Rackspace Technology Reports Second Quarter 2024 Results
Rackspace Technology (Nasdaq: RXT) reported its Q2 2024 results, showing a revenue decline of 8% year-over-year to $685 million. Private Cloud revenue decreased by 17% to $260 million, while Public Cloud revenue fell 2% to $425 million. Despite the revenue drop, the company saw improvements in profitability, with a net income of $25 million compared to a net loss of $27 million in Q2 2023. Earnings per diluted share were $0.11, up from a loss of $0.13 per share last year. However, Non-GAAP Operating Profit decreased by 42% to $23 million. The company provided Q3 2024 guidance, projecting total revenue between $668-$680 million and a Non-GAAP Loss Per Share of $(0.06) - $(0.08).
Rackspace Technology (Nasdaq: RXT) ha riportato i suoi risultati del Q2 2024, mostrando un calo dei ricavi dell'8% anno dopo anno, raggiungendo 685 milioni di dollari. I ricavi del Cloud Privato sono diminuiti del 17% a 260 milioni di dollari, mentre i ricavi del Cloud Pubblico sono scesi del 2% a 425 milioni di dollari. Nonostante la diminuzione dei ricavi, l'azienda ha registrato miglioramenti nella redditività, con un utile netto di 25 milioni di dollari rispetto a una perdita netta di 27 milioni di dollari nel Q2 2023. Gli utili per azione diluiti sono stati di 0,11 dollari, in crescita rispetto a una perdita di 0,13 dollari per azione dell'anno precedente. Tuttavia, l'utile operativo Non-GAAP è diminuito del 42% a 23 milioni di dollari. L'azienda ha fornito una guida per il Q3 2024, prevedendo ricavi totali tra 668 e 680 milioni di dollari e una perdita per azione Non-GAAP di $(0,06) - $(0,08).
Rackspace Technology (Nasdaq: RXT) reportó sus resultados del Q2 2024, mostrando una disminución de ingresos del 8% interanual, alcanzando 685 millones de dólares. Los ingresos de Cloud Privado cayeron un 17% a 260 millones de dólares, mientras que los ingresos de Cloud Público disminuyeron un 2% a 425 millones de dólares. A pesar de la caída en los ingresos, la compañía vio mejoras en la rentabilidad, con un ingreso neto de 25 millones de dólares en comparación con una pérdida neta de 27 millones de dólares en el Q2 de 2023. Las ganancias por acción diluida fueron de 0,11 dólares, frente a una pérdida de 0,13 dólares por acción del año anterior. Sin embargo, la ganancia operativa No-GAAP disminuyó un 42% a 23 millones de dólares. La compañía proporcionó una guía para el Q3 de 2024, proyectando ingresos totales entre 668 y 680 millones de dólares y una pérdida por acción No-GAAP de $(0,06) - $(0,08).
랙스페이스 테크놀로지(Nasdaq: RXT)는 2024년 2분기 실적을 발표하며 전년 동기 대비 8% 감소한 6억 8500만 달러의 매출을 기록했다고 전했습니다. 프라이빗 클라우드 수익은 17% 감소하여 2억 6000만 달러에 이르렀고, 퍼블릭 클라우드 수익은 2% 감소하여 4억 2500만 달러에 도달했습니다. 수익 감소에도 불구하고, 회사는 수익성에서 개선을 보았으며, 2500만 달러의 순이익을 기록해 2023년 2분기 2700만 달러의 순손실에서 회복했습니다. 희석 주당순이익은 0.11달러로, 지난해 0.13달러의 손실에서 증가했습니다. 그러나 비-GAAP 운영 수익은 42% 감소하여 2300만 달러에 달했습니다. 회사는 2024년 3분기를 위한 가이드를 제시하며 총 수익을 6억 6800만 달러에서 6억 8000만 달러로 예상하고 비-GAAP 주당 손실을 $(0.06) - $(0.08)로 보았습니다.
Rackspace Technology (Nasdaq: RXT) a publié ses résultats du Q2 2024, montrant une baisse des revenus de 8 % par rapport à l’année précédente, atteignant 685 millions de dollars. Les revenus Cloud Privé ont diminué de 17 % à 260 millions de dollars, tandis que les revenus Cloud Public ont chuté de 2 % à 425 millions de dollars. Malgré cette baisse, l’entreprise a enregistré des améliorations en termes de rentabilité, avec un revenu net de 25 millions de dollars par rapport à une perte nette de 27 millions de dollars au Q2 2023. Le bénéfice par action diluée était de 0,11 dollar, contre une perte de 0,13 dollar par action l’année précédente. Cependant, le bénéfice d’exploitation non-GAAP a diminué de 42 % à 23 millions de dollars. L'entreprise a fourni des prévisions pour le Q3 2024, projetant un revenu total compris entre 668 et 680 millions de dollars et une perte par action non-GAAP de $(0,06) - $(0,08).
Rackspace Technology (Nasdaq: RXT) berichtete über seine Ergebnisse für das Q2 2024 und verzeichnete einen Rückgang der Einnahmen um 8 % im Vergleich zum Vorjahr auf 685 Millionen Dollar. Die Einnahmen aus Private Cloud sanken um 17 % auf 260 Millionen Dollar, während die Einnahmen aus Public Cloud um 2 % auf 425 Millionen Dollar zurückgingen. Trotz des Rückgangs der Einnahmen verzeichnete das Unternehmen Verbesserungen bei der Rentabilität mit einem Nettoeinkommen von 25 Millionen Dollar im Vergleich zu einem Nettoverlust von 27 Millionen Dollar im Q2 2023. Der Gewinn pro verwässerter Aktie betrug 0,11 Dollar, gegenüber einem Verlust von 0,13 Dollar pro Aktie im Vorjahr. Allerdings sank der Non-GAAP-Betriebsgewinn um 42 % auf 23 Millionen Dollar. Das Unternehmen gab eine Prognose für das Q3 2024 ab und erwartet Gesamteinnahmen zwischen 668 und 680 Millionen Dollar sowie einen Non-GAAP-Verlust pro Aktie von $(0,06) - $(0,08).
