Rackspace Technology, Inc.

Good day and thank you for standing by. Welcome to the Rackspace first quarter 2026 earnings webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Sagar Hebar, head of investor relations. Please go ahead.

Thank you, and welcome to Rackspace Technologies' first quarter 2026 earnings conference call. I'm Sagar Hebar, head of investor relations. Joining me today are Gajan Pandaya, our chief executive officer, and Mark Marino, our chief financial officer. As a reminder, certain comments we make on this call will be forward-looking. These statements involve risks and uncertainties which could cause actual results to differ. A discussion of these risks and uncertainties is included in our SEC filings. Backspace technology assumes no obligation to update the information presented on the call except as required by law. In particular, our discussion today will include forward-looking statements regarding our recently announced Memorandum of Understanding with AMD, including statements regarding the anticipated scope, benefits commercial potential of the collaboration, deployment timelines or financial projections, the expected execution of definitive agreements, and the anticipated impact of the partnership on our business, financial results, and capital structure. The MOU represents a non-binding framework only and does not constitute a binding commitment by either party to complete any specific transaction, financing, or other commercial arrangement. no definitive agreements with amd have been reached discussions remain preliminary and there can be no assurance that any such arrangements will be entered into that the parties will reach agreement on terms or that the anticipated benefits of the collaboration will be realized any third party financing required to implement the transactions contemplated by the mou is subject to the availability of financing on acceptable terms there can be no assurance that any such financing will be obtained Our presentation includes certain non-GAAP financial measures and adjustments to these measures, which we believe provide useful information to our investors. In accordance with SEC rules, we have provided a reconciliation of these measures to their most directly compatible GAAP measures in the earnings test release and presentation, both of which are available on our investor relations website. I will now turn the call over to Gajan for an update on the business.

Thank you, Sagar. Last quarter, I said rapidly the provider to becoming the orchestrator and operator of enterprise AI in regulated environments. We laid out three specifics, a partnership with Palantir anchored by a core build-out of forward deployed engineers, a technology stack with VMware as the control plane rubric for cyber resilience, and Palantir as the data and AI platform layer, spanning infrastructure, resilience, and AI, and accelerating demand for private cloud in regulated environments. The results this quarter reinforce the strategy we've been executing against, what we call where enterprise AI goes to production. governed infrastructure as the foundation, an integrated technology stack of curated partners on top of it, and one accountable operator running it end to end. Every win this quarter sits inside that frame. We secured regulated and sovereign private cloud deals across healthcare, telecoms, and financial services. We also closed our first joint a US-based solar tracking manufacturer where the problem was costly and quantifiable, 16 and a half days to move from a customer inquiry to a signed quote, burdened by manual intake and fragmented handoffs. Our FDEs deployed AI-enabled workflows on Palantir Foundry directly inside the customer's environment, reducing the coding cycle by 94% and earning an expanded engagement to extend the FDE model into EMEA. We are also deploying Palantir inside Rackspace, running end-to-end business workflows on Foundry natively. We are not just recommending Palantir to customers, we are operating our own business on it. We continue to expand our partner ecosystem. Today, I am pleased to announce the signing of a memorandum of understanding with AMD that establishes a new category of governed enterprise AI infrastructure. We are integrating AMD Instinct GPU accelerators, AMD EPYC CPUs, and the RockM software ecosystem into a fully managed, governed technology stack. Purpose-built for enterprise including healthcare, financial services, and sovereign environment where security, compliance, and accountability are non-negotiable. The MOU establishes AMD as the launch silicon across our four integrated capabilities. Enterprise AI Cloud, our fully managed private, public, and sovereign AI environment with one operator accountable across the stack. Enterprise Inference Engine, a context-aware inference runtime that retains domain knowledge, session history, and enterprise-specific data context across queries. with Rackspace owning the SLA, inference as a service, dedicated accelerated compute as a governed alternative to commodity GPU rental, launching with AMD Instinct, and bare metal accelerated compute, launching with AMD Instinct for training and inference workloads requiring deterministic performance. Production inference is heterogeneous. Frontier models