Rackspace Technology, Inc. · NASDAQ:RXT
Rackspace Technology — Q4 2023 Earnings Presentation
23 slides from Rackspace Technology's earnings presentation, Mar 12, 2024
Slide 1: Rackspace Technology Q4 2023 Earnings Presentation
Rackspace Technology Q4 2023 Earnings Presentation March 12, 2024
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: Q4 2023 financial results
Q4 2023 financial results $'s in millions Q4 2023 Q/Q Y/Y Total Revenue $720 (2%) (9%) Non-GAAP Net Revenue $413 (4%) (14%) • Non-GAAP Net Revenue is a metric that applies Non-GAAP Gross Profit $158 (2%) (23%) net-accounting to public cloud infrastructure Non-GAAP Gross Margin 22.0% (0 pts) (4 pts)
Slide 4: Q4 2023 segment financials
Q4 2023 segment financials $'s in millions Q/Q % Y/Y % Total Private Public Total Private Public Total Private Public Rackspace Cloud Cloud Rackspace Cloud Cloud Rackspace Cloud Cloud Total Revenue $720 $285 $435 (2%) (5%) 1% (9%) (14%) (5%) Non-GAAP Net Revenue $413 $285 $128 (4%) -- (1%) (14%) --
Slide 5: Cash flow & capital expenditures
Cash flow & capital expenditures $'s in millions Reported Normalized As of December 31, 2023 Q4'23 2023 Q4'23 2023 Cash Provided by Operating Activities $72 $375 $62 $159 Free Cash Flow $38 $278 $29 $63 LTM Free Cash Flow Yield 63% 14% Total Capital Expenditures $38 $181 $38 $181 Total CAPEX Intensi
Slide 6: Debt structure overview as of 12/31/2023
Debt structure overview as of 12/31/2023 $'s in millions As of December 31, 2023 $2.9B Debt Highlights • Total debt $2.9B, Net Debt $2.7B Term Loan B $2,181 • Primarily (~70%) fixed or hedged debt structure Senior Secured Notes • No funded corporate maturities until $514 2028 Senior Notes $198 2023
Slide 7: Liability management resulting in roughly $900M proforma Net Debt Reduction since 2022 YE
Liability management resulting in roughly $900M proforma Net Debt Reduction since 2022 YE ($467M) $3,360 ($364M) $2,893 Total Debt $2,529 $Million Proposed $275 $2,260 transaction will $2,181 FLFO New Money improve liquidity, $1,731 Term Loan extend maturities Repurchased $444M of debt Exchange tran
Slide 8: Pro Forma Debt Structure Overview
Pro Forma Debt Structure Overview $'s in millions PF for Closing of Public Debt Exchange (Assuming 100% Participation) $2.5B Debt Highlights FLFO New Money Term Loan $275 • Total debt $2.5B, Net Debt $2.2B FLSO Term Loan $1,731 • $275 million of new money funded at closing of the private debt exchan
Slide 9: Outlook
Outlook Q1 2024 Guidance Total 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 Expen
Slide 10: Appendix
Appendix rackspace technology.
Slide 11: FY 2023 financial results
FY 2023 financial results $'s in millions FY 2023 Y/Y Total Revenue $2,957 (5%) Non-GAAP Net Revenue $1,750 (11%) • Non-GAAP Net Revenue is a metric that applies Non-GAAP Gross Profit $662 (25%) net-accounting to public cloud infrastructure Non-GAAP Gross Margin 22.4% (6 pts) resale revenue (only th
Slide 12: FY 2023 segment financials
FY 2023 segment financials $'s in millions Y/Y % FY'23 Total Private Public FY'23 Total Private Public Rackspace Cloud Cloud Rackspace Cloud Cloud Total Revenue $2,957 $1,210 $1,747 (5%) (12%) 0% Non-GAAP Net Revenue $1,750 $1,210 $540 (11%) -- (8%) Non-GAAP Gross Profit $662 $462 $200 (25%) (26%) (
Slide 13: Debt repurchases in 2023
Debt repurchases in 2023 Throughout 2023, Rackspace successfully retired $444 million of its outstanding debt due in 2028 via open market repurchases Strategic rationale Key stats Amount Retired Amount Spent1 Capture attractive discount, with $444M in debt repurchased at an average price of 38%, cap
Slide 14: Non-GAAP Net Revenue Reconciliation
Non-GAAP Net Revenue Reconciliation (In millions) Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 2022 2023 Total Revenue $787.0 $758.7 $746.3 $732.4 $719.7 $3,122.3 $2,957.1 Pass-through infrastructure resale costs (306.3) (298.8) (299.7) (302.5) (306.4) (1,153.4) (1,207.4) Non-GAAP Net Revenue $480.7 $459
Slide 15: Non-GAAP Gross Profit Reconciliation
Non-GAAP Gross Profit Reconciliation (In millions) Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 2022 2023 GAAP Gross Profit $199.8 $169.6 $153.1 $152.0 $154.1 $856.9 $628.8 Share-based compensation expense 2.6 2.8 2.6 2.0 1.7 11.6 9.1 Special bonuses and other compensation expense 0.3 0.7 1.4 1.2 0.7 1.9
Slide 16: Non-GAAP Net Income (Loss) Reconciliation
Non-GAAP Net Income (Loss) Reconciliation (In millions) Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 2022 2023 Net income (loss) $(214.0) $(612.0) $(27.2) $(226.6) $28.0 $(804.8) $(837.8) Share-based compensation expense 10.0 15.2 19.5 17.2 13.5 69.5 65.4 Special bonuses and other compensation expense 1.
Slide 17: Non-GAAP Operating Profit Reconciliation
Non-GAAP Operating Profit Reconciliation (In millions) Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 2022 2023 Loss from operations $(227.2) $(581.0) $(63.8) $(239.4) $(15.2) $(679.0) $(899.4) Share-based compensation expense 10.0 15.2 19.5 17.2 13.5 69.5 65.4 Special bonuses and other compensation expens
Slide 18: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (In millions) Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 2022 2023 Net income (loss) $(214.0) $(612.0) $(27.2) $(226.6) $28.0 $(804.8) $(837.8) Share-based compensation expense 10.0 15.2 19.5 17.2 13.5 69.5 65.4 Special bonuses and other compensation expense 1.8 2.2 4.2 3
Slide 19: Non-GAAP Earnings (Loss) Per Share Reconciliation
Non-GAAP Earnings (Loss) Per Share Reconciliation (In millions) Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 2022 2023 Net income (loss) attributable to common stockholders $(214.0) $(612.0) $(27.2) $(226.6) $28.0 $(804.8) $(837.8) Non-GAAP Net Income (Loss) $13.5 $(4.7) $(13.5) $(8.1) $(6.4) $114.9 (32.
Slide 20: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (In millions) Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 2022 2023 Net cash provided by (used in) operating activities $27.5 $(1.9) $37.8 $266.8 $72.2 $246.7 $374.9 Cash purchases of property, equipment and software (15.0) (12.1) (23.4) (27.5) (33.9) (80.4) (96.9) Free Cas
Slide 21: Normalized Cash Flow Reconciliations
Normalized Cash Flow Reconciliations (In millions) Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 2022 2023 Net cash provided by (used in) operating activities $27.5 $(1.9) $37.8 $266.8 $72.2 $246.7 $374.9 Accounts receivable securitization and associated fees - - - (205.7) (9.8) - (215.5) Normalized Cash
Slide 22: 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 23: rackspace technology
rackspace technology: