being within the scope of the framework of the GPUaaS Agreement. …”see in full comparison
Full comparison: every changed paragraph (10)
We have disclosed under the heading "Risk Factors" in our Annual Report the risk factors which materially affect our business, financial condition or results of operations. ThereOther than as set forth below, there have been no material changes from the risk factors previously disclosed. You should carefully consider the risk factors set forth in our Annual Report and the other information set forth elsewhere in this Quarterly Report on Form 10-Q. You should be aware that these risk factors and other information may not describe every risk facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
We depend on AMD as well as other Key Partners for our Enterprise AI business.
Our Enterprise AI business depends substantially on our relationship with Advanced Micro Devices, Inc. ("AMD") as well as on other partners who provide, or may provide in the future, complementary products, software and platform capabilities for our Enterprise AI solutions, including Palantir Technologies, Inc., VMware by Broadcom, Uniphore Technologies, Inc., Rubrik, Inc. and any future partners (collectively, our "Key Partners"). Our ability to obtain AMD Products and related hardware on commercially acceptable terms and timelines depends on our relationships with the third-party original equipment manufacturers who incorporate AMD Products into their servers as well as supply and demand for GPUs and related hardware in the overall market, which can fluctuate rapidly.
We have entered into a definitive GPU-as-a-Service Agreement - Master Terms and Conditions (the "GPUaaS Agreement") with AMD intended to facilitate the phased deployment of AMD AI compute products (including AMD Instinct™ GPUs (e.g., MI355X, MI350P, and future successor chips) and AMD EPYC™ CPUs) (collectively, the "AMD Products") in our global data centers. The GPUaaS Agreement establishes a commercial framework and does not itself obligate AMD to purchase any particular quantity of services, approve any deployment, or enter into future commercial arrangements. We have agreed to dedicate, maintain and make available an aggregate of 30 megawatts of capacity within our data centers as an initial launch footprint for AMD Products, where AMD Products are fit for purpose and subject to certain financing, operational, and legal conditions (the "AMD Footprint Obligation"). Satisfying the AMD Footprint Obligation will require significant capital expenditures, financing, customer demand, power availability, cooling capacity, networking infrastructure, operational execution and other conditions that may not occur on the anticipated timeline, at the anticipated costs, or at all. If we fail to satisfy the AMD Footprint Obligation, we could lose certain benefits under the GPUaaS Agreement, and our relationship with AMD could be adversely affected.
Each deployment under the GPUaaS Agreement is subject to agreement between the parties on the commercial terms applicable to such deployment, including pricing, term and financial parameters, and AMD has no obligation under the GPUaaS Agreement to agree to any particular deployment as being within the scope of the framework of the GPUaaS Agreement. If the parties agree that a deployment is within the scope of the GPUaaS Agreement, AMD has agreed to purchase residual unsold capacity from the applicable deployment, subject to the satisfaction of delivery and service availability requirements and an aggregate cap for each deployment. There can be no assurance that the applicable conditions will be satisfied or that such purchases will offset our investment, financing or operating costs. The GPUaaS Agreement also provides AMD with a right of first refusal to consume GPU capacity before the Company sells GPUaaS services to third parties below a specified price threshold. The GPUaaS Agreement remains in effect until the expiration or termination of all deployments thereunder. Either party may terminate an affected deployment upon the other party's uncured material breach or insolvency, if the go-live date for such deployment has not occurred by a specified outside date, or upon certain service level failures.
We also depend on joint marketing and demand generation activities conducted together with AMD and our Key Partners to build customer awareness and generate sales opportunities for our Enterprise AI solutions. Any reduction in, or failure to effectively execute, these efforts could adversely affect demand for our Enterprise AI solutions and our results of operations. Demand for our Enterprise AI solutions may also be affected by customer preferences for GPU technology that may not align with the technology we have deployed or plan to deploy. AMD or our Key Partners may change product roadmaps, allocation priorities, commercialization strategies, pricing or licensing terms, interoperability, preferred deployment partners or channel relationships at any time, which could reduce our access to the products and services offered by AMD and our Key Partners or adversely affect the pricing, economics, or competitiveness of our Enterprise AI offerings. Our ability to realize anticipated benefits from these relationships depends upon successful integration of the platforms of our Key Partners into our offerings, customer adoption, continued commercial cooperation, and the ability of the parties to execute their obligations. Customers may elect not to adopt offerings provided by our Key Partners or may prefer competing platforms. If our relationship with AMD or any of our Key Partners deteriorates for any reason, our ability to deliver Enterprise AI solutions to customers, and our results of operations, could be materially and adversely affected.
