Rackspace Technology reported second-quarter results showing modest overall revenue growth as the company continues shifting its focus toward enterprise AI infrastructure and managed cloud services.

Revenue reached $670 million for the quarter ended June 30, 2026, compared with $666 million in the same period a year earlier. On a constant-currency basis, revenue increased 0.4%.

CEO Gajen Kandiah said enterprises in regulated industries are increasingly moving artificial intelligence from experimentation into production and are seeking technology partners that can remain accountable for those deployments.

The company also launched its Managed Compute and Inference Platform, supported by partners including AMD and Palantir. Rackspace said the platform is part of its broader effort to build an enterprise AI stack for customers.

Private Cloud Outperforms Public Cloud

The company’s two primary cloud businesses moved in different directions during the quarter.

Private Cloud revenue increased 5.5% on a reported basis to $263 million, compared with $250 million a year earlier. Constant-currency growth was 5.2%.

Public Cloud revenue, meanwhile, declined 2.3% to $407 million, compared with $417 million in the second quarter of 2025. On a constant-currency basis, Public Cloud revenue decreased 2.5%.

The divergence highlights the importance of Rackspace’s private-cloud operations as the company works to expand its enterprise infrastructure and AI offerings.

Profitability Remains a Challenge

Despite the modest increase in revenue, Rackspace continued to report losses.

The company recorded a $33 million operating loss in the second quarter, compared with a $25 million operating loss in the year-ago period.

Net loss reached $68 million, or $0.27 per diluted share, compared with a $55 million net loss, or $0.23 per diluted share, in the second quarter of 2025.

On a non-GAAP basis, operating profit remained at $27 million, unchanged from the prior-year quarter.

Non-GAAP loss per share was $0.08, compared with $0.06 a year earlier, representing a 33% decline in the company’s non-GAAP loss-per-share performance.

Cash Flow and Capital Spending

Rackspace reported $32 million of cash flow used in operating activities during the second quarter.

On a trailing-twelve-month basis, however, cash flow from operating activities was $104 million.

Capital expenditures totaled $28 million during the quarter, down from $31 million in the second quarter of 2025.

The figures indicate that Rackspace continues to manage capital spending while investing in infrastructure and new AI-related capabilities.

AI Infrastructure Becomes a Key Growth Opportunity

Rackspace’s latest results come as enterprises increasingly move AI applications from testing environments toward production deployments.

The company’s strategy is centered on providing infrastructure and managed services that can support those deployments, particularly for organizations operating in regulated industries.

The launch of the Managed Compute and Inference Platform, together with relationships involving AMD and Palantir, gives Rackspace another avenue to participate in the expanding enterprise AI infrastructure market.

However, the company’s relatively flat overall revenue and continued GAAP losses show that the AI opportunity has not yet translated into a significant acceleration in consolidated financial performance.

Market Outlook

Rackspace Technology enters the second half of 2026 with a growing emphasis on enterprise AI infrastructure while its traditional cloud businesses continue to produce mixed results. Private Cloud growth and the launch of the Managed Compute and Inference Platform provide potential avenues for expansion, but declining Public Cloud revenue and continued net losses remain important challenges. The company’s ability to convert increasing enterprise AI adoption into sustainable revenue and profitability will be a key factor in determining whether its AI infrastructure strategy can produce stronger financial results over the coming quarters.