Form 8-K - Current report

0001810019FALSE00018100192024-08-082024-08-08

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 8, 2024

RACKSPACE TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

Delaware

001-39420

81-3369925

(State of Incorporation)

(Commission File Number)

(I.R.S. Employer Identification No.)

19122 US Highway 281N, Suite 128

San Antonio, Texas 78258

(Address of principal executive offices, including zip code)

1-800-961-4454

(Registrant's telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

RXT

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

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Item 2.02.    Results of Operations and Financial Condition.

On August 8, 2024, Rackspace Technology, Inc. issued a press release announcing its financial results for the fiscal quarter ended June 30, 2024. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.

The information contained in this report, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filings, unless expressly incorporated by specific reference in such filing.

Item 9.01.    Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number

Exhibit Description

99.1

Press Release dated August 8, 2024.

104

Cover Page Interactive Data File (formatted as Inline XBRL)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

RACKSPACE TECHNOLOGY, INC.

Date:

August 8, 2024

By:

/s/ Mark Marino

Mark Marino

Chief Financial Officer

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Exhibit 99.1

Rackspace Technology Reports Second Quarter 2024 Results

•Revenue of $685 million in the Second Quarter, down 8% Year-over-Year

•Private Cloud Revenue was $260 million, down 17% Year-over-Year

•Public Cloud Revenue was $425 million, down 2% Year-over-Year

•Second Quarter 2024 Cash Flow From Operating Activities was $24 million; Cash Flow From Operating Activities was $273 million on a Trailing-Twelve-Month Basis

SAN ANTONIO, August 8, 2024 – Rackspace Technology, Inc. (Nasdaq: RXT), a leading end-to-end, hybrid, multicloud, and AI solutions company, today announced results for its second quarter ended June 30, 2024.

Amar Maletira, Chief Executive Officer, stated, “Our second quarter financial results once again exceeded guidance for revenue, operating profit, and EPS. We are focused on strengthening our pipeline in both Private and Public Cloud, stabilizing and growing revenue and profit while continuing to drive cost efficiencies. We are pleased with the steady progress on all fronts.”

Second Quarter 2024 Results

Revenue was $685 million in the second quarter of 2024, a decrease of 8% on a reported and constant currency basis as compared to revenue of $746 million in the second quarter of 2023.

Private Cloud revenue was $260 million in the second quarter of 2024, a decrease of 17% on a reported and constant currency basis as compared to revenue of $313 million in the second quarter of 2023.

Public Cloud revenue was $425 million in the second quarter of 2024, a decrease of 2% on a reported and constant currency basis compared to revenue of $434 million in the second quarter of 2023.

Loss from operations was $(54) million in the second quarter of 2024, compared to loss from operations of $(64) million in the second quarter of 2023.

Net income was $25 million in the second quarter of 2024, compared to net loss of $(27) million in the second quarter of 2023.

Net earnings per diluted share was $0.11 in the second quarter of 2024, compared to net loss per diluted share of $(0.13) in the second quarter of 2023.

Non-GAAP Operating Profit was $23 million in the second quarter of 2024, a decrease of 42% compared to $39 million in the second quarter of 2023.

Non-GAAP Loss Per Share was $(0.08) in the second quarter of 2024, a decrease of 33% as compared to Non-GAAP Loss Per Share of $(0.06) in the second quarter of 2023.

Capital expenditures were $33 million in the second quarter of 2024, compared to $45 million in the second quarter of 2023.

As of June 30, 2024, we had cash and cash equivalents of $190 million with no balance outstanding on our New Revolving Credit Facility ($375 million of undrawn commitments).

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Financial Outlook

Rackspace Technology is providing guidance as follows:

			Q3 2024 Guidance
Total Revenue			$668 - $680 million
Private Cloud Revenue			$255 - $262 million
Public Cloud Revenue			$414 - $419 million
Non-GAAP Operating Profit			$29 - $31 million
Non-GAAP Loss Per Share			$(0.06) - $(0.08)
Non-GAAP Other Income (Expense)			$(51) – $(55) million
Non-GAAP Tax Expense Rate			26		%
Non-GAAP Weighted Average Shares			231-233 million

Information about Rackspace Technology’s use of non-GAAP financial measures is provided below under “Non-GAAP Financial Measures”.

