Rackspace Technology, Inc.RXT
Rackspace Technology, Inc. Segments Disclosure
Segment Reporting
We have organized our operations into two operating segments, which correspond directly to our reportable segments: Public Cloud, a services-centric, capital-light model providing value-added cloud solutions through managed services, Elastic Engineering and professional services offerings for customer environments hosted on the AWS, Microsoft Azure and Google Cloud public cloud platforms; and Private Cloud, a technology-forward, capital-intensive model providing managed service offerings for customer environments hosted in one of our data centers as well as in those owned by customers or by third parties such as colocation providers. Private Cloud also includes our legacy OpenStack Public Cloud business that we ceased to actively market to customers in 2017.
This two-business unit operating model allows for each segment to be managed separately based on the different service offerings and respective operational and marketing strategies, ensuring increased focus, delivery, and service quality for our customers.
Our segments are based upon a number of factors, including, the basis for our budgets and forecasts, organizational and management structure and the financial information regularly provided to our Chief Operating Decision Maker (“CODM”), who we have determined to be our Chief Executive Officer. Our Board appointed a new chief executive officer, effective September 3, 2025, who immediately assumed the CODM responsibilities. The CODM is responsible for making key operating and strategic decisions to assess performance for each segment. We assess financial performance of our segments on the basis of revenue and segment operating profit. The CODM utilizes both revenue and segment operating profit or loss before interest and income taxes to allocate resources and assesses performance of each segment by comparing actual revenue and operating profit or loss results, respectively, to historical results and previously forecasted financial information. Segment operating profit includes expenses directly attributable to running the respective segments' business. This excludes any corporate overhead expenses. We have centralized corporate functions that provide services to the segments in areas such as accounting, information technology, marketing, legal and human resources. Corporate function costs that are not allocated to the segments are included in the row labeled "Corporate functions" in the table below.
The table below presents revenue and segment operating profit by reportable segment and a reconciliation of consolidated segment operating profit to consolidated loss before income taxes for the years ended December 31, 2023, 2024 and 2025.
| Year Ended December 31, | |||||||||||||||||
| (In millions) | 2023 | 2024 | 2025 | ||||||||||||||
Public Cloud | |||||||||||||||||
Revenue | $ | 1,742.7 | $ | 1,682.6 | $ | 1,696.0 | |||||||||||
Third party infrastructure (1) | (1,320.7) | (1,325.1) | (1,328.9) | ||||||||||||||
Other cost of revenue (2) | (228.6) | (202.6) | (211.3) | ||||||||||||||
Other segment items (3) | (111.6) | (110.7) | (88.2) | ||||||||||||||
| Segment operating profit | $ | 81.8 | $ | 44.2 | $ | 67.6 | |||||||||||
| Private Cloud | |||||||||||||||||
Revenue | $ | 1,214.4 | $ | 1,054.5 | $ | 989.7 | |||||||||||
| Cost of revenue | (749.1) | (646.8) | (624.3) | ||||||||||||||
Other segment items (3) | (122.3) | (113.3) | (113.0) | ||||||||||||||
| Segment operating profit | $ | 343.0 | $ | 294.4 | $ | 252.4 | |||||||||||
Total Consolidated | |||||||||||||||||
Revenue | $ | 2,957.1 | $ | 2,737.1 | $ | 2,685.7 | |||||||||||
Segment operating profit | $ | 424.8 | $ | 338.6 | $ | 320.0 | |||||||||||
| Corporate functions | (267.6) | (233.0) | (193.9) | ||||||||||||||
| Share-based compensation expense | (65.4) | (63.4) | (45.1) | ||||||||||||||
Transaction related adjustments, net (4) | (5.2) | (5.2) | (2.5) | ||||||||||||||
Restructuring and transformation expenses (5) | (56.7) | (58.5) | (32.3) | ||||||||||||||
| Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage | 4.8 | 1.4 | — | ||||||||||||||
Amortization of intangible assets (6) | (161.0) | (154.1) | (146.9) | ||||||||||||||
| Impairment of goodwill | (708.8) | (714.9) | — | ||||||||||||||
