Rackspace Technology Reports Third Quarter 2024 Results
Rackspace Technology reported Q3 2024 results with revenue of $676 million, down 8% year-over-year. Private Cloud revenue decreased 14% to $258 million, while Public Cloud revenue fell 3% to $418 million. The company posted a net loss of $187 million, or $(0.82) per diluted share, improving from a net loss of $227 million in Q3 2023. Non-GAAP Operating Profit was $34 million, down 25% year-over-year. The company ended the quarter with $157 million in cash and provided Q4 2024 guidance projecting revenue between $668-$680 million.
Rackspace Technology ha riportato i risultati del terzo trimestre 2024, con ricavi di 676 milioni di dollari, in calo dell'8% rispetto all'anno precedente. I ricavi del Cloud Privato sono diminuiti del 14% a 258 milioni di dollari, mentre i ricavi del Cloud Pubblico sono scesi del 3% a 418 milioni di dollari. L'azienda ha registrato una perdita netta di 187 milioni di dollari, ovvero $(0.82) per azione diluita, in miglioramento rispetto a una perdita netta di 227 milioni di dollari nel terzo trimestre del 2023. Il profitto operativo Non-GAAP è stato di 34 milioni di dollari, in calo del 25% rispetto all'anno precedente. L'azienda ha chiuso il trimestre con 157 milioni di dollari in contanti e ha fornito previsioni per il quarto trimestre 2024, stimando ricavi tra 668 e 680 milioni di dollari.
Rackspace Technology reportó los resultados del tercer trimestre de 2024, con ingresos de 676 millones de dólares, un descenso del 8% en comparación con el año anterior. Los ingresos de Nube Privada disminuyeron un 14% a 258 millones de dólares, mientras que los ingresos de Nube Pública cayeron un 3% a 418 millones de dólares. La compañía reportó una pérdida neta de 187 millones de dólares, o $(0.82) por acción diluida, mejorando desde una pérdida neta de 227 millones de dólares en el tercer trimestre de 2023. La ganancia operativa Non-GAAP fue de 34 millones de dólares, una disminución del 25% en comparación con el año anterior. La compañía terminó el trimestre con 157 millones de dólares en efectivo y proporcionó orientación para el cuarto trimestre de 2024 proyectando ingresos entre 668 y 680 millones de dólares.
랙스페이스 기술은 2024년 3분기 실적을 발표했으며, 매출은 6억 7,600만 달러로, 작년 대비 8% 감소했습니다. 프라이빗 클라우드 매출은 14% 감소하여 2억 5,800만 달러에 이르렀고, 퍼블릭 클라우드 매출은 3% 감소하여 4억 1,800만 달러에 도달했습니다. 회사는 1억 8,700만 달러의 순손실을 기록했으며, 희석주당 $(0.82)입니다. 이는 2023년 3분기 순손실 2억 2,700만 달러에서 개선된 수치입니다. 비-GAAP 운영 이익은 3,400만 달러로, 작년 대비 25% 감소했습니다. 회사는 분기를 1억 5,700만 달러의 현금으로 마감했으며, 2024년 4분기에는 6억 6,800만 달러에서 6억 8,000만 달러 사이의 매출을 예상했습니다.
Rackspace Technology a annoncé les résultats du troisième trimestre 2024, avec un chiffre d'affaires de 676 millions de dollars, en baisse de 8 % par rapport à l'année précédente. Le chiffre d'affaires du Cloud Privé a diminué de 14 % pour atteindre 258 millions de dollars, tandis que le chiffre d'affaires du Cloud Public a chuté de 3 % à 418 millions de dollars. L'entreprise a enregistré une perte nette de 187 millions de dollars, soit $(0,82) par action diluée, s'améliorant par rapport à une perte nette de 227 millions de dollars au troisième trimestre 2023. Le bénéfice d'exploitation non-GAAP s'est élevé à 34 millions de dollars, en baisse de 25 % par rapport à l'année précédente. L'entreprise a clôturé le trimestre avec 157 millions de dollars en liquidités et a fourni des prévisions pour le quatrième trimestre 2024, prévoyant un chiffre d'affaires compris entre 668 et 680 millions de dollars.
