Rackspace Raises $66 Million for GPU Buildout as Cloud Revenue Sinks

Rackspace Technology raised $66.0 million this month by selling 24.0 million new shares at roughly $2.75 each, with the money earmarked in part for GPU-related initiatives under its AMD agreement.

The cloud services company disclosed the private placement in an 8-K filing on Tuesday. Voss Capital signed its purchase agreement on Nov. 6 and received 18,181,816 shares on Nov. 9 for about $50 million. Other investors signed on Nov. 9 and took 5,818,181 shares for about $16 million, according to the filing.

Rackspace said it will use the proceeds for general corporate purposes, "including, without limitation, for working capital, capital expenditures, and growth capital (including GPU-related initiatives)."

The placement price of roughly $2.75 sits above the stock's $2.53 close on Nov. 6, the day Voss signed, and close to its $2.72 close on Nov. 9. Rackspace paid no underwriting fees. The new shares are restricted and cannot be resold until they are registered with regulators or qualify for an exemption.

How much dilution does the deal create?

Rackspace had 263,048,856 shares outstanding on Nov. 3, according to the cover page of its third-quarter 10-Q. The 24.0 million new shares lift that total to roughly 287.0 million, an increase of about 9.1 percent.

Voss's 18.2 million shares alone equal about 6.3 percent of the enlarged share count, before counting any stake Voss already held. Investors above 5 percent of a listed company's stock must file a Schedule 13D or 13G with the SEC. No such filing from Voss had appeared on EDGAR by Tuesday evening.

The 10-Q lists the Voss-led sale as a subsequent event and confirms the investor group paid $66.0 million on Nov. 9.

Who controls Rackspace now?

Funds affiliated with Apollo Global Management no longer hold a majority. Apollo bought Rackspace in 2016, but its stake fell below 50 percent on Sept. 9, 2026, ending the company's "controlled company" status under Nasdaq rules. Rackspace can retain certain governance exemptions during a one-year transition period.

What is the money buying?

The placement landed days after third-quarter results on Nov. 9 that framed the bet. Capital spending tripled to $104 million in the quarter while public cloud revenue fell 17 percent, according to MLQ.ai's coverage of the results.

The first GPU deployment under Rackspace's agreement with AMD is expected to reach nearly 2 megawatts and finish by the end of 2026. About $75 million of related capital spending will be financed through third-party leases, the 10-Q shows.

The equity raise is not the company's only funding channel. Rackspace also runs a $250 million at-the-market stock program with Goldman Sachs. In the third quarter it sold 2.8 million shares through that program for $12.2 million in net proceeds.

The balance sheet remains stretched. At Sept. 30, Rackspace held $108 million of cash, had drawn $290 million on its $375 million revolving credit facility, and carried $2.75 billion of total debt, according to the 10-Q. The $66 million injection roughly equals two-thirds of the quarter's capital spending.

The equity raise gives Rackspace fresh ammunition for its AMD-linked GPU push, but with shrinking public cloud revenue and a heavily drawn revolver, further placements or lease financing will likely be needed to sustain the buildout through 2026.