Rackspace Technology, Inc.

1. Company Overview, Basis of Presentation, and Summary of Significant Accounting Policies

Nature of Operations and Basis of Presentation

Rackspace Technology, Inc. ("Rackspace Technology") is a Delaware corporation formerly controlled by investment funds affiliated with Apollo Global Management, Inc. and its subsidiaries ("Apollo"). Rackspace Technology was formed on July 21, 2016 but had no assets, liabilities or operating results until November 3, 2016 when Rackspace Hosting, Inc. (now named Rackspace Technology Global, Inc., or "Rackspace Technology Global"), a global provider of modern information technology-as-a-service, was acquired by Inception Parent, Inc., a wholly-owned entity indirectly owned by Rackspace Technology (the "Rackspace Acquisition").

Rackspace Technology Global commenced operations in 1998 as a limited partnership and was incorporated in Delaware in March 2000. Rackspace Technology serves as the holding company for Rackspace Technology Global and does not engage in any material business or operations other than those related to its indirect ownership of the capital stock of Rackspace Technology Global and its subsidiaries or business or operations otherwise customarily undertaken by a holding company.

For ease of reference, the terms "we," "our company," "the company," "us," or "our" as used in this report refer to Rackspace Technology and its consolidated subsidiaries.

The unaudited condensed consolidated financial statements include the accounts of Rackspace Technology, Inc. and our wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.

Unaudited Interim Financial Information

The unaudited condensed consolidated financial statements as of September 30, 2026, and for the three and nine months ended September 30, 2025 and 2026, have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. Accordingly, certain financial information and disclosures required for financial statements prepared under GAAP have been omitted in accordance with the Securities and Exchange Commission ("SEC") disclosure rules and regulations that permit reduced disclosure for interim periods. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on March 6, 2026 ("Annual Report"). The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements included in our Annual Report and, in the opinion of management, reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of our financial position as of September 30, 2026, our results of operations and stockholders' deficit for the three and nine months ended September 30, 2025 and 2026, and our cash flows for the nine months ended September 30, 2025 and 2026.

The results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2026, or for any other interim period, or for any other future year.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities in the condensed consolidated financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates, including those related to the allowance for credit losses, useful lives of property, equipment and software, software capitalization, incremental borrowing rates for lease liability measurement, fair values of intangible assets and reporting units, useful lives of intangible assets, share-based compensation, contingencies, and income taxes, among others. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from our estimates.

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Liquidity Overview

We are a highly leveraged company. As of September 30, 2026, we had $2,306.3 million aggregate principal amount outstanding under our debt instruments, which are comprised of the first lien first out senior secured term loan facility (the "FLFO Term Loan Facility"), the first lien second out senior secured term loan facility (the "FLSO Term Loan Facility"), the senior secured first lien term loan facility (the "Term Loan Facility"),3.50% FLSO Senior Secured Notes due 2028 (the "3.50% FLSO Senior Secured Notes"),5.375% Senior Notes due 2028 (the "5.375% Senior Notes"), and 3.50% Senior Secured Notes due 2028 (the "3.50% Senior Secured Notes"). We primarily finance our operations and capital expenditures with internally-generated cash from operations and hardware leases, and if necessary, borrowings under the senior secured first lien first out revolving credit facility (the "Revolving Credit Facility"). As of September 30, 2026, the Revolving Credit Facility provided for up to $375.0 million of borrowings, $290.0 million of which was drawn and outstanding as of September 30, 2026. Our primary uses of cash are working capital requirements, debt service requirements and capital expenditures. Based on our current level of operations and available cash and cash equivalents of $108.0 million as of September 30, 2026, we believe our sources will provide sufficient liquidity over at least the next twelve months. We cannot provide assurance, however, that our business will generate sufficient cash flows from operations or that future borrowings will be available to us under the Revolving Credit Facility or from other sources in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. Our ability to do so depends on our ability to deliver on our strategic objectives and prevailing economic conditions and other factors, many of which are beyond our control.

Subsequent Events

Pursuant to share purchase agreements entered into with an investor group led by Voss Capital, LP, we issued an aggregate of 24.0 million shares of our common stock to such investors on November 9, 2026 for a cash purchase price of $66.0 million.

Significant Accounting Policies and Estimates

Our Annual Report includes an additional discussion of the significant accounting policies and estimates used in the preparation of our consolidated financial statements. There were no material changes to our significant accounting policies and estimates during the nine months ended September 30, 2026.

Recent Accounting Pronouncements

Measurement of Credit Losses

In July 2025, the Financial Accounting Standards Board issued Accounting Standards Update("ASU") No. 2025-05, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 allows entities to apply a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions under Accounting Standards Codification ("ASC") No. 606, Revenue from Contracts with Customers. We adopted this guidance on January 1, 2026 on a prospective basis. The adoption did not have a material impact on our consolidated financial statements.