UK office closure (7) | (12.1) | — | — | ||||||||||||||
| Impairment of assets, net | (52.2) | (20.0) | — | ||||||||||||||
| Interest expense | (221.6) | (98.0) | (82.7) | ||||||||||||||
| Gain on investments, net | 0.3 | 0.1 | 0.3 | ||||||||||||||
| Gain on debt extinguishment, net of debt modification costs | 271.3 | 147.2 | — | ||||||||||||||
| Other expense, net | (5.0) | (21.7) | (18.7) | ||||||||||||||
| Total consolidated loss before income taxes | $ | (854.4) | $ | (881.5) | $ | (201.8) | |||||||||||
| (1) | Represents usage charges from public cloud infrastructure providers. | ||||
| (2) | Other cost of revenue excludes third party infrastructure expenses and is comprised of certain license costs, labor, and other designated expenses. | ||||
(3) | Other segment items for each segment include directly allocable research and development expenses, sales and marketing expenses, and certain other general and administrative expenses. | ||||
(4) | Includes purchase accounting adjustments, exploratory acquisition and divestiture costs, and expenses related to financing activities. | ||||
(5) | Includes consulting and advisory fees related to business transformation and optimization activities, as well as associated severance, certain facility closure costs, and lease termination expenses. Also includes payroll taxes associated with the exercise of stock options and vesting of restricted stock. The year ended December 31, 2024 includes a $9.0 million MEIA early termination fee associated with the sale of our corporate headquarters in March 2024. | ||||
(6) | All of our intangible assets are attributable to acquisitions, including the Rackspace Acquisition in 2016. | ||||
(7) | Expense recognized related to the closure of a UK office that we exited in the second quarter of 2023 prior to the lease end date. | ||||
The table below presents depreciation expense included in segment operating profit above for the years ended December 31, 2023, 2024 and 2025.
| Year Ended December 31, | |||||||||||||||||
| (In millions) | 2023 | 2024 | 2025 | ||||||||||||||
| Public Cloud | $ | 9.2 | $ | 7.0 | $ | 6.9 | |||||||||||
| Private Cloud | 171.3 | 115.1 | 124.1 | ||||||||||||||
| Corporate functions | 28.2 | 19.2 | 20.4 | ||||||||||||||
| Total depreciation expense | $ | 208.7 | $ | 141.3 | $ | 151.4 | |||||||||||
Management does not use total assets by segment to evaluate segment performance or allocate resources. As such, total assets by segment are not disclosed.
Geographic Information
The table below presents revenue by country for the years ended December 31, 2023, 2024 and 2025. For the year ended December 31, 2025, we changed the basis for attributing revenue amounts to be based upon the customer’s primary address. Revenue amounts for the years ended December 31, 2023 and 2024 are based upon the location of the support function servicing the customer.
| Year Ended December 31, | |||||||||||||||||
| (In millions) | 2023 | 2024 | 2025 | ||||||||||||||
| United States | $ | 2,035.6 | $ | 1,847.7 | $ | 1,781.4 | |||||||||||
| United Kingdom | 484.5 | 468.0 | 365.2 | ||||||||||||||
Other foreign countries (1) | 437.0 | 421.4 | 539.1 | ||||||||||||||
| Total revenue | $ | 2,957.1 | $ | 2,737.1 | $ | 2,685.7 | |||||||||||
(1) No other foreign country had revenue that exceeded 10% of total consolidated revenue for the years ended December 31, 2023, 2024 and 2025.
The table below presents property, equipment and software, net by country, based on the physical location of the assets:
| (In millions) | December 31, 2023 | December 31, 2024 | December 31, 2025 | ||||||||||||||
| United States | $ | 478.4 | $ | 480.8 | $ | 441.2 | |||||||||||
| United Kingdom | 109.0 | 100.3 | 97.6 | ||||||||||||||
Other foreign countries (1) | 21.4 | 19.9 | 57.5 | ||||||||||||||
| Total property, equipment and software, net | $ | 608.8 | $ | 601.0 | $ | 596.3 | |||||||||||
(1) No other foreign country had property, equipment and software, net that exceeded 10% of total consolidated property, equipment and software, net.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 6, 2026 | Showing above |
| 2024 | Mar 21, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Feb 26, 2021 | |
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.