Definitions of non-GAAP financial measures and the reconciliations to the most directly comparable measures in accordance with generally accepted accounting principles in the United States (“GAAP”) are provided in subsequent sections of this press release narrative and supplemental schedules. Rackspace Technology has not reconciled Non-GAAP Operating Profit, Non-GAAP Loss Per Share, Non-GAAP Other Income (Expense) or Non-GAAP Tax Expense Rate guidance to the most directly comparable GAAP measure because it does not provide guidance on GAAP net income (loss) or the reconciling items between these Non-GAAP measures and GAAP net income (loss) as a result of the uncertainty regarding, and the potential variability of, certain of these items, such as share-based compensation expense. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort. With respect to Non-GAAP Operating Profit, Non-GAAP Loss Per Share, Non-GAAP Other Income (Expense) and Non-GAAP Tax Expense Rate guidance, adjustments in future periods are generally expected to be similar to the kinds of charges and costs excluded from these Non-GAAP measures in prior periods, but the impact of such adjustments could be significant.

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Conference Call and Webcast

Rackspace Technology will hold a conference call today, August 8, 2024, at 4:00pm CT / 5:00pm ET to discuss its second quarter 2024 results. Interested parties may access the conference call as follows:

USA & Canada - Toll-Free [phone]

International - Toll [phone]

Conference ID: 4653491

To listen to the live webcast or access the replay following the webcast, please visit our IR website at the following link: https://edge.media-server.com/mmc/p/zjyvhdh3/

About Rackspace Technology

Rackspace Technology is a leading end-to-end, hybrid, multicloud, and AI solutions company. We design, build, and operate our customers’ cloud environments across all major technology platforms, irrespective of technology stack or deployment model. We partner with our customers at every stage of their cloud journey, enabling them to modernize applications, build new products, and adopt innovative technologies.

Forward-looking Statements

Rackspace Technology has made statements in this press release 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 historical fact, included in this press release are, or could be, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are made in reliance on the safe harbor protections provided thereunder. These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions, and other matters. Any forward-looking statement made in this press release speaks only as of the date on which it is made. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. Forward-looking statements can be identified by various words such as “expects,” “intends,” “will,” “anticipates,” “believes,” “confident,” “continue,” “propose,” “seeks,” “could,” “may,” “should,” “estimates,” “forecasts,” “might,” “goals,” “objectives,” “targets,” “planned,” “projects,” and similar expressions. These forward-looking statements are based on management’s current beliefs and assumptions and on information currently available to management. Rackspace Technology cautions that these statements are subject to risks and uncertainties, many of which are outside of our control, and could cause future events or results to be materially different from those stated or implied in this press release, including among others, risk factors that are described in Rackspace Technology, Inc.’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the Securities and Exchange Commission, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein.

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Non-GAAP Financial Measures

This press release includes several non-GAAP financial measures such as constant currency revenue, Non-GAAP Gross Profit, Non-GAAP Net Income (Loss), Non-GAAP Operating Profit, Adjusted EBITDA and Non-GAAP Earnings (Loss) Per Share. These non-GAAP financial measures exclude the impact of certain costs, losses and gains that are required to be included in our profit and loss measures under GAAP. Although we believe these measures are useful to investors and analysts for the same reasons they are useful to management, as described in the accompanying pages, these measures are not a substitute for, or superior to, GAAP financial measures or disclosures. Other companies may calculate similarly-titled non-GAAP measures differently, limiting their usefulness as comparative measures. We have reconciled each of these non-GAAP measures to the applicable most comparable GAAP measure in the accompanying pages.

IR Contact

Sagar Hebbar

Rackspace Technology Investor Relations

[e-mail]

PR Contact

Natalie Silva

Rackspace Technology Corporate Communications

[e-mail]

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RACKSPACE TECHNOLOGY, INC.