The debt we have incurred or may incur to deploy AI infrastructure could adversely affect our financial condition and results of operations.
To fund the acquisition of GPU hardware and related AI infrastructure, we expect to incur substantial additional indebtedness, whether through equipment financing/leasing arrangements, secured term loans, vendor or OEM financing, or other instruments. Additional leverage will increase our overall debt service obligations, may impose restrictive covenants limiting our operational and financial flexibility, and increase our exposure to interest rate fluctuations and refinancing risk. Certain financing arrangements may require us to pledge GPUs or other assets as collateral, which could limit our financial flexibility. Our ability to service this debt depends on generating sufficient Enterprise AI revenue and infrastructure utilization to justify the underlying capital expenditure; if customer demand does not develop as anticipated, if pricing for AI compute declines due to competition or oversupply, or if we are not able to attach value-added services, we may be unable to generate returns sufficient to service this debt or recover our capital investment. In addition, there can be no assurances that we will be able to obtain financing on commercially reasonable terms or in the amounts necessary to facilitate such deployments, if at all. If we are unable to access capital markets or financing on acceptable terms in the future, our ability to expand or maintain our Enterprise AI business could be impaired.
Our Enterprise AI business is capital-intensive and depends on recovering large investments in rapidly evolving GPU infrastructure, and if GPU utilization, customer demand, hardware residual values or other assumptions fall short of our expectations, our results of operations could be materially and adversely affected.
Our Enterprise AI business is capital-intensive, and its profitability depends on maintaining sufficient utilization of deployed GPU infrastructure. Our expectations regarding the size, timing and growth of the Enterprise AI market, customer demand, utilization rates, pricing, financing availability, returns on invested capital and our ability to attach value-added services may prove inaccurate. Because a substantial portion of our operating and financing costs is fixed and continues to be incurred regardless of utilization, periods of underutilization, including if demand develops more slowly than we anticipate, or if we invest ahead of customer adoption, could materially reduce our margins and cash flows. The Enterprise AI infrastructure market is characterized by rapid technological change, and the GPUs and related infrastructure we acquire may become obsolete or non-competitive before we have recovered our investment, requiring further capital expenditure to remain competitive. The residual value of AI hardware is uncertain. If the market value of our GPU infrastructure declines more rapidly than expected, we could incur impairment charges, refinancing challenges or losses upon disposition. We may also face customer concentration risk if a limited number of large customers account for a significant portion of Enterprise AI revenue, and the loss of any such customer could materially affect our results. Any of these factors, individually or together, could prevent us from realizing an adequate return on our GPU infrastructure investments and could have a material adverse effect on our results of operations.
Management's Discussion & Analysis (MD&A)
New heading “Subsequent Events”
New heading “Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2026”
New heading “Cost of Revenue”
New heading “Selling, General and Administrative Expenses”
New heading “Loss from Operations, Segment Operating Profit, and Non-GAAP Operating Profit”
New heading “Interest Expense”
New heading “Gain on Debt Extinguishment”
New heading “Other Expense, Net”
New heading “Provision for Income Taxes”
Removed heading “Subsequent Debt Repurchases”
Largest changes
“Loss from Operations, Segment Operating Profit, and Non-GAAP Operating Profit”see in full comparison
“Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2026”see in full comparison
Full comparison: every changed paragraph (101)
We are the operator of the full enterprise AI stack from governed private cloud to AI inference and agents in production. With an Outcomes-as-a-Service model built on secure infrastructure, data foundations, and forward-deployed engineering, Rackspace delivers business results for regulated and mission-critical industries where governance, sovereignty, and uptime are non-negotiable.
We are a leading end-to-end hybrid cloud and AI solutions company. We design, build and operate our customers' cloud environments across all major technology platforms, irrespective of technology stack or deployment model. We partner with our customers at every stage of their cloud journey, enabling them to modernize applications, build new products, and adopt innovative technologies.
Subsequent Events
For a description of subsequent events, see "Subsequent Events" in Item 1 of Part I, Financial Statements - Note 1, "Company Overview, Basis of Presentation, and Summary of Significant Accounting Policies."