- Net income improved to $25 million from a net loss of $27 million in Q2 2023
- Earnings per diluted share turned positive at $0.11 compared to a loss of $0.13 in Q2 2023
- Cash and cash equivalents of $190 million with no balance on New Revolving Credit Facility
- Q2 2024 financial results exceeded guidance for revenue, operating profit, and EPS
- Total revenue decreased by 8% year-over-year to $685 million
- Private Cloud revenue declined by 17% to $260 million
- Public Cloud revenue fell by 2% to $425 million
- Non-GAAP Operating Profit decreased by 42% to $23 million
- Non-GAAP Loss Per Share increased to $(0.08) from $(0.06) in Q2 2023
Insights
Rackspace's Q2 2024 results reveal a mixed financial picture. While revenue declined
The company's transition from loss to profit is positive, with a net income of
Rackspace's Q2 results highlight the ongoing shift in cloud preferences. The stark contrast between Private Cloud's
The company's focus on strengthening its pipeline in both Private and Public Cloud is crucial. However, the challenge lies in balancing revenue stabilization with cost efficiencies. The reduction in capital expenditures from
- Revenue of
$685 million in the Second Quarter, down8% Year-over-Year - Private Cloud Revenue was
$260 million , down17% Year-over-Year - Public Cloud Revenue was
$425 million , down2% Year-over-Year - Second Quarter 2024 Cash Flow From Operating Activities was
$24 million ; Cash Flow From Operating Activities was$273 million on a Trailing-Twelve-Month Basis
SAN ANTONIO, Aug. 08, 2024 (GLOBE NEWSWIRE) -- Rackspace Technology, Inc. (Nasdaq: RXT), a leading end-to-end, hybrid, multicloud, and AI solutions company, today announced results for its second quarter ended June 30, 2024.
Amar Maletira, Chief Executive Officer, stated, “Our second quarter financial results once again exceeded guidance for revenue, operating profit, and EPS. We are focused on strengthening our pipeline in both Private and Public Cloud, stabilizing and growing revenue and profit while continuing to drive cost efficiencies. We are pleased with the steady progress on all fronts.”
Second Quarter 2024 Results
Revenue was
Private Cloud revenue was
Public Cloud revenue was
Loss from operations was
Net income was
Net earnings per diluted share was
Non-GAAP Operating Profit was
Non-GAAP Loss Per Share was
Capital expenditures were
As of June 30, 2024, we had cash and cash equivalents of
Financial Outlook
Rackspace Technology is providing guidance as follows:
| Q3 2024 Guidance | ||
| Total Revenue | ||
| Private Cloud Revenue | ||
| Public Cloud Revenue | ||
| Non-GAAP Operating Profit | ||
| Non-GAAP Loss Per Share | ||
| Non-GAAP Other Income (Expense) | ||
| Non-GAAP Tax Expense Rate | ||
| Non-GAAP Weighted Average Shares | 231-233 million | |
Information about Rackspace Technology’s use of non-GAAP financial measures is provided below under “Non-GAAP Financial Measures”.
Definitions of non-GAAP financial measures and the reconciliations to the most directly comparable measures in accordance with generally accepted accounting principles in the United States (“GAAP”) are provided in subsequent sections of this press release narrative and supplemental schedules. Rackspace Technology has not reconciled Non-GAAP Operating Profit, Non-GAAP Loss Per Share, Non-GAAP Other Income (Expense) or Non-GAAP Tax Expense Rate guidance to the most directly comparable GAAP measure because it does not provide guidance on GAAP net income (loss) or the reconciling items between these Non-GAAP measures and GAAP net income (loss) as a result of the uncertainty regarding, and the potential variability of, certain of these items, such as share-based compensation expense. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort. With respect to Non-GAAP Operating Profit, Non-GAAP Loss Per Share, Non-GAAP Other Income (Expense) and Non-GAAP Tax Expense Rate guidance, adjustments in future periods are generally expected to be similar to the kinds of charges and costs excluded from these Non-GAAP measures in prior periods, but the impact of such adjustments could be significant.
Conference Call and Webcast
Rackspace Technology will hold a conference call today, August 8, 2024, at 4:00pm CT / 5:00pm ET to discuss its second quarter 2024 results. Interested parties may access the conference call as follows:
USA & Canada - Toll-Free (800) 715-9871
International - Toll (646) 307-1963
Conference ID: 4653491
To listen to the live webcast or access the replay following the webcast, please visit our IR website at the following link: https://edge.media-server.com/mmc/p/zjyvhdh3/
About Rackspace Technology
Rackspace Technology is a leading end-to-end, hybrid, multicloud, and AI solutions company. We design, build, and operate our customers’ cloud environments across all major technology platforms, irrespective of technology stack or deployment model. We partner with our customers at every stage of their cloud journey, enabling them to modernize applications, build new products, and adopt innovative technologies.
Forward-looking Statements
Rackspace Technology has made statements in this press release and other reports, filings, and other public written and verbal announcements that are forward-looking and therefore subject to risks and uncertainties. All statements, other than statements of historical fact, included in this press release are, or could be, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are made in reliance on the safe harbor protections provided thereunder. These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions, and other matters. Any forward-looking statement made in this press release speaks only as of the date on which it is made. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. Forward-looking statements can be identified by various words such as “expects,” “intends,” “will,” “anticipates,” “believes,” “confident,” “continue,” “propose,” “seeks,” “could,” “may,” “should,” “estimates,” “forecasts,” “might,” “goals,” “objectives,” “targets,” “planned,” “projects,” and similar expressions. These forward-looking statements are based on management’s current beliefs and assumptions and on information currently available to management. Rackspace Technology cautions that these statements are subject to risks and uncertainties, many of which are outside of our control, and could cause future events or results to be materially different from those stated or implied in this press release, including among others, risk factors that are described in Rackspace Technology, Inc.’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the Securities and Exchange Commission, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein.
Non-GAAP Financial Measures
This press release includes several non-GAAP financial measures such as constant currency revenue, Non-GAAP Gross Profit, Non-GAAP Net Income (Loss), Non-GAAP Operating Profit, Adjusted EBITDA and Non-GAAP Earnings (Loss) Per Share. These non-GAAP financial measures exclude the impact of certain costs, losses and gains that are required to be included in our profit and loss measures under GAAP. Although we believe these measures are useful to investors and analysts for the same reasons they are useful to management, as described in the accompanying pages, these measures are not a substitute for, or superior to, GAAP financial measures or disclosures. Other companies may calculate similarly-titled non-GAAP measures differently, limiting their usefulness as comparative measures. We have reconciled each of these non-GAAP measures to the applicable most comparable GAAP measure in the accompanying pages.
IR Contact
Sagar Hebbar
Rackspace Technology Investor Relations
ir@rackspace.com
PR Contact
Natalie Silva
Rackspace Technology Corporate Communications
publicrelations@rackspace.com
| RACKSPACE TECHNOLOGY, INC. CONSOLIDATED RESULTS OF OPERATIONS (Unaudited) | ||||||||||||||||||||
| Three Months Ended June 30, | Year-Over-Year | |||||||||||||||||||
| 2023 | 2024 | Comparison | ||||||||||||||||||
| (In millions, except % and per share data) | Amount | % Revenue | Amount | % Revenue | Amount | % Change | ||||||||||||||
| Revenue | $ | 746.3 | 100.0 | % | $ | 684.9 | 100.0 | % | $ | (61.4 | ) | (8.2 | )% | |||||||
| Cost of revenue | (593.2 | ) | (79.5 | )% | (553.5 | ) | (80.8 | )% | 39.7 | (6.7 | )% | |||||||||
| Gross profit | 153.1 | 20.5 | % | 131.4 | 19.2 | % | (21.7 | ) | (14.2 | )% | ||||||||||
| Selling, general and administrative expenses | (216.9 | ) | (29.1 | )% | (185.2 | ) | (27.0 | )% | 31.7 | (14.6 | )% | |||||||||
| Loss from operations | (63.8 | ) | (8.5 | )% | (53.8 | ) | (7.9 | )% | 10.0 | (15.7 | )% | |||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest expense | (57.3 | ) | (7.7 | )% | (18.4 | ) | (2.7 | )% | 38.9 | (67.9 | )% | |||||||||
| Gain on investments, net | 0.1 | 0.0 | % | — | — % | (0.1 | ) | (100.0 | )% | |||||||||||
| Debt modification costs and gain on debt extinguishment | 94.9 | 12.7 | % | 72.5 | 10.6 | % | (22.4 | ) | (23.6 | )% | ||||||||||
| Other income (expense), net | 0.2 | 0.0 | % | (5.2 | ) | (0.8 | )% | (5.4 | ) | NM | ||||||||||
| Total other income (expense) | 37.9 | 5.1 | % | 48.9 | 7.2 | % | 11.0 | 29.0 | % | |||||||||||
| Loss before income taxes | (25.9 | ) | (3.5 | )% | (4.9 | ) | (0.7 | )% | 21.0 | (81.1 | )% | |||||||||
| Benefit (provision) for income taxes | (1.3 | ) | (0.2 | )% | 29.9 | 4.4 | % | 31.2 | NM | |||||||||||
| Net income (loss) | $ | (27.2 | ) | (3.6 | )% | $ | 25.0 | 3.7 | % | $ | 52.2 | NM | ||||||||
| Net earnings (loss) per share: | ||||||||||||||||||||
| Basic | $ | (0.13 | ) | $ | 0.11 | |||||||||||||||
| Diluted | $ | (0.13 | ) | $ | 0.11 | |||||||||||||||
| Weighted average number of shares outstanding: | ||||||||||||||||||||
| Basic | 215.1 | 224.5 | ||||||||||||||||||
| Diluted | 215.1 | 229.6 | ||||||||||||||||||
NM = not meaningful.
| RACKSPACE TECHNOLOGY, INC. CONSOLIDATED RESULTS OF OPERATIONS (Unaudited) | ||||||||||||||||||||
| Six Months Ended June 30, | Year-Over-Year | |||||||||||||||||||
| 2023 | 2024 | Comparison | ||||||||||||||||||
| (In millions, except % and per share data) | Amount | % Revenue | Amount | % Revenue | Amount | % Change | ||||||||||||||
| Revenue | $ | 1,505.0 | 100.0 | % | $ | 1,375.7 | 100.0 | % | $ | (129.3 | ) | (8.6 | )% | |||||||
| Cost of revenue | (1,182.3 | ) | (78.6 | )% | (1,111.5 | ) | (80.8 | )% | 70.8 | (6.0 | )% | |||||||||
| Gross profit | 322.7 | 21.4 | % | 264.2 | 19.2 | % | (58.5 | ) | (18.1 | )% | ||||||||||
| Selling, general and administrative expenses | (424.4 | ) | (28.2 | )% | (377.6 | ) | (27.5 | )% | 46.8 | (11.0 | )% | |||||||||
| Impairment of goodwill | (543.1 | ) | (36.1 | )% | (573.2 | ) | (41.7 | )% | (30.1 | ) | 5.5 | % | ||||||||
| Impairment of assets, net | — | — % | (20.0 | ) | (1.5 | )% | (20.0 | ) | 100.0 | % | ||||||||||
| Loss from operations | (644.8 | ) | (42.8 | )% | (706.6 | ) | (51.4 | )% | (61.8 | ) | 9.6 | % | ||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest expense | (114.2 | ) | (7.6 | )% | (62.1 | ) | (4.5 | )% | 52.1 | (45.6 | )% | |||||||||
| Gain on investments, net | 0.2 | 0.0 | % | 0.1 | 0.0 | % | (0.1 | ) | (50.0 | )% | ||||||||||
| Debt modification costs and gain on debt extinguishment | 107.7 | 7.2 | % | 129.2 | 9.4 | % | 21.5 | 20.0 | % | |||||||||||
| Other income (expense), net | 2.3 | 0.2 | % | (10.8 | ) | (0.8 | )% | (13.1 | ) | NM | ||||||||||
| Total other income (expense) | (4.0 | ) | (0.3 | )% | 56.4 | 4.1 | % | 60.4 | NM | |||||||||||
| Loss before income taxes | (648.8 | ) | (43.1 | )% | (650.2 | ) | (47.3 | )% | (1.4 | ) | 0.2 | % | ||||||||
| Benefit for income taxes | 9.6 | 0.6 | % | 34.6 | 2.5 | % | 25.0 | NM | ||||||||||||
| Net loss | $ | (639.2 | ) | (42.5 | )% | $ | (615.6 | ) | (44.7 | )% | $ | 23.6 | (3.7 | )% | ||||||
| Net loss per share: | ||||||||||||||||||||
| Basic and diluted | $ | (2.98 | ) | $ | (2.77 | ) | ||||||||||||||
| Weighted average number of shares outstanding: | ||||||||||||||||||||
| Basic and diluted | 214.2 | 222.2 | ||||||||||||||||||
NM = not meaningful.