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2. Customer Contracts

The following table presents the balances related to customer contracts:

(1) Allowance for credit losses and accrued customer credits was $12.2 million and $11.1 million as of December 31, 2025 and September 30, 2026, respectively.

Amounts recognized in revenue for the three months ended September 30, 2025 and 2026, which were included in deferred revenue as of the beginning of each period totaled $42.8 million and $74.5 million, respectively. Amounts recognized in revenue for the nine months ended September 30, 2025 and 2026, which were included in deferred revenue as of the beginning of each period totaled $80.3 million and $91.9 million, respectively.

Cost Incurred to Obtain and Fulfill a Contract

As of December 31, 2025 and September 30, 2026, the balances of capitalized costs to obtain a contract were $30.8 million and $24.9 million, respectively, and the balances of capitalized costs to fulfill a contract were $16.3 million and $16.9 million, respectively. These capitalized costs are included in "Other non-current assets" on the Condensed Consolidated Balance Sheets.

Amortization of capitalized sales commissions and implementation costs was as follows:

Remaining Performance Obligations

As of September 30, 2026, the aggregate amount of transaction price allocated to remaining performance obligations was $850.3 million, of which approximately 11% is expected to be recognized as revenue during the remainder of 2026 and the remainder thereafter. These remaining performance obligations primarily relate to our fixed-term arrangements. The aggregate amount of transaction price excludes variable consideration related to our usage-based arrangements for which we recognize revenue based on the right to invoice for the services performed.

The E.U. Data Act became effective in September 2025 and establishes new requirements related to cloud service switching rights and limits on early termination fees. These provisions will require modifications to our existing E.U. contract terms. We are currently assessing which of our contracts are subject to these requirements. As of September 30, 2026, our existing contractual terms were in place and provide the basis for the remaining performance obligations disclosed above. We expect to revise our contractual terms to comply with the E.U. Data Act in 2026 which could reduce the amount of remaining performance obligations disclosed in future periods.

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Convertible Promissory Note

On September 27, 2022, we entered into a convertible note purchase agreement with a private company that is also a customer and a vendor. Pursuant to the purchase agreement, we purchased an unsecured convertible promissory note (the "Note") in an aggregate principal amount of $15.0 million. The Note accrues simple interest at a rate of 6% per annum and matures on September 27, 2027, unless earlier converted per the terms of the agreement. Principal and accrued interest are due and payable on the maturity date. We have elected to apply the fair value option under ASC No. 825, Financial Instruments, to account for the Note. As of December 31, 2025 and September 30, 2026, the fair value of the Note was $17.1 million and $20.3 million, respectively. The fair value of the Note is included in "Other non-current assets" and "Other current assets" on our Condensed Consolidated Balance Sheets as of December 31, 2025 and September 30, 2026, respectively. The increase in the fair value of the Note is included in “Other expense, net” in the Condensed Consolidated Statements of Comprehensive Loss.

3. Sale of Receivables

On September 29, 2023, Rackspace US, Inc. and Rackspace Receivables II, LLC, a bankruptcy-remote special purpose vehicle ("SPV"), each an indirect subsidiary of the company, entered into an accounts receivable purchase agreement (the "Receivables Purchase Agreement") with PNC Bank, National Association ("PNC") and other parties thereto. On February 12, 2024, the Receivables Purchase Agreement was amended to include certain international subsidiaries of the company as parties to the agreement and Rackspace Receivables Canada Limited, a Canadian indirect subsidiary of the company, was established as a SPV. On July 2, 2026, the SPVs, and certain other subsidiaries of the company entered into another amendment that, among other things, extended the termination date from September 29, 2026 to the earlier of July 2, 2029 or six months prior to the maturity date of our Revolving Credit Facility (or any revolving credit facility that refinances or replaces such revolving credit facility) and permits the aggregate maximum limit of accounts receivable the SPVs can sell to be increased from $300.0 million to $350.0 million.

We recorded $5.2 million and $5.9 million of yield charges and fees for the three months ended September 30, 2025 and 2026, respectively, and $15.5 million and $14.6 million of yield charges and fees for the nine months ended September 30, 2025 and 2026, respectively, in connection with sold accounts receivable. This expense is recorded within "Other expense, net" in the Condensed Consolidated Statements of Comprehensive Loss.

The outstanding portfolio of sold accounts receivable derecognized from our Condensed Consolidated Balance Sheet as of December 31, 2025 and September 30, 2026 was $253.8 million and $179.5 million, respectively. The SPVs hold unsold accounts receivable of $55.5 million as of September 30, 2026 that are pledged as collateral to PNC.

