Rackspace Technology Shares Drop 15% on Mixed Q2 Results & Disappointing Guidance
Rackspace Technology, Inc. (NASDAQ:RXT) shares plunged more than 15% on Wednesday following the company’s reported mixed Q2 results and disappointing guidance.
Q2 EPS came in at $0.17, better than the Street estimate of $0.16. Revenue was $772 million, missing the Street estimate of $784.73 million.
The company provided its Q3 guidance, expecting EPS in the range of $0.08-$0.10. Q3 revenue is expected to be in the range of $769-779 million, worse than the Street estimate of $818.2 million.
Following the results, RBC Capital analysts lowered their 2022/2023 revenue/adjusted EBITDA estimates to $3.1 billion/$592 million and $3.2 billion/$626 million from $3.2 billion/$648 million and $3.5 billion/$707 million, respectively. Their price target moved to $9 from $16, while the outperform rating was reiterated.
| Symbol | Price | %chg |
|---|---|---|
| 4338.HK | 1600 | 0 |
| MSFT.NE | 30.07 | 0.07 |
| 377300.KS | 31950 | 8.45 |
| CYBR.JK | 505 | -2.97 |
Rackspace Technology Share Price Drops 12% Following Q4 Results
Rackspace Technology, Inc. (NASDAQ:RXT) shares closed more than 12% lower on Wednesday following the company’s reported Q4 results. While the results came in slightly better than the Street expectations (EPS of $0.25 vs. Street’s $0.24 and Revenue of $777 million vs. Street’s $771.22 million), the 2022 guidance was well below expectations for revenue growth, margins, and FCF.
According to the analysts at Deutsche Bank, the positive during the earnings call was the company’s expectation of revenue growth to ramp through the year to double digits for 2022 after starting soft in Q1/22. However, the analysts believe that margins and FCF will continue to suffer near term with no credible reason to believe these negative trends will change on the horizon.
As a result, the analysts lowered their 2022/2023 EPS by $0.13/$0.21 to $0.98/$1.14 and introduced a 2024 EPS of $1.31. The analysts downgraded the company to hold from buy and lowered their price target to $9 from $21.
