Rackspace Technology, Inc. (Nasdaq: RXT), a leading end-to-end
hybrid, multicloud, and AI solutions company, today announced
results for its fourth quarter and year ended December 31, 2023.
Amar Maletira, Chief Executive Officer, stated,
“I'm pleased to announce that our results for the fiscal fourth
quarter of 2023 exceeded the midpoint of our revenue, operating
profit, and EPS guidance. FY23 was a period of transition, through
which we focused on implementing structural changes to facilitate a
turnaround, repositioning Rackspace to capitalize on emerging
technology inflections points and strengthening our capital
structure and I am happy with the progress we have made this
year.”
Mr. Maletira added, “I’m excited to announce our
successful debt refinancing amidst the highest rate environment
seen in 20 years. Assuming full participation in the public
exchange offer, we will have managed to reduce our net financial
debt by over $900 million while securing an additional $575 million
of new capital over the past 12 months, resulting in lower interest
expenses and extended maturities, thereby enhancing our financial
flexibility and improving liquidity.”
Fourth Quarter
2023 Results
Revenue was $720 million in the fourth quarter
of 2023, a decrease of 9% on a reported and constant currency basis
as compared to revenue of $787 million in the fourth quarter of
2022.
Private Cloud revenue was $285 million in the
fourth quarter of 2023, a decrease of 14% on a reported basis and
15% on a constant currency basis as compared to revenue of $330
million in the fourth quarter of 2022.
Public Cloud revenue was $435 million in the
fourth quarter of 2023, a decrease of 5% on a reported and constant
currency basis as compared to revenue of $457 million in the fourth
quarter of 2022.
The fourth quarter of 2023 included a total of
$4 million of non-cash impairment charges compared to $217 million
of non-cash impairment charges in the fourth quarter of 2022. The
impairments in the fourth quarter of 2022 were driven primarily by
a decline in our market capitalization following the ransomware
attack on our Hosted Exchange email business and impairment of our
headquarters office.
Loss from operations was $(15) million in the
fourth quarter of 2023, compared to loss from operations of $(227)
million in the fourth quarter of 2022.
Net income was $28 million in the fourth quarter
of 2023, compared to net loss of $(214) million in the fourth
quarter of 2022.
Net income per diluted share was $0.13 in the
fourth quarter of 2023, compared to net loss per diluted share of
$(1.01) in the fourth quarter of 2022.
Non-GAAP Operating Profit was $48 million in the
fourth quarter of 2023, a decrease of 34% compared to $74 million
in the fourth quarter of 2022.
Non-GAAP Loss Per Share was $(0.03) in the
fourth quarter of 2023, a decrease of 150% as compared to Non-GAAP
Earnings Per Share of $0.06 in the fourth quarter of 2022.
Capital expenditures were $38 million in the
fourth quarter of 2023, compared to $43 million in the fourth
quarter of 2022.
Full Year 2023
Results
Revenue was $2,957 million in 2023, a decrease
of 5% on a reported and constancy currency basis as compared to
revenue of $3,122 million in 2022.
Private Cloud revenue was $1,210 million in
2023, a decrease of 12% on a reported basis and 13% on a constant
currency basis as compared to revenue of $1,382 million in
2022.
Public Cloud revenue was $1,747 million in 2023,
an increase of 0.4% on a reported and constancy currency basis as
compared to revenue of $1,741 million in 2022.
2023 included a total of $761 million of
non-cash impairment charges compared to $681 million of non-cash
impairment charges in 2022. These impairments were primarily a
result of a sustained decrease in our market capitalization.
Loss from operations was $(899) million in 2023,
compared to loss from operations of $(679) million in 2022.
Net loss was $(838) million in 2023, compared to
net loss of $(805) million in 2022.
Net loss per diluted share was $(3.89) in 2023,
compared to net loss per diluted share of $(3.81) in 2022.
Non-GAAP Operating Profit was $183 million in
2023, a decrease of 50% compared to $364 million in 2022.
Non-GAAP Loss Per Share was $(0.15) in 2023, a
decrease of 128% as compared to Non-GAAP Earnings Per Share of
$0.54 in 2022.
Capital expenditures were $181 million in 2023,
compared to $142 million in 2022.
As of December 31, 2023, we had cash and
cash equivalents of $197 million with no balance outstanding on our
Revolving Credit Facility ($375 million of undrawn
commitments).
Debt Refinancing
On March 12, the Company closed a private debt
exchange (the “Private Exchange”) with certain of its creditors
representing more than 72% of the Company’s first lien term loans
and more than 64% of its first lien notes, as well as 100% of its
Revolving Credit Facility lenders. Through the Private Exchange,
Rackspace has eliminated more than $375 million of net debt and has
received $275 million of new money (the “New Money Financing”) to
advance key strategic initiatives. Additionally, the maturities on
the participating debt facilities were extended to May 2028.
In connection with the transaction, the Company
plans to launch a public debt exchange offer (the “Public Exchange
Offer”) to all of its outstanding lenders and first lien
noteholders. The Public Exchange Offer will offer existing lenders
and first lien noteholders new term loans or new first lien notes,
as applicable, with an improved security position, tighter
covenants, and other restrictions. Through full participation in
the Public Exchange Offer, the Company has the opportunity to
eliminate more than $600 million in net debt, reducing net annual
interest expense by approximately $13 million.