Rackspace Technology hat die Ergebnisse des 3. Quartals 2024 bekannt gegeben, mit einem Umsatz von 676 Millionen Dollar, was einem Rückgang von 8 % im Vergleich zum Vorjahr entspricht. Der Umsatz aus Private Cloud fiel um 14 % auf 258 Millionen Dollar, während der Umsatz aus Public Cloud um 3 % auf 418 Millionen Dollar zurückging. Das Unternehmen verzeichnete einen Nettoverlust von 187 Millionen Dollar, oder $(0,82) pro verwässerter Aktie, was sich gegenüber einem Nettoverlust von 227 Millionen Dollar im 3. Quartal 2023 verbesserte. Der Non-GAAP Betriebsgewinn betrug 34 Millionen Dollar, was einem Rückgang von 25 % im Vergleich zum Vorjahr entspricht. Das Unternehmen schloss das Quartal mit 157 Millionen Dollar in bar und gab eine Prognose für das 4. Quartal 2024 ab, die einen Umsatz zwischen 668 und 680 Millionen Dollar voraussagt.
- Net loss improved to $187 million from $227 million year-over-year
- Double-digit bookings growth with record Public Cloud bookings
- Strong cash position with $157 million and undrawn credit facility of $375 million
- Operating cash flow of $52 million in Q3 2024
- Total revenue declined 8% year-over-year to $676 million
- Private Cloud revenue dropped 14% to $258 million
- Public Cloud revenue decreased 3% to $418 million
- Non-GAAP Operating Profit fell 25% to $34 million
Insights
Rackspace's Q3 results paint a concerning picture with continued revenue decline across both segments. Total revenue dropped -8% to
The Q4 guidance suggests continued pressure, projecting revenue between
The cloud services market dynamics reflected in Rackspace's results show concerning trends. The steeper decline in Private Cloud revenue (
The company's transition challenges are evident in the financial metrics, though operational efficiency improvements have helped contain losses. The guidance implies a sequential stabilization but continued year-over-year declines, reflecting persistent market headwinds and competitive pressures in the cloud infrastructure space.
- Revenue of
$676 million in the Third Quarter, down8% Year-over-Year - Private Cloud Revenue was
$258 million , down14% Year-over-Year - Public Cloud Revenue was
$418 million , down3% Year-over-Year - Third Quarter 2024 Cash Flow From Operating Activities was
$52 million
SAN ANTONIO, Nov. 12, 2024 (GLOBE NEWSWIRE) -- Rackspace Technology, Inc. (Nasdaq: RXT), a leading end-to-end, hybrid, multicloud, and AI solutions company, today announced results for its third quarter ended September 30, 2024.
Amar Maletira, Chief Executive Officer, stated, “Our third-quarter results exceeded the midpoint of our guidance for revenue, operating profit, and EPS. Bookings grew double digits with Public Cloud posting a record bookings quarter since the formation of the two business units. I’m pleased with the steady progress we are making in both the businesses on multiple fronts.”
Third Quarter 2024 Results
Revenue was
Private Cloud revenue was
Public Cloud revenue was
Loss from operations was
Net loss was
Net loss per diluted share was
Non-GAAP Operating Profit was
Non-GAAP Loss Per Share was
Capital expenditures were
As of September 30, 2024, we had cash and cash equivalents of
Financial Outlook
Rackspace Technology is providing guidance as follows:
| Q4 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 | 26 | % |
| Non-GAAP Weighted Average Shares | 240 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, November 12, 2024, at 4:00pm CT / 5:00pm ET to discuss its third quarter 2024 results. Interested parties may access the conference call as follows:
To listen to the live webcast or access the replay following the webcast, please visit our IR website at the following link: https://ir.rackspace.com/news-and-events/events-and-presentations.
To obtain a dial-in number, please pre-register at the following link:
https://register.vevent.com/register/BI6a615cf19559421fb574530f157e778c
Registrants will receive dial-in information and a PIN allowing them to access the live call.