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4. Net Loss Per Share

Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is calculated based on the weighted average number of shares of common stock plus the dilutive effect of potential common share equivalents outstanding during the period as determined under the treasury stock method.

The following table sets forth the computation of basic and diluted net loss per share:

Potential common share equivalents consist of shares issuable upon the exercise of stock options, vesting of restricted stock or purchase under the Employee Stock Purchase Plan (the "ESPP"), as well as contingent shares associated with our acquisition of Datapipe Parent, Inc. Since we were in a net loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods as the inclusion of all potential common shares outstanding would have been anti-dilutive. We excluded 21.8 million and 21.0 million potential common shares from the computation of dilutive loss per share for the three months ended September 30, 2025 and 2026, respectively, and 21.8 million and 21.0 million for the nine months ended September 30, 2025 and 2026, respectively, because the effect would have been anti-dilutive.

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5. Property, Equipment and Software, net

Property, equipment and software, net, consisted of the following:

6. Goodwill and Intangible Assets

The following table sets forth the changes in the carrying amounts of goodwill by reportable segment.

(1) On a consolidated basis, gross and net goodwill as of September 30, 2026 was $3,044.3 million and $738.7 million, respectively. Accumulated impairment charges on a consolidated basis was $2,305.6 million as of September 30, 2026.

The following table provides information regarding our intangible assets other than goodwill:

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7. Debt

Debt consisted of the following:

(1) Contractual interest rate as of each respective balance sheet date. The Revolving Credit Facility interest rate is the weighted average interest rate of borrowings outstanding as of the balance sheet date.

Senior Facilities

On March 12, 2024, Rackspace Finance Holdings, LLC ("Rackspace Finance Holdings"), Rackspace Finance, LLC ("Rackspace Finance"), the lenders and issuing banks party thereto and Citibank, N.A., as the administrative agent and collateral agent, entered into the credit agreement governing the FLSO Term Loan Facility, FLFO Term Loan Facility and Revolving Credit Facility (together, the "Senior Facilities") (the "First Lien Credit Agreement").

FLSO Term Loan Facility

Rackspace Finance issued the FLSO Term Loan Facility in an aggregate principal amount of $1,687.2 million. The FLSO Term Loan Facility matures on May 15, 2028. Borrowings under the FLSO Term Loan Facility bear interest at an annual rate equal to Term Secured Overnight Financing Rate ("SOFR") equal to the forward-looking term rate, based on the secured overnight financing rate as administered by the Federal Reserve Bank of New York, for the interest period relevant to such borrowing, plus a credit spread adjustment of 0.11% for an interest period of one-month’s duration,0.26% for an interest period of three-month duration, and 0.43% for an interest period of six-month duration, subject to a 0.75% floor, plus an applicable margin of 2.75%.

As of September 30, 2026, the contractual interest rate on the FLSO Term Loan Facility was 6.76%. We are required to make quarterly principal payments of $4.2 million.

Affiliates of Apollo are FLSO Term Loan Facility lenders under the First Lien Credit Agreement. As of September 30, 2026, the outstanding principal amount of the FLSO Term Loan Facility was $1,597.4 million, of which $61.1 million, or 3.8%, is due to Apollo affiliates.

Rackspace Finance may prepay some or all of the FLSO Term Loan Facility, together with accrued and unpaid interest, without prepayment premium or penalty.

The fair value of the FLSO Term Loan Facility as of September 30, 2026 was $1,437.7 million, based on quoted market prices for identical assets that are traded in over-the-counter secondary markets that are not considered active. The fair value of the FLSO Term Loan Facility is classified as Level 2 within the fair value hierarchy.

The FLSO Term Loan Facility contains certain customary affirmative covenants, negative covenants, and events of default.

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FLFO Term Loan Facility

Rackspace Finance issued the FLFO Term Loan Facility in an initial aggregate principal amount of $275.0 million. The FLFO Term Loan Facility matures on May 15, 2028. Borrowings under the FLFO Term Loan Facility bear interest at an annual rate equal to Term SOFR equal to the forward-looking term rate, based on the secured overnight financing rate as administered by the Federal Reserve Bank of New York, for the interest period relevant to such borrowing, plus a credit spread adjustment of 0.11% for an interest period of one-month’s duration,0.26% for an interest period of three-month duration, and 0.43% for an interest period of six-month duration, subject to a 0.75% floor, plus an applicable margin of 6.25% and were issued with 1.00% of original issue discount.

As of September 30, 2026, the contractual interest rate on the FLFO Term Loan Facility was 10.26%. We are required to make quarterly principal payments of $0.7 million.