Financial Outlook
Rackspace Technology is providing guidance as
follows:
|
Q1 2024 Guidance |
Revenue |
$680 - $690 million |
Private Cloud Revenue |
$268 - $273 million |
Public Cloud Revenue |
$412 - $417 million |
Non-GAAP Operating Profit |
$12 - $14 million |
Non-GAAP Loss Per Share |
($0.12) - ($0.14) |
Non-GAAP Other Income (Expense) |
($50) – ($52) million |
Non-GAAP Tax Expense Rate |
26% |
Non-GAAP Weighted Average Shares |
221 – 223 million |
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, March 12, 2024, at 4:00pm CT / 5:00pm ET to discuss its
fourth quarter and full year 2023 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/BI01e651a628314f96ba04ab3fe5146f8f.
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.
Important Information
This press release is for informational purposes
only and does not constitute or form part of any offer or
invitation to purchase or sell, or any solicitation of any offer to
sell or purchase, notes or any other securities or debt
instruments, and neither this press release nor any part of it, nor
the fact of its release, shall form the basis of, or be relied on
or in connection with, any contract therefor. The Public Exchange
Offer for the Company’s existing first lien notes will be made only
by and pursuant to the terms and conditions of a confidential
offering memorandum that will only be made available to eligible
holders of the Company’s existing first lien notes. The complete
terms and conditions of the Public Exchange Offer for the Company’s
existing first lien notes will be set forth in such confidential
offering memorandum. The Public Exchange Offer for the Company’s
existing term loans will be made only by and pursuant to the terms
and conditions of an exchange agreement that will only be made
available to holders of the Company’s existing term loans. The
complete terms and conditions of the Public Exchange Offer for the
Company’s existing term loans will be set forth in such exchange
agreement. Neither the Company nor any of its affiliates takes any
position or makes any recommendation as to whether or not eligible
holders should participate in the Public Exchange Offer for the
Company’s existing first lien notes or existing term loans once
commenced.
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, the Private Exchange, the Public Exchange Offer,
the New Money Financing, the anticipated benefits of the Private
Exchange, the Public Exchange Offer and the New Money Financing,
and the Company’s strategic initiatives, among other things. The
Public Exchange Offer will be subject to customary closing
conditions. 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 ContactSagar HebbarRackspace
Technology Investor Relationsir@rackspace.com
PR ContactNatalie SilvaRackspace
Technology Corporate
Communicationspublicrelations@rackspace.com
RACKSPACE TECHNOLOGY, INC. |
CONSOLIDATED RESULTS OF OPERATIONS |
(Unaudited) |
|
|
Three Months Ended December 31, |
|
Year-Over-Year Comparison |
|
2022 |
|
2023 |
|
(In millions, except % and per share data) |
Amount |
|
% Revenue |
|
Amount |
|
% Revenue |
|
Amount |
|
% Change |
Revenue |
$ |
787.0 |
|
|
100.0 |
% |
|
$ |
719.7 |
|
|
100.0 |
% |
|
$ |
(67.3 |
) |
|
(8.6 |
)% |
Cost of revenue |
|
(587.2 |
) |
|
(74.6 |
)% |
|
|
(565.6 |
) |
|
(78.6 |
)% |
|
|
21.6 |
|
|
(3.7 |
)% |
Gross profit |
|
199.8 |
|
|
25.4 |
% |
|
|
154.1 |
|
|
21.4 |
% |
|
|
(45.7 |
) |
|
(22.9 |
)% |
Selling, general and administrative expenses |
|
(210.3 |
) |
|
(26.7 |
)% |
|
|
(165.5 |
) |
|
(23.0 |
)% |
|
|
44.8 |
|
|
(21.3 |
)% |
Impairment of goodwill |
|
(129.3 |
) |
|
(16.4 |
)% |
|
|
— |
|
|
— |
% |
|
|
129.3 |
|
|
(100.0 |
)% |
Impairment of assets, net |
|
(87.4 |
) |
|
(11.1 |
)% |
|
|
(3.8 |
) |
|
(0.5 |
)% |
|
|
83.6 |
|
|
(95.7 |
)% |
Loss from operations |
|
(227.2 |
) |
|
(28.9 |
)% |
|
|
(15.2 |
) |
|
(2.1 |
)% |
|
|
212.0 |
|
|
(93.3 |
)% |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(55.6 |
) |
|
(7.1 |
)% |
|
|
(50.9 |
) |
|
(7.1 |
)% |
|
|
4.7 |
|
|
(8.5 |
)% |
Gain on investments, net |
|
0.2 |
|
|
0.0 |
% |
|
|
0.1 |
|
|
0.0 |
% |
|
|
(0.1 |
) |
|
(50.0 |
)% |
Gain on debt extinguishment |
|
— |
|
|
— |
% |
|
|
108.2 |
|
|
15.0 |
% |
|
|
108.2 |
|
|
100.0 |
% |
Other income (expense), net |
|
5.5 |
|
|
0.7 |
% |
|
|
(4.7 |
) |
|
(0.7 |
)% |
|
|
(10.2 |
) |
|
NM |
|
Total other income (expense) |
|
(49.9 |
) |
|
(6.3 |
)% |
|
|
52.7 |
|
|
7.3 |
% |
|
|
102.6 |
|
|
NM |
|
Income (loss) before income taxes |
|
(277.1 |
) |
|
(35.2 |
)% |
|
|
37.5 |
|
|
5.2 |
% |
|
|
314.6 |
|
|
NM |
|
Benefit (provision) for income taxes |
|
63.1 |
|
|
8.0 |
% |
|
|
(9.5 |
) |
|
(1.3 |
)% |
|
|
(72.6 |
) |
|
NM |
|
Net income (loss) |
$ |
(214.0 |
) |
|
(27.2 |
)% |
|
$ |
28.0 |
|
|
3.9 |
% |
|
$ |
242.0 |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(1.01 |
) |
|
|
|
$ |
0.13 |
|
|
|
|
|
|
|
Diluted |
$ |
(1.01 |
) |
|
|
|
$ |
0.13 |
|
|
|
|
|
|
|
Weighted average number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
211.6 |
|
|
|
|
|
216.6 |
|
|
|
|
|
|
|
Diluted |
|
211.6 |
|
|
|
|
|
219.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM = not meaningful.
RACKSPACE TECHNOLOGY, INC. |
CONSOLIDATED RESULTS OF OPERATIONS |
(Unaudited) |
|
|
Year Ended December 31, |
|
Year-Over-Year Comparison |
|
2022 |
|
2023 |
|
(In millions, except % and per share data) |
Amount |
|
% Revenue |
|
Amount |
|
% Revenue |
|
Amount |
|
% Change |
Revenue |
$ |
3,122.3 |
|
|
100.0 |
% |
|
$ |
2,957.1 |
|
|
100.0 |
% |
|
$ |
(165.2 |
) |
|
(5.3 |
)% |
Cost of revenue |
|
(2,265.4 |
) |
|
(72.6 |
)% |
|
|
(2,328.3 |
) |
|
(78.7 |
)% |
|
|
(62.9 |
) |
|
2.8 |
% |
Gross profit |
|
856.9 |
|
|
27.4 |
% |
|
|
628.8 |
|
|
21.3 |
% |
|
|
(228.1 |
) |
|
(26.6 |
)% |
Selling, general and administrative expenses |
|
(855.3 |
) |
|
(27.4 |
)% |
|
|
(767.2 |
) |
|
(25.9 |
)% |
|
|
88.1 |
|
|
(10.3 |
)% |
Impairment of goodwill |
|
(534.5 |
) |
|
(17.1 |
)% |
|
|
(708.8 |
) |
|
(24.0 |
)% |
|
|
(174.3 |
) |
|
32.6 |
% |
Impairment of assets, net |
|
(146.1 |
) |
|
(4.7 |
)% |
|
|
(52.2 |
) |
|
(1.8 |
)% |
|
|
93.9 |
|
|
(64.3 |
)% |
Loss from operations |
|
(679.0 |
) |
|
(21.7 |
)% |
|
|
(899.4 |
) |
|
(30.4 |
)% |
|
|
(220.4 |
) |
|
32.5 |
% |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(208.5 |
) |
|
(6.7 |
)% |
|
|
(221.6 |
) |
|
(7.5 |
)% |
|
|
(13.1 |
) |
|
6.3 |
% |
Gain (loss) on investments, net |
|
(0.2 |
) |
|
(0.0 |
)% |
|
|
0.3 |
|
|
0.0 |
% |
|
|
0.5 |
|
|
NM |
|
Gain on debt extinguishment |
|
— |
|
|
— |
% |
|
|
271.3 |
|
|
9.2 |
% |
|
|
271.3 |
|
|
100.0 |
% |
Other expense, net |
|
(10.0 |
) |
|
(0.3 |
)% |
|
|
(5.0 |
) |
|
(0.2 |
)% |
|
|
5.0 |
|
|
(50.0 |
)% |
Total other income (expense) |
|
(218.7 |
) |
|
(7.0 |
)% |
|
|
45.0 |
|
|
1.5 |
% |
|
|
263.7 |
|
|
NM |
|
Loss before income taxes |
|
(897.7 |
) |
|
(28.8 |
)% |
|
|
(854.4 |
) |
|
(28.9 |
)% |
|
|
43.3 |
|
|
(4.8 |
)% |
Benefit for income taxes |
|
92.9 |
|
|
3.0 |
% |
|
|
16.6 |
|
|
0.6 |
% |
|
|
(76.3 |
) |
|
(82.1 |
)% |
Net loss |
$ |
(804.8 |
) |
|
(25.8 |
)% |
|
$ |
(837.8 |
) |
|
(28.3 |
)% |
|
$ |
(33.0 |
) |
|
4.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
$ |
(3.81 |
) |
|
|
|
$ |
(3.89 |
) |
|
|
|
|
|
|
Weighted average number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
211.2 |
|
|
|
|
|
215.3 |
|
|
|
|
|
|
|
NM = not meaningful.
