Rackspace allegedly cut 15% of its global workforce and began exiting colocation and basic hosting lines to reserve capacity for enterprise AI, while full-year revenue targets stayed intact until a $150 million reduction landed on July 9, 2026.

NEW YORK, Aug. 26, 2026 /PRNewswire/ — Levi & Korsinsky, LLP announces that a securities class action has been filed against Rackspace Technology, Inc. (NASDAQ: RXT) on behalf of investors who purchased securities between May 7, 2026 and July 8, 2026. Find out if you might qualify for recovery. You may also contact Joseph E. Levi, Esq. at jlevi@levikorsinsky.com or (212) 363-7500.

RXT shares fell $2.21, or 33.6%, to close at $4.37 on July 9, 2026, down from a Class Period high of $7.53 reached on June 17, 2026. Full-year 2026 revenue guidance was reduced by $150 million and adjusted EBITDA guidance by $20 million. Motions for lead plaintiff must be filed with the Court by September 28, 2026.

The Alleged Capacity Reallocation Behind the Restructuring

On June 16, 2026, Rackspace disclosed a workforce realignment plan terminating approximately 15% of its global workforce, with one-time charges of $14 million to $19 million and expected annualized run-rate savings of $75 million to $85 million. Three weeks later, the Company disclosed that it was exiting colocation and basic hosting revenues to reserve capacity for enterprise AI, and exiting low-margin Public Cloud resale as hyperscalers moved customers to direct contracts. The action contends that the scale of this operational retrenchment, and its revenue consequences, were not disclosed while guidance was being reaffirmed.

Alleged Operational Impact by the Numbers

• Private Cloud revenue outlook reduced from $1,025-$1,075 million to $1,000-$1,050 million, a $25 million cut tied to exiting colocation and basic hosting
• Public Cloud revenue outlook reduced from $1,575-$1,625 million to $1,450-$1,500 million, a $125 million cut
• Total revenue outlook reduced from $2,600-$2,700 million to $2,450-$2,550 million, implying a (9)% to (5)% year-over-year decline
• Private Cloud carried a 24.7% operating margin versus 4.7% for Public Cloud in the quarter ended March 31, 2026, as pleaded
• Approximately 15% of the global workforce was designated for termination, primarily within legacy Public Cloud service delivery functions

“The complaint raises serious questions about whether investors received accurate information regarding the capacity and capital being redirected away from Rackspace’s higher-margin Private Cloud offerings. Plaintiffs allege that the operational scope of this transition was material and was not adequately disclosed during the Class Period.” — Joseph E. Levi, Esq.

Submit your information now or call (212) 363-7500.

WHY LEVI & KORSINSKY — Ranked in ISS Securities Class Action Services’ Top 50 Report for seven consecutive years, Levi & Korsinsky, LLP is a nationally recognized leader in shareholder rights litigation. With a team of over 70 professionals, the firm has recovered hundreds of millions of dollars for investors. Investors who suffered losses have until September 28, 2026 to seek appointment as lead plaintiff.

Frequently Asked Questions About the RXT Lawsuit

Q: What is the RXT lead plaintiff deadline? A: The deadline to apply for lead plaintiff appointment is September 28, 2026. This deadline applies only to investors seeking to serve as lead plaintiff. Class members who do not apply may still participate in any recovery without taking action before this date.

Q: How much did RXT stock drop? A: Shares fell approximately 33.6%, a decline of $2.21 per share, after the Company disclosed a $150 million reduction to full-year 2026 revenue guidance tied to re-prioritizing resources toward enterprise AI. 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 do RXT investors need to do right now? A: Gather brokerage records including purchase dates, share quantities, and prices paid. Contact Levi & Korsinsky for a free, no-obligation evaluation at jlevi@levikorsinsky.com or (212) 363-7500. No immediate action is required to remain eligible as an absent class member.

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 contact the firm. Securities class actions are generally handled on a pure contingency basis. No upfront fees, no retainer, and no out-of-pocket costs. Any attorneys’ fees and expenses awarded to class counsel are subject to court approval.

Q: Do I need to go to court or give testimony? A: No. The overwhelming majority of class members never appear in court or give depositions. If there is a settlement or recovery, eligible class members generally submit a claim form to seek their portion.

CONTACT:
Levi & Korsinsky, LLP
Joseph E. Levi, Esq.
Ed Korsinsky, Esq.
33 Whitehall Street, 27th Floor
New York, NY 10004
jlevi@levikorsinsky.com
Tel: (212) 363-7500
Fax: (212) 363-7171

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SOURCE Levi & Korsinsky, LLP