Rackspace (RXT) Stock Surges 68% Following Q4 Earnings Beat

TLDR

• Rackspace (RXT) stock surged ~68% on Thursday and was up another 11% in premarket Friday after Q4 results beat expectations.
• Q4 EPS came in at -$0.010, beating the estimate of -$0.040 by $0.03; revenue hit $683M vs. the $674.91M consensus.
• The company generated $60M in operating cash flow and ended the year with ~$397M in total liquidity.
• Rackspace guided FY2026 revenue of $2.6B–$2.7B and operating profit of $160M–$170M, though EPS guidance of -$0.150 missed the consensus of -$0.030.
• A recently announced partnership with Palantir to deploy enterprise AI tools added to positive sentiment ahead of the results.

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Rackspace Technology posted Q4 results that came in better than feared, and the market noticed in a big way.

The stock jumped roughly 68% on Thursday. It then tacked on another 11% in premarket trading Friday, making RXT one of the biggest single-day movers in the market this week.

Rackspace Technology, Inc., RXT

So what drove it?

Q4 revenue came in at $683 million, topping the analyst consensus of $674.91 million. EPS landed at -$0.010, beating the estimate of -$0.040 by $0.03.

Not a profit, but a smaller loss than expected — and right now, that’s enough.

The company also reported $60 million in operating cash flow for the quarter. Non-GAAP operating profit hit $41 million, above the high end of its own guidance.

Rackspace ended 2025 with around $397 million in total liquidity. That number matters because balance sheet concerns have been a weight on the stock for a while.

FY2026 Guidance: Mixed Picture

For the full year 2026, Rackspace guided revenue of $2.6 billion to $2.7 billion. The analyst consensus had been sitting at $2.72 billion, so that’s a slight miss on the top end.

Operating profit guidance came in at $160 million to $170 million, which points to improving margins as the turnaround progresses.

The EPS guidance is harder to ignore though. Rackspace sees FY2026 EPS of -$0.150, well below the consensus estimate of -$0.030. That gap is wide, and it’s something investors will be watching closely.

In the 90 days before this report, the stock saw zero positive EPS revisions and one negative revision — not exactly a ringing endorsement heading in.

Palantir Partnership Adds to the Momentum

Part of the stock’s move can be traced to earlier in the month.

Rackspace announced a partnership with Palantir Technologies. Under the deal, Rackspace will help enterprise customers deploy and operate Palantir’s Foundry and AI Platform (AIP).

It ties Rackspace more directly to enterprise AI spending, which has been a hot area for investor interest.

The combination of the Palantir news and a cleaner-than-expected earnings report appears to have triggered a wave of short covering and fresh buying.

The stock closed at $1.35 before the post-earnings move. It is up 27.36% over the last three months but still down 43.98% over the past 12 months.

Wall Street’s current consensus rating on RXT is Hold, based on one analyst rating over the past three months. The average price target sits at $1.30 — which, even after the run-up, implies potential downside from current levels.

Rackspace saw zero positive EPS revisions and one negative revision in the last 90 days ahead of this report.

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