RACKSPACE TECHNOLOGY, INC. |
CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
|
(In millions, except per share data) |
|
December 31,2022 |
|
December 31,2023 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
228.4 |
|
|
$ |
196.8 |
|
Accounts receivable, net allowance for credit losses and accrued
customer credits of $24.6 and $20.1, respectively |
|
|
622.2 |
|
|
|
339.7 |
|
Prepaid expenses |
|
|
97.3 |
|
|
|
87.4 |
|
Other current assets |
|
|
125.3 |
|
|
|
114.2 |
|
Total current assets |
|
|
1,073.2 |
|
|
|
738.1 |
|
|
|
|
|
|
Property, equipment and software, net |
|
|
628.3 |
|
|
|
608.8 |
|
Goodwill, net |
|
|
2,155.1 |
|
|
|
1,452.4 |
|
Intangible assets, net |
|
|
1,236.0 |
|
|
|
1,019.0 |
|
Operating right-of-use assets |
|
|
138.0 |
|
|
|
126.3 |
|
Other non-current assets |
|
|
226.1 |
|
|
|
151.6 |
|
Total assets |
|
$ |
5,456.7 |
|
|
$ |
4,096.2 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
447.3 |
|
|
$ |
432.7 |
|
Accrued compensation and benefits |
|
|
95.3 |
|
|
|
72.2 |
|
Deferred revenue |
|
|
80.9 |
|
|
|
78.8 |
|
Debt |
|
|
23.0 |
|
|
|
23.0 |
|
Accrued interest |
|
|
36.3 |
|
|
|
20.5 |
|
Operating lease liabilities |
|
|
60.0 |
|
|
|
66.0 |
|
Finance lease liabilities |
|
|
61.7 |
|
|
|
55.8 |
|
Financing obligations |
|
|
16.7 |
|
|
|
14.0 |
|
Other current liabilities |
|
|
35.3 |
|
|
|
36.5 |
|
Total current liabilities |
|
|
856.5 |
|
|
|
799.5 |
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
Debt |
|
|
3,295.4 |
|
|
|
2,839.6 |
|
Operating lease liabilities |
|
|
84.8 |
|
|
|
74.6 |
|
Finance lease liabilities |
|
|
310.5 |
|
|
|
308.0 |
|
Financing obligations |
|
|
47.6 |
|
|
|
52.4 |
|
Deferred income taxes |
|
|
126.7 |
|
|
|
79.2 |
|
Other non-current liabilities |
|
|
105.7 |
|
|
|
97.4 |
|
Total liabilities |
|
|
4,827.2 |
|
|
|
4,250.7 |
|
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
Stockholders' equity (deficit): |
|
|
|
|
Preferred stock, $0.01 par value per share: 5.0 shares authorized;
no shares issued or outstanding |
|
|
— |
|
|
|
— |
|
Common stock, $0.01 par value per share: 1,495.0 shares authorized;
215.7 and 220.5 shares issued; 212.6 and 217.4 shares outstanding,
respectively |
|
|
2.2 |
|
|
|
2.2 |
|
Additional paid-in capital |
|
|
2,573.3 |
|
|
|
2,638.2 |
|
Accumulated other comprehensive income |
|
|
71.4 |
|
|
|
60.3 |
|
Accumulated deficit |
|
|
(1,986.4 |
) |
|
|
(2,824.2 |
) |
Treasury stock, at cost; 3.1 shares held |
|
|
(31.0 |
) |
|
|
(31.0 |
) |
Total stockholders' equity (deficit) |
|
|
629.5 |
|
|
|
(154.5 |
) |
Total liabilities and stockholders' equity (deficit) |
|
$ |
5,456.7 |
|
|
$ |
4,096.2 |
|
|
RACKSPACE TECHNOLOGY, INC. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited) |
|
|
Year Ended December 31, |
(In millions) |
2022 |
|
2023 |
Cash Flows From Operating Activities |
|
|
|
Net loss |
$ |
(804.8 |
) |
|
$ |
(837.8 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
Depreciation and amortization |
|
387.8 |
|
|
|
369.7 |
|
Amortization of operating right-of-use assets |
|
59.8 |
|
|
|
73.2 |
|
Deferred income taxes |
|
(108.8 |
) |
|
|
(41.9 |
) |
Share-based compensation expense |
|
69.5 |
|
|
|
65.4 |
|
Impairment of goodwill |
|
534.5 |
|
|
|
708.8 |
|
Impairment of assets, net |
|
146.1 |
|
|
|
52.2 |
|
Gain on debt extinguishment |
|
— |
|
|
|
(271.3 |
) |
Unrealized loss on derivative contracts |
|
18.5 |
|
|
|
15.5 |
|
(Gain) loss on investments, net |
|
0.2 |
|
|
|
(0.3 |
) |
Provision for bad debts and accrued customer credits |
|
12.4 |
|
|
|
9.0 |
|
Amortization of debt issuance costs and debt discount |
|
8.0 |
|
|
|
7.9 |
|
Non-cash fair value adjustments |
|
3.2 |
|
|
|