CONSOLIDATED RESULTS OF OPERATIONS

(Unaudited)

			Three Months Ended June 30,																								Year-Over-Year Comparison
			2023												2024
(In millions, except % and per share data)			Amount						% Revenue						Amount						% Revenue						Amount						% Change
Revenue			$	746.3					100.0		%				$	684.9					100.0		%				$	(61.4)					(8.2)		%
Cost of revenue			(593.2)						(79.5)		%				(553.5)						(80.8)		%				39.7						(6.7)		%
Gross profit			153.1						20.5		%				131.4						19.2		%				(21.7)						(14.2)		%
Selling, general and administrative expenses			(216.9)						(29.1)		%				(185.2)						(27.0)		%				31.7						(14.6)		%
Loss from operations			(63.8)						(8.5)		%				(53.8)						(7.9)		%				10.0						(15.7)		%
Other income (expense):
Interest expense			(57.3)						(7.7)		%				(18.4)						(2.7)		%				38.9						(67.9)		%
Gain on investments, net			0.1						0.0		%				—						—		%				(0.1)						(100.0)		%
Debt modification costs and gain on debt extinguishment			94.9						12.7		%				72.5						10.6		%				(22.4)						(23.6)		%
Other income (expense), net			0.2						0.0		%				(5.2)						(0.8)		%				(5.4)						NM
Total other income (expense)			37.9						5.1		%				48.9						7.2		%				11.0						29.0		%
Loss before income taxes			(25.9)						(3.5)		%				(4.9)						(0.7)		%				21.0						(81.1)		%
Benefit (provision) for income taxes			(1.3)						(0.2)		%				29.9						4.4		%				31.2						NM
Net income (loss)			$	(27.2)					(3.6)		%				$	25.0					3.7		%				$	52.2					NM
Net earnings (loss) per share:
Basic			$	(0.13)											$	0.11
Diluted			$	(0.13)											$	0.11
Weighted average number of shares outstanding:
Basic			215.1												224.5
Diluted			215.1												229.6

NM = not meaningful.

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RACKSPACE TECHNOLOGY, INC.

CONSOLIDATED RESULTS OF OPERATIONS

(Unaudited)

			Six Months Ended June 30,																								Year-Over-Year Comparison
			2023												2024
(In millions, except % and per share data)			Amount						% Revenue						Amount						% Revenue						Amount						% Change
Revenue			$	1,505.0					100.0		%				$	1,375.7					100.0		%				$	(129.3)					(8.6)		%
Cost of revenue			(1,182.3)						(78.6)		%				(1,111.5)						(80.8)		%				70.8						(6.0)		%
Gross profit			322.7						21.4		%				264.2						19.2		%				(58.5)						(18.1)		%
Selling, general and administrative expenses			(424.4)						(28.2)		%				(377.6)						(27.5)		%				46.8						(11.0)		%
Impairment of goodwill			(543.1)						(36.1)		%				(573.2)						(41.7)		%				(30.1)						5.5		%
Impairment of assets, net			—						—		%				(20.0)						(1.5)		%				(20.0)						100.0		%
Loss from operations			(644.8)						(42.8)		%				(706.6)						(51.4)		%				(61.8)						9.6		%
Other income (expense):
Interest expense			(114.2)						(7.6)		%				(62.1)						(4.5)		%				52.1						(45.6)		%
Gain on investments, net			0.2						0.0		%				0.1						0.0		%				(0.1)						(50.0)		%
Debt modification costs and gain on debt extinguishment			107.7						7.2		%				129.2						9.4		%				21.5						20.0		%
Other income (expense), net			2.3						0.2		%				(10.8)						(0.8)		%				(13.1)						NM
Total other income (expense)			(4.0)						(0.3)		%				56.4						4.1		%				60.4						NM
Loss before income taxes			(648.8)						(43.1)		%				(650.2)						(47.3)		%				(1.4)						0.2		%
Benefit for income taxes			9.6						0.6		%				34.6						2.5		%				25.0						NM
Net loss			$	(639.2)					(42.5)		%				$	(615.6)					(44.7)		%				$	23.6					(3.7)		%
Net loss per share:
Basic and diluted			$	(2.98)											$	(2.77)
Weighted average number of shares outstanding:
Basic and diluted			214.2												222.2

NM = not meaningful.