About Rackspace Technology
Rackspace Technology is a leading end-to-end, hybrid, multicloud, and AI solutions company. We can 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 September 30, | Year-Over-Year Comparison | |||||||||||||||||||
| 2023 | 2024 | |||||||||||||||||||
| (In millions, except % and per share data) | Amount | % Revenue | Amount | % Revenue | Amount | % Change | ||||||||||||||
| Revenue | $ | 732.4 | 100.0 | % | $ | 675.8 | 100.0 | % | $ | (56.6 | ) | (7.7 | )% | |||||||
| Cost of revenue | (580.4 | ) | (79.2 | )% | (538.3 | ) | (79.6 | )% | 42.1 | (7.3 | )% | |||||||||
| Gross profit | 152.0 | 20.8 | % | 137.5 | 20.4 | % | (14.5 | ) | (9.5 | )% | ||||||||||
| Selling, general and administrative expenses | (177.3 | ) | (24.2 | )% | (169.5 | ) | (25.1 | )% | 7.8 | (4.4 | )% | |||||||||
| Impairment of goodwill | (165.7 | ) | (22.6 | )% | (141.7 | ) | (21.0 | )% | 24.0 | (14.5 | )% | |||||||||
| Impairment of assets, net | (48.4 | ) | (6.6 | )% | — | — | % | 48.4 | (100.0 | )% | ||||||||||
| Loss from operations | (239.4 | ) | (32.7 | )% | (173.7 | ) | (25.7 | )% | 65.7 | (27.4 | )% | |||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest expense | (56.5 | ) | (7.7 | )% | (18.0 | ) | (2.7 | )% | 38.5 | (68.1 | )% | |||||||||
| Gain on investments, net | — | — | % | 0.1 | 0.0 | % | 0.1 | 100.0 | % | |||||||||||
| Debt modification costs and gain on debt extinguishment | 55.4 | 7.6 | % | 18.0 | 2.7 | % | (37.4 | ) | (67.5 | )% | ||||||||||
| Other expense, net | (2.6 | ) | (0.4 | )% | (1.0 | ) | (0.2 | )% | 1.6 | (61.5 | )% | |||||||||
| Total other income (expense) | (3.7 | ) | (0.5 | )% | (0.9 | ) | (0.1 | )% | 2.8 | (75.7 | )% | |||||||||
| Loss before income taxes | (243.1 | ) | (33.2 | )% | (174.6 | ) | (25.8 | )% | 68.5 | (28.2 | )% | |||||||||
| Benefit (provision) for income taxes | 16.5 | 2.3 | % | (12.0 | ) | (1.8 | )% | (28.5 | ) | NM | ||||||||||
| Net loss | $ | (226.6 | ) | (30.9 | )% | $ | (186.6 | ) | (27.6 | )% | $ | 40.0 | (17.7 | )% | ||||||
| Net loss per share: | ||||||||||||||||||||
| Basic and diluted | $ | (1.05 | ) | $ | (0.82 | ) | ||||||||||||||
| Weighted average number of shares outstanding: | ||||||||||||||||||||
| Basic and diluted | 216.0 | 226.4 | ||||||||||||||||||
NM = not meaningful.
| RACKSPACE TECHNOLOGY, INC. CONSOLIDATED RESULTS OF OPERATIONS (Unaudited) | ||||||||||||||||||||
| Nine Months Ended September 30, | Year-Over-Year Comparison | |||||||||||||||||||
| 2023 | 2024 | |||||||||||||||||||
| (In millions, except % and per share data) | Amount | % Revenue | Amount | % Revenue | Amount | % Change | ||||||||||||||
| Revenue | $ | 2,237.4 | 100.0 | % | $ | 2,051.5 | 100.0 | % | $ | (185.9 | ) | (8.3 | )% | |||||||
| Cost of revenue | (1,762.7 | ) | (78.8 | )% | (1,649.8 | ) | (80.4 | )% | 112.9 | (6.4 | )% | |||||||||
| Gross profit | 474.7 | 21.2 | % | 401.7 | 19.6 | % | (73.0 | ) | (15.4 | )% | ||||||||||
| Selling, general and administrative expenses | (601.7 | ) | (26.9 | )% | (547.1 | ) | (26.7 | )% | 54.6 | (9.1 | )% | |||||||||
| Impairment of goodwill | (708.8 | ) | (31.7 | )% | (714.9 | ) | (34.8 | )% | (6.1 | ) | 0.9 | % | ||||||||
| Impairment of assets, net | (48.4 | ) | (2.2 | )% | (20.0 | ) | (1.0 | )% | 28.4 | (58.7 | )% | |||||||||
