Slide 1: Rackspace Technology Q1 2023 Earnings Presentation
Rackspace Technology Q1 2023 Earnings Presentation May 9, 2023
Slide 2: Disclaimer
Disclaimer Forward-Looking Statements Rackspace Technology has made statements in this presentation 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 histor
Slide 3: Rackspace organized around two dynamic markets
Rackspace organized around two dynamic markets LEADERSHIP BUSINESS DYNAMICS FOCUS AREAS Cloud/digital transformation DK Sinha Secular growth market President, Public Cloud Services across infrastructure, Services-centric with deep applications, data and security 30-year industry leader with broad cu
Slide 4: Q1 2023 revenue in prior and new segments
Q1 2023 revenue in prior and new segments #039;s in millions Prior Segments New Segments Apps & Cross Platform Multicloud $759 12% $92, (3%) Y/Y Public Cloud $759 Private Cloud 84% 59% 41% $634, (1%) Y/Y (2%) Y/Y $445, +7% Y/Y (2%) Y/Y $314, (12%) Y/Y 4% OpenStack $33, (17%) Y/Y 4
Slide 5: Q1 2023 financial results
Q1 2023 financial results #039;s in millions Q1 2023 Y/Y % Q/Q % Total Revenue $759 (2%) (4%) Non-GAAP Net Revenue $460 (9%) (4%) • Non-GAAP Net Revenue is a metric that applies Non-GAAP Gross Profit $179 (24%) (13%) net-accounting to public cloud infrastructure Non-GAAP Gross Margin 23.6% (7 pts) (3 p
Slide 6: Q1 2023 segment financials
Q1 2023 segment financials #039;s in millions Y/Y % Total Public Private Total Public Private Rackspace Cloud Cloud Rackspace Cloud Cloud Total Revenue $759 $445 $314 (2%) 7% (12%) Non-GAAP Net Revenue $460 $146 $314 (9%) 1% -- Non-GAAP Gross Profit $179 $53 $126 (24%) (20%) (26%) Non-GAAP Gross Margin
Slide 7: Cash flow & capital expenditures
Cash flow & capital expenditures #039;s in millions As of March 31, 2023 Q1’23 LTM • Q1 cash flow was in line with expectations due to our strong working capital management, which Cash Provided by Operating Activities ($2) $180 largely offset the impacts of the company bonus payout and a large vendor p
Slide 8: Debt structure overview
Debt structure overview #039;s in millions Rackspace has no funded maturities until 2028 Debt Structure Highlights As of March 31, 2023 $3.3B • Total debt $3.3B, Net Debt $3.2B • Primarily (~70%) fixed or hedged debt Term Loan B $2,254 structure with 5.5% weighted average cost of debt (1) • No funded d
Slide 9: Outlook
Outlook Q2 2023 Guidance Total Revenue $725 - $735 million Public Cloud Revenue $430 - $435 million Private Cloud Revenue $295 - $300 million Non-GAAP Operating Profit $33 - $37 million Non-GAAP Loss Per Share ($0.09) - ($0.07) Non-GAAP Other Income (Expense) ($57) - ($59) million Non-GAAP Tax Expen
Slide 10: Recent additions to Rackspace Board of Directors
Recent additions to Rackspace Board of Directors Anthony Roberts joined the board in January 2023 and brings 35+ years of technology, change management, and entrepreneurial experience, ultimately as Walgreens Boots Alliance’s Global CIO. Previously, Roberts had senior technology and supply chain rol
Slide 11: Appendix
Appendix
Slide 12: Non-GAAP Net Revenue Reconciliation
Non-GAAP Net Revenue Reconciliation (In millions) Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Total Revenue $775.5 $772.2 $787.6 $787.0 $758.7 Pass-through infrastructure resale costs (272.7) (276.4) (298.0) (306.3) (298.9) Non-GAAP Net Revenue $502.8 $495.8 $489.6 $480.7 $459.8 12
Slide 13: Non-GAAP Gross Profit Reconciliation
Non-GAAP Gross Profit Reconciliation (In millions) Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 GAAP Gross Profit $226.0 $224.0 $207.1 $199.8 $169.6 Share-based compensation expense 2.8 3.4 2.8 2.6 2.8 Other compensation expense 0.8 0.4 0.4 0.3 0.7 Purchase accounting impact on expense 0.7 0.8 0.6 0.6 0.
Slide 14: Non-GAAP Net Income (Loss) Reconciliation
Non-GAAP Net Income (Loss) Reconciliation (In millions) Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Net loss $(38.5) $(40.6) $(511.7) $(214.0) $(612.0) Share-based compensation expense 17.0 23.1 19.4 10.0 15.2 Special bonuses and other compensation expense 3.4 2.4 2.4 1.8 2.2 Transaction-related adjustm
Slide 15: Non-GAAP Operating Profit Reconciliation
Non-GAAP Operating Profit Reconciliation (In millions) Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Income (loss) from operations $20.9 $4.0 $(476.7) $(227.2) $(581.0) Share-based compensation expense 17.0 23.1 19.4 10.0 15.2 Special bonuses and other compensation expense 3.4 2.4 2.4 1.8 2.2 Transaction-
Slide 16: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (In millions) Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Net loss $(38.5) $(40.6) $(511.7) $(214.0) $(612.0) Share-based compensation expense 17.0 23.1 19.4 10.0 15.2 Special bonuses and other compensation expense 3.4 2.4 2.4 1.8 2.2 Transaction-related adjustments, net 5
Slide 17: Non-GAAP Earnings (Loss) Per Share Reconciliation
Non-GAAP Earnings (Loss) Per Share Reconciliation (In millions) Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Net loss attributable to common stockholders $(38.5) $(40.6) $(511.7) $(214.0) $(612.0) Non-GAAP Net Income (Loss) $45.9 $35.5 $20.0 $13.5 $(4.7) Weighted average number of shares – Diluted 211.4
Slide 18: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (In millions) Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Net cash provided by (used in) operating activities $64.5 $84.0 $70.7 $27.5 $(1.9) Cash purchases of property, equipment and software (19.2) (27.2) (19.0) (15.0) (12.1) Free Cash Flow $45.3 $56.8 $51.7 $12.5 $(14.0)
Slide 19: Definitions
Definitions Non-GAAP Net Non-GAAP Net Revenue applies net-accounting to public cloud infrastructure resale revenue. This means only the profit element of infrastructure resale is included in Non-GAAP Net Revenue in Revenue addition to public cloud services and private cloud revenues. Segment Segment
Slide 20: rackspace
rackspace technology-