| Source: Rackspace Technology, Inc.
SAN ANTONIO, May 09, 2024 (GLOBE NEWSWIRE) — Rackspace Technology, Inc. (Nasdaq: RXT), a leading end-to-end, hybrid, multicloud, and AI solutions company, today announced results for its first quarter ended March 31, 2024.
Amar Maletira, Chief Executive Officer, stated, “I’m pleased to announce that first quarter 2024 results exceeded the high-end of guidance for revenue, operating profit, and EPS. We continue to make steady progress on our turnaround, and I’m encouraged by the continued success from implementing our healthcare vertical strategy in Private Cloud and go-to-market execution in our Public Cloud business.”
Mr. Maletira added, “We successfully completed our debt refinancing which provides ample liquidity and runway for our turnaround. Our goal for 2024 is to position the business to generate consistent revenue and profit growth.”
First Quarter 2024 Results
Revenue was $691 million in the first quarter of 2024, a decrease of 9% on a reported and constant currency basis as compared to revenue of $759 million in the first quarter of 2023.
Private Cloud revenue was $268 million in the first quarter of 2024, a decrease of 15% on a reported basis and 16% on a constant currency basis as compared to revenue of $315 million in the first quarter of 2023.
Public Cloud revenue was $422 million in the first quarter of 2024, a decrease of 5% on a reported and constant currency basis compared to revenue of $444 million in the first quarter of 2023.
The first quarter of 2024 included a total of $593 million of non-cash impairment charges compared to $543 million of non-cash impairment charges in the first quarter of 2023.
Loss from operations was $(653) million in the first quarter of 2024, compared to loss from operations of $(581) million in the first quarter of 2023.
Net loss per diluted share is expected to be between $(2.48) and $(2.94) in the first quarter of 2024, compared to net loss per diluted share of $(2.87) in the first quarter of 2023.
Non-GAAP Operating Profit was $16 million in the first quarter of 2024, a decrease of 68% compared to $51 million in the first quarter of 2023.
Non-GAAP Loss Per Share was $(0.11) in the first quarter of 2024, a decrease of 450% as compared to Non-GAAP Loss Per Share of $(0.02) in the first quarter of 2023.
Capital expenditures were $46 million in the first quarter of 2024, compared to $72 million in the first quarter of 2023.
As of March 31, 2024, we had cash and cash equivalents of $283 million with no balance outstanding on our New Revolving Credit Facility ($375 million of undrawn commitments).
Financial Outlook
Rackspace Technology is providing guidance as follows:
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, May 9, 2024, at 4:00pm CT / 5:00pm ET to discuss its first 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/BI948ffa0430e74a9d85c144912294218d. 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 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, including our expected results for our first quarter 2024 results and our financial outlook, 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.
Preliminary Financial Results
The financial results included in this press release are preliminary and pending final review by the company and its external auditors. These preliminary financial results represent estimates and expectations based on the most current information available. Financial results will not be final until Rackspace Technology files its quarterly report on Form 10-Q for the period. Rackspace Technology does not undertake any obligation to update these preliminary results, except as required by law.
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, 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
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Rackspace Technology Corporate Communications
publicrelations@rackspace.com
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.
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.
Non-GAAP Net Income (Loss) and Non-GAAP Operating Profit
We present Non-GAAP Net Income (Loss) and Non-GAAP Operating Profit 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, 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, and certain other non-operating, non-recurring or non-core gains and losses.
Non-GAAP Operating Profit is one of management’s principal metrics for measuring our underlying financial performance. Non-GAAP Operating Profit, along with other quantitative and qualitative information, is also one of 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) or Non-GAAP Operating Profit. Our presentation of Non-GAAP Net Income (Loss) and Non-GAAP Operating Profit 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
Loss from operations reconciliation to Non-GAAP Operating Profit
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.