(1.0 |
) |
Other operating activities |
|
(0.2 |
) |
|
|
0.4 |
|
Changes in operating assets and liabilities, net of effects of
acquisitions: |
|
|
|
Accounts receivable |
|
(82.4 |
) |
|
|
275.1 |
|
Prepaid expenses and other current assets |
|
(7.1 |
) |
|
|
24.6 |
|
Accounts payable, accrued expenses, and other current
liabilities |
|
69.8 |
|
|
|
(44.2 |
) |
Deferred revenue |
|
(21.6 |
) |
|
|
(5.8 |
) |
Operating lease liabilities |
|
(65.5 |
) |
|
|
(65.6 |
) |
Other non-current assets and liabilities |
|
27.3 |
|
|
|
41.0 |
|
Net cash provided by operating activities |
|
246.7 |
|
|
|
374.9 |
|
Cash Flows From Investing Activities |
|
|
|
Purchases of property, equipment and software |
|
(80.4 |
) |
|
|
(96.9 |
) |
Acquisitions, net of cash acquired |
|
(7.7 |
) |
|
|
— |
|
Purchase of convertible promissory note |
|
(15.0 |
) |
|
|
— |
|
Other investing activities |
|
5.2 |
|
|
|
0.9 |
|
Net cash used in investing activities |
|
(97.9 |
) |
|
|
(96.0 |
) |
Cash Flows From Financing Activities |
|
|
|
Proceeds from employee stock plans |
|
3.7 |
|
|
|
1.3 |
|
Shares of common stock withheld for employee taxes |
|
— |
|
|
|
(1.0 |
) |
Shares of common stock repurchased |
|
(31.0 |
) |
|
|
— |
|
Proceeds from borrowings under long-term debt arrangements |
|
— |
|
|
|
50.0 |
|
Payments on long-term debt |
|
(23.0 |
) |
|
|
(241.9 |
) |
Payments on financing component of interest rate swap |
|
(17.2 |
) |
|
|
(18.8 |
) |
Principal payments of finance lease liabilities |
|
(67.2 |
) |
|
|
(79.7 |
) |
Principal payments of financing obligations |
|
(49.0 |
) |
|
|
(22.7 |
) |
Other financing activities |
|
(3.3 |
) |
|
|
— |
|
Net cash used in financing activities |
|
(187.0 |
) |
|
|
(312.8 |
) |
Effect of exchange rate changes on cash, cash equivalents, and
restricted cash |
|
(5.8 |
) |
|
|
2.2 |
|
Decrease in cash, cash equivalents, and restricted cash |
|
(44.0 |
) |
|
|
(31.7 |
) |
Cash, cash equivalents, and restricted cash at beginning of
period |
|
275.4 |
|
|
|
231.4 |
|
Cash, cash equivalents, and restricted cash at end of period |
$ |
231.4 |
|
|
$ |
199.7 |
|
Supplemental Cash Flow Information |
|
|
|
Cash payments for interest, net of amount capitalized |
$ |
177.9 |
|
$ |
213.9 |
|
Cash payments for income taxes, net of refunds |
$ |
10.5 |
|
$ |
11.9 |
|
|
|
|
|
Non-cash Investing and Financing Activities |
|
|
|
Acquisition of property, equipment and software by finance
leases |
$ |
36.7 |
|
$ |
67.7 |
|
Acquisition of property, equipment and software by financing
obligations |
|
7.1 |
|
|
25.0 |
|
Other non-cash additions |
|
— |
|
|
5.3 |
|
Increase (decrease) in property, equipment and software accrued in
liabilities |
|
17.6 |
|
|
(13.6 |
) |
Non-cash purchases of property, equipment and software |
$ |
61.4 |
|
$ |
84.4 |
|
|
|
|
|
SEGMENT DATA
(In millions, except %) |
|
Three Months Ended December 31, |
|
% Change |
Revenue by segment: |
|
2022 |
|
2023 |
|
Actual |
|
Constant Currency
(a) |
Public Cloud |
|
$ |
456.7 |
|
$ |
435.1 |
|
(4.7 |
)% |
|
(5.0 |
)% |
Private Cloud |
|
|
330.3 |
|
|
284.6 |
|
(13.8 |
)% |
|
(14.9 |
)% |
Total consolidated revenue |
|
$ |
787.0 |
|
$ |
719.7 |
|
(8.6 |
)% |
|
(9.2 |
)% |
(In millions, except %) |
|
Year Ended December 31, |
|
% Change |
Revenue by segment: |
|
2022 |
|
2023 |
|
Actual |
|
Constant
Currency(a) |
Public Cloud |
|
$ |
1,740.8 |
|
$ |
1,747.4 |
|
0.4 |
% |
|
0.4 |
% |
Private Cloud |
|
|
1,381.5 |
|
|
1,209.7 |
|
(12.4 |
)% |
|
(12.5 |
)% |
Total consolidated revenue |
|
$ |
3,122.3 |
|
$ |
2,957.1 |
|
(5.3 |
)% |
|
(5.3 |
)% |
(a) Refer to "Non-GAAP Financial Measures" in this
section for further explanation and reconciliation.
