Time-Sensitive: Allegations Focus on Rackspace’s Public Cloud Resale Representations, Where a $125 Million Guidance Cut Followed Reaffirmed Full-Year Targets.

RXT INVESTOR ALERT

NEW YORK, Aug. 13, 2026 /PRNewswire/ — SueWallSt alerts investors in Rackspace Technology, Inc. (NASDAQ: RXT) of a pending securities class action on behalf of shareholders who purchased securities between May 7, 2026 and July 8, 2026. Check if you might be eligible to recover your investment losses. You may also contact Joseph E. Levi, Esq. at jlevi@SueWallSt.com or ☎(888) SueWallSt.

RXT shares fell 33.6%, or $2.21, to close at $4.37 on July 9, 2026. Full-year 2026 Public Cloud revenue guidance was cut by $125 million, from a range of $1.575 billion to $1.625 billion down to $1.450 billion to $1.500 billion. The Court has set September 28, 2026 as the deadline to apply for lead plaintiff appointment.

The Alleged Public Cloud Resale Concentration

Public Cloud generated roughly 63% of Rackspace’s total revenue in 2025, approximately $1,696 million of $2,685.7 million. The lawsuit asserts that a material portion of that revenue consisted of low-margin infrastructure resale that was already eroding as hyperscale cloud platforms moved customers to direct contracts. As alleged, management reaffirmed full-year guidance in its entirety on May 7, 2026 without disclosing that this resale base was shrinking.

“Investors deserve transparency about material risks that could affect their investments. Here, the complaint alleges that a $125 million reduction to the Company’s largest reporting segment followed a full reaffirmation of guidance weeks earlier.” — Joseph E. Levi, Esq.

Hyperscaler Direct Contracting in Resale Revenue

• Public Cloud carried an operating margin of just 4.7% in the first quarter of 2026, compared with 24.7% in Private Cloud.
• The action claims the Company was already positioned to exit low-margin resale as hyperscalers continued shifting customers to direct contracting arrangements.
• Revised Public Cloud guidance implies a year-over-year decline of 12% to 15%, versus the prior range of a 4% to 7% decline.
• Adjusted EBITDA outlook was lowered by $20 million, to $285 million to $295 million.
• A workforce realignment announced June 16, 2026 targeted approximately 15% of the global workforce, tied primarily to legacy service delivery functions within the Public Cloud unit.

Why Public Cloud Adequacy Allegedly Matters to Investors

Rackspace’s own quarterly filing described a business mix shift toward infrastructure resale and services within Public Cloud, and stated that the focus in Public Cloud was expanding segment operating margins through cost efficiencies and higher-margin services revenue. The lawsuit asserts those descriptions did not disclose the extent to which resale volumes were already contracting, or that a material portion of that business would be exited. Shares reached a Class Period closing high of $7.53 on June 17, 2026 before the July 9 update.

Learn more about the case or call (888) SueWallSt.

WHY SUEWALLST: SueWallSt is powered by Levi & Korsinsky LLP. Levi & Korsinsky LLP has established itself as a nationally-recognized securities litigation firm that has secured hundreds of millions of dollars for aggrieved shareholders and built a track record of winning high-stakes cases. The firm has extensive expertise representing investors in complex securities litigation and a team of over 70 employees to serve our clients. For seven years in a row, Levi & Korsinsky has ranked in ISS Securities Class Action Services’ Top 50 Report as one of the top securities litigation firms in the United States.

Frequently Asked Questions About the RXT Lawsuit

Q: Who is eligible to join the RXT investor lawsuit? A: Investors who purchased RXT stock or securities between May 7, 2026 and July 8, 2026 and suffered financial losses may be eligible. Eligibility is based on purchase date and documented losses — not on whether you still hold the shares.

Q: What specific misstatements does the RXT lawsuit allege? A: The complaint alleges Rackspace Technology, Inc. made materially false or misleading statements regarding the durability of its Public Cloud resale revenue and the impact of its enterprise AI reprioritization on Private Cloud capacity during the Class Period. When the Company disclosed a $150 million reduction to full-year 2026 revenue guidance, the stock price declined sharply.

Q: How much did RXT stock drop? A: Shares fell approximately 33.6%, a decline of $2.21 per share, after the Company disclosed its strategic and financial update and reduced guidance on July 9, 2026. Investors who purchased shares during the Class Period at artificially inflated prices and suffered losses may be eligible to seek compensation.

Q: What court was the RXT class action filed in? A: The case was filed in the United States District Court for the Southern District of New York.

Q: What is a lead plaintiff and why does it matter? A: A lead plaintiff is the investor appointed by the court to represent the entire class. Lead plaintiffs are typically investors with the largest documented losses. Being appointed does not increase individual recovery but gives direct oversight of how the case is run.

Q: What documents do I need to submit my information? A: Brokerage statements or trade confirmations showing purchase dates, share quantities, prices paid, and any subsequent sale dates and prices.

Q: What if I already sold my RXT shares — can I still recover losses? A: Yes. Eligibility is based on when you purchased, not whether you still hold the shares. Investors who bought during the Class Period and sold at a loss may still be eligible to participate.

Q: What does it cost me to participate? A: There is no upfront cost to submit your information and review whether you may be eligible to recover. Should you choose to participate in the securities class action, they are generally handled on a contingency basis, with any attorneys’ fees and expenses subject to court approval.

Q: What if I live outside the United States? A: U.S. securities class actions generally cover purchases on U.S. exchanges regardless of the investor’s country of residence.

CONTACT:
Levi & Korsinsky, LLP
Joseph E. Levi, Esq.
33 Whitehall Street, 27th Floor
New York, NY 10004
jlevi@SueWallSt.com
Tel: (888) SueWallSt
Fax: (212) 363-7171

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SOURCE SueWallSt.com