- Revenue of $676 million in the Third Quarter, down 8% Year-over-Year
- Private Cloud Revenue was $258 million, down 14% Year-over-Year
- Public Cloud Revenue was $418 million, down 3% Year-over-Year
- Third Quarter 2024 Cash Flow From Operating Activities was $52 million
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 $676 million in the third quarter of 2024, a decrease of 8% on a reported and constant currency basis as compared to revenue of $732 million in the third quarter of 2023.
Private Cloud revenue was $258 million in the third quarter of 2024, a decrease of 14% on a reported basis and 15% on a constant currency basis as compared to revenue of $301 million in the third quarter of 2023.
Public Cloud revenue was $418 million in the third quarter of 2024, a decrease of 3% on a reported and constant currency basis compared to revenue of $432 million in the third quarter of 2023.
Loss from operations was $(174) million in the third quarter of 2024, compared to loss from operations of $(239) million in the third quarter of 2023.
Net loss was $(187) million in the third quarter of 2024, compared to net loss of $(227) million in the third quarter of 2023.
Net loss per diluted share was $(0.82) in the third quarter of 2024, compared to net loss per diluted share of $(1.05) in the third quarter of 2023.
Non-GAAP Operating Profit was $34 million in the third quarter of 2024, a decrease of 25% compared to $46 million in the third quarter of 2023.
Non-GAAP Loss Per Share was $(0.04) in the both the third quarter of 2024 and 2023.
Capital expenditures were $31 million in the third quarter of 2024, compared to $28 million in the third quarter of 2023.
As of September 30, 2024, we had cash and cash equivalents of $157 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:
| Q4 2024 Guidance | ||
| Total Revenue | $668 - $680 million | |
| Private Cloud Revenue | $258 - $264 million | |
| Public Cloud Revenue | $410 - $416 million | |
| Non-GAAP Operating Profit | $34 - $36 million | |
| Non-GAAP Loss Per Share | $(0.03) - $(0.05) | |
| Non-GAAP Other Income (Expense) | $(47) - $(51) million | |
| Non-GAAP Tax Expense Rate | 26 | % |
| Non-GAAP Weighted Average Shares | 240 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, 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
PR Contact
Natalie Silva
Rackspace Technology Corporate Communications
| 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 | ||||||||||||||||||
| 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 | ()[\]\\.,;:\s@\"]+)*)|(\".+\"))@((\[[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\])|(([a-zA-Z\-0-9]+\.)+[a-zA-Z]{2,}))$/;return b.test(a)}$(document).ready(function(){if(performance.navigation.type==2){location.reload(true)}$("iframe[data-lazy-src]").each(function(b){$(this).attr("src",$(this).attr("data-lazy-src"))});if($(".owl-article-body-images").length){$(".owl-article-body-images").owlCarousel({items:1,loop:true,center:false,dots:false,autoPlay:true,mouseDrag:false,touchDrag:false,pullDrag:false,nav:true})}var a=$("#display_full_text").val();if(a==0){$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:$("#cms_article_id").val()},dataType:"json",success:function(b){},error:function(b,d,c){}})}$(".read-full-article").on("click",function(d){d.preventDefault();var b=$(this).attr("data-cmsArticleId");var c=$(this).attr("data-productId");var f=$(this).attr("data-href");dataLayer.push({event:"paywall_click",paywall_name:"the_manila_times_premium",paywall_id:"paywall_article_"+b});$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:b,productId:c},dataType:"json",success:function(e){window.location.href=$("#BASE_URL").val()+f},error:function(e,h,g){}})});$(".article-embedded-newsletter-form .close-btn").on("click",function(){$(".article-embedded-newsletter-form").fadeOut(1000)})});$(document).on("click",".article-embedded-newsletter-form .newsletter-button",function(){var b=$(".article-embedded-newsletter-form .newsletter_email").val();var d=$("#ga_user_id").val();var c=$("#ga_user_yob").val();var a=$("#ga_user_gender").val();var e=$("#ga_user_country").val();if(validateEmail(b)){$.ajax({url:"/ajax/sendynewsletter",type:"POST",data:{email:b},success:function(f){$(".article-embedded-newsletter-form .nf-message").html(f);$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000);dataLayer.push({event:"newsletter_sub",user_id:d,product_name:"newsletter",gender:a,yob:c,country:e})},error:function(f,h,g){}})}else{$(".article-embedded-newsletter-form .nf-message").html("Please enter a valid email address.");$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000)}});$(document).on("click",".article-embedded-newsletter-form .nf-message",function(){$(this).removeClass("show");$(this).html("")});
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