| Loss from operations | (884.2 | ) | (39.5 | )% | (880.3 | ) | (42.9 | )% | 3.9 | (0.4 | )% | |||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest expense | (170.7 | ) | (7.6 | )% | (80.1 | ) | (3.9 | )% | 90.6 | (53.1 | )% | |||||||||
| Gain on investments, net | 0.2 | 0.0 | % | 0.2 | 0.0 | % | — | — | % | |||||||||||
| Debt modification costs and gain on debt extinguishment | 163.1 | 7.3 | % | 147.2 | 7.2 | % | (15.9 | ) | (9.7 | )% | ||||||||||
| Other expense, net | (0.3 | ) | (0.0 | )% | (11.8 | ) | (0.6 | )% | (11.5 | ) | NM | |||||||||
| Total other income (expense) | (7.7 | ) | (0.3 | )% | 55.5 | 2.7 | % | 63.2 | NM | |||||||||||
| Loss before income taxes | (891.9 | ) | (39.9 | )% | (824.8 | ) | (40.2 | )% | 67.1 | (7.5 | )% | |||||||||
| Benefit for income taxes | 26.1 | 1.2 | % | 22.6 | 1.1 | % | (3.5 | ) | (13.4 | )% | ||||||||||
| Net loss | $ | (865.8 | ) | (38.7 | )% | $ | (802.2 | ) | (39.1 | )% | $ | 63.6 | (7.3 | )% | ||||||
| Net loss per share: | ||||||||||||||||||||
| Basic and diluted | $ | (4.03 | ) | $ | (3.59 | ) | ||||||||||||||
| Weighted average number of shares outstanding: | ||||||||||||||||||||
| Basic and diluted | 214.8 | 223.6 | ||||||||||||||||||
NM = not meaningful.
| RACKSPACE TECHNOLOGY, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||||
| (In millions, except per share data) | December 31, 2023 | September 30, 2024 | |||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 196.8 | $ | 157.1 | |||
| Accounts receivable, net allowance for credit losses and accrued customer credits of | 339.7 | 311.8 | |||||
| Prepaid expenses | 87.4 | 95.4 | |||||
| Other current assets | 114.2 | 84.4 | |||||
| Total current assets | 738.1 | 648.7 | |||||
| Property, equipment and software, net | 608.8 | 616.3 | |||||
| Goodwill, net | 1,452.4 | 739.7 | |||||
| Intangible assets, net | 1,019.0 | 883.4 | |||||
| Operating right-of-use assets | 126.3 | 139.4 | |||||
| Other non-current assets | 151.6 | 118.3 | |||||
| Total assets | $ | 4,096.2 | $ | 3,145.8 | |||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||||
| Current liabilities: | |||||||
| Accounts payable and accrued expenses | $ | 432.7 | $ | 407.9 | |||
| Accrued compensation and benefits | 72.2 | 94.2 | |||||
| Deferred revenue | 78.8 | 68.8 | |||||
| Debt | 23.0 | 27.1 | |||||
| Accrued interest | 20.5 | 8.1 | |||||
| Operating lease liabilities | 66.0 | 55.8 | |||||
| Finance lease liabilities | 55.8 | 50.5 | |||||
| Financing obligations | 14.0 | 16.3 | |||||
| Other current liabilities | 36.5 | 40.2 | |||||
| Total current liabilities | 799.5 | 768.9 | |||||
| Non-current liabilities: | |||||||
| Debt | 2,839.6 | 2,782.4 | |||||
| Operating lease liabilities | 74.6 | 86.3 | |||||
| Finance lease liabilities | 308.0 | 294.3 | |||||
| Financing obligations | 52.4 | 39.5 | |||||
| Deferred income taxes | 79.2 | 26.0 | |||||
| Other non-current liabilities | 97.4 | 98.1 | |||||
| Total liabilities | 4,250.7 | 4,095.5 | |||||
| Commitments and Contingencies | |||||||
| Stockholders' deficit: | |||||||
| Preferred stock, | — | — | |||||
| Common stock, | 2.2 | 2.3 | |||||
| Additional paid-in capital | 2,638.2 | 2,672.0 | |||||
| Accumulated other comprehensive income | 60.3 | 33.4 | |||||
| Accumulated deficit | (2,824.2 | ) | (3,626.4 | ) | |||
| Treasury stock, at cost; 3.1 shares held | (31.0 | ) | (31.0 | ) | |||
| Total stockholders' deficit | (154.5 | ) | (949.7 | ) | |||
| Total liabilities and stockholders' deficit | $ | 4,096.2 | $ | 3,145.8 | |||