On or after September 12, 2025 but prior to September 12, 2027, Rackspace Finance may prepay some or all of the FLFO Term Loan Facility, together with accrued and unpaid interest, subject to a prepayment fee equal to (x)3.00% of the principal amount of the FLFO Term Loan Facility so prepaid prior to September 12, 2026 and (y)1.00% of the principal amount of the FLFO Term Loan Facility so prepaid on or after September 12, 2026 but prior to September 12, 2027. On or after September 12, 2027, Rackspace Finance may prepay some or all of the FLFO Term Loan Facility, together with accrued and unpaid interest, without prepayment premium or penalty.

The fair value of the FLFO Term Loan Facility as of September 30, 2026 was $270.8 million, based on quoted market prices for identical assets that are traded in over-the-counter secondary markets that are not considered active. The fair value of the FLFO Term Loan Facility is classified as Level 2 within the fair value hierarchy.

The FLFO Term Loan Facility contains certain customary affirmative covenants, negative covenants, and events of default.

Revolving Credit Facility

Rackspace Finance established the Revolving Credit Facility in an aggregate principal amount of $375.0 million of commitments. The Revolving Credit Facility matures on May 15, 2028 and bears interest at an annual rate equal to Term SOFR equal to the forward-looking term rate, based on the secured overnight financing rate as administered by the Federal Reserve Bank of New York, for the interest period relevant to such borrowing, subject to a 1.00% floor, plus an applicable margin of initially 3.00%. The applicable margin is subject to a net first lien leverage-based pricing grid as set forth in the First Lien Credit Agreement. In addition to paying interest on the outstanding principal under the Revolving Credit Facility, Rackspace Finance is required to pay a commitment fee equal to initially 0.50% per annum to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. The commitment fee is subject to a net first lien leverage-based pricing grid as set forth in the First Lien Credit Agreement. Rackspace Finance may prepay loans incurred under the Revolving Credit Facility, together with accrued and unpaid interest, without prepayment premium or penalty.

The Revolving Credit Facility contains certain customary affirmative covenants, negative covenants, and events of default. In addition, the Revolving Credit Facility contains a financial covenant which limits the super-priority net senior secured leverage ratio to a maximum of 5.00 to 1.00; however, this covenant is only applicable and tested if the aggregate amount of outstanding borrowings under the Revolving Credit Facility and letters of credit issued thereunder (excluding $25.0 million of undrawn letters of credit and cash collateralized letters of credit) as of the last day of a fiscal quarter is greater than 35% of the Revolving Credit Facility commitments as of the last day of such fiscal quarter.

During thenine months ended September 30, 2026, we borrowed $330.0 million and repaid $100.0 million on the Revolving Credit Facility. As of September 30, 2026, we had total commitments of $375.0 million, $290.0 million of outstanding borrowings under the Revolving Credit Facility, and $23.5 million of letters of credit issued thereunder. As such, as of September 30, 2026, we had $61.5 million of available commitments remaining.

As of September 30, 2026, we were in compliance with all covenants under the Senior Facilities, including the financial covenant under the Revolving Credit Facility, which was applicable and tested as of such date.

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3.50% FLSO Senior Secured Notes due 2028

On March 12, 2024, Rackspace Finance issued $267.3 million initial aggregate principal amount of the 3.50% FLSO Senior Secured Notes. On April 2, 2024 and April 16, 2024, Rackspace Finance issued additional 3.50% FLSO Senior Secured Notes in an aggregate principal amount of $93.3 million and $3.6 million, respectively. The 3.50% FLSO Senior Secured Notes will mature on May 15, 2028 and bear interest at an annual fixed rate of 3.50%. Interest is payable semiannually on February 15 and August 15. The 3.50% FLSO Senior Secured Notes are not subject to registration rights.

Rackspace Finance may redeem the 3.50% FLSO Senior Secured Notes at its option, in whole at any time or in part from time to time, at a redemption price equal to 100% of the principal amount of the 3.50% FLSO Senior Secured Notes redeemed, plus accrued and unpaid interest, if any, to but excluding the redemption date.

During the nine months ended September 30, 2026, Rackspace Finance repurchased and surrendered for cancellation $70.3 million principal amount of the 3.50% FLSO Senior Secured Notes for $35.5 million, including accrued interest and fees of $0.4 million. In connection with these repurchases, we recorded a gain, included in "Gain on debt extinguishment", of $40.3 million in our Condensed Consolidated Statements of Comprehensive Loss for the nine months ended September 30, 2026, which includes $5.2 million of unamortized debt premium write-offs.

