Slide 1: Rackspace Technology Investor Presentation Spring-Summer 2022
Rackspace Technology Investor Presentation Spring-Summer 2022 TM
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: Agenda
Agenda RXT overview Financial overview Concluding Remarks and Q&A 3
Slide 4: Rackspace Technology
Rackspace Technology Well positioned in the large, attractive and growing A leading end-to-end multicloud multicloud services market technology services company Winning differentiators, including proprietary automation technology, deep multicloud expertise, comprehensive partnership ecosystem and fa
Slide 5: Rackspace Technology transformed
Rackspace Technology transformed At LBO Today Competitor Partner Market positioning to public cloud to cloud ecosystem Managed hosting, A leader in end-to-end Core offerings and services expertise OpenStack public cloud multicloud solutions Revenue from segments with <10% 94% attractive growth dynam
Slide 6: The multicloud ecosystem is a large and growing market
The multicloud ecosystem is a large and growing market Businesses recognize the Leading to complexity and driving Creating a large benefits of multicloud strategies demand for multicloud services market opportunity % of enterprise customers seeking Managed services and cloud % of cloud users working
Slide 7: Our robust portfolio powers the future of innovation
Our robust portfolio powers the future of innovation Multicloud Applications Data Security Cloud strategy Cloud-optimized COTS apps Data engineering and strategy Data governance and security Cloud adoption and migration SaaS products Relational and next-gen DBs Security design and strategy Managed s
Slide 8: Our proprietary technology is at the center of our multicloud capabilities
Our proprietary technology is at the center of our multicloud capabilities Rackspace Fabric™ Automation 9 years Solution automation Reduced manual onboarding, of development provisioning, and admin tasks $1B+ Intelligent automation More than 75% of Multicloud workloads invested in Rackspace Technolo
Slide 9: Our people bring the deep technical expertise necessary to deliver solutions
Our people bring the deep technical expertise necessary to deliver solutions across customers' multicloud journeys CERTIFICATIONS* Cloud certified • One of the leading AWS consulting 2,800+ professionals 2,300+ partners with 15 competencies Top tech talent • Expert partner Cloud-native application 1
Slide 10: Strategy to accelerate long-term growth
Strategy to accelerate long-term growth Strategic M&A Geographic expansion Sales execution Leveraging of Canada Technology partner network footprint Japan Increased sales force expansion investment and Middle East productivity LATAM Stronger enterprise Cloud-native app focus development and Europe m
Slide 11: Rackspace Technology: A Socially Responsible Investment
Rackspace Technology: A Socially Responsible Investment Environmental: • Rackspace Technology has completed an annual greenhouse gas emissions inventory every year since 2008 • We are committed to achieving carbon neutrality 5 years ahead of the Paris Accord schedule. Social: • The company sponsors
Slide 12: Agenda
Agenda RXT overview Financial overview Concluding Remarks and Q&A 12
Slide 13: Q1 2022 Financial Highlights
Q1 2022 Financial Highlights Revenue ($M) Core Revenue ($M) $776 $735 $726 $677 Q1 2021 Q1 2022 Q1 2021 Q1 2022 Non-GAAP Operating Profit ($M) Non-GAAP EPS $0.23 -4% $0.22 $119 -6% $112 Non-GAAP 16% 14% Operating Margin Q1 2021 Q1 2022 Q1 2021 Q1 2022 Note: Refer to Appendix for more information on
Slide 14: Q1 2022 Revenue Detail
Q1 2022 Revenue Detail Revenue by Geography Revenue by Segment Multicloud +10% YoY 83% Apps and 75% 20% Americas EMEA Cross Platform +7% YoY 12% +2% YoY -3% YoY 5% 5% OpenStack APJ -17% YoY +32% YoY G R O W T H I N M U LT I C L O U D D R I V E N B Y P U B L I C C L O U D B U S I N E S S ; A P P S &
Slide 15: Cash flow and balance sheet metrics
Cash flow and balance sheet metrics Cash Provided by Total Cash Cash Operating Activities Capital Expenditures Capital Expenditures & Cash Equivalents Strong first quarter $65M $31M $19M $269M operating and free cash flow CAPEX intensity in line with expectations Free Total Cash Undrawn Revolving $6
Slide 16: Debt structure highlights
Debt structure highlights $3.4B Debt & related maturities: Total debt $3.4B, Net Debt $3.1B Term loan: L+275 $2.3B 0.75% Libor Floor Manageable leverage ratio of 4.3x No material debt maturities until 2028 Senior secured notes: 3.50% $550M No significant debt covenants Senior notes: 5.375% $550M 202
Slide 17: Outlook
Outlook Q2 2022 Revenue $780 - $790 million Core Revenue $744 - $752 million Non-GAAP Operating Profit $93 - $97 million Non-GAAP EPS $0.15 - $0.17 Non-GAAP Other Income (Expense) ($49) – ($51) million Non-GAAP Tax Expense Rate 26% Non-GAAP Weighted Average Shares 213 – 215 million NOTE: Refer to Ap
Slide 18: Two Distinct Multicloud Markets With Different Dynamics
Two Distinct Multicloud Markets With Different Dynamics Public Cloud UNIQUE Private Cloud & ATTRIBUTES: Managed Hosting • Secular growth market • CAPEX light Operating • Mature/low growth market • Services-centric Models • CAPEX heavy • Investments for growth • Product-centric Growth • Investments t
Slide 19: Rackspace Technology investment thesis
Rackspace Well positioned in the large, attractive and growing Technology multicloud services market investment Winning differentiators, including proprietary automation thesis technology, deep multicloud expertise, comprehensive partnership ecosystem and fanatical customer experience Demonstrated t
Slide 20: Appendix
Appendix rackspace technology.
Slide 21: Non-GAAP Gross Profit Reconciliation
Non-GAAP Gross Profit Reconciliation Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2020 2021 (In millions) GAAP Gross Profit $247.4 $235.3 $235.5 $231.7 $234.3 $984.4 $936.8 Share-based compensation expense 5.9 4.9 4.3 4.0 3.5 14.5 16.7 Other compensation expense 1.0 1.3 0.4 0.4 0.6 5.9 2.7 Purchase accou
Slide 22: Non-GAAP Net Income Reconciliation
Non-GAAP Net Income Reconciliation Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2020 2021 (In millions) Net loss $(63.8) $(64.0) $(36.6) $(34.8) $(82.9) $(245.8) $(218.3) Share-based compensation expense 17.7 17.2 20.4 19.1 18.7 74.5 75.4 Special bonuses and other compensation expense 18.4 4.0 3.0 2.1 2.
Slide 23: Non-GAAP Operating Profit Reconciliation
Non-GAAP Operating Profit Reconciliation (In millions) Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2020 2021 Income (loss) from operations $(4.8) $24.2 $2.9 $(2.9) $(26.7) $24.7 $(2.5) Share-based compensation expense 17.7 17.2 20.4 19.1 18.7 74.5 75.4 Special bonuses and other compensation expense 18.4
Slide 24: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (In millions) Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2020 2021 Net loss $(63.8) $(64.0) $(36.6) $(34.8) $(82.9) $(245.8) $(218.3) Share-based compensation expense 17.7 17.2 20.4 19.1 18.7 74.5 75.4 Special bonuses and other compensation expense 18.4 4.0 3.0 2.1 2.7 37
Slide 25: Non-GAAP EPS Reconciliation
Non-GAAP EPS Reconciliation (In millions) Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2020 2021 Net loss attributable to common stockholders $(63.8) $(64.0) $(36.6) $(34.8) $(82.9) $(245.8) $(218.3) Non-GAAP Net Income $53.6 $49.1 $50.9 $53.6 $52.9 $151.3 $206.5 Weighted average number of shares – Dilut
Slide 26: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (In millions) Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2020 2021 Net cash provided by operating activities $(16.0) $103.2 $105.7 $102.3 $59.6 $116.7 $370.8 Cash purchases of property, equipment and software (18.9) (36.9) (29.1) (21.2) (21.2) (116.5) (108.4) Free Cash Flo
Slide 27: Definitions
Definitions We calculate Bookings for a given period as the annualized monthly value of our recurring customer contracts entered into during the period from (i) new customers and (ii) net upgrades by existing customers within the same workload, plus the actual (not annualized) estimated value of pro
Slide 28: rackspace technology
rackspace technology.