run on GPU, small language models, classical ML embeddings, and many domain-specific workloads run more efficiently on CPU. AMD is the partner that brings both Instinct GPUs and EPYC CPUs inside one integrated architecture, which lets us route each workload to the right compute. That is what production economics requires. This puts Rackspace in a unique category. The market today is dominated by commodity GPU rental where capacity is sold by the hour and the customer carries the burden of integration, security, and accountability. We are building the opposite. AMD's leadership in open, high-performance AI acceleration combined with our operator-grade outcomes as a service model delivers governed AI infrastructure that is accountable from silicon to outcomes. We expect the definitive agreement with AMD to be executed in the near term. Governed infrastructure is where enterprise AI either succeeds or stalls. When AI works with patient records, financial data, or sovereign information, where that data sits and how access is governed determines compliance or exposure. That is why Rackspace's over 25-year history managing data centers and infrastructure is more important than ever. And this is why one of the largest epic environments runs on Rackspace. The second reason enterprises choose us is how we handle technical complexity. Enterprise AI Cloud is not a single component problem. It takes data, compute, models, small language models, working together in real time. If even one element in the technology stack is off, cost per token skyrockets and operational risk increases. We solve this by integrating each vendor's IP, making technologies fit together and operate as one. The third reason is accountability. In a fragmented enterprise AI cloud vendor ecosystem, nobody owns the outcome or takes responsibility when something breaks down. We solve that by being one accountable partner in the eyes of the customer, responsible for how the system performs and the outcome it delivers. That is why we are seeing momentum across the business. At our core, Rackspace is a data center and infrastructure company. we own and operate the physical infrastructure that enterprise ai runs on that foundation combined with our ability to take end-to-end accountability for ai in production from governed private cloud to ai inference and agents in production is exactly what our enterprise customers are looking for and with that let me get into our business performance starting with private cloud First quarter private cloud revenue was $235 million with first half revenue on track with the timing of a large deal onboarding within our healthcare vertical, consistent with the dynamics we outlined last quarter. Segment operating margin came in at 24.7% up 30 basis points year over year, driven by continued cost discipline. Our customer wins this quarter tell a consistent story. Enterprises in regulated industries are choosing Rackspace to modernize and operate environments where governance, reliability, and compliance are non-negotiable, and where those environments increasingly serve as the foundation for AI adoption. For example, in financial services, we secured a long-term recommitment from a leading global online trading platform modernizing core infrastructure through software-defined private cloud, improving resilience and user experience in a latency-sensitive, highly regulated environment. In healthcare, we signed a multi-year agreement with a major UK NHS foundation trust to migrate and operate workloads in a sovereign healthcare cloud with full outcome as a service and security embedded from the outset. and this quarter we expanded our relationship with advent health a long-standing customer we already host and manage the infrastructure of their epic ehr one of the top five epic systems in the world and this quarter we expanded our relationship to host and manage over 400 additional workloads on rackspace private cloud healthcare is one of our most expressions of our strategy epic managed services is proprietary rackspace ip purpose built for governance performance and uptime that clinical environments demand as regulated healthcare organizations move from ai experimentation to ai in production where data sits and how it's governed becomes the defining question that is exactly the environment we are built to operate This extends into sovereign markets. In Saudi Arabia, our partnership with Sadaya places us inside one of the world's most advanced national AI programs, built on in-country infrastructure, jurisdictional accountability, and managed operations. In the UK, BT recently selected Rackspace as the infrastructure foundation for BT Sovereign Cloud. positioned as UK's first full suite of sovereign services hosted and operated entirely within the UK with security cleared operations teams and managed services covering migration, operations and ongoing compliance. That is the kind of public anchor that validates our sovereign thesis. These are environments where AI cannot be deployed without full control over data and infrastructure, and they are increasingly central to how sovereign and enterprise AI is deployed. What makes these environments possible at scale is VMware Cloud Foundation 9, the control plane at the center of our governed AI