MeritValue

Rackspace Technology, Inc.

RXTdata completeness 100%8 fiscal years on file
The thesis, from the filings

Rackspace Technology, Inc. earns about -7% on invested capital, but has diluted owners by 15% over 5 years — worth asking whether the growth reaches owners. The cash-flow models don't apply cleanly here — the ledger says why below.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$3.01B1$3.12B2$2.96B3$2.74B3$2.69B3
Net income−$218.3M4−$804.8M5−$837.8M6−$858.2M6−$225.8M6
Operating cash flow$370.8M7$246.7M8$374.9M9$39.9M9$151.4M9
Capital expenditure$108.4M10$80.4M11$96.9M12$111.1M12$60.8M12
Free cash flow (derived)$262.4M7$166.3M8$278M9−$71.2M9$90.6M9
Total debt$6.67B13$6.64B14$5.73B15$5.57B16$5.49B16
Cash & equivalents$272.8M17$228.4M18$196.8M19$144M19$105.8M19
Diluted shares208.0M211.2M215.3M224.8M238.7M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
−$51.09
your share of equity
Profit it earned you last year
−$9.46
Free cash flow it threw off
$3.8
Debt you’d be carrying
$230.08

10 shares is a claim on −$51.09 of net worth that earned you −$9.46 and generated $3.8 of cash last year, against $230.08 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
-7% avg · 5y
FY21 -0%FY22 -8%FY23 -9%FY24 -16%FY25 -4%

It earned an average -7% on invested capital over 5 years. Compare that to what it costs to fund the business.

seeing a moat in the numbers →
Management signal · capital allocation
+15% shares · 5y

Share count is up 15% over 5 years — owners have been diluted. Worth asking what they got for it. Total debt has fallen 18% — deleveraging.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0
DCF · Growth Exit 10Y
not applicable
negative equity value — refusing to publish per-share figure
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth0.0%
  • fcfBase$90.6M
DCF · Growth Exit 5Y
not applicable
negative equity value — refusing to publish per-share figure
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth0.0%
  • fcfBase$90.6M
Earnings Power Value
not applicable
normalized (5y-median) earnings non-positive — EPV undefined
Graham Number
not applicable
diluted EPS missing or non-positive — Graham Number undefined

Different models answer different questions — which to trust when →

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0001810019-24-000042 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-12-31 · accession 0001810019-25-000043 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-12-31 · accession 0001810019-26-000015 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-12-31 · accession 0001810019-24-000042 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0001810019-25-000043 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0001810019-26-000015 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0001810019-24-000042 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0001810019-25-000043 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0001810019-26-000015 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0001810019-24-000042 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-12-31 · accession 0001810019-25-000043 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-12-31 · accession 0001810019-26-000015 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2021-12-31 · accession 0001810019-23-000034 (LongTermDebtNoncurrent)
  14. 10-K · period ending 2022-12-31 · accession 0001810019-24-000042 (LongTermDebtNoncurrent)
  15. 10-K · period ending 2023-12-31 · accession 0001810019-25-000043 (LongTermDebtNoncurrent)
  16. 10-K · period ending 2024-12-31 · accession 0001810019-26-000015 (LongTermDebtNoncurrent)
  17. 10-K · period ending 2021-12-31 · accession 0001810019-24-000042 (CashAndCashEquivalentsAtCarryingValue)
  18. 10-K · period ending 2022-12-31 · accession 0001810019-25-000043 (CashAndCashEquivalentsAtCarryingValue)
  19. 10-K · period ending 2023-12-31 · accession 0001810019-26-000015 (CashAndCashEquivalentsAtCarryingValue)