Slide 1: Rackspace Technology Q2 2023 Earnings Presentation
Rackspace Technology Q2 2023 Earnings Presentation August 8, 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: Q2 2023 financial results
Q2 2023 financial results #039;s in millions Q2 2023 Y/Y Q/Q Total Revenue $746 (3%) (2%) Non-GAAP Net Revenue $447 (10%) (3%) • Non-GAAP Net Revenue is a metric that applies Non-GAAP Gross Profit $163 (30%) (9%) net-accounting to public cloud infrastructure Non-GAAP Gross Margin 21.8% (8 pts) (2 pts)
Slide 4: Q2 2023 segment financials
Q2 2023 segment financials #039;s in millions Y/Y % Total Public Private Total Public Private Rackspace Cloud Cloud Rackspace Cloud Cloud Total Revenue $746 $435 $311 (3%) 3% (11%) Non-GAAP Net Revenue $447 $135 $311 (10%) (7%) -- Non-GAAP Gross Profit $163 $47 $116 (30%) (30%) (30%) Non-GAAP Gross Mar
Slide 5: Cash flow & capital expenditures
Cash flow & capital expenditures #039;s in millions As of June 30, 2023 Q2’23 LTM Cash Provided by Operating Activities $38 $134 Free Cash Flow $14 $65 LTM Free Cash Flow Yield 11% Total Capital Expenditures $45 $190 Total CAPEX Intensity 6% 6% Cash Capital Expenditures $23 $69 Cash CAPEX Intensity 3%
Slide 6: Debt structure overview
Debt structure overview #039;s in millions As of June 30, 2023 $3.2B Debt Highlights • Total debt $3.2B, Net Debt $3.1B Term Loan B $2,248 • Primarily (~70%) fixed or hedged debt structure • No funded maturities until 2028 except Senior Secured Notes $550 the $50M revolver borrowing Revolver $50 Senior
Slide 7: Opportunistic debt repurchases have created equity value
Opportunistic debt repurchases have created equity value Throughout the first 7 months of 2023, Rackspace successfully retired $222 million of its outstanding 5.375% unsecured notes due 2028 via open market repurchases Strategic rationale Key stats Amount Retired Amount Spend1 Capture attractive dis
Slide 8: Outlook
Outlook Q3 2023 Guidance Total Revenue $722 - $732 million Public Cloud Revenue $428 - $433 million Private Cloud Revenue $294 - $299 million Non-GAAP Operating Profit $43 - $47 million Non-GAAP Loss Per Share ($0.06) - ($0.04) Non-GAAP Other Income (Expense) ($58) - ($60) million Non-GAAP Tax Expen
Slide 9: Appendix
Appendix
Slide 10: 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 11: Non-GAAP Net Revenue Reconciliation
Non-GAAP Net Revenue Reconciliation (In millions) Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Total Revenue $772.2 $787.6 $787.0 $758.7 $746.3 Pass-through infrastructure resale costs (276.4) (298.0) (306.3) (298.9) (299.7) Non-GAAP Net Revenue $495.8 $489.6 $480.7 $459.8 $446.6 11
Slide 12: Non-GAAP Gross Profit Reconciliation
Non-GAAP Gross Profit Reconciliation (In millions) Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 GAAP Gross Profit $224.0 $207.1 $199.8 $169.6 $153.1 Share-based compensation expense 3.4 2.8 2.6 2.8 2.6 Other compensation expense 0.4 0.4 0.3 0.7 1.4 Purchase accounting impact on expense 0.8 0.6 0.6 0.6 0.
Slide 13: Non-GAAP Net Income (Loss) Reconciliation
Non-GAAP Net Income (Loss) Reconciliation (In millions) Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Net loss $(40.6) $(511.7) $(214.0) $(612.0) $(27.2) Share-based compensation expense 23.1 19.4 10.0 15.2 19.5 Special bonuses and other compensation expense 2.4 2.4 1.8 2.2 4.2 Transaction-related adjustm
Slide 14: Non-GAAP Operating Profit Reconciliation
Non-GAAP Operating Profit Reconciliation (In millions) Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Income (loss) from operations $4.0 $(476.7) $(227.2) $(581.0) $(63.8) Share-based compensation expense 23.1 19.4 10.0 15.2 19.5 Special bonuses and other compensation expense 2.4 2.4 1.8 2.2 4.2 Transactio
Slide 15: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (In millions) Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Net loss $(40.6) $(511.7) $(214.0) $(612.0) $(27.2) Share-based compensation expense 23.1 19.4 10.0 15.2 19.5 Special bonuses and other compensation expense 2.4 2.4 1.8 2.2 4.2 Transaction-related adjustments, net 1
Slide 16: Non-GAAP Earnings (Loss) Per Share Reconciliation
Non-GAAP Earnings (Loss) Per Share Reconciliation (In millions) Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Net loss attributable to common stockholders $(40.6) $(511.7) $(214.0) $(612.0) $(27.2) Non-GAAP Net Income (Loss) $35.5 $20.0 $13.5 $(4.7) $(13.5) Weighted average number of shares – Diluted 209.
Slide 17: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (In millions) Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Net cash provided by (used in) operating activities $84.0 $70.7 $27.5 $(1.9) $37.8 Cash purchases of property, equipment and software (27.2) (19.0) (15.0) (12.1) (23.4) Free Cash Flow $56.8 $51.7 $12.5 $(14.0) $14.4
Slide 18: 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 19: Rackspace Technology
rackspace technology-