Rackspace Technology, Inc. — Earnings Quality Grade F
RXT · Technology
Major red flags
Screening Summary
Management Signals
Financial Trends
Revenue & Net Income ($B)
Margins (%)
18-Point Screening
Revenue Quality
DSO 36 days, change -4 days YoY
AR growth -10.8% vs revenue growth -1.9%
Revenue -1.9%, CFFO 279.4%. Cash follows revenue
Expense Quality
No material inventory
CapEx growth -45.3% vs revenue -1.9%. Normal
SG&A/Gross Profit = 119.9%, exceeds 70%
Gross margin 18.9%, change -0.6pp. Stable
Cash Flow Quality
CFFO < Net Income for 3 consecutive years
Small-cap context: Small-cap CFFO/NI often diverges from working-capital swings, not necessarily manipulation.
FCF $0.1B, FCF/NI = -0.40
Accruals ratio = -13.5%. Low accruals
Cash $0.1B covers only 3% of debt $3.2B
Balance Sheet Health
Goodwill+Intangibles $1.4B = -118% of equity. Manageable
Debt/EBITDA = 13.3x (>4x). Interest coverage = -1.2x (<2x). Financial stress
Other assets -13.9% vs revenue -1.9%. Normal
No write-off data
Acquisition Risk
FCF after acquisitions positive
Goodwill+Intangibles change -9% YoY. Normal
Manipulation Score
M-Score = -3.20 (< -2.22). Unlikely manipulator
Portfolio monitoring
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Beneish M-Score
Altman Z-Score
Generated from public financial data using forensic accounting frameworks. Not investment advice. Data: Yahoo Finance · 2026-04-25