We believe our combination of proprietary technology, automation capabilities and technical expertise creates a value proposition for our customers that is hard to replicate for both competitors and in-house IT departments. We and our customers face a variety of challenges, including evolving technologies (including AI and GenAI) and an uncertain regulatory landscape, including international trade policies and tariffs, as well as other macroeconomic and geopolitical factors. These factors have and will continue to affect demand for our products and services. We believe enterprise demand for AI is shifting from experimentation toward production deployment, with growing emphasis on inference workloads and on governance, security and data control requirements, particularly among customers in regulated industries and the public sector. Our continued success depends to a significant extent on our ability to respond to these and other challenges presented by our highly competitive and dynamic market, including the following key factors:
Our success depends to a significant extent on our ability to continue to differentiate, expand and upgrade our service offerings in line with developing customer needs,needs. whileWe deepeningbelieve our relationshipscurated, best-of-breed partners across every layer of the AI stack, combined with leadingdata publiccenter cloud service providerscapacity and establishingover new25 relationships,years includingof withtechnical salesexpertise, partners.represents a unique positional advantage for us. We are the operator of the full enterprise AI stack and have strategic partnership agreements with AMD, VMware by Broadcom, Palantir, Uniphore, Rubrik, and Dell Technologies, with Rackspace remaining fully accountable from silicon through business outcomes. We are also a certified premier consulting and managed services partner to some of the largest cloud computing platforms, including AWS, Microsoft Azure, Google Cloud, Oracle, SAP and VMware by Broadcom. We believe we are unique in our ability to serve customers across major technology stacks and deployment options, all while deliveringhelping Fanaticalcustomers Experience.move AI from experimentation to real-world production. Our existing and prospective customers are also under increasing pressure to move from on-premise or self-managed IT to the cloud to compete effectively in a digital economy and maximize the value of their cloud investments, which we believe presents an opportunity for professional services projects as well as new recurring business.
Our success greatly depends on our ability to retain and develop opportunities with our existing customers and to attract new customers. We operate in a growing but competitive and evolving market environment, requiring innovation to differentiate us from our competitors. Enterprise AI offerings in the market today typically put the full operational burden on the customer, which is especially difficult in regulated industries where governance, data sovereignty and operational continuity are critical. We believe Rackspace is uniquely positioned to deliver the full governed enterprise AI stack from silicon through business outcomes under a single accountable operator, serving a demand now visible across the market. Enterprises, particularly in regulated industries, are seeking control over their compute, their models, and their data, and assurance that the proprietary knowledge embedded in that data is not transferred outside their environments. We are model-agnostic by design and operate the governed layer that allows enterprises to use the best available models, whether open, closed, or their own, on private cloud where control matters and public cloud where elasticity matters, while policy, identity, and data boundaries remain under the enterprise’s control.
Our success greatly depends on our ability to retain and develop opportunities with our existing customers and to attract new customers. We operate in a growing but competitive and evolving market environment, requiring innovation to differentiate us from our competitors. We believe that our integrated cloud service portfolio and our differentiated customer experience and technology are keys to retaining and growing revenue from existing customers as well as acquiring new customers. For example, we believe that Rackspace Fabric provides customers a unified experience across their entire cloud and security footprint, and that our Rackspace Elastic Engineering model helps customers embrace a cloud native approach with on-demand access to a dedicated team of highly skilled cloud architects and engineers. These offerings differentiate us from legacy IT service providers that operate under long-term fixed and project-based fee structures often tethered to their existing technologies with less automation.
The mix of revenue has shifted in recent years, from our Private Cloud offerings to infrastructure resale and services within Public Cloud. Private Cloud offerings are generally hosted on our own infrastructure and deliver higher segment operating margins, but also require a higher level of capital expenditures. Conversely,Historical Private Cloud offerings have also included colocation and basic hosting contracts, which typically generate lower margins relative to other Private Cloud offerings, including managed services and Enterprise AI. Public Cloud segment operating margins arehave lower,historically been lower than Private Cloud segment operating margins, driven by high volumes of infrastructure resale revenue which come at significantly lower margins. However, Public Cloud requires significantly less capital expenditures. Going forward, we will continue to take a workload-centric approach and both Public and Private Cloud will be the net recipients of the workloads. The focus in Private Cloud will be to defend and expand our revenue with new solutions. The focus in Public Cloud is on expanding segment operating margins by driving cost efficiencies and growing higher-margin services revenue.
