Rackspace Technology announced a strategic pivot toward becoming a full enterprise artificial intelligence stack operator on July 9, 2026, leading to a downward revision of its fiscal year 2026 revenue outlook by $150 million due to capacity constraints and strategic exits from legacy services.
The San Antonio-based company adjusted its total fiscal year 2026 revenue projections to a midpoint of $2.5 billion, while lowering its adjusted EBITDA expectations by $20 million to a new midpoint of $290 million.
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Private cloud revenue projections dropped by $25 million as the firm exits colocation and basic hosting to reserve capacity for enterprise AI.
Public cloud revenue projections fell by $125 million due to an exit from low-margin resale contracts.
Workforce Reduction and Restructuring
To fuel this transition, the company is reducing its global workforce by approximately 15 percent, incurring up to $19 million in restructuring charges to generate up to $85 million in annual savings for AI reinvestment.
For the second quarter of 2026, preliminary figures show expected revenue between $641 million and $649 million, alongside an expected GAAP net loss ranging from $91 million to $62 million.
As part of its structural shift, Rackspace finalized a definitive agreement with Palantir to deploy Palantir Foundry and AIP in mid-market, regulated, and sovereign environments, establishing Rackspace as a preferred partner.
The company has already achieved roughly 400 Palantir certifications across its technical and sales teams.
“The best-of-breed partnerships we have signed during 2026 – with AMD, Palantir, Rubrik, Uniphore and VMware by Broadcom – combined with the data center capacity and 25+ years of expertise that Rackspace brings to the table, represent a unique positional advantage for Rackspace.