The indenture governing the 3.50% FLSO Senior Secured Notes (the "3.50% FLSO Senior Secured Notes Indenture") contains covenants that, among other things, limit our ability to incur certain additional debt, incur certain liens securing debt, pay certain dividends or make other restricted payments, make certain investments, make certain asset sales and enter into certain transactions with affiliates. These covenants are subject to a number of exceptions, limitations, and qualifications as set forth in the 3.50% FLSO Senior Secured Notes Indenture. Additionally, upon the occurrence of a change of control (as defined in the 3.50% FLSO Senior Secured Notes Indenture), we will be required to make an offer to repurchase all of the outstanding 3.50% FLSO Senior Secured Notes at a price in cash equal to 101.000% of the aggregate principal amount, plus accrued and unpaid interest, if any, to, but not including the purchase date. The 3.50% FLSO Senior Secured Notes Indenture also contains customary events of default.

As of September 30, 2026, we were in compliance with all covenants under the 3.50% FLSO Senior Secured Notes Indenture.

The fair value of the 3.50% FLSO Senior Secured Notes as of September 30, 2026 was$212.2 million based on quoted market prices for identical assets that are traded in over-the-counter secondary markets that are not considered active. The fair value of the 3.50% FLSO Senior Secured Notes is classified as Level 2 within the fair value hierarchy.

Term Loan Facility

On February 9, 2021, Rackspace Technology Global amended and restated the credit agreement governing the $2,300.0 million Term Loan Facility. The Term Loan Facility matures on February 15, 2028.

Borrowings under the Term Loan Facility bear interest at an annual rate equal to an applicable margin plus, at our option, either (a) Term SOFR equal to the forward-looking term rate, based on the secured overnight financing rate as administered by the Federal Reserve Bank of New York, for the interest period relevant to such borrowing, plus a credit spread adjustment of 0.11% for an interest period of one-month's duration,0.26% for an interest period of three-month duration, and 0.43% for an interest period of six-month duration, subject to a 0.75% floor or (b) a base rate determined by reference to the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate last quoted by The Wall Street Journal and (iii) adjusted Term SOFR for a one-month tenor plus 1.00%.

The applicable margin for the Term Loan Facility is 2.75% for SOFR loans and 1.75% for base rate loans. Interest is due at the end of each interest period elected, not exceeding 90 days, for SOFR loans and at the end of every calendar quarter for base rate loans.

As of September 30, 2026, the contractual interest rate on the Term Loan Facility was 6.76%. We are required to make quarterly principal payments of $0.2 million.

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In addition to the quarterly amortization payments discussed above, the Term Loan Facility requires us to make certain mandatory prepayments, including using (i) a portion of annual excess cash flow, as defined in the credit agreement governing the Term Loan Facility, to prepay the Term Loan Facility, (ii) net cash proceeds of certain non-ordinary assets sales or dispositions of property to prepay the Term Loan Facility and (iii) net cash proceeds of any issuance or incurrence of debt not permitted under the Term Loan Facility to prepay the Term Loan Facility. We may make voluntary prepayments at any time without penalty.

As of September 30, 2026, we were in compliance with all covenants under the credit agreement governing the Term Loan Facility.

The fair value of the Term Loan Facility as of September 30, 2026 was $51.8 million, based on quoted market prices for identical assets that are traded in over-the-counter secondary markets that are not considered active. The fair value of the Term Loan Facility is classified as Level 2 within the fair value hierarchy.

3.50% Senior Secured Notes due 2028

On February 9, 2021, Rackspace Technology Global issued $550.0 million aggregate principal amount of the 3.50% Senior Secured Notes. The 3.50% Senior Secured Notes will mature on February 15, 2028 and bear interest at an annual fixed rate of 3.50%. Interest is payable semiannually on February 15 and August 15. The 3.50% Senior Secured Notes are not subject to registration rights.

Rackspace Technology Global may redeem the 3.50% Senior Secured Notes at its option, in whole at any time or in part from time to time, at a redemption price equal to 100.000% of the principal amount, plus accrued and unpaid interest, if any, to but excluding the redemption date. Notwithstanding the foregoing, Rackspace Technology Global may redeem during each twelve-month period, commencing with February 9, 2021, up to 10.0% of the original aggregate principal amount of the 3.50% Senior Secured Notesat a redemption price of 103.000%, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

During the nine months ended September 30, 2026, Rackspace Technology Global repurchased and surrendered for cancellation $1.3 million principal amount of the 3.50% Senior Secured Notes for $0.6 million. In connection with this repurchase, we recorded a gain, included in "Gain on debt extinguishment", of $0.7 million, in our Condensed Consolidated Statements of Comprehensive Loss for the nine months ended September 30, 2026.

