Voss Capital, LP on Rackspace Technology, Inc.

Rackspace is a highly leveraged turnaround where a roughly $900 million equity value sits on top of a much larger enterprise value, creating substantial equity upside if operations recover. The company already controls a large data-center footprint with significant unused capacity, and Voss believes Private Cloud demand is beginning to improve as sovereign AI and data-security concerns reverse years of customer migration toward Public Cloud. New management is repositioning Rackspace around AI infrastructure, including a Palantir partnership and an AMD agreement covering 30 megawatts of compute that Voss estimates could eventually add $500-600 million of revenue and $250-$400 million of EBITDA. Q2 provided tangible evidence of improvement as total remaining performance obligations rose 40% sequentially to $809.1 million and long-term RPO nearly doubled year over year. Rackspace's bonds have also rallied from distressed levels toward par, suggesting to Voss that the equity has materially underreacted to improving credit expectations. If idle capacity and new AI contracts can lift run-rate EBITDA toward $500-$800 million or more within two years, the highly leveraged equity could appreciate substantially.