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RACKSPACE TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions, except per share data)			December 31, 2023						June 30, 2024
ASSETS
Current assets:
Cash and cash equivalents			$	196.8					$	190.2
Accounts receivable, net allowance for credit losses and accrued customer credits of $20.1 and $25.8, respectively			339.7						322.8
Prepaid expenses			87.4						86.6
Other current assets			114.2						96.7
Total current assets			738.1						696.3
Property, equipment and software, net			608.8						612.2
Goodwill, net			1,452.4						877.7
Intangible assets, net			1,019.0						921.5
Operating right-of-use assets			126.3						144.4
Other non-current assets			151.6						141.6
Total assets			$	4,096.2					$	3,393.7
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses			$	432.7					$	401.9
Accrued compensation and benefits			72.2						72.3
Deferred revenue			78.8						72.5
Debt			23.0						54.0
Accrued interest			20.5						8.3
Operating lease liabilities			66.0						58.7
Finance lease liabilities			55.8						50.8
Financing obligations			14.0						16.9
Other current liabilities			36.5						36.0
Total current liabilities			799.5						771.4
Non-current liabilities:
Debt			2,839.6						2,816.0
Operating lease liabilities			74.6						90.3
Finance lease liabilities			308.0						295.0
Financing obligations			52.4						41.3
Deferred income taxes			79.2						35.6
Other non-current liabilities			97.4						100.3
Total liabilities			4,250.7						4,149.9
Commitments and Contingencies
Stockholders' deficit:
Preferred stock, $0.01 par value per share: 5.0 shares authorized; no shares issued or outstanding			—						—
Common stock, $0.01 par value per share: 1,495.0 shares authorized; 220.5 and 228.7 shares issued; 217.4 and 225.6 shares outstanding, respectively			2.2						2.3
Additional paid-in capital			2,638.2						2,661.1
Accumulated other comprehensive income			60.3						51.2
Accumulated deficit			(2,824.2)						(3,439.8)
Treasury stock, at cost; 3.1 shares held			(31.0)						(31.0)
Total stockholders' deficit			(154.5)						(756.2)
Total liabilities and stockholders' deficit			$	4,096.2					$	3,393.7

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RACKSPACE TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

			Six Months Ended June 30,
(In millions)			2023						2024
Cash Flows From Operating Activities
Net loss			$	(639.2)					$	(615.6)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			192.4						149.0
Amortization of operating right-of-use assets			42.5						34.2
Deferred income taxes			(17.0)						(51.2)
Share-based compensation expense			34.7						32.3
Impairment of goodwill			543.1						573.2
Impairment of assets, net			—						20.0
Debt modification costs and gain on debt extinguishment			(107.7)						(129.2)
Unrealized loss on derivative contracts			7.7						—
Gain on investments, net			(0.2)						(0.1)
Provision for bad debts and accrued customer credits			5.0						10.8
Amortization of debt issuance costs and debt discount and premium			4.0						(3.5)
Third party fees paid in connection with the Refinancing Transactions			—						(31.7)
Other operating activities			—						(2.9)
Changes in operating assets and liabilities:
Accounts receivable			74.7						10.4
Prepaid expenses and other current assets			23.5						4.2
Accounts payable, accrued expenses, and other current liabilities			(101.2)						(35.5)
Deferred revenue			(9.2)						(7.7)
Operating lease liabilities			(30.8)						(43.8)
Other non-current assets and liabilities			13.6						20.9
Net cash provided by (used in) operating activities			35.9						(66.2)
Cash Flows From Investing Activities
Purchases of property, equipment and software			(35.5)						(66.7)
Proceeds from sale of headquarters			—						16.9
Other investing activities			0.6						0.3
Net cash used in investing activities			(34.9)						(49.5)
Cash Flows From Financing Activities
Proceeds from employee stock plans			0.8						0.4
Shares of common stock withheld for employee taxes			—						(3.4)
Proceeds from borrowings under long-term debt arrangements			50.0						275.0
Payments on long-term debt			(67.0)						(91.9)
Debt extinguishment costs			—						(22.1)
Payments on financing component of interest rate swap			(8.6)						(8.6)
Principal payments of finance lease liabilities			(39.1)						(30.8)
Principal payments of financing obligations			(6.9)						(8.2)
Net cash provided by (used in) financing activities			(70.8)						110.4
Effect of exchange rate changes on cash, cash equivalents, and restricted cash			1.4						(1.3)
Decrease in cash, cash equivalents, and restricted cash			(68.4)						(6.6)
Cash, cash equivalents, and restricted cash at beginning of period			231.4						199.7
Cash, cash equivalents, and restricted cash at end of period			$	163.0					$	193.1