|
Three Months Ended December 31, |
|
Year-Over-Year Comparison |
(In millions, except %) |
2022 |
|
2023 |
|
Segment operating profit
(a): |
Amount |
|
% of Segment Revenue |
|
Amount |
|
% of Segment Revenue |
|
Amount |
|
% Change |
Public Cloud |
$ |
32.4 |
|
|
7.1 |
% |
|
$ |
27.3 |
|
|
6.3 |
% |
|
$ |
(5.1 |
) |
|
(15.7 |
)% |
Private Cloud |
|
108.2 |
|
|
32.8 |
% |
|
|
76.2 |
|
|
26.8 |
% |
|
|
(32.0 |
) |
|
(29.6 |
)% |
Total consolidated segment operating profit |
|
140.6 |
|
|
|
|
|
103.5 |
|
|
|
|
|
(37.1 |
) |
|
(26.4 |
)% |
Corporate functions (b) |
|
(66.9 |
) |
|
|
|
|
(55.1 |
) |
|
|
|
|
11.8 |
|
|
(17.6 |
)% |
Non-GAAP Operating Profit (c) |
$ |
73.7 |
|
|
|
|
$ |
48.4 |
|
|
|
|
$ |
(25.3 |
) |
|
(34.3 |
)% |
|
Year Ended December 31, |
|
Year-Over-Year Comparison |
(In millions, except %) |
2022 |
|
2023 |
|
Segment operating profit
(a): |
Amount |
|
% of Segment Revenue |
|
Amount |
|
% of Segment Revenue |
|
Amount |
|
% Change |
Public Cloud |
$ |
124.9 |
|
|
7.2 |
% |
|
$ |
90.4 |
|
|
5.2 |
% |
|
$ |
(34.5 |
) |
|
(27.6 |
)% |
Private Cloud |
|
493.9 |
|
|
35.8 |
% |
|
|
340.8 |
|
|
28.2 |
% |
|
|
(153.1 |
) |
|
(31.0 |
)% |
Total consolidated segment operating profit |
|
618.8 |
|
|
|
|
|
431.2 |
|
|
|
|
|
(187.6 |
) |
|
(30.3 |
)% |
Corporate functions (b) |
|
(255.0 |
) |
|
|
|
|
(247.8 |
) |
|
|
|
|
7.2 |
|
|
(2.8 |
)% |
Non-GAAP Operating Profit (c) |
$ |
363.8 |
|
|
|
|
$ |
183.4 |
|
|
|
|
$ |
(180.4 |
) |
|
(49.6 |
)% |
(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 December 31, 2022 |
|
Three Months Ended December 31, 2023 |
|
% Change |
(In millions, except %) |
|
Revenue |
|
Revenue |
|
Foreign Currency Translation
(a) |
|
Revenue in Constant Currency |
|
Actual |
|
Constant Currency |
Public Cloud |
|
$ |
456.7 |
|
$ |
435.1 |
|
$ |
(1.2 |
) |
|
$ |
433.9 |
|
(4.7 |
)% |
|
(5.0 |
)% |
Private Cloud |
|
|
330.3 |
|
|
284.6 |
|
|
(3.5 |
) |
|
|
281.1 |
|
(13.8 |
)% |
|
(14.9 |
)% |
Total |
|
$ |
787.0 |
|
$ |
719.7 |
|
$ |
(4.7 |
) |
|
$ |
715.0 |
|
(8.6 |
)% |
|
(9.2 |
)% |
|
|
Year Ended December 31, 2022 |
|
Year Ended December 31, 2023 |
|
% Change |
(In millions, except %) |
|
Revenue |
|
Revenue |
|
Foreign Currency Translation
(a) |
|
Revenue in Constant Currency |
|
Actual |
|
Constant Currency |
Public Cloud |
|
$ |
1,740.8 |
|
$ |
1,747.4 |
|
$ |
0.4 |
|
|
$ |
1,747.8 |
|
0.4 |
% |
|
0.4 |
% |
Private Cloud |
|
|
1,381.5 |
|
|
1,209.7 |
|
|
(1.2 |
) |
|
|
1,208.5 |
|
(12.4 |
)% |
|
(12.5 |
)% |
Total |
|
$ |
3,122.3 |
|
$ |
2,957.1 |
|
$ |
(0.8 |
) |
|
$ |
2,956.3 |
|
(5.3 |
)% |
|
(5.3 |
)% |
(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 December 31, |
|
Year Ended December 31, |
(In millions) |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
Gross profit |
|
$ |
199.8 |
|
$ |
154.1 |
|
$ |
856.9 |
|
$ |
628.8 |
Share-based compensation expense |
|
|
2.6 |
|
|
1.7 |
|
|
11.6 |
|
|
9.1 |
Special bonuses and other compensation expense (a) |
|
|
0.3 |
|
|
0.7 |
|
|
1.9 |
|
|
4.0 |
Purchase accounting impact on expense (b) |
|
|
0.6 |
|
|
0.7 |
|
|
2.7 |
|
|
2.6 |
Restructuring and transformation expenses (c) |
|
|
1.7 |
|
|
0.9 |
|
|
10.9 |
|
|
16.9 |
Hosted Exchange incident expenses, net of proceeds received or
expected to be received under our insurance coverage |
|
|
0.2 |
|
|
— |
|
|
0.2 |
|
|
0.3 |
Non-GAAP Gross Profit |
|
$ |
205.2 |
|
$ |
158.1 |
|
$ |
884.2 |
|
$ |
661.7 |
(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. This amount
also includes certain costs associated with the July 2021
Restructuring Plan which are not accounted for as exit and disposal
costs under ASC 420, including one-time offshore build out
costs. |
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, 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 Receivables Purchase Facility,