| RACKSPACE TECHNOLOGY, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||||
| (In millions, except per share data) | December 31, 2023 | June 30, 2024 | |||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 196.8 | $ | 190.2 | |||
| Accounts receivable, net allowance for credit losses and accrued customer credits of | 339.7 | 322.8 | |||||
| Prepaid expenses | 87.4 | 86.6 | |||||
| Other current assets | 114.2 | 96.7 | |||||
| Total current assets | 738.1 | 696.3 | |||||
| Property, equipment and software, net | 608.8 | 612.2 | |||||
| Goodwill, net | 1,452.4 | 877.7 | |||||
| Intangible assets, net | 1,019.0 | 921.5 | |||||
| Operating right-of-use assets | 126.3 | 144.4 | |||||
| Other non-current assets | 151.6 | 141.6 | |||||
| Total assets | $ | 4,096.2 | $ | 3,393.7 | |||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||||
| Current liabilities: | |||||||
| Accounts payable and accrued expenses | $ | 432.7 | $ | 401.9 | |||
| Accrued compensation and benefits | 72.2 | 72.3 | |||||
| Deferred revenue | 78.8 | 72.5 | |||||
| Debt | 23.0 | 54.0 | |||||
| Accrued interest | 20.5 | 8.3 | |||||
| Operating lease liabilities | 66.0 | 58.7 | |||||
| Finance lease liabilities | 55.8 | 50.8 | |||||
| Financing obligations | 14.0 | 16.9 | |||||
| Other current liabilities | 36.5 | 36.0 | |||||
| Total current liabilities | 799.5 | 771.4 | |||||
| Non-current liabilities: | |||||||
| Debt | 2,839.6 | 2,816.0 | |||||
| Operating lease liabilities | 74.6 | 90.3 | |||||
| Finance lease liabilities | 308.0 | 295.0 | |||||
| Financing obligations | 52.4 | 41.3 | |||||
| Deferred income taxes | 79.2 | 35.6 | |||||
| Other non-current liabilities | 97.4 | 100.3 | |||||
| Total liabilities | 4,250.7 | 4,149.9 | |||||
| Commitments and Contingencies | |||||||
| Stockholders' deficit: | |||||||
| Preferred stock, | — | — | |||||
| Common stock, | 2.2 | 2.3 | |||||
| Additional paid-in capital | 2,638.2 | 2,661.1 | |||||
| Accumulated other comprehensive income | 60.3 | 51.2 | |||||
| Accumulated deficit | (2,824.2 | ) | (3,439.8 | ) | |||
| Treasury stock, at cost; 3.1 shares held | (31.0 | ) | (31.0 | ) | |||
| Total stockholders' deficit | (154.5 | ) | (756.2 | ) | |||
| Total liabilities and stockholders' deficit | $ | 4,096.2 | $ | 3,393.7 | |||
| RACKSPACE TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||
| Six Months Ended June 30, | |||||||
| (In millions) | 2023 | 2024 | |||||
| Cash Flows From Operating Activities | |||||||
| Net loss | $ | (639.2 | ) | $ | (615.6 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 192.4 | 149.0 | |||||
| Amortization of operating right-of-use assets | 42.5 | 34.2 | |||||
| Deferred income taxes | (17.0 | ) | (51.2 | ) | |||
| Share-based compensation expense | 34.7 | 32.3 | |||||
| Impairment of goodwill | 543.1 | 573.2 | |||||
| Impairment of assets, net | — | 20.0 | |||||
| Debt modification costs and gain on debt extinguishment | (107.7 | ) | (129.2 | ) | |||
| Unrealized loss on derivative contracts | 7.7 | — | |||||
| Gain on investments, net | (0.2 | ) | (0.1 | ) | |||
| Provision for bad debts and accrued customer credits | 5.0 | 10.8 | |||||
| Amortization of debt issuance costs and debt discount and premium | 4.0 | (3.5 | ) | ||||
| Third party fees paid in connection with the Refinancing Transactions | — | (31.7 | ) | ||||
| Other operating activities | — | (2.9 | ) | ||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | 74.7 | 10.4 | |||||
| Prepaid expenses and other current assets | 23.5 | 4.2 | |||||
| Accounts payable, accrued expenses, and other current liabilities | (101.2 | ) | (35.5 | ) | |||
| Deferred revenue | (9.2 | ) | (7.7 | ) | |||
| Operating lease liabilities | (30.8 | ) | (43.8 | ) | |||
| Other non-current assets and liabilities | 13.6 | 20.9 | |||||
| Net cash provided by (used in) operating activities | 35.9 | (66.2 | ) | ||||
| Cash Flows From Investing Activities | |||||||
| Purchases of property, equipment and software | (35.5 | ) | (66.7 | ) | |||
| Proceeds from sale of headquarters | — | 16.9 | |||||
| Other investing activities | 0.6 | 0.3 | |||||
| Net cash used in investing activities | (34.9 | ) | (49.5 | ) | |||
| Cash Flows From Financing Activities | |||||||
| Proceeds from employee stock plans | 0.8 | 0.4 | |||||
| Shares of common stock withheld for employee taxes | — | (3.4 | ) | ||||
| Proceeds from borrowings under long-term debt arrangements | 50.0 | 275.0 | |||||
| Payments on long-term debt | (67.0 | ) | (91.9 | ) | |||
| Debt extinguishment costs | — | (22.1 | ) | ||||
| Payments on financing component of interest rate swap | (8.6 | ) | (8.6 | ) | |||
| Principal payments of finance lease liabilities | (39.1 | ) | (30.8 | ) | |||
| Principal payments of financing obligations | (6.9 | ) | (8.2 | ) | |||