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Supplemental Cash Flow Information
Cash payments for interest, net of amount capitalized			$	113.6					$	70.1
Cash payments for income taxes, net of refunds			$	5.6					$	6.8
Non-cash Investing and Financing Activities
Acquisition of property, equipment and software by finance leases			$	63.2					$	13.7
Acquisition of property, equipment and software by financing obligations			8.5						—
Increase (decrease) in property, equipment and software accrued in liabilities			9.0						(1.3)
Other non-cash additions			—						(0.5)
Non-cash purchases of property, equipment and software			$	80.7					$	11.9
Non-cash gain on sale of property and equipment			$	—					$	(5.1)

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SEGMENT DATA

(In millions, except %)						Three Months Ended June 30,												% Change
Revenue by segment:						2023						2024						Actual						Constant Currency (a)
Public Cloud						$	433.7					$	424.9					(2.0)		%				(2.0)		%
Private Cloud						312.6						260.0						(16.8)		%				(17.0)		%
Total consolidated revenue						$	746.3					$	684.9					(8.2)		%				(8.3)		%

(In millions, except %)						Six Months Ended June 30,												% Change
Revenue by segment:						2023						2024						Actual						Constant Currency (a)
Public Cloud						$	877.2					$	847.3					(3.4)		%				(3.5)		%
Private Cloud						627.8						528.4						(15.8)		%				(16.3)		%
Total consolidated revenue						$	1,505.0					$	1,375.7					(8.6)		%				(8.8)		%

(a)			Refer to "Non-GAAP Financial Measures" in this section for further explanation and reconciliation.

			Three Months Ended June 30,																								Year-Over-Year Comparison
(In millions, except %)			2023												2024
Segment operating profit (a):			Amount						% of Segment Revenue						Amount						% of Segment Revenue						Amount						% Change
Public Cloud			$	15.8					3.6		%				$	11.8					2.8		%				$	(4.0)					(25.3)		%
Private Cloud			88.0						28.2		%				69.7						26.8		%				(18.3)						(20.8)		%
Total consolidated segment operating profit			103.8												81.5												(22.3)						(21.5)		%
Corporate functions (b)			(64.8)												(58.7)												6.1						(9.4)		%
Non-GAAP Operating Profit (c)			$	39.0											$	22.8											$	(16.2)					(41.5)		%

			Six Months Ended June 30,																								Year-Over-Year Comparison
(In millions, except %)			2023												2024
Segment operating profit (a):			Amount						% of Segment Revenue						Amount						% of Segment Revenue						Amount						% Change
Public Cloud			$	39.2					4.5		%				$	21.1					2.5		%				$	(18.1)					(46.2)		%
Private Cloud			182.0						29.0		%				141.4						26.8		%				(40.6)						(22.3)		%
Total consolidated segment operating profit			221.2												162.5												(58.7)						(26.5)		%
Corporate functions (b)			(131.7)												(123.5)												8.2						(6.2)		%
Non-GAAP Operating Profit (c)			$	89.5											$	39.0											$	(50.5)					(56.4)		%

(a)			Segment revenue less expenses directly attributable to running the respective segments’ business. These expenses exclude centralized corporate function costs.
(b)			Costs that are not allocated to segments. These costs are related to centralized corporate functions that provide services to the segments in areas such as accounting, information technology, marketing, legal and human resources.
(c)			Refer to "Non-GAAP Financial Measures" in this section for further explanation and reconciliation.