As we continue to execute our Enterprise AI strategy, we may de-emphasize and/or exit certain colocation and basic hosting arrangements within our established Private Cloud base in order to reserve and optimize capacity for Enterprise AI, our new revenue growth vector within Private Cloud. We also expect to continue to de-emphasize and/or exit lower-margin infrastructure resale in Public Cloud over time, as hyperscalers continue to move customers to direct contracts and we prioritize resources for higher-margin opportunities. Following these transitions, we believe our business mix will shift from legacy lower-growth, lower-margin revenue opportunities toward higher-growth, higher margin revenue opportunities as our strategy matures.
Our Enterprise AI strategy will require significant upfront capital investment (including GPU-related costs). We expect near-term margin pressure as we fund this next phase of growth, as certain investments are anticipated to be incurred ahead of Enterprise AI revenue ramping.
Three Months Ended MarchJune 31,30, 2025 Compared to Three Months Ended MarchJune 31,30, 2026
NM = not meaningful.
Revenue increased $13$4 million, or 1.9%,0.6%, to $678$670 million in the three months ended MarchJune 31,30, 2026 from $665$666 million in the three months ended MarchJune 31,30, 2025. Revenue growthincreased wasdue drivento byPrivate PublicCloud Cloud,growth, as discussed below.
Public Cloud revenue in the three months ended MarchJune 31,30, 2026 increaseddecreased 6.7%2.3% on an actual basis and 6.1%2.5% on a constant currency basis, from the three months ended MarchJune 31,30, 2025. The increasedecline was driven by both higherlower services revenue and increased infrastructure volumes.revenue.
Private Cloud revenue in the three months ended MarchJune 31,30, 2026 decreasedincreased 6.0%5.5% on an actual basis and 7.5%5.2% on a constant currency basis, from the three months ended MarchJune 31,30, 2025, reflectinglargely due to revenue related to certain customer transitionscontracts offthat legacyinclude platforms,embedded partiallysales-type offsetlease byarrangements revenuefor from new bookings.hardware.
Cost of revenue increased $21$18 million, or 4%,3%, to $559$555 million in the three months ended MarchJune 31,30, 2026 from $539$537 million in the three months ended MarchJune 31,30, 2025. The primary driversdriver of the increase includewas higher usage chargesexpense for third-partyhardware infrastructure,mainly consistentrelated withto revenuecertain growth,customer andcontracts higherthat include embedded sales-type lease arrangements. Higher depreciation expense.expense also contributed to the increase in cost of revenue. These increases were partially offset by lower license expense, due to a reduction in usage betweencharges periods,for third-party infrastructure and a decrease in personnel costs. The decrease in personnel costs drivenwas bylargely due to a decline in headcount between periods and a reduction in non-equity incentive compensationcompensation, andpartially share-basedoffset compensation.by an increase in severance expense driven by the workforce realignment plan announced in June 2026.
As a percentage of revenue, cost of revenue increased 150230 basis points in the three months ended MarchJune 31,30, 2026 to 82.4%82.9% from 80.9%80.6% in the three months ended MarchJune 31,30, 2025 for the reasons discussed above.
Our gross profit was $115 million in the three months ended June 30, 2026, a decrease of $14 million from $129 million in the three months ended June 30, 2025. Our gross margin was 17.1% in the three months ended June 30, 2026, a decrease of 230 basis points from 19.4% in the three months ended June 30, 2025.
Our gross profit was $119 million in the three months ended March 31, 2026, a decrease of $8 million from $127 million in the three months ended March 31, 2025. Our gross margin was 17.6% in the three months ended March 31, 2026, a decrease of 150 basis points from 19.1% in the three months ended March 31, 2025.
Selling, general and administrative expenses decreased $28$6 million, or 17%,4%, to $137$148 million in the three months ended MarchJune 31,30, 2026 from $165$154 million in the three months ended MarchJune 31,30, 2025. DecliningAmortization personnel costsexpense had the largest impact due to a reduction in headcount between periods and a decrease in severance and share-based compensation expense. Also drivingon the overall reduction in selling, general and administrative expenses was a gain on disposal of non-core assets in the current period and a decrease in amortization expense as certain customer relationship intangible assets reached the end of their useful lives between periods. Personnel costs also contributed to the decline in expense due to a reduction in headcount between periods and a decrease in non-equity incentive compensation, partially offset by an increase in severance expense driven by the workforce realignment plan announced in June 2026. An increase in professional fees between periods partially offset these expense reductions.