| Net cash provided by (used in) financing activities | (70.8 | ) | 110.4 | ||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 1.4 | (1.3 | ) | ||||
| Decrease in cash, cash equivalents, and restricted cash | (68.4 | ) | (6.6 | ) | |||
| Cash, cash equivalents, and restricted cash at beginning of period | 231.4 | 199.7 | |||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 163.0 | $ | 193.1 | |||
| Supplemental Cash Flow Information | |||||||
| Cash payments for interest, net of amount capitalized | $ | 113.6 | $ | 70.1 | |||
| Cash payments for income taxes, net of refunds | $ | 5.6 | $ | 6.8 | |||
| Non-cash Investing and Financing Activities | |||||||
| Acquisition of property, equipment and software by finance leases | $ | 63.2 | $ | 13.7 | |||
| Acquisition of property, equipment and software by financing obligations | 8.5 | — | |||||
| Increase (decrease) in property, equipment and software accrued in liabilities | 9.0 | (1.3 | ) | ||||
| Other non-cash additions | — | (0.5 | ) | ||||
| Non-cash purchases of property, equipment and software | $ | 80.7 | $ | 11.9 | |||
| Non-cash gain on sale of property and equipment | $ | — | $ | (5.1 | ) | ||
| SEGMENT DATA | ||||||||||||||
| (In millions, except %) | Three Months Ended June 30, | % Change | ||||||||||||
| Revenue by segment: | 2023 | 2024 | Actual | Constant Currency (a) | ||||||||||
| Public Cloud | $ | 433.7 | $ | 424.9 | (2.0 | )% | (2.0 | )% | ||||||
| Private Cloud | 312.6 | 260.0 | (16.8 | )% | (17.0 | )% | ||||||||
| Total consolidated revenue | $ | 746.3 | $ | 684.9 | (8.2 | )% | (8.3 | )% | ||||||
| (In millions, except %) | Six Months Ended June 30, | % Change | ||||||||||||
| Revenue by segment: | 2023 | 2024 | Actual | Constant Currency (a) | ||||||||||
| Public Cloud | $ | 877.2 | $ | 847.3 | (3.4 | )% | (3.5 | )% | ||||||
| Private Cloud | 627.8 | 528.4 | (15.8 | )% | (16.3 | )% | ||||||||
| Total consolidated revenue | $ | 1,505.0 | $ | 1,375.7 | (8.6 | )% | (8.8 | )% | ||||||
| (a) | Refer to "Non-GAAP Financial Measures" in this section for further explanation and reconciliation. |
| Three Months Ended June 30, | Year-Over-Year | |||||||||||||||||||
| (In millions, except %) | 2023 | 2024 | Comparison | |||||||||||||||||
| Segment operating profit (a): | Amount | % of Segment Revenue | Amount | % of Segment Revenue | Amount | % Change | ||||||||||||||
| Public Cloud | $ | 15.8 | 3.6 | % | $ | 11.8 | 2.8 | % | $ | (4.0 | ) | (25.3 | )% | |||||||
| Private Cloud | 88.0 | 28.2 | % | 69.7 | 26.8 | % | (18.3 | ) | (20.8 | )% | ||||||||||
| Total consolidated segment operating profit | 103.8 | 81.5 | (22.3 | ) | (21.5 | )% | ||||||||||||||
| Corporate functions (b) | (64.8 | ) | (58.7 | ) | 6.1 | (9.4 | )% | |||||||||||||
| Non-GAAP Operating Profit (c) | $ | 39.0 | $ | 22.8 | $ | (16.2 | ) | (41.5 | )% | |||||||||||
| Six Months Ended June 30, | Year-Over-Year | |||||||||||||||||||
| (In millions, except %) | 2023 | 2024 | Comparison | |||||||||||||||||
| Segment operating profit (a): | Amount | % of Segment Revenue | Amount | % of Segment Revenue | Amount | % Change | ||||||||||||||
| Public Cloud | $ | 39.2 | 4.5 | % | $ | 21.1 | 2.5 | % | $ | (18.1 | ) | (46.2 | )% | |||||||
| Private Cloud | 182.0 | 29.0 | % | 141.4 | 26.8 | % | (40.6 | ) | (22.3 | )% | ||||||||||
| Total consolidated segment operating profit | 221.2 | 162.5 | (58.7 | ) | (26.5 | )% | ||||||||||||||
| Corporate functions (b) | (131.7 | ) | (123.5 | ) | 8.2 | (6.2 | )% | |||||||||||||
| Non-GAAP Operating Profit (c) | $ | 89.5 | $ | 39.0 | $ | (50.5 | ) | (56.4 | )% | |||||||||||
| (a) | Segment revenue less expenses directly attributable to running the respective segments’ business. These expenses exclude centralized corporate function costs. |
| (b) | Costs that are not allocated to segments. These costs are related to centralized corporate functions that provide services to the segments in areas such as accounting, information technology, marketing, legal and human resources. |
| (c) | Refer to "Non-GAAP Financial Measures" in this section for further explanation and reconciliation. |
NON-GAAP FINANCIAL MEASURES
Constant Currency Revenue
We use constant currency revenue as an additional metric for understanding and assessing our growth excluding the effect of foreign currency rate fluctuations on our international business operations. Constant currency information compares results between periods as if exchange rates had remained constant period over period and is calculated by translating the non-U.S. dollar income statement balances for the most current period to U.S. dollars using the average exchange rate from the comparative period rather than the actual exchange rates in effect during the respective period. We also believe this is an important metric to help investors evaluate our performance in comparison to prior periods.