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NON-GAAP FINANCIAL MEASURES

Constant Currency Revenue

We use constant currency revenue as an additional metric for understanding and assessing our growth excluding the effect of foreign currency rate fluctuations on our international business operations. Constant currency information compares results between periods as if exchange rates had remained constant period over period and is calculated by translating the non-U.S. dollar income statement balances for the most current period to U.S. dollars using the average exchange rate from the comparative period rather than the actual exchange rates in effect during the respective period. We also believe this is an important metric to help investors evaluate our performance in comparison to prior periods.

						Three Months Ended June 30, 2023						Three Months Ended June 30, 2024																		% Change
(In millions, except %)						Revenue						Revenue						Foreign Currency Translation (a)						Revenue in Constant Currency						Actual						Constant Currency
Public Cloud						$	433.7					$	424.9					$	—					$	424.9					(2.0)		%				(2.0)		%
Private Cloud						312.6						260.0						(0.5)						259.5						(16.8)		%				(17.0)		%
Total						$	746.3					$	684.9					$	(0.5)					$	684.4					(8.2)		%				(8.3)		%

						Six Months Ended June 30, 2023						Six Months Ended June 30, 2024																		% Change
(In millions, except %)						Revenue						Revenue						Foreign Currency Translation (a)						Revenue in Constant Currency						Actual						Constant Currency
Public Cloud						$	877.2					$	847.3					$	(0.7)					$	846.6					(3.4)		%				(3.5)		%
Private Cloud						627.8						528.4						(2.6)						525.8						(15.8)		%				(16.3)		%
Total						$	1,505.0					$	1,375.7					$	(3.3)					$	1,372.4					(8.6)		%				(8.8)		%

(a)

The effect of foreign currency is calculated by translating current period results using the average exchange rate from the prior comparative period.

Non-GAAP Gross Profit

We present Non-GAAP Gross Profit because we believe the measure is useful in analyzing trends in our underlying, recurring gross margins. We define Non-GAAP Gross Profit as gross profit, adjusted to exclude the impact of share-based compensation expense and other non-recurring or unusual compensation items, purchase accounting-related effects, certain business transformation-related costs, and costs related to the Hosted Exchange incident.

			Three Months Ended June 30,												Six Months Ended June 30,
(In millions)			2023						2024						2023						2024
Gross profit			$	153.1					$	131.4					$	322.7					$	264.2
Share-based compensation expense			2.6						2.0						5.4						3.9
Special bonuses and other compensation expense (a)			1.4						1.0						2.1						1.9
Purchase accounting impact on expense (b)			0.7						0.6						1.3						1.2
Restructuring and transformation expenses (c)			5.1						4.3						9.8						9.2
Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage			—						—						0.3						—
Non-GAAP Gross Profit			$	162.9					$	139.3					$	341.6					$	280.4

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(a)			Adjustments for retention bonuses, mainly in connection with restructuring and transformation projects, and the related payroll tax, and payroll taxes associated with the exercise of stock options and vesting of restricted stock. Beginning in the second quarter of 2023, includes expense related to the one-time grant of long-term incentive bonuses as a component of our annual compensation award process.
(b)			Adjustment for the impact of purchase accounting from the November 2016 merger on expenses.
(c)			Adjustment for the impact of business transformation and optimization activities, as well as associated severance, certain facility closure costs and lease termination expenses.