As a percentage of revenue, selling, general and administrative expenses decreased 460110 basis points, to 20.2%22.1% in the three months ended MarchJune 31,30, 2026 from 24.8%23.2% in the three months ended MarchJune 31,30, 2025 primarily due to personnelamortization costs,expense, as discussed above.
Our loss from operations was $18$33 million in the three months ended MarchJune 31,30, 2026 compared to $38$25 million in the three months ended MarchJune 31,30, 2025. Our Non-GAAP Operating Profit was $31$27 million in both the three months ended MarchJune 31,30, 2026,2026 anand increaseJune of $5 million from $26 million in the three months ended March 31,30, 2025. Non-GAAP Operating Profit is a non-GAAP financial measure. See "Non-GAAP Financial Measures" below for more information.
Public Cloud operating profit increased 20% in the three months ended March 31, 2026 from the three months ended March 31, 2025. Segment operating profit as a percentage of segment revenue increased by 50 basis points, reflecting a 7% increase in segment revenue, partially offset by a 6% increase in segment operating expenses. The increase in expenses was mainly driven by higher cost of revenue, which increased inline with revenue growth between periods.
PrivatePublic Cloud operating profit decreasedincreased 5%17% in the three months ended MarchJune 31,30, 2026 from the three months ended MarchJune 31,30, 2025. Segment operating profit as a percentage of segment revenue increased by 3080 basis pointspoints, due toreflecting a 6%3% decrease in segment operating expenses, partially offset by a 6%2% decrease in segment revenue. The decrease in expenses was mainly driven by lower cost of revenue, inlinein-line with revenue decline,decline andbetween gains on disposal of non-core assets in the current period.periods.
Private Cloud operating profit decreased 7% in the three months ended June 30, 2026 from the three months ended June 30, 2025. Segment operating profit as a percentage of segment revenue decreased by 280 basis points due to a 9% increase in segment operating expenses, partially offset by a 5% increase in segment revenue. The increase in expenses was mainly due to higher cost of revenue, including higher expense for hardware mainly related to certain customer contracts that include embedded sales-type lease arrangements, customer license and data center costs, driven by margin compression between periods.
Centralized corporate functions that provide services to the segments in areas such as accounting, information technology, marketing, legal and human resources are not allocated to the segments and are included in "corporate functions" in the table above. This expense decreased 9%3% in the three months ended MarchJune 31,30, 2026 from the three months ended MarchJune 31,30, 2025 due to our continued focus on cost management.
Interest expense increased $7$13 million, or 35%,61%, to $26$34 million in the three months ended MarchJune 31,30, 2026 from $19$21 million in the three months ended MarchJune 31,30, 2025 driven by the impact of our interest rate swap maturing in February 2026. Borrowings on the Revolving Credit Facility also contributed to the increase in interest expense between periods.
We recorded 56$7 million total gain on debt extinguishment in the three months ended MarchJune 31,30, 2026 related to repurchases of an aggregate $96$11 million principal amount of the 3.50% FLSO Senior Secured Notes, 3.50% Senior Secured Notes,Notes and 5.375% Senior Notes.
The decreaseincrease in other expense, net to $5 million in the three months ended June 30, 2026 from $4 million in the three months ended MarchJune 31, 2026 from $5 million in the three months ended March 31,30, 2025 is primarily due to foreign currency transaction gains.losses.
Benefit (Provision) for Income Taxes
Our income tax benefitexpense was $0.1$2 million in the three months ended MarchJune 31,30, 2026 compared to $8$5 million income tax expense in the three months ended MarchJune 31,30, 2025. Our effective tax rate increased to (1.52.8)% in the three months ended MarchJune 31,30, 2026 from (12.99.3)% in the three months ended MarchJune 31,30, 2025. The increase in the effective tax rate year-over-year is primarily due to the tax impact associated with changes in valuation allowance, the net impact of the geographic distribution of our earnings, and the tax effects from non-deductible share-based compensation, and executive compensation that is non-deductible under Internal Revenue Code (“IRC”) Section 162(m).compensation. The difference between the effective tax rate and the statutory rate for the three months ended MarchJune 31,30, 2026 is primarily due to the tax impact associated with changes in valuation allowance, executive compensation that is non-deductible under Internal Revenue Code ("IRC") Section 162(m), and the net impact of the geographic distribution of our earnings.
Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2026
The following table sets forth our results of operations for the specified periods, as well as changes between periods and as a percentage of revenue for those same periods (totals in table may not foot due to rounding):
Revenue increased $17 million, or 1.2%, to $1,348 million in the six months ended June 30, 2026 from $1,332 million in the six months ended June 30, 2025. Revenue increased due to Public Cloud growth, as discussed below.
After removing the impact from foreign currency fluctuations, on a constant currency basis, revenue increased 0.7% year-over-year. The following table presents revenue by segment:
(a) Refer to "Non-GAAP Financial Measures" in this section for further explanation and reconciliation.
Public Cloud revenue in the six months ended June 30, 2026 increased 2.2% on an actual basis and 1.8% on a constant currency basis, from the six months ended June 30, 2025. The revenue growth was driven primarily by increased infrastructure volumes.
Private Cloud revenue in the six months ended June 30, 2026 decreased 0.3% on an actual basis and 1.2% on a constant currency basis, from the six months ended June 30, 2025, reflecting customer transitions off legacy platforms, partially offset by revenue from new bookings, including revenue related to certain customer contracts that include embedded sales-type lease arrangements for hardware.
Cost of Revenue
Cost of revenue increased $39 million, or 4%, to $1,114 million in the six months ended June 30, 2026 from $1,076 million in the six months ended June 30, 2025. The primary drivers of the increase include higher usage charges for third-party infrastructure and higher depreciation expense. In addition, we had higher expense for hardware mainly related to certain customer contracts that include embedded sales-type lease arrangements. These increases were partially offset by lower license expense, due to a reduction in usage between periods, and a decrease in personnel costs. The decrease in personnel costs was largely due to a decline in headcount between periods and a reduction in non-equity incentive compensation, partially offset by an increase in severance expense driven by the workforce realignment plan announced in June 2026.
As a percentage of revenue, cost of revenue increased 190 basis points in the six months ended June 30, 2026 to 82.7% from 80.8% in the six months ended June 30, 2025 for the reasons discussed above.
Gross Profit
Our gross profit was $234 million in the six months ended June 30, 2026, a decrease of $22 million from $256 million in the six months ended June 30, 2025. Our gross margin was 17.3% in the six months ended June 30, 2026, a decrease of 190 basis points from 19.2% in the six months ended June 30, 2025.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $35 million, or 11%, to $285 million in the six months ended June 30, 2026 from $320 million in the six months ended June 30, 2025. Declining personnel costs had the largest impact due to a reduction in headcount between periods and a decrease in share-based compensation and non-equity incentive compensation expense, partially offset by an increase in severance expense. Also driving the overall reduction in selling, general and administrative expenses was a gain on disposal of non-core assets in the current period and a decrease in amortization expense as certain customer relationship intangible assets reached the end of their useful lives between periods. An increase in professional fees between periods partially offset these expense reductions.
As a percentage of revenue, selling, general and administrative expenses decreased 290 basis points, to 21.1% in the six months ended June 30, 2026 from 24.0% in the six months ended June 30, 2025 primarily due to personnel costs and amortization expense, discussed above.
Loss from Operations, Segment Operating Profit, and Non-GAAP Operating Profit
Our loss from operations was $51 million in the six months ended June 30, 2026 compared to $64 million in the six months ended June 30, 2025. Our Non-GAAP Operating Profit was $58 million in the six months ended June 30, 2026, an increase of $5 million from $53 million in the six months ended June 30, 2025. Non-GAAP Operating Profit is a non-GAAP financial measure. See "Non-GAAP Financial Measures" below for more information.
The table below presents a reconciliation of loss from operations to Non-GAAP Operating Profit.
Our segment operating profit and segment operating margin for the periods indicated, and the change between periods is shown in the table below:
Public Cloud operating profit increased 19% in the six months ended June 30, 2026 from the six months ended June 30, 2025. Segment operating profit as a percentage of segment revenue increased by 70 basis points, reflecting a 2% increase in segment revenue, partially offset by a 1% increase in segment operating expenses. The increase in expenses was mainly driven by higher cost of revenue, which increased in-line with revenue growth between periods.
Private Cloud operating profit decreased 6% in the six months ended June 30, 2026 from the six months ended June 30, 2025. Segment operating profit as a percentage of segment revenue decreased by 130 basis points due to a 1% increase in segment operating expenses and a slight decrease in segment revenue. The increase in expenses was mainly driven by higher cost of revenue.