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-tiled 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 Income (Loss)
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
(In millions) |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
Net income (loss) |
|
$ |
(214.0 |
) |
|
$ |
28.0 |
|
|
$ |
(804.8 |
) |
|
$ |
(837.8 |
) |
Share-based compensation expense |
|
|
10.0 |
|
|
|
13.5 |
|
|
|
69.5 |
|
|
|
65.4 |
|
Special bonuses and other compensation expense (a) |
|
|
1.8 |
|
|
|
2.4 |
|
|
|
10.0 |
|
|
|
12.1 |
|
Transaction-related adjustments, net (b) |
|
|
1.4 |
|
|
|
1.1 |
|
|
|
11.0 |
|
|
|
5.2 |
|
Restructuring and transformation expenses (c) |
|
|
24.7 |
|
|
|
7.8 |
|
|
|
99.0 |
|
|
|
70.8 |
|
Hosted Exchange incident expenses, net of proceeds received or
expected to be received under our insurance coverage |
|
|
5.9 |
|
|
|
(4.4 |
) |
|
|
5.9 |
|
|
|
(4.8 |
) |
Impairment of goodwill |
|
|
129.3 |
|
|
|
— |
|
|
|
534.5 |
|
|
|
708.8 |
|
UK office closure (d) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12.1 |
|
Impairment of assets, net |
|
|
87.4 |
|
|
|
3.8 |
|
|
|
146.1 |
|
|
|
52.2 |
|
Net (gain) loss on divestiture and investments (e) |
|
|
(0.2 |
) |
|
|
(0.1 |
) |
|
|
0.2 |
|
|
|
(0.3 |
) |
Gain on debt extinguishment (f) |
|
|
— |
|
|
|
(108.2 |
) |
|
|
— |
|
|
|
(271.3 |
) |
Other adjustments (g) |
|
|
(5.5 |
) |
|
|
(1.3 |
) |
|
|
10.0 |
|
|
|
(1.0 |
) |
Amortization of intangible assets (h) |
|
|
40.4 |
|
|
|
39.4 |
|
|
|
166.8 |
|
|
|
161.0 |
|
Tax effect of non-GAAP adjustments (i) |
|
|
(67.7 |
) |
|
|
11.6 |
|
|
|
(133.3 |
) |
|
|
(5.1 |
) |
Non-GAAP Net Income (Loss) |
|
$ |
13.5 |
|
|
$ |
(6.4 |
) |
|
$ |
114.9 |
|
|
$ |
(32.7 |
) |
Loss from operations reconciliation to
Non-GAAP Operating Profit
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
(In millions) |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
Loss from operations |
|
$ |
(227.2 |
) |
|
$ |
(15.2 |
) |
|
$ |
(679.0 |
) |
|
$ |
(899.4 |
) |
Share-based compensation expense |
|
|
10.0 |
|
|
|
13.5 |
|
|
|
69.5 |
|
|
|
65.4 |
|
Special bonuses and other compensation expense (a) |
|
|
1.8 |
|
|
|
2.4 |
|
|
|
10.0 |
|
|
|
12.1 |
|
Transaction-related adjustments, net (b) |
|
|
1.4 |
|
|
|
1.1 |
|
|
|
11.0 |
|
|
|
5.2 |
|
Restructuring and transformation expenses (c) |
|
|
24.7 |
|
|
|
7.8 |
|
|
|
99.0 |
|
|
|
70.8 |
|
Hosted Exchange incident expenses, net of proceeds received or
expected to be received under our insurance coverage |
|
|
5.9 |
|
|
|
(4.4 |
) |
|
|
5.9 |
|
|
|
(4.8 |
) |
Impairment of goodwill |
|
|
129.3 |
|
|
|
— |
|
|
|
534.5 |
|
|
|
708.8 |
|
UK office closure (d) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12.1 |
|
Impairment of assets, net |
|
|
87.4 |
|
|
|
3.8 |
|
|
|
146.1 |
|
|
|
52.2 |
|
Amortization of intangible assets (h) |
|
|
40.4 |
|
|
|
39.4 |
|
|
|
166.8 |
|
|
|
161.0 |
|
Non-GAAP Operating Profit |
|
$ |
73.7 |
|
|
$ |
48.4 |
|
|
$ |
363.8 |
|
|
$ |
183.4 |
|
Net income (loss) reconciliation to
Adjusted EBITDA
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
(In millions) |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
Net income (loss) |
|
$ |
(214.0 |
) |
|
$ |
28.0 |
|
|
$ |
(804.8 |
) |
|
$ |
(837.8 |
) |
Share-based compensation expense |
|
|
10.0 |
|
|
|
13.5 |
|
|
|
69.5 |
|
|
|
65.4 |
|
Special bonuses and other compensation expense (a) |
|
|
1.8 |
|
|
|
2.4 |
|
|
|
10.0 |
|
|
|
12.1 |
|
Transaction-related adjustments, net (b) |
|
|
1.4 |
|
|
|
1.1 |
|
|
|
11.0 |
|
|
|
5.2 |
|
Restructuring and transformation expenses (c) |
|
|
24.7 |
|
|
|
7.8 |
|
|
|
99.0 |
|
|
|
70.8 |
|
Hosted Exchange incident expenses, net of proceeds received or
expected to be received under our insurance coverage |
|
|
5.9 |
|
|
|
(4.4 |
) |