Non-GAAP Net Income (Loss), Non-GAAP Operating Profit and Adjusted EBITDA

We present Non-GAAP Net Income (Loss), Non-GAAP Operating Profit and Adjusted EBITDA because they are a basis upon which management assesses our performance and we believe they are useful to evaluating our financial performance. We believe that excluding items from net income that may not be indicative of, or are unrelated to, our core operating results, and that may vary in frequency or magnitude, enhances the comparability of our results and provides a better baseline for analyzing trends in our business.

We define Non-GAAP Net Income (Loss) as net income (loss) adjusted to exclude the impact of non-cash charges for share-based compensation, special bonuses and other compensation expense, transaction-related costs and adjustments, restructuring and transformation charges, costs related to the Hosted Exchange incident, the amortization of acquired intangible assets, goodwill and asset impairment charges, costs related to the closure of a UK office, the interest expense impact from the debt Refinancing Transactions, and certain other non-operating, non-recurring or non-core gains and losses, as well as the tax effects of these non-GAAP adjustments.

We define Non-GAAP Operating Profit as income (loss) from operations adjusted to exclude the impact of non-cash charges for share-based compensation, special bonuses and other compensation expense, transaction-related costs and adjustments, restructuring and transformation charges, costs related to the Hosted Exchange incident, the amortization of acquired intangible assets, goodwill and asset impairment charges, costs related to the closure of a UK office, and certain other non-operating, non-recurring or non-core gains and losses.

We define Adjusted EBITDA as net income (loss) adjusted to exclude the impact of non-cash charges for share-based compensation, special bonuses and other compensation expense, transaction-related costs and adjustments, restructuring and transformation charges, costs related to the Hosted Exchange incident, costs related to the closure of a UK office, certain other non-operating, non-recurring or non-core gains and losses, interest expense, expenses for our accounts receivable purchase agreement, income taxes, depreciation and amortization, and goodwill and asset impairment charges.

Non-GAAP Operating Profit and Adjusted EBITDA are management's principal metrics for measuring our underlying financial performance. Non-GAAP Operating Profit and Adjusted EBITDA, along with other quantitative and qualitative information, are also the principal financial measures used by management and our board of directors in determining performance-based compensation for our management and key employees.

These non-GAAP measures are not intended to imply that we would have generated higher income or avoided net losses if the November 2016 merger and the subsequent transactions and initiatives had not occurred. In the future we may incur expenses or charges such as those added back to calculate Non-GAAP Net Income (Loss), Non-GAAP Operating Profit or Adjusted EBITDA. Our presentation of Non-GAAP Net Income (Loss), Non-GAAP Operating Profit and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these items. Other companies, including our peer companies, may calculate similarly-titled measures in a different manner from us, and therefore, our non-GAAP measures may not be comparable to similarly-titled measures of other companies. Investors are cautioned against using these measures to the exclusion of our results in accordance with GAAP.

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Net income (loss) reconciliation to Non-GAAP Net Loss

			Three Months Ended June 30,												Six Months Ended June 30,
(In millions)			2023						2024						2023						2024
Net income (loss)			$	(27.2)					$	25.0					$	(639.2)					$	(615.6)
Share-based compensation expense			19.5						19.5						34.7						32.3
Special bonuses and other compensation expense (a)			4.2						3.3						6.4						6.4
Transaction-related adjustments, net (b)			1.2						1.6						2.5						2.6
Restructuring and transformation expenses (c)			23.1						13.7						48.7						33.7
Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage			1.7						(0.1)						4.9						0.1
Impairment of goodwill			—						—						543.1						573.2
UK office closure (d)			12.1						—						12.1						—
Impairment of assets, net			—						—						—						20.0
Net gain on divestiture and investments (e)			(0.1)						—						(0.2)						(0.1)
Debt modification costs and gain on debt extinguishment			(94.9)						(72.5)						(107.7)						(129.2)
Interest expense impact from the Refinancing Transactions (f)			—						(25.6)						—						(25.6)
Other adjustments (g)			(0.2)						0.1						(2.3)						0.5
Amortization of intangible assets (h)			41.0						38.6						81.9						77.3
Tax effect of non-GAAP adjustments (i)			6.1						(23.0)						(3.1)						(19.3)
Non-GAAP Net Loss			$	(13.5)					$	(19.4)					$	(18.2)					$	(43.7)

