Rackspace Technology Inc (NASDAQ:RXT) has reported exceeding guidance for revenue, profit, and EPS for the tenth consecutive quarter. The company saw record-breaking quarterly sales bookings with high double-digit growth in annual contract value both sequentially and year over year. Strong performance in the Americas and increasing adoption of hybrid cloud solutions contributed to a 14% growth in sales bookings for fiscal 2024. Private cloud bookings showed a significant acceleration, with a 42% growth in the second half of 2024 compared to the first half. Public cloud bookings grew 22% year over year, driven by robust performance in services and infrastructure resale.
However, non-GAAP gross profit margin and non-GAAP operating margin for the full year 2024 were down, and free cash flow usage was $71 million for the year, indicating some cash flow challenges. Despite recent momentum, private cloud revenues are expected to show modest declines in fiscal 2025. Infrastructure resale volumes are also difficult to predict and may face declines depending on contract renewals.
Looking ahead, Rackspace anticipates modest declines in private cloud revenues for 2025, with expectations for positive operating cash flow and free cash flow supported by low double-digit growth in operating profit. The company also expects AI to play a growing role in bookings, with plans for it to grow to over 5% of revenue in the next few years. Overall, Rackspace remains optimistic about maintaining momentum into 2025, driven by strong execution and increasing interest in hybrid cloud solutions.
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