Share-Based Compensation

6 Months Ended

Jun. 30, 2026

Share-Based Payment Arrangement [Abstract]

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 six months ended June 30, 2026, we granted 8.0 million restricted stock units ("RSUs") under the 2020 Incentive Plan with a weighted-average grant date fair value of $1.40. The majority of the RSUs were granted as part of our annual compensation award process and vest ratably over a three-year period, subject to continued service.

In addition, during the six months ended June 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 June 30, 2026 the LTIC units had a weighted average fair value of $0.98. 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.

Share-Based Compensation Expense

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


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2025		2026		2025		2026
Equity classified awards	$	6.9	$	3.6	$	14.5	$	7.4
Liability classified awards	3.1		6.8		7.5		9.6
Total share-based compensation expense	$	10.0	$	10.4	$	22.0	$	17.0

Total share-based compensation expense recognized was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2025		2026		2025		2026
Cost of revenue	$	1.3	$	1.2	$	3.1	$	2.1
Selling, general and administrative expenses	8.7		9.2		18.9		14.9
Pre-tax share-based compensation expense	10.0		10.4		22.0		17.0
Less: Income tax benefit	(2.1)		(2.2)		(4.6)		(3.6)
Total share-based compensation expense, net of tax	$	7.9	$	8.2	$	17.4	$	13.4

As of June 30, 2026, there was $25.7 million of total unrecognized compensation cost related to RSUs, performance stock units, and stock options, 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 June 30, 2026 there was $21.1 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.