The indenture governing the 3.50% Senior Secured Notes (the "3.50% Notes Indenture") contains covenants that, among other things, limit our ability to incur certain additional debt, incur certain liens securing debt, pay certain dividends or make other restricted payments, make certain investments, make certain asset sales and enter into certain transactions with affiliates. These covenants are subject to a number of exceptions, limitations, and qualifications as set forth in the 3.50% Notes Indenture. Additionally, upon the occurrence of a change of control (as defined in the 3.50% Notes Indenture), we will be required to make an offer to repurchase all of the outstanding 3.50% Senior Secured Notes at a price in cash equal to 101.000% of the aggregate principal amount, plus accrued and unpaid interest, if any, to, but not including the purchase date.

As of September 30, 2026, Rackspace Technology Global was in compliance with all covenants under the 3.50% Notes Indenture.

The fair value of the 3.50% Senior Secured Notes as of September 30, 2026 was $26.5 million, based on quoted market prices for identical assets that are traded in over-the-counter secondary markets that are not considered active. The fair value of the 3.50% Senior Secured Notes is classified as Level 2 within the fair value hierarchy.

5.375% Senior Notes due 2028

On December 1, 2020, Rackspace Technology Global issued $550.0 million aggregate principal amount of the 5.375% Senior Notes. The 5.375% Senior Notes will mature on December 1, 2028 and bear interest at an annual fixed rate of 5.375%. Interest is payable semiannually on June 1 and December 1. The 5.375% Senior Notes are not subject to registration rights.

Rackspace Technology Global may redeem the 5.375% Senior Notes at its option, in whole at any time or in part from time to time, at a redemption price equal to 100.000% of the principal amount, plus accrued and unpaid interest, if any, to but excluding the redemption date.

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During the nine months ended September 30, 2026, Rackspace Technology Global repurchased and surrendered for cancellation $36.0 million principal amount of the 5.375% Senior Secured Notes for $15.0 million, including accrued interest and fees of $0.7 million. In connection with these repurchases, we recorded a gain, included in "Gain on debt extinguishment", of $21.4 million, in our Condensed Consolidated Statements of Comprehensive Loss for the nine months ended September 30, 2026, which includes $0.2 million of unamortized debt issuance costs write-offs.

The indenture governing the 5.375% Senior Notes (the "5.375% Notes Indenture") contains covenants that, among other things, limit our ability to incur certain additional debt, incur certain liens securing debt, pay certain dividends or make other restricted payments, make certain investments, make certain asset sales and enter into certain transactions with affiliates. These covenants are subject to a number of exceptions, limitations, and qualifications as set forth in the 5.375% Notes Indenture. Additionally, upon the occurrence of a change of control (as defined in the 5.375% Notes Indenture), we will be required to make an offer to repurchase all of the outstanding 5.375% Senior Notes at a price in cash equal to 101.000% of the aggregate principal amount, plus accrued and unpaid interest, if any, to, but not including the purchase date.

As of September 30, 2026, Rackspace Technology Global was in compliance with all covenants under the 5.375% Notes Indenture.

The fair value of the 5.375% Senior Notes as of September 30, 2026 was $71.2 million, based on quoted market prices for identical assets that are traded in over-the-counter secondary markets that are not considered active. The fair value of the 5.375% Senior Notes is classified as Level 2 within the fair value hierarchy.

8. Commitments and Contingencies

We have contingencies that arise from various litigation, claims and commitments, none of which we consider to be material. From time to time, we may be party to various legal proceedings arising in the ordinary course of business. In addition, third parties may bring intellectual property claims against us asserting that certain of our offerings, services and technologies infringe, misappropriate or otherwise violate the intellectual property or proprietary rights of others. Adverse results in these lawsuits may include awards of substantial monetary damages, costly royalty or licensing agreements, or orders preventing us from offering certain features, products, or services, and may also cause us to change our business practices and require development of non-infringing products or technologies, which could result in a loss of revenue for us or otherwise harm our business.

We record an accrual for a loss contingency when a loss is considered probable and reasonably estimable. As additional facts concerning a loss contingency become known, we reassess our position and make appropriate adjustments to a recorded accrual. The amount that will ultimately be paid related to a matter may differ from the recorded accrual, and the timing of such payments, if any, may be uncertain.

Except as noted below and based on current information, we are not a party to any litigation, the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material and adverse effect on our business, financial position or results of operations.

On July 29, 2026, we andtwo of our executive officers were named as defendants in a putative securities class action complaint filed in the United States District Court for the Southern District of New York (Morgan-Reed v. Rackspace Technology, Inc., et al., Case No. 1:26-cv-06491). The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of a putative class of persons who purchased or otherwise acquired our common stock between May 7, 2026 and July 8, 2026. See Part II, Item 1, "Legal Proceedings," for further detail. As this matter is in its preliminary stages, we are unable to predict its outcome or reasonably estimate a range of possible loss, if any, and no liability has been recorded as of the date of this filing.

