Rackspace Technology, Inc. · NASDAQ:RXT
Rackspace Technology — Debt Investor Presentation (November 2020)
30 slides from Rackspace Technology's debt investor presentation, Nov 16, 2020
Slide 1: Rackspace Technology Global Investor Presentation
Rackspace Technology Global Investor Presentation November 16, 2020 TM
Slide 2: Disclaimer
Disclaimer Forward-Looking Statements Rackspace Technology Global, Inc. (the “Company”) 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, ot
Slide 3: Agenda
Agenda Transaction Overview Citi Company Overview Kevin Jones Financial Update Dustin Semach
Slide 4: Agenda
Agenda Transaction Overview Citi Company Overview Kevin Jones Financial Update Dustin Semach
Slide 5: Transaction Overview
Transaction Overview • Rackspace Technology Global Inc. (“Rackspace” or the “Company”) is a leading end-to-end multicloud technology services company The Company designs, builds and operates customers’ cloud environments across all major technology platforms, irrespective of technology stack or de
Slide 6: Sources and Uses / Pro Forma Capitalization
Sources and Uses / Pro Forma Capitalization 9/30/2020 Pro Forma Sources Amount % of Total ($ in millions) Amount Adj. Amount New Senior Notes $550 99% Cash(4) $253 ($95) $158 Cash from Balance Sheet(1) 5 1 Revolver ($375mm) -- -- -- Term Loan Facility $2,803 -- $2,803 Total Sources $555 100% Receiva
Slide 7: Summary Term Sheet
Summary Term Sheet Issuer: Rackspace Technology Global, Inc. Issue: $550 million Senior Notes The Borrower and substantially all existing and future, direct or indirect, wholly-owned, domestic subsidiaries Guarantors: (Same as existing 8.625% Senior Notes due 2024) Security: None Tenor: 8 Years Call
Slide 8: Agenda
Agenda Transaction Overview Citi Company Overview Kevin Jones Financial Update Dustin Semach
Slide 9: 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% ~92% attractive growth dyna
Slide 10: We are mission control for multicloud
We are mission control for multicloud Advise Design Multicloud Applications Security Data Optimize Build Manage 10
Slide 11: 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 cloud users working with % of enterprise customers consuming Estimated total add
Slide 12: Our multicloud delivers flexibility in technology stack and deployment model
Our multicloud delivers flexibility in technology stack and deployment model AP P L I C AT I O N S D ATA SECURITY Deployed across Rackspace Technology datacenters, hyperscalers and on-premises Fanatical ExperienceTM At-scale capabilities across all major clouds and everywhere in between 12
Slide 13: 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 Solution automation 8 years of development Reduced manual onboarding, provisioning, and admin tasks $1B+ Intelligent automation 62% of workloads automated invested in Rackspace Technology IP 12M+
Slide 14: Driving a highly efficient business with software-like economics
Driving a highly efficient business with software-like economics 2019 revenue per employee, $k per employee $375 $340 $334 Rackspace Technology Software IT services $325 $308 $307 $292 $291 $270 95%+ $209 $201 of 2019 $167 revenues $118 IT services median: $80k are recurring $87 $72 $57 $52 $49 $46
Slide 15: Competitive environment
Competitive environment IT systems Cloud SPs and Regional Hybrid colocation In-house IT integrators digital SIs MSPs providers CORE Consulting Cloud services Company’s internal Primarily “build” and Hardware and network and outsourcing within a single OFFERING IT department “manage” services connect
Slide 16: Our competitive advantage positions us to win
Our competitive advantage positions us to win Automation Standardization Rackspace FabricTM Automation-driven efficiency and scalability Efficiency for customers Investment in technology innovation Fanatical ExperienceTM End-to-end multicloud Best-in-class customer experience Across entire customer
Slide 17: Successful execution has accelerated growth
Successful execution has accelerated growth Total Bookings Growth Core Segment Revenue Growth NEW NEW MANAGEMENT MANAGEMENT 18% TEAM TEAM $315 $288 13% 11% $231 $231 10% 7% $192 7% 6% 6% 2% 2% $139 $139 0% Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Year-Over-
Slide 18: Well positioned in a $400 billion market
Well Value proposition for Rackspace Technology positioned services has accelerated in a $400 billion market. Diverse customer base with low concentration Remote, software-enabled delivery model Supporting mission critical IT systems and applications Strong EBITDA margin profile with ample liquidity
Slide 19: Agenda
Agenda Transaction Overview Citi Company Overview Kevin Jones Financial Update Dustin Semach
Slide 20: Financial model highlights
Scale Revenue visibility Growth in Core segments $2.6B 95%+ 10% Revenue Recurring revenues YoY PF Core (LTM Q3’20) (2019) revenue growth (Q3’20) Financial model highlights Low capital intensity Strong Adj. PF EBITDA Margin profile 7% $857M 29% Capital intensity Pro Forma Adj. EBITDA Adj. EBITDA marg
Slide 21: Accelerating revenue growth and operating leverage
Accelerating revenue growth and operating leverage Core OpenStack Bookings ($M) Revenue ($M) – yoy growth in constant currency 13% total 64% $315 17% Core $682 $192 $602 $56 $70 $626 $531 Q3 2019 Q3 2020 Q3 2019 Q3 2020 Adj. EBITDA ($M) Capital Intensity (CapEx as % of revenue) 2% $191 $187 (220) BP
Slide 22: Components of our revenue
Components of our revenue Multicloud Services Apps and Cross Platform OpenStack Public Cloud 8% Integrated suite of managed Applications Open-source cloud platform cloud services across public and private Security Declining % of revenue Data “Core” segments – single integrated portfolio 22
Slide 23: Financial policies update
Financial policies update Leverage Policy Capital Allocation Strong Balance Sheet • Current net leverage of 3.7x, down • Potential to selectively pursue • Substantial access to liquidity via from 4.5x prior to completion of strategic / bolt-on M&A to $375mm revolving credit facility the IPO enhance
Slide 24: An investment in a leading pure play multicloud solutions company
An investment in a leading pure play multicloud solutions company End-to-end Accelerating multicloud leader Bookings growth Uniquely positioned in a Improving large and growing market profitability Relentless focus Rapid FCF per on execution share growth 24
Slide 25: Appendix
Appendix Solving rackspace Together technology.
Slide 26: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation Nine Months Ended Twelve months Ended Year Ended December 31, September 30, September 30, (In millions) 2017 2018 2019 2019 2020 2020 Net loss $(59.9) $(470.6) $(102.3) $(55.5) $(178.4) $(225.2) Interest expense 223.4 281.1 329.0 270.7 209.2 286.4 Benefit for income ta
Slide 27: Constant currency revenue reconciliation
Constant currency revenue reconciliation Three Months Ended Three Months Ended September 30, 2020 September 30, 2019 Foreign Currency Revenue in (In millions) Revenue Revenue Translation Constant Currency Multicloud Services $450.2 $542.1 $(3.6) $538.5 Apps & Cross Platform 81.1 83.9 (0.2) 83.7 Core
Slide 28: 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 29: Definitions
Definitions Structural Non- We utilize an estimated structural long-term non-GAAP tax rate in order to provide consistency across reporting periods, removing the effect of non-recurring tax adjustments, which include but are not limited to tax rate changes, U.S. tax reform, share-based compensation,
Slide 30: Rackspace Technology
rackspace technology.
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