| Three Months Ended June 30, 2023 | Three Months Ended June 30, 2024 | % Change | ||||||||||||||||||||
| (In millions, except %) | Revenue | Revenue | Foreign Currency Translation (a) | Revenue in Constant Currency | Actual | Constant Currency | ||||||||||||||||
| Public Cloud | $ | 433.7 | $ | 424.9 | $ | — | $ | 424.9 | (2.0 | )% | (2.0 | )% | ||||||||||
| Private Cloud | 312.6 | 260.0 | (0.5 | ) | 259.5 | (16.8 | )% | (17.0 | )% | |||||||||||||
| Total | $ | 746.3 | $ | 684.9 | $ | (0.5 | ) | $ | 684.4 | (8.2 | )% | (8.3 | )% | |||||||||
| Six Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | % Change | ||||||||||||||||||||
| (In millions, except %) | Revenue | Revenue | Foreign Currency Translation (a) | Revenue in Constant Currency | Actual | Constant Currency | ||||||||||||||||
| Public Cloud | $ | 877.2 | $ | 847.3 | $ | (0.7 | ) | $ | 846.6 | (3.4 | )% | (3.5 | )% | |||||||||
| Private Cloud | 627.8 | 528.4 | (2.6 | ) | 525.8 | (15.8 | )% | (16.3 | )% | |||||||||||||
| Total | $ | 1,505.0 | $ | 1,375.7 | $ | (3.3 | ) | $ | 1,372.4 | (8.6 | )% | (8.8 | )% | |||||||||
| (a) | The effect of foreign currency is calculated by translating current period results using the average exchange rate from the prior comparative period. |
Non-GAAP Gross Profit
We present Non-GAAP Gross Profit because we believe the measure is useful in analyzing trends in our underlying, recurring gross margins. We define Non-GAAP Gross Profit as gross profit, adjusted to exclude the impact of share-based compensation expense and other non-recurring or unusual compensation items, purchase accounting-related effects, certain business transformation-related costs, and costs related to the Hosted Exchange incident.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (In millions) | 2023 | 2024 | 2023 | 2024 | |||||||||||
| Gross profit | $ | 153.1 | $ | 131.4 | $ | 322.7 | $ | 264.2 | |||||||
| Share-based compensation expense | 2.6 | 2.0 | 5.4 | 3.9 | |||||||||||
| Special bonuses and other compensation expense (a) | 1.4 | 1.0 | 2.1 | 1.9 | |||||||||||
| Purchase accounting impact on expense (b) | 0.7 | 0.6 | 1.3 | 1.2 | |||||||||||
| Restructuring and transformation expenses (c) | 5.1 | 4.3 | 9.8 | 9.2 | |||||||||||
| Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage | — | — | 0.3 | — | |||||||||||
| Non-GAAP Gross Profit | $ | 162.9 | $ | 139.3 | $ | 341.6 | $ | 280.4 | |||||||
| (a) | Adjustments for retention bonuses, mainly in connection with restructuring and transformation projects, and the related payroll tax, and payroll taxes associated with the exercise of stock options and vesting of restricted stock. Beginning in the second quarter of 2023, includes expense related to the one-time grant of long-term incentive bonuses as a component of our annual compensation award process. |
| (b) | Adjustment for the impact of purchase accounting from the November 2016 merger on expenses. |
| (c) | Adjustment for the impact of business transformation and optimization activities, as well as associated severance, certain facility closure costs and lease termination expenses. |
Non-GAAP Net Income (Loss), Non-GAAP Operating Profit and Adjusted EBITDA
We present Non-GAAP Net Income (Loss), Non-GAAP Operating Profit and Adjusted EBITDA because they are a basis upon which management assesses our performance and we believe they are useful to evaluating our financial performance. We believe that excluding items from net income that may not be indicative of, or are unrelated to, our core operating results, and that may vary in frequency or magnitude, enhances the comparability of our results and provides a better baseline for analyzing trends in our business.
We define Non-GAAP Net Income (Loss) as net income (loss) adjusted to exclude the impact of non-cash charges for share-based compensation, special bonuses and other compensation expense, transaction-related costs and adjustments, restructuring and transformation charges, costs related to the Hosted Exchange incident, the amortization of acquired intangible assets, goodwill and asset impairment charges, costs related to the closure of a UK office, the interest expense impact from the debt Refinancing Transactions, and certain other non-operating, non-recurring or non-core gains and losses, as well as the tax effects of these non-GAAP adjustments.
We define Non-GAAP Operating Profit as income (loss) from operations adjusted to exclude the impact of non-cash charges for share-based compensation, special bonuses and other compensation expense, transaction-related costs and adjustments, restructuring and transformation charges, costs related to the Hosted Exchange incident, the amortization of acquired intangible assets, goodwill and asset impairment charges, costs related to the closure of a UK office, and certain other non-operating, non-recurring or non-core gains and losses.
We define Adjusted EBITDA as net income (loss) adjusted to exclude the impact of non-cash charges for share-based compensation, special bonuses and other compensation expense, transaction-related costs and adjustments, restructuring and transformation charges, costs related to the Hosted Exchange incident, costs related to the closure of a UK office, certain other non-operating, non-recurring or non-core gains and losses, interest expense, expenses for our accounts receivable purchase agreement, income taxes, depreciation and amortization, and goodwill and asset impairment charges.
