Rackspace Technology (RXT) Stock: Why The Price Jumped Today

By Amit Chowdhry ● Nov 16, 2021
  • The stock price of Rackspace Technology, Inc. (NASDAQ: RXT) increased by over 12% during intraday trading today. This is why it happened.

The stock price of Rackspace Technology, Inc. (NASDAQ: RXT) increased by over 12% during intraday trading today. Investors are responding positively to the company’s results for the third quarter ended September 30, 2021.

Q3 2021 Results

— Revenue was $763 million in the third quarter of 2021, an increase of 12% as compared to revenue of $682 million in the third quarter of 2020. Revenue for the third quarter of 2021 was positively impacted by new customer acquisitions and growing customer spending in Multicloud Services and Apps & Cross Platform segments. On a constant currency basis, revenue increased by 11% in the third quarter of 2021 as compared to the third quarter of 2020.

— Revenue from the Core Segments, comprised of Multicloud Services and Apps & Cross Platform, increased 15% on an actual basis and 14% on a constant currency basis, in the third quarter of 2021 as compared to the third quarter of 2020.

— Bookings were $200 million in the third quarter of 2021, a decrease of 36% as compared to Bookings of $315 million in the third quarter of 2020. Rackspace Technology expects to achieve its $1 billion bookings target for fiscal 2021, as a large, competitive deal was awarded to the company early in the fourth quarter and is expected to be signed before year-end.

— Net loss was $(35) million in the third quarter of 2021, compared to a net loss of $(101) million in the third quarter of 2020.

— Net loss per diluted share was $(0.17) in the third quarter of 2021, compared to net loss per diluted share of $(0.54) in the third quarter of 2020.

— Non-GAAP Operating Profit was $124 million in the third quarter of 2021, an increase of 6% compared to $117 million in the third quarter of 2020.

— Non-GAAP Earnings Per Share was $0.25 in the third quarter of 2021, an increase of 32% as compared to Non-GAAP Earnings Per Share of $0.19 in the third quarter of 2020.

— Capital expenditures were $35 million in the third quarter of 2021, compared to $48 million in the third quarter of 2020.

— As of September 30, 2021, the company had cash and cash equivalents of $260 million with no balance outstanding on their Revolving Credit Facility.

This is the company’s financial outlook:

Q4 2021 Guidance

— Revenue: $766 – $776 million

— Core Revenue: $724 – $732 million

— Non-GAAP Operating Profit: $118 – $122 million

— Non-GAAP Earnings Per Share: $0.23 – $0.25

— Non-GAAP Other Income (Expense): ($51) – ($52) million

— Non-GAAP Tax Expense Rate: 26%

— Non-GAAP Weighted Average Shares: 212 – 214 million

FY 2021 Guidance

— Revenue: $2.998 – $3.008 million

— Core Revenue: $2.815 – $2.823 million

— Non-GAAP Operating Profit: $480 – $484 million

— Non-GAAP Earnings Per Share: $0.95 – $0.97

— Non-GAAP Other Income (Expense): ($205) – ($206) million

— Non-GAAP Tax Expense Rate: 26%

— Non-GAAP Weighted Average Shares: 213 – 215 million

KEY QUOTES:

“The Cloud market continues to grow and momentum continues to accelerate. Companies of all sizes need help with their move to the cloud. And as a leading pure-play cloud services company, Rackspace Technology is poised to be their partner of choice for all things cloud – wherever they are in their journey.”

“In the third quarter, revenue, Core Revenue, Non-GAAP Operating Profit and Non-GAAP EPS all grew at a healthy year-over-year clip. We delivered strong operating cash flow of over $100 million for the third quarter in a row. And we also continued to introduce timely new product and service offerings that help our customers get the most out of their cloud investment. Our new Elastic Engineering model is gaining fast adoption and was expanded to several new areas. And we are very excited about the launch of Rackspace Data Freedom, a new storage service based on robust Rackspace-developed technology that helps customers manage their costs across multiple cloud platforms.”

— Kevin Jones, Chief Executive Officer

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.