Centralized corporate functions that provide services to the segments in areas such as accounting, information technology, marketing, legal and human resources are not allocated to the segments and are included in "corporate functions" in the table above. This expense decreased 6% in the six months ended June 30, 2026 from the six months ended June 30, 2025 due to our continued focus on cost management.
For more information about our segment operating profit, see Item 1 of Part I, Financial Statements - Note 13, "Segment Reporting."
Interest Expense
Interest expense increased $20 million, or 48%, to $60 million in the six months ended June 30, 2026 from $41 million in the six months ended June 30, 2025 driven by the impact of our interest rate swap maturing in February 2026. Borrowings on the Revolving Credit Facility also contributed to the increase in interest expense between periods. These increases in interest expense were partially offset by repurchases of senior notes between periods, discussed below.
Gain on Debt Extinguishment
We recorded a $63 million gain on debt extinguishment in the six months ended June 30, 2026 related to repurchases of $108 million principal amount of the 3.50% FLSO Senior Secured Notes, 3.50% Senior Secured Notes, and 5.375% Senior Notes.
For more information, see Item 1 of Part I, Financial Statements - Note 7, "Debt."
RXT insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 10 filings (5 insiders, 6 trade dates, 991,095 shares, about $3.7M; 9 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -991,095 (purchases minus sales); net value about -$3.7M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-15 | Sobel Aaron F. |
Grant/award | 40,545 | — | — |
| 2026-09-08 | Teal-Guess Kellie |
Open-market sale |
33,558 | $3.13 | $105.0K |
| 2026-09-04 | Kandiah Gajakarnan Vibushanan |
Open-market sale |
498,728 | $3.21 | $1.6M |
| 2026-09-02 | Marino Mark A. |
Open-market sale |
51,373 | $2.95 | $151.6K |
| 2026-09-02 | Sinha Dharmendra Kumar |
Open-market sale |
107,002 | $2.95 | $315.7K |
| 2026-09-02 | Kandiah Gajakarnan Vibushanan |
Open-market sale |
8,258 | $2.95 | $24.4K |
| 2026-08-14 | Scott Anthony |
Open-market sale | 48,780 | $4.25 | $207.3K |
| 2026-06-18 | Roberts Anthony C. |
Shares withheld for tax | 35,472 | $7.22 | $256.1K |
| 2026-06-18 | Roberts Anthony C. |
Grant/award | 37,950 | — | — |
| 2026-06-18 | Scott Anthony |
Grant/award | 37,950 | — | — |
| 2026-06-18 | Garber Mitchell Alan |
Grant/award | 37,950 | — | — |
| 2026-06-18 | Benjamin Jeffrey D |
Grant/award | 71,156 | — | — |
| 2026-06-04 | Teal-Guess Kellie |
Open-market sale |
33,966 | $5.56 | $188.9K |
| 2026-06-04 | Kandiah Gajakarnan Vibushanan |
Shares withheld for tax | 8,059 | $5.92 | $47.7K |
| 2026-06-04 | Marino Mark A. |
Open-market sale |
48,099 | $5.56 | $267.4K |
| 2026-06-04 | Sinha Dharmendra Kumar |
Open-market sale |
48,099 | $5.56 | $267.4K |
| 2026-05-18 | Teal-Guess Kellie |
Open-market sale |
113,232 | $5.12 | $579.7K |
| 2026-04-03 | Teal-Guess Kellie |
Grant/award |
443,548 | — | — |
| 2026-04-03 | Kandiah Gajakarnan Vibushanan |
Grant/award | 200,000 | — | — |
| 2026-04-03 | Marino Mark A. |
Grant/award |
806,451 | — | — |
| 2026-04-03 | Sinha Dharmendra Kumar |
Grant/award |
1,142,473 | — | — |
Well-known investors holding RXT (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 5,130,701 | $33.5M | 0.01% | Added 13% |
| Two Sigma Investments | 2026-06-30 | 3,835,773 | $25.0M | 0.02% | Added 8131% |
| Renaissance Technologies | 2026-06-30 | 2,429,758 | $15.9M | 0.02% | Added 19% |
| Millennium Management (Israel Englander) | 2026-06-30 | 2,343,283 | $15.3M | 0.01% | Added 705% |
| Polen Capital Management | 2026-06-30 | 709,189 | $4.6M | 0.04% | New position |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 655,066 | $4.3M | 0.0% | Added 1521% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 42,305 | $276.3K | 0.0% | New position |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 27,122 | $26.6K | — | Sold out |