Rackspace Technology is trying to recast a highly levered hybrid-cloud franchise as the operator of a governed enterprise AI stack, and the June quarter is the first clean look at whether that story is earning its keep. Private Cloud grew while Public Cloud shrank, which is the mix shift management wants. The problem is that the rebound arrived with a timing lift from an embedded lease, cash from operations went negative, and the July strategy update cut the year outlook as the company reserved capacity for AI and exited low-margin resale. Revenue reached $670 million, essentially flat versus the year-ago quarter. That is not a growth print. It is a transition print, and the market has to decide whether the transition funds itself before the 2028 maturity wall.
The July ninth update is the real event. Management cut full-year revenue guidance by $150 million. Adjusted earnings before interest, taxes, depreciation, and amortization, commonly called adjusted EBITDA, was trimmed by $20 million. Most of the revenue cut sits in Public Cloud, where hyperscalers keep pulling customers onto direct contracts. Private Cloud was also lowered as the company exits colocation and basic hosting to reserve capacity for Enterprise AI. Apollo Global Management, which controls a majority of the vote and sits on the board, publicly backed the raise. A $250 million at-the-market equity program with Goldman Sachs is the funding vehicle for the graphics-processing-unit build.
Second-quarter cash used in operations was $32 million. Liquidity at mid-year sat at $202 million against nearly three billion of carrying-value debt. Balances are as of June 30, 2026. The open question is whether the first two megawatts of AMD capacity actually land under contract this year, and whether Private Cloud growth holds once the lease timing rolls off.