| RACKSPACE TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||
| Nine Months Ended September 30, | |||||||
| (In millions) | 2023 | 2024 | |||||
| Cash Flows From Operating Activities | |||||||
| Net loss | $ | (865.8 | ) | $ | (802.2 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 282.5 | 222.0 | |||||
| Amortization of operating right-of-use assets | 57.9 | 51.4 | |||||
| Deferred income taxes | (38.9 | ) | (46.4 | ) | |||
| Share-based compensation expense | 51.9 | 47.8 | |||||
| Impairment of goodwill | 708.8 | 714.9 | |||||
| Impairment of assets, net | 48.4 | 20.0 | |||||
| Debt modification costs and gain on debt extinguishment | (163.1 | ) | (147.2 | ) | |||
| Unrealized loss on derivative contracts | 13.7 | — | |||||
| Gain on investments, net | (0.2 | ) | (0.2 | ) | |||
| Provision for bad debts and accrued customer credits | 5.1 | 11.3 | |||||
| Amortization of debt issuance costs and debt discount and premium | 6.0 | 3.5 | |||||
| Third party fees paid in connection with the Refinancing Transactions | — | (31.7 | ) | ||||
| Non-cash fair value adjustments | (1.0 | ) | (2.2 | ) | |||
| Other operating activities | 0.3 | (3.7 | ) | ||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | 268.8 | 16.9 | |||||
| Prepaid expenses and other current assets | 23.1 | (2.1 | ) | ||||
| Accounts payable, accrued expenses, and other current liabilities | (65.6 | ) | (12.8 | ) | |||
| Deferred revenue | (1.5 | ) | (13.1 | ) | |||
| Operating lease liabilities | (48.6 | ) | (63.0 | ) | |||
| Other non-current assets and liabilities | 20.9 | 22.4 | |||||
| Net cash provided by (used in) operating activities | 302.7 | (14.4 | ) | ||||
| Cash Flows From Investing Activities | |||||||
| Purchases of property, equipment and software | (63.0 | ) | (91.2 | ) | |||
| Proceeds from sale of headquarters | — | 16.9 | |||||
| Other investing activities | 0.7 | 5.4 | |||||
| Net cash used in investing activities | (62.3 | ) | (68.9 | ) | |||
| Cash Flows From Financing Activities | |||||||
| Proceeds from employee stock plans | 0.8 | 0.4 | |||||
| Shares of common stock withheld for employee taxes | (1.0 | ) | (4.3 | ) | |||
| Proceeds from borrowings under long-term debt arrangements | 50.0 | 275.0 | |||||
| Payments on long-term debt | (151.8 | ) | (138.5 | ) | |||
| Debt extinguishment costs | — | (22.1 | ) | ||||
| Payments on financing component of interest rate swap | (14.3 | ) | (13.0 | ) | |||
| Principal payments of finance lease liabilities | (60.3 | ) | (44.0 | ) | |||
| Principal payments of financing obligations | (14.8 | ) | (10.5 | ) | |||
| Net cash provided by (used in) financing activities | (191.4 | ) | 43.0 | ||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 0.3 | 0.7 | |||||
| Increase (decrease) in cash, cash equivalents, and restricted cash | 49.3 | (39.6 | ) | ||||
| Cash, cash equivalents, and restricted cash at beginning of period | 231.4 | 199.7 | |||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 280.7 | $ | 160.1 | |||
| Supplemental Cash Flow Information | |||||||
| Cash payments for interest, net of amount capitalized | $ | 166.2 | $ | 83.9 | |||
| Cash payments for income taxes, net of refunds | $ | 9.9 | $ | 9.7 | |||
| Non-cash Investing and Financing Activities | |||||||
| Acquisition of property, equipment and software by finance leases | $ | 67.4 | $ | 22.0 | |||