|
|
5.9 |
|
|
|
(4.8 |
) |
Impairment of goodwill |
|
|
129.3 |
|
|
|
— |
|
|
|
534.5 |
|
|
|
708.8 |
|
UK office closure (d) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12.1 |
|
Impairment of assets, net |
|
|
87.4 |
|
|
|
3.8 |
|
|
|
146.1 |
|
|
|
52.2 |
|
Net (gain) loss on divestiture and investments (e) |
|
|
(0.2 |
) |
|
|
(0.1 |
) |
|
|
0.2 |
|
|
|
(0.3 |
) |
Gain on debt extinguishment (f) |
|
|
— |
|
|
|
(108.2 |
) |
|
|
— |
|
|
|
(271.3 |
) |
Other (income) expense, net (j) |
|
|
(5.5 |
) |
|
|
4.7 |
|
|
|
10.0 |
|
|
|
5.0 |
|
Interest expense |
|
|
55.6 |
|
|
|
50.9 |
|
|
|
208.5 |
|
|
|
221.6 |
|
Provision (benefit) for income taxes |
|
|
(63.1 |
) |
|
|
9.5 |
|
|
|
(92.9 |
) |
|
|
(16.6 |
) |
Depreciation and amortization (k) |
|
|
91.4 |
|
|
|
87.2 |
|
|
|
387.5 |
|
|
|
366.4 |
|
Adjusted EBITDA |
|
$ |
124.7 |
|
|
$ |
96.2 |
|
|
$ |
584.5 |
|
|
$ |
388.8 |
|
(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. This amount also includes total charges of
$5.2 million for the year ended December 31, 2022 related to the
July 2021 Restructuring Plan which are not accounted for as exit
and disposal costs under ASC 420, including one-time offshore build
out costs. |
(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) |
Includes gains related to repurchases of 5.375% Senior Notes, 3.50%
Senior Secured Notes and the Term Loan Facility. |
(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. We used a structural non-GAAP tax rate of 26% for all
periods which reflects the removal of the tax effect of non-GAAP
pre-tax adjustments and non-recurring tax adjustments on a
year-over-year basis. The non-GAAP tax rate could be subject to
change for a variety of reasons, including the rapidly evolving
global tax environment, significant changes in our geographic
earnings mix including due to acquisition activity, or other
changes to our strategy or business operations. We will re-evaluate
our long-term non-GAAP tax rate as appropriate. We believe that
making these adjustments facilitates a better evaluation of our
current operating performance and comparisons to prior
periods. |
(j) |
Primarily consists of foreign currency gains and losses and expense
related to our Receivables Purchase Facility. |
(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 December 31, |
|
Year Ended December 31, |
(In millions, except per share amounts) |
2022 |
|
2023 |
|
2022 |
|
2023 |
Net income (loss) attributable to common stockholders |
$ |
(214.0 |
) |
|
$ |
28.0 |
|
|
$ |
(804.8 |
) |
|
$ |
(837.8 |
) |
Non-GAAP Net Income (Loss) |
$ |
13.5 |
|
|
$ |
(6.4 |
) |
|
$ |
114.9 |
|
|
$ |
(32.7 |
) |
|
|
|
|
|
|
|
|
Weighted average number of shares - Diluted |
|
211.6 |
|
|
|
219.6 |
|
|
|
211.2 |
|
|
|
215.3 |
|
Effect of dilutive securities (a) |
|
0.3 |
|
|
|
— |
|
|
|
1.3 |
|
|
|
3.1 |
|
Non-GAAP weighted average number of shares - Diluted |
|
211.9 |
|
|
|
219.6 |
|
|
|
212.5 |
|
|
|
218.4 |
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share - Diluted |
$ |
(1.01 |
) |
|
$ |
0.13 |
|
|
$ |
(3.81 |
) |
|
$ |
(3.89 |
) |
Per share impacts of adjustments to net income (loss) (b) |
|
1.08 |
|
|
|
(0.16 |
) |
|
|
4.35 |
|
|
|
3.74 |
|
Per share impacts of shares dilutive after adjustments to net
income (loss) (a) |
|
(0.01 |
) |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
Non-GAAP Earnings (Loss) Per Share |
$ |
0.06 |
|
|
$ |
(0.03 |
) |
|
$ |
0.54 |
|
|
$ |
(0.15 |
) |
(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, 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, 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 loss, as noted in the above table, divided
by the GAAP diluted number of shares outstanding for the relevant
period. |
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