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9. Share-Based Compensation and Stockholder’s Equity

2020 Incentive Plan

On April 27, 2026, the Board of Directors approved an amendment to the Rackspace Technology, Inc. 2020 Equity Incentive Plan (the "2020 Incentive Plan") to increase the maximum number of shares of our common stock available for issuance under the 2020 Incentive Plan from 87.9 million shares to 107.9 million shares, subject to stockholder approval. The amendment was subsequently approved by our stockholders as part of the 2026 Annual Meeting of Stockholders held on June 18, 2026.

During the nine months ended September 30, 2026, we granted 8.8 million restricted stock units ("RSUs") under the 2020 Incentive Plan with a weighted-average grant date fair value of $1.67. The majority of the RSUs were granted as part of our annual compensation award process and vest ratably over athree-year period, subject to continued service.

In addition, during the nine months ended September 30, 2026, we granted 18.3 million long-term incentive cash units ("LTIC units") under the 2020 Incentive Plan. The awards were valued using a Monte Carlo simulation and as of September 30, 2026 the LTIC units had a weighted average fair value of $0.95. The LTIC units represent the target amount of grants, and the actual number of units awarded upon vesting may vary depending upon the achievement of the relevant market condition which is based on the performance of our common stock. The awards are eligible to vest in equal installments over three years based on the attainment of the market condition and the employee’s continued service through the vesting date. As the company intends to settle the LTIC units in cash, they were classified as liabilities within "Other current liabilities" and "Other non-current liabilities" in the Condensed Consolidated Balance Sheets.

Lastly, during the nine months ended September 30, 2026, we granted 0.3 million stock options under the 2020 Incentive Plan with a grant date fair value of $3.68. These options were granted as part of our recruitment process and vest ratably over afour-year period, subject to continued service.

Share-Based Compensation Expense

Total share-based compensation expense is comprised of the following equity and liability classified award amounts:

Total share-based compensation expense recognizedwas as follows:

As of September 30, 2026, there was $23.7 million of total unrecognized compensation cost related to RSUs, performance stock units, stock options and the ESPP, which will be recognized using the service period or over our best estimate of the period over which the performance condition will be met, as applicable. Additionally, as of September 30, 2026 there was $12.5 million of total unrecognized expense related to LTIC units, which will be recognized over the remaining service period. The expense ultimately recognized is dependent on the fair value of the award as of the end of the performance periods.

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Stockholder’s Equity

On July 9, 2026, we entered into an equity distribution agreement with Goldman Sachs & Co. LLC under which we may offer and sell up to $250.0 million of shares of our common stock, par value $0.01 per share. We currently intend to use the net proceeds from this offering for general corporate purposes, including for working capital, capital expenditures and growth capital (including GPU-related costs). During the three months ended September 30, 2026, we sold 2.8 million shares of our common stock under the equity distribution agreement for net proceeds to us of $12.2 million, after deducting compensation paid to Goldman Sachs & Co. LLC of $0.2 million and transaction fees, or $11.1 million after also deducting other offering costs (with total commissions, fees and other offering costs of $1.3 million).

Pursuant to a Share Issuance Agreement with Palantir Technologies Inc. ("Palantir"), we issued 2.2 million shares of our common stock to Palantir on July 6, 2026 as non-cash consideration having an aggregate fair value of approximately $14.0 million on the date of issuance. We issued an additional 3.8 million shares of our common stock to Palantir on October 1, 2026 as non-cash consideration having an aggregate fair value of approximately $14.7 million on the date of issuance.

10. Taxes

We are subject to U.S. federal income tax and various state, local, and international income taxes in numerous jurisdictions. The differences between our effective tax rate and the U.S. federal statutory rate of 21% generally result from various factors, including the geographical distribution of taxable income, contingency reserves for uncertain tax positions, and permanent differences between the book and tax treatment of certain items. Additionally, the amount of income taxes paid is subject to our interpretation of applicable tax laws in the jurisdictions in which we file. For the three and nine months ended September 30, 2026, our effective tax rate is lower than the U.S. federal statutory rate of 21% primarily due to the tax impact associated with changes in valuation allowance, executive compensation that is nondeductible under Internal Revenue Code ("IRC") Section 162(m), and the net impact of the geographic distribution of our earnings.

11. Derivatives

We utilize derivative instruments, including interest rate swap agreements, to manage our exposure to interest rate risk. We only hold such instruments for economic hedging purposes, not for speculative or trading purposes. Our derivative instruments are transacted only with highly-rated institutions, which reduces our exposure to credit risk in the event of nonperformance.