| Acquisition of property, equipment and software by financing obligations | 8.5 | — | |||||
| Increase (decrease) in property, equipment and software accrued in liabilities | 4.9 | (1.7 | ) | ||||
| Other non-cash activity | — | (2.1 | ) | ||||
| Non-cash purchases of property, equipment and software | $ | 80.8 | $ | 18.2 | |||
| SEGMENT DATA | |||||||||||||||
| (In millions, except %) | Three Months Ended September 30, | % Change | |||||||||||||
| Revenue by segment: | 2023 | 2024 | Actual | Constant Currency (a) | |||||||||||
| Public Cloud | $ | 431.5 | $ | 418.3 | (3.1 | )% | (3.1 | )% | |||||||
| Private Cloud | 300.9 | 257.5 | (14.4 | )% | (14.7 | )% | |||||||||
| Total consolidated revenue | $ | 732.4 | $ | 675.8 | (7.7 | )% | (7.9 | )% | |||||||
| (In millions, except %) | Nine Months Ended September 30, | % Change | |||||||||||||
| Revenue by segment: | 2023 | 2024 | Actual | Constant Currency (a) | |||||||||||
| Public Cloud | $ | 1,308.7 | $ | 1,265.6 | (3.3 | )% | (3.4 | )% | |||||||
| Private Cloud | 928.7 | 785.9 | (15.4 | )% | (15.8 | )% | |||||||||
| Total consolidated revenue | $ | 2,237.4 | $ | 2,051.5 | (8.3 | )% | (8.5 | )% | |||||||
| (a) | Refer to "Non-GAAP Financial Measures" in this section for further explanation and reconciliation. | |
| Three Months Ended September 30, | Year-Over-Year Comparison | |||||||||||||||||||
| (In millions, except %) | 2023 | 2024 | ||||||||||||||||||
| Segment operating profit (a): | Amount | % of Segment Revenue | Amount | % of Segment Revenue | Amount | % Change | ||||||||||||||
| Public Cloud | $ | 20.3 | 4.7 | % | $ | 16.4 | 3.9 | % | $ | (3.9 | ) | (19.2 | )% | |||||||
| Private Cloud | 86.2 | 28.6 | % | 74.5 | 28.9 | % | (11.7 | ) | (13.6 | )% | ||||||||||
| Corporate functions (b) | (61.0 | ) | (56.6 | ) | 4.4 | (7.2 | )% | |||||||||||||
| Non-GAAP Operating Profit (c) | $ | 45.5 | $ | 34.3 | $ | (11.2 | ) | (24.6 | )% | |||||||||||
| Nine Months Ended September 30, | Year-Over-Year Comparison | |||||||||||||||||||
| (In millions, except %) | 2023 | 2024 | ||||||||||||||||||
| Segment operating profit (a): | Amount | % of Segment Revenue | Amount | % of Segment Revenue | Amount | % Change | ||||||||||||||
| Public Cloud | $ | 59.5 | 4.5 | % | $ | 37.5 | 3.0 | % | $ | (22.0 | ) | (37.0 | )% | |||||||
| Private Cloud | 268.2 | 28.9 | % | 215.9 | 27.5 | % | (52.3 | ) | (19.5 | )% | ||||||||||
| Corporate functions (b) | (192.7 | ) | (180.1 | ) | 12.6 | (6.5 | )% | |||||||||||||
| Non-GAAP Operating Profit (c) | $ | 135.0 | $ | 73.3 | $ | (61.7 | ) | (45.7 | )% | |||||||||||
| (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 September 30, 2023 | Three Months Ended September 30, 2024 | % Change | |||||||||||||||||||
| (In millions, except %) | Revenue | Revenue | Foreign Currency Translation (a) | Revenue in Constant Currency | Actual | Constant Currency | |||||||||||||||
| Public Cloud | $ | 431.5 | $ | 418.3 | $ | (0.3 | ) | $ | 418.0 | (3.1 | )% | (3.1 | )% | ||||||||
| Private Cloud | 300.9 | 257.5 | (0.8 | ) | 256.7 | (14.4 | )% | (14.7 | )% | ||||||||||||
| Total | $ | 732.4 | $ | 675.8 | $ | (1.1 | ) | $ | 674.7 | (7.7 | )% | (7.9 | )% | ||||||||
| Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2024 | % Change | |||||||||||||||||||
| (In millions, except %) | Revenue | Revenue | Foreign Currency Translation (a) | Revenue in Constant Currency | Actual | Constant Currency | |||||||||||||||