strategy. It unifies compute, storage, networking, and security into one operating substrate with native AI workload support, data residency controls, and policy enforcement that needs regulated and sovereign requirements out of the box. Our deepening partnership with Broadcom around VCF9 is one of the most strategic commitments we are making this year because it gives our customers a sense with the workload with elasticity to public cloud where it makes sense. Running on top of that foundation is where our AI platform partnerships come to life. This quarter, we expanded our relationship with Unifor adding agent-based workflows to our governed AI technology staff. Together, we are building context-aware inference a capability that retains domain knowledge, session history, and enterprise-specific data context across queries. So AI agents and large language models perform with the consistency and institutional memory that production environments require. Like Palantir, our engineers are trained on the Unifor platform and embedded directly inside customer environments. We are not just orchestrating infrastructure. We are orchestrating outcomes. VCF9 as the control plane, Dell for core infrastructure, Palantir and Unifor for government AI and agent workflows, Rubrik for data resilience, AMD for enterprise-ready compute. Each partner is best in class, but the value Rackspace delivers is making them operate as one integrated system with full accountability for how the system performs and the outcomes it delivers. Looking ahead, the next phase is already emerging. As enterprise AI evolves towards agentic workflows, where machines interact with machines and processes run end-to-end without human intervention, the demands of governed infrastructure become even more acute. Training will largely sit with specialized providers, but inference, particularly context-aware inference on regulated data, is where production enterprise AI lives. That is the workload we are built to operate. And as customers develop a clearer picture of their data residency requirements, more of those workloads will move into governed private cloud deployed across our global data center footprint in the jurisdictions and sovereignty zones our customers require. That is why we are doubling down on VCF9 and Broadcom this year. Our full-year private cloud growth outlook remains on track. We have signed engagements with AdventHealth, Seattle Children's, and a strategic database as a service partner, onboarding through the rest of the year. We are also seeing encouraging pipeline momentum on our Palantir and Unifor partnerships, where context-aware inference and governed agent workflows are gaining traction at deal sizes that we have not historically seen. The AMD partnership announced today adds a further layer of future optionality as governed AI compute becomes more central to how regulated enterprises operate. Together, these give us confidence in the full-year private cloud growth profile we are reaffirming today. Now, for our public cloud update. First quarter public cloud revenue was $443 million. services revenue grew 10%, reflecting our continued shift towards higher value engagements. Our customer wins this quarter highlight the breadth of our platform capabilities and our deepening presence in the AI space. First, we are powering a large-scale enterprise-wide multi-cloud transformation for a leading healthcare technology organization. Through a governance model, we are delivering program-managed migrations, modern architecture, intelligent automation, and measurable cost optimization, ensuring each workload is placed on the right platform for the right reasons. Second, Rackspace is serving as the growth AI-native database as a service partner operating across both public and private cloud environments. Our execution capabilities are a direct accelerant to our partners' client acquisition and market expansion, reflecting a high-value compounding partnership driving differentiated multi-cloud database as a service outcomes. Our service portfolio is built for where enterprise AI is headed, production, not experimentation. We are embedding engineers directly into customer environments, moving from strategy to live deployment in weeks, with governance and accountability built in from day one. New partnerships expand our ability to deploy context-aware inference, governed agent workflows, and forward giving enterprises a governed path from strategy to inference workloads in production. We are complementing this with purpose-built capabilities in AIOps, identity security, and data resilience, addressing the operational and security demands that become non-negotiable once AI moves into production environments. In summary, public cloud is executing. As inference workloads move into production, we are increasingly positioned as the partner enterprises rely on to operate, secure, and optimize their cloud environments with full accountability to match. The results this quarter confirm the thesis, governed AI infrastructure as the foundation an integrated technology stack of curated partners running on top of it, one accountable operator responsible for the outcomes. That is what today's Rackspace delivers. With that, I will turn it over to Mark for our financial results.