Non-GAAP Operating Profit and Adjusted EBITDA are management's principal metrics for measuring our underlying financial performance. Non-GAAP Operating Profit and Adjusted EBITDA, along with other quantitative and qualitative information, are also the principal financial measures used by management and our board of directors in determining performance-based compensation for our management and key employees.
These non-GAAP measures are not intended to imply that we would have generated higher income or avoided net losses if the November 2016 merger and the subsequent transactions and initiatives had not occurred. In the future we may incur expenses or charges such as those added back to calculate Non-GAAP Net Income (Loss), Non-GAAP Operating Profit or Adjusted EBITDA. Our presentation of Non-GAAP Net Income (Loss), Non-GAAP Operating Profit and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these items. Other companies, including our peer companies, may calculate similarly-titled measures in a different manner from us, and therefore, our non-GAAP measures may not be comparable to similarly-titled measures of other companies. Investors are cautioned against using these measures to the exclusion of our results in accordance with GAAP.
Net income (loss) reconciliation to Non-GAAP Net Loss
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (In millions) | 2023 | 2024 | 2023 | 2024 | |||||||||||
| Net income (loss) | $ | (27.2 | ) | $ | 25.0 | $ | (639.2 | ) | $ | (615.6 | ) | ||||
| Share-based compensation expense | 19.5 | 19.5 | 34.7 | 32.3 | |||||||||||
| Special bonuses and other compensation expense (a) | 4.2 | 3.3 | 6.4 | 6.4 | |||||||||||
| Transaction-related adjustments, net (b) | 1.2 | 1.6 | 2.5 | 2.6 | |||||||||||
| Restructuring and transformation expenses (c) | 23.1 | 13.7 | 48.7 | 33.7 | |||||||||||
| Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage | 1.7 | (0.1 | ) | 4.9 | 0.1 | ||||||||||
| Impairment of goodwill | — | — | 543.1 | 573.2 | |||||||||||
| UK office closure (d) | 12.1 | — | 12.1 | — | |||||||||||
| Impairment of assets, net | — | — | — | 20.0 | |||||||||||
| Net gain on divestiture and investments (e) | (0.1 | ) | — | (0.2 | ) | (0.1 | ) | ||||||||
| Debt modification costs and gain on debt extinguishment | (94.9 | ) | (72.5 | ) | (107.7 | ) | (129.2 | ) | |||||||
| Interest expense impact from the Refinancing Transactions (f) | — | (25.6 | ) | — | (25.6 | ) | |||||||||
| Other adjustments (g) | (0.2 | ) | 0.1 | (2.3 | ) | 0.5 | |||||||||
| Amortization of intangible assets (h) | 41.0 | 38.6 | 81.9 | 77.3 | |||||||||||
| Tax effect of non-GAAP adjustments (i) | 6.1 | (23.0 | ) | (3.1 | ) | (19.3 | ) | ||||||||
| Non-GAAP Net Loss | $ | (13.5 | ) | $ | (19.4 | ) | $ | (18.2 | ) | $ | (43.7 | ) | |||
Loss from operations reconciliation to Non-GAAP Operating Profit
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (In millions) | 2023 | 2024 | 2023 | 2024 | |||||||||||
| Loss from operations | $ | (63.8 | ) | $ | (53.8 | ) | $ | (644.8 | ) | $ | (706.6 | ) | |||
| Share-based compensation expense | 19.5 | 19.5 | 34.7 | 32.3 | |||||||||||
| Special bonuses and other compensation expense (a) | 4.2 | 3.3 | 6.4 | 6.4 | |||||||||||
| Transaction-related adjustments, net (b) | 1.2 | 1.6 | 2.5 | 2.6 | |||||||||||
| Restructuring and transformation expenses (c) | 23.1 | 13.7 | 48.7 | 33.7 | |||||||||||
| Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage | 1.7 | (0.1 | ) | 4.9 | 0.1 | ||||||||||
| Impairment of goodwill | — | — | 543.1 | 573.2 | |||||||||||
| Impairment of assets, net | — | — | — | 20.0 | |||||||||||
| Amortization of intangible assets (h) | 41.0 | 38.6 | 81.9 | 77.3 | |||||||||||
| UK office closure (d) | 12.1 | — | 12.1 | — | |||||||||||
| Non-GAAP Operating Profit | $ | 39.0 | $ | 22.8 | $ | 89.5 | $ | 39.0 | |||||||
Net income (loss) reconciliation to Adjusted EBITDA
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (In millions) | 2023 | 2024 | 2023 | 2024 | |||||||||||
| Net income (loss) | $ | (27.2 | ) | $ | 25.0 | $ | (639.2 | ) | $ | (615.6 | ) | ||||
| Share-based compensation expense | 19.5 | 19.5 | 34.7 | 32.3 | |||||||||||
| Special bonuses and other compensation expense (a) | 4.2 | 3.3 | 6.4 | 6.4 | |||||||||||
| Transaction-related adjustments, net (b) | 1.2 | 1.6 | 2.5 | 2.6 | |||||||||||
| Restructuring and transformation expenses (c) | 23.1 | 13.7 | 48.7 | 33.7 | |||||||||||
| Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage | 1.7 | (0.1 | ) | 4.9 | 0.1 | ||||||||||
| Impairment of goodwill | — | — | 543.1 | 573.2 | |||||||||||
| UK office closure (d) | 12.1 | — | 12.1 | — | |||||||||||
| Impairment of assets, net | — | — | — | 20.0 | |||||||||||
| Net gain on divestiture and investments (e) | (0.1 | ) | — | (0.2 | ) | (0.1 | ) | ||||||||
| Debt modification costs and gain on debt extinguishment | (94.9 | ) | (72.5 | ) | (107.7 | ) | (129.2 | ) | |||||||
| Other (income) expense, net (j) | (0.2 | ) | 5.2 | (2.3 | ) | 10.8 | |||||||||
| Interest expense | 57.3 | 18.4 | 114.2 | 62.1 | |||||||||||
| Provision (benefit) for income taxes | 1.3 | (29.9 | ) | (9.6 | ) | (34.6 | ) | ||||||||
| Depreciation and amortization (k) | 95.5 | 73.4 | 189.1 | 148.3 | |||||||||||
| Adjusted EBITDA | $ | 93.5 | $ | 57.6 | $ | 196.7 | $ | 110.0 | |||||||
| (a) | Includes expense related to retention bonuses, mainly relating to restructuring and integration projects, and the related payroll tax, senior executive signing bonuses and relocation costs, and payroll taxes associated with the exercise of stock options and vesting of restricted stock. Beginning in the second quarter of 2023, includes expense related to the one-time grant of long-term incentive bonuses as a component of our annual compensation award process. |