| Public Cloud | $ | 1,308.7 | $ | 1,265.6 | $ | (1.0 | ) | $ | 1,264.6 | (3.3 | )% | (3.4 | )% | ||||||||
| Private Cloud | 928.7 | 785.9 | (3.4 | ) | 782.5 | (15.4 | )% | (15.8 | )% | ||||||||||||
| Total | $ | 2,237.4 | $ | 2,051.5 | $ | (4.4 | ) | $ | 2,047.1 | (8.3 | )% | (8.5 | )% | ||||||||
| (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 September 30, | Nine Months Ended September 30, | ||||||||||||||
| (In millions) | 2023 | 2024 | 2023 | 2024 | |||||||||||
| Gross profit | $ | 152.0 | $ | 137.5 | $ | 474.7 | $ | 401.7 | |||||||
| Share-based compensation expense | 2.0 | 2.0 | 7.4 | 5.9 | |||||||||||
| Special bonuses and other compensation expense (a) | 1.2 | 0.7 | 3.3 | 2.6 | |||||||||||
| Purchase accounting impact on expense (b) | 0.6 | 0.3 | 1.9 | 1.5 | |||||||||||
| Restructuring and transformation expenses (c) | 6.2 | 2.6 | 16.0 | 11.8 | |||||||||||
| Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage | — | — | 0.3 | — | |||||||||||
| Non-GAAP Gross Profit | $ | 162.0 | $ | 143.1 | $ | 503.6 | $ | 423.5 | |||||||
| (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 loss reconciliation to Non-GAAP Net Loss
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| (In millions) | 2023 | 2024 | 2023 | 2024 | |||||||||||
| Net loss | $ | (226.6 | ) | $ | (186.6 | ) | $ | (865.8 | ) | $ | (802.2 | ) | |||
| Share-based compensation expense | 17.2 | 15.5 | 51.9 | 47.8 | |||||||||||
| Special bonuses and other compensation expense (a) | 3.3 | 2.7 | 9.7 | 9.1 | |||||||||||
| Transaction-related adjustments, net (b) | 1.6 | 1.8 | 4.1 | 4.4 | |||||||||||
| Restructuring and transformation expenses (c) | 14.3 | 8.8 | 63.0 | 42.5 | |||||||||||
| Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage | (5.3 | ) | (1.2 | ) | (0.4 | ) | (1.1 | ) | |||||||
| Impairment of goodwill | 165.7 | 141.7 | 708.8 | 714.9 | |||||||||||
| UK office closure (d) | — | — | 12.1 | — | |||||||||||
| Impairment of assets, net | 48.4 | — | 48.4 | 20.0 | |||||||||||
| Net gain on divestiture and investments (e) | — | (0.1 | ) | (0.2 | ) | (0.2 | ) | ||||||||
| Debt modification costs and gain on debt extinguishment | (55.4 | ) | (18.0 | ) | (163.1 | ) | (147.2 | ) | |||||||
| Interest expense impact from the Refinancing Transactions (f) | — | (25.0 | ) | — | (50.6 | ) | |||||||||
| Other adjustments (g) | 2.6 | (4.3 | ) | 0.3 | (3.8 | ) | |||||||||
| Amortization of intangible assets (h) | 39.7 | 38.7 | 121.6 | 116.0 | |||||||||||
| Tax effect of non-GAAP adjustments (i) | (13.6 | ) | 15.7 | (16.7 | ) | (3.6 | ) | ||||||||
| Non-GAAP Net Loss | $ | (8.1 | ) | $ | (10.3 | ) | $ | (26.3 | ) | $ | (54.0 | ) | |||
Loss from operations reconciliation to Non-GAAP Operating Profit
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| (In millions) | 2023 | 2024 | 2023 | 2024 | |||||||||||
| Loss from operations | $ | (239.4 | ) | $ | (173.7 | ) | $ | (884.2 | ) | $ | (880.3 | ) | |||
| Share-based compensation expense | 17.2 | 15.5 | 51.9 | 47.8 | |||||||||||
| Special bonuses and other compensation expense (a) | 3.3 | 2.7 | 9.7 | 9.1 | |||||||||||
| Transaction-related adjustments, net (b) | 1.6 | 1.8 | 4.1 | 4.4 | |||||||||||
| Restructuring and transformation expenses (c) | 14.3 | 8.8 | 63.0 | 42.5 | |||||||||||
| Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage | (5.3 | ) | (1.2 | ) | (0.4 | ) | (1.1 | ) | |||||||
| Impairment of goodwill | 165.7 | 141.7 | 708.8 | 714.9 | |||||||||||
| Impairment of assets, net | 48.4 | — | 48.4 | 20.0 | |||||||||||
| Amortization of intangible assets (h) | 39.7 | 38.7 | 121.6 | 116.0 | |||||||||||
| UK office closure (d) | — | — | 12.1 | — | |||||||||||
| Non-GAAP Operating Profit | $ | 45.5 | $ | 34.3 | $ | 135.0 | $ | 73.3 | |||||||
Net loss reconciliation to Adjusted EBITDA
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| (In millions) | 2023 | 2024 | 2023 | 2024 | |||||||||||
| Net loss | $ | (226.6 | ) | $ | (186.6 | ) | $ | (865.8 | ) | $ | (802.2 | ) | |||
| Share-based compensation expense | 17.2 | 15.5 | 51.9 | 47.8 | |||||||||||
| Special bonuses and other compensation expense (a) | 3.3 | 2.7 | 9.7 | 9.1 | |||||||||||
| Transaction-related adjustments, net (b) | 1.6 | 1.8 | 4.1 | 4.4 | |||||||||||
| Restructuring and transformation expenses (c) | 14.3 | 8.8 | 63.0 | 42.5 | |||||||||||
| Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage | (5.3 | ) | (1.2 | ) | (0.4 | ) | (1.1 | ) | |||||||
| Impairment of goodwill | 165.7 | 141.7 | 708.8 | 714.9 | |||||||||||
| UK office closure (d) | — | — | 12.1 | — | |||||||||||
| Impairment of assets, net | 48.4 | — | 48.4 | 20.0 | |||||||||||
| Net gain on divestiture and investments (e) | — | (0.1 | ) | (0.2 | ) | (0.2 | ) | ||||||||
| Debt modification costs and gain on debt extinguishment | (55.4 | ) | (18.0 | ) | (163.1 | ) | (147.2 | ) | |||||||
| Other expense, net (j) | 2.6 | 1.0 | 0.3 | 11.8 | |||||||||||
| Interest expense | 56.5 | 18.0 | 170.7 | 80.1 | |||||||||||
| Provision (benefit) for income taxes | (16.5 | ) | 12.0 | (26.1 | ) | (22.6 | ) | ||||||||
| Depreciation and amortization (k) | 90.1 | 72.3 | 279.2 | 220.6 | |||||||||||
| Adjusted EBITDA | $ | 95.9 | $ | 67.9 | $ | 292.6 | $ | 177.9 | |||||||
| (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 nine months ended September 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 September 30, | Nine Months Ended September 30, | ||||||||||||||
| (In millions, except per share amounts) | 2023 | 2024 | 2023 | 2024 | |||||||||||
| Net loss attributable to common stockholders | $ | (226.6 | ) | $ | (186.6 | ) | $ | (865.8 | ) | $ | (802.2 | ) | |||
| Non-GAAP Net Loss | $ | (8.1 | ) | $ | (10.3 | ) | $ | (26.3 | ) | $ | (54.0 | ) | |||
| Weighted average number of shares - Diluted | 216.0 | 226.4 | 214.8 | 223.6 | |||||||||||
| Effect of dilutive securities (a) | 6.4 | 9.4 | 2.9 | 9.3 | |||||||||||
| Non-GAAP weighted average number of shares - Diluted | 222.4 | 235.8 | 217.7 | 232.9 | |||||||||||
| Net loss per share - Diluted | $ | (1.05 | ) | $ | (0.82 | ) | $ | (4.03 | ) | $ | (3.59 | ) | |||
| Per share impacts of adjustments to net loss (b) | 1.01 | 0.78 | 3.91 | 3.35 | |||||||||||
| Per share impacts of shares dilutive after adjustments to net loss (a) | 0.00 | (0.00 | ) | 0.00 | 0.01 | ||||||||||
| Non-GAAP Loss Per Share | $ | (0.04 | ) | $ | (0.04 | ) | $ | (0.12 | ) | $ | (0.23 | ) | |||
| (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 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 Loss to our net loss, as noted in the above table, divided by the GAAP diluted number of shares outstanding for the relevant period. | |
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