TLDR
- Rackspace Technology (RXT) shares exploded approximately 68% higher on Thursday, adding another 11% during Friday’s premarket session following better-than-anticipated Q4 performance.
- Fourth quarter EPS registered at -$0.010, surpassing Wall Street’s -$0.040 expectation by $0.03; quarterly revenue reached $683M compared to analyst estimates of $674.91M.
- Operating cash flow totaled $60M during the quarter, with year-end liquidity standing at approximately $397M.
- Full-year 2026 revenue outlook of $2.6B–$2.7B and operating profit projection of $160M–$170M were provided, while EPS forecast of -$0.150 fell short of the -$0.030 consensus.
- A strategic collaboration with Palantir focused on enterprise AI deployment contributed to bullish sentiment surrounding the earnings release.
Rackspace Technology delivered fourth quarter financial results that exceeded lowered expectations, sparking one of the most dramatic single-day rallies in recent market history.
Shares rocketed approximately 68% higher during Thursday’s trading session. The momentum continued into Friday morning, with an additional 11% gain in premarket activity, positioning RXT among the week’s top performers.
Rackspace Technology, Inc., RXT
What sparked this explosive move?
Fourth quarter revenue totaled $683 million, exceeding Wall Street’s $674.91 million projection. Loss per share narrowed to -$0.010, comfortably beating the anticipated -$0.040 loss by three cents.
While still unprofitable, the company posted a narrower-than-expected loss — and in this environment, that proved sufficient to ignite investor enthusiasm.
Operating cash flow generation reached $60 million for the period. Non-GAAP operating profit registered $41 million, surpassing the upper boundary of management’s prior guidance range.
The company finished 2025 holding approximately $397 million in total liquidity. This figure carries particular significance given ongoing balance sheet concerns that have pressured the stock.
Full-Year 2026 Outlook: A Mixed Bag
Management provided full-year 2026 revenue guidance ranging from $2.6 billion to $2.7 billion. This came in slightly below the Street’s $2.72 billion consensus at the high end.
Operating profit projections of $160 million to $170 million suggest margin expansion as the company’s transformation continues.
However, the EPS outlook presents a more challenging picture. Management expects full-year 2026 EPS of -$0.150, significantly worse than the consensus forecast of -$0.030. This substantial variance represents a key monitoring point going forward.
During the 90-day period preceding this report, analyst sentiment remained cautious with zero upward EPS revisions and one downward adjustment.
Strategic Palantir Alliance Amplifies Positive Momentum
Portion of the share price surge can be attributed to developments earlier this month.
Rackspace unveiled a strategic collaboration with Palantir Technologies. Through this arrangement, Rackspace will assist enterprise clients in implementing and managing Palantir’s Foundry platform and AI Platform (AIP) solutions.
This partnership positions Rackspace more strategically within the enterprise AI infrastructure market, an area attracting significant investor capital.
The convergence of the Palantir announcement and better-than-feared financial results appears to have catalyzed substantial short covering alongside renewed buying interest.
Prior to the post-earnings surge, shares traded at $1.35. The stock has climbed 27.36% during the past three months, though it remains down 43.98% over the trailing twelve-month period.
The current Wall Street consensus stands at Hold, derived from one analyst rating issued within the past three months. The average price target of $1.30 suggests potential downside from current trading levels even following the recent rally.
Analyst EPS estimate revisions during the 90-day pre-earnings window showed no positive adjustments and one negative revision.
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