Interest Rate Swaps

We are exposed to interest rate risk associated with fluctuations in interest rates on the floating-rate Term Loan Facility, FLSO Term Loan Facility, and FLFO Term Loan Facility. The objective in using interest rate derivatives is to manage our exposure to interest rate movements. To accomplish this objective, we have entered into interest rate swap agreements as part of our interest rate risk management strategy. Interest rate swaps involve the receipt of variable amounts from a counterparty in exchange for the company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

On February 9, 2021, we entered into a $1.35 billion pay-fixed interest rate swap that matured in February 2026. The pay-fixed interest rate swap qualified as a hybrid instrument in accordance with ASC No. 815, Derivatives and Hedging, consisting of a loan and an embedded at-market derivative that was designated as a cash flow hedge. The loan was accounted for at amortized cost over the life of the swap while the embedded at-market derivative was accounted for at fair value. The $1.35 billion swap was indexed to one-month Term SOFR and net settled on a monthly basis with the counterparty for the difference between the fixed rate of 2.34150% and the variable rate based uponone-month Term SOFR (subject to a floor of 0.75%) as applied to the notional amount of the swap. The cash flows related to the portion treated as debt was classified as financing activities in the Condensed Consolidated Statements of Cash Flows while the portion treated as an at-market derivative was classified as operating activities.

Our interest rate swap agreement, excluding the portion treated as debt, was recognized at fair value in the Condensed Consolidated Balance Sheets and was valued using pricing models that rely on market observable inputs such as yield curve data, which are classified as Level 2 inputs within the fair value hierarchy.

As of December 31, 2025 the cash flow hedge was highly effective. Our interest rate swap matured on February 9, 2026. Therefore, as of September 30, 2026, we do not have any interest rate swaps outstanding.

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Fair Values of Derivatives on the Condensed Consolidated Balance Sheets

The fair value of our derivative and its location on the Condensed Consolidated Balance Sheets as of December 31, 2025 was as follows:

(1) The entire balance is comprised of the financing component of the pay-fixed interest rate swap.

For financial statement presentation purposes, we do not offset assets and liabilities under master netting arrangements and all amounts above are presented on a gross basis. The following table, however, is presented on a net asset and net liability basis:

Effect of Derivatives on the Condensed Consolidated Statements of Comprehensive Loss

The effect of our derivative and its location on the Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2025 and 2026 was as follows:

See Note 12, "Accumulated Other Comprehensive Income (Loss)," for information regarding changes in fair value of our derivatives designated as hedging instruments.

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12. Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) consisted of the following:

(1) Includes a reduction to interest expense recognized of $11.6 million related to the cash flow hedge gain for the three months ended September 30, 2025.

(1) Includes a reduction to interest expense recognized of $34.4 million related to the cash flow hedge gain for thenine months ended September 30, 2025.

(1) Includes a reduction to interest expense recognized of $4.0 million related to the cash flow hedge gain for thenine months ended September 30, 2026.

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13. Segment Reporting

We have organized our operations intotwo operating segments, which correspond directly to our reportable segments: Public Cloud, a services-centric, capital-light model providing value-added cloud solutions through managed services, Elastic Engineering and professional services offerings for customer environments hosted on the Amazon Web Services ("AWS"), Microsoft Azure and Google Cloud public cloud platforms; and Private Cloud, a technology-forward, capital-intensive model providing managed service offerings for customer environments hosted in one of our data centers as well as in those owned by customers or by third parties such as colocation providers.

Thistwo-business unit operating model allows for each segment to be managed separately based on the different service offerings and respective operational and marketing strategies, ensuring increased focus, delivery, and service quality for our customers.

Our segments are based upon a number of factors, including, the basis for our budgets and forecasts, organizational and management structure and the financial information regularly provided to our Chief Operating Decision Maker ("CODM"), who we have determined to be our Chief Executive Officer. The CODM is responsible for making key operating and strategic decisions to assess performance for each segment. We assess financial performance of our segments on the basis of revenue and segment operating profit. The CODM utilizes both revenue and segment operating profit or loss before interest and income taxes to allocate resources and assesses performance of each segment by comparing actual revenue and operating profit or loss results, respectively, to historical results and previously forecasted financial information. Segment operating profit includes expenses directly attributable to running the respective segments' business. This excludes any corporate overhead expenses. We have centralized corporate functions that provide services to the segments in areas such as accounting, information technology, marketing, legal and human resources. Corporate function costs that are not allocated to the segments are included in the row labeled "Corporate functions" in the table below.

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The table below presents revenue and segment operating profit by reportable segment and a reconciliation of consolidated segment operating profit to consolidated loss before income taxes for the three and nine months ended September 30, 2025 and 2026.

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The table below presents depreciation expense included in segment operating profit above for the three and nine months ended September 30, 2025 and 2026.

Management does not use total assets by segment to evaluate segment performance or allocate resources. As such, total assets by segment are not disclosed.

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