| (b) | Includes legal, professional, accounting and other advisory fees related to acquisitions, certain one-time compliance costs related to being a public company, integration costs of acquired businesses, purchase accounting adjustments, payroll costs for employees that dedicate significant time to supporting these projects and exploratory acquisition and divestiture costs and expenses related to financing activities. |
| (c) | Includes consulting and advisory fees related to business transformation and optimization activities, payroll costs for employees that dedicate significant time to these projects, as well as associated severance, certain facility closure costs, and lease termination expenses. The six months ended June 30, 2024 also includes a |
| (d) | Expense recognized related to the closure of a UK office that we exited in the second quarter of 2023 prior to the lease end date. |
| (e) | Includes gains and losses on investment and from dispositions. |
| (f) | Interest expense impact due to the accounting for contractual interest payments on debt instruments entered into as part of the March 2024 Refinancing Transactions, which reduced interest expense relative to contractual interest cost. |
| (g) | Primarily consists of foreign currency gains and losses. |
| (h) | All of our intangible assets are attributable to acquisitions, including the November 2016 merger. |
| (i) | We utilize an estimated structural long-term non-GAAP tax rate in order to provide consistency across reporting periods, removing the effect of non-recurring tax adjustments, which include but are not limited to tax rate changes, U.S. tax reform, share-based compensation, audit conclusions and changes to valuation allowances. When computing this long-term rate for the 2023 and 2024 interim periods, we based it on an average of the 2022 and estimated 2023 tax rates and 2023 and estimated 2024 tax rates, respectively, recomputed to remove the tax effect of non-GAAP pre-tax adjustments and non-recurring tax adjustments, resulting in a structural non-GAAP tax rate of |
| (j) | Primarily consists of foreign currency gains and losses and expense related to our accounts receivable purchase agreement. |
| (k) | Excludes accelerated depreciation expense related to facility closures. |
Non-GAAP Earnings (Loss) Per Share
We define Non-GAAP Earnings (Loss) Per Share as Non-GAAP Net Income (Loss) divided by our GAAP weighted average number of shares outstanding for the period on a diluted basis and further adjusted for the weighted average number of shares associated with securities which are anti-dilutive to GAAP loss per share but dilutive to Non-GAAP Earnings (Loss) Per Share. Management uses Non-GAAP Earnings (Loss) Per Share to evaluate the performance of our business on a comparable basis from period to period, including by adjusting for the impact of the issuance of shares that would be dilutive to Non-GAAP Earnings (Loss) Per Share.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (In millions, except per share amounts) | 2023 | 2024 | 2023 | 2024 | |||||||||||
| Net income (loss) attributable to common stockholders | $ | (27.2 | ) | $ | 25.0 | $ | (639.2 | ) | $ | (615.6 | ) | ||||
| Non-GAAP Net Loss | $ | (13.5 | ) | $ | (19.4 | ) | $ | (18.2 | ) | $ | (43.7 | ) | |||
| Weighted average number of shares - Diluted | 215.1 | 229.6 | 214.2 | 222.2 | |||||||||||
| Effect of dilutive securities (a) | 1.2 | — | 1.4 | 7.3 | |||||||||||
| Non-GAAP weighted average number of shares - Diluted | 216.3 | 229.6 | 215.6 | 229.5 | |||||||||||
| Net earnings (loss) per share - Diluted | $ | (0.13 | ) | $ | 0.11 | $ | (2.98 | ) | $ | (2.77 | ) | ||||
| Per share impacts of adjustments to net income (loss) (b) | 0.06 | (0.19 | ) | 2.90 | 2.57 | ||||||||||
| Per share impacts of shares dilutive after adjustments to net income (loss) (a) | 0.01 | 0.00 | 0.00 | 0.01 | |||||||||||
| Non-GAAP Earnings (Loss) Per Share | $ | (0.06 | ) | $ | (0.08 | ) | $ | (0.08 | ) | $ | (0.19 | ) | |||
| (a) | Reflects impact of awards that would have been anti-dilutive to net loss per share, and therefore not included in the calculation, but would be dilutive to Non-GAAP Earnings (Loss) Per Share and are therefore included in the share count for purposes of this non-GAAP measure. Potential common share equivalents consist of shares issuable upon the exercise of stock options, vesting of restricted stock units (including performance-based restricted stock units) or purchases under the Employee Stock Purchase Plan (the "ESPP"), as well as contingent shares associated with our acquisition of Datapipe Parent, Inc. Certain of our potential common share equivalents are contingent on Apollo achieving pre-established performance targets based on a multiple of their invested capital ("MOIC"), which are included in the denominator for the entire period if such shares would be issuable as of the end of the reporting period assuming the end of the reporting period was the end of the contingency period. |
| (b) | Reflects the aggregate adjustments made to reconcile Non-GAAP Net Income (Loss) to our net income (loss), as noted in the above table, divided by the GAAP diluted number of shares outstanding for the relevant period. |
FAQ
What was Rackspace Technology's revenue in Q2 2024?
How did Rackspace's Private Cloud and Public Cloud revenues perform in Q2 2024?
What was Rackspace Technology's net income in Q2 2024?
What is Rackspace Technology's revenue guidance for Q3 2024?