Loss from operations reconciliation to Non-GAAP Operating Profit

			Three Months Ended June 30,												Six Months Ended June 30,
(In millions)			2023						2024						2023						2024
Loss from operations			$	(63.8)					$	(53.8)					$	(644.8)					$	(706.6)
Share-based compensation expense			19.5						19.5						34.7						32.3
Special bonuses and other compensation expense (a)			4.2						3.3						6.4						6.4
Transaction-related adjustments, net (b)			1.2						1.6						2.5						2.6
Restructuring and transformation expenses (c)			23.1						13.7						48.7						33.7
Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage			1.7						(0.1)						4.9						0.1
Impairment of goodwill			—						—						543.1						573.2
Impairment of assets, net			—						—						—						20.0
Amortization of intangible assets (h)			41.0						38.6						81.9						77.3
UK office closure (d)			12.1						—						12.1						—
Non-GAAP Operating Profit			$	39.0					$	22.8					$	89.5					$	39.0

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Net income (loss) reconciliation to Adjusted EBITDA

			Three Months Ended June 30,												Six Months Ended June 30,
(In millions)			2023						2024						2023						2024
Net income (loss)			$	(27.2)					$	25.0					$	(639.2)					$	(615.6)
Share-based compensation expense			19.5						19.5						34.7						32.3
Special bonuses and other compensation expense (a)			4.2						3.3						6.4						6.4
Transaction-related adjustments, net (b)			1.2						1.6						2.5						2.6
Restructuring and transformation expenses (c)			23.1						13.7						48.7						33.7
Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage			1.7						(0.1)						4.9						0.1
Impairment of goodwill			—						—						543.1						573.2
UK office closure (d)			12.1						—						12.1						—
Impairment of assets, net			—						—						—						20.0
Net gain on divestiture and investments (e)			(0.1)						—						(0.2)						(0.1)
Debt modification costs and gain on debt extinguishment			(94.9)						(72.5)						(107.7)						(129.2)
Other (income) expense, net (j)			(0.2)						5.2						(2.3)						10.8
Interest expense			57.3						18.4						114.2						62.1
Provision (benefit) for income taxes			1.3						(29.9)						(9.6)						(34.6)
Depreciation and amortization (k)			95.5						73.4						189.1						148.3
Adjusted EBITDA			$	93.5					$	57.6					$	196.7					$	110.0

(a)			Includes expense related to retention bonuses, mainly relating to restructuring and integration projects, and the related payroll tax, senior executive signing bonuses and relocation costs, and payroll taxes associated with the exercise of stock options and vesting of restricted stock. Beginning in the second quarter of 2023, includes expense related to the one-time grant of long-term incentive bonuses as a component of our annual compensation award process.
(b)			Includes legal, professional, accounting and other advisory fees related to acquisitions, certain one-time compliance costs related to being a public company, integration costs of acquired businesses, purchase accounting adjustments, payroll costs for employees that dedicate significant time to supporting these projects and exploratory acquisition and divestiture costs and expenses related to financing activities.
(c)			Includes consulting and advisory fees related to business transformation and optimization activities, payroll costs for employees that dedicate significant time to these projects, as well as associated severance, certain facility closure costs, and lease termination expenses. The six months ended June 30, 2024 also includes a $9.0 million MEIA early termination fee associated with the sale of our corporate headquarters in March 2024.
(d)			Expense recognized related to the closure of a UK office that we exited in the second quarter of 2023 prior to the lease end date.
(e)			Includes gains and losses on investment and from dispositions.
(f)			Interest expense impact due to the accounting for contractual interest payments on debt instruments entered into as part of the March 2024 Refinancing Transactions, which reduced interest expense relative to contractual interest cost.
(g)			Primarily consists of foreign currency gains and losses.
(h)			All of our intangible assets are attributable to acquisitions, including the November 2016 merger.
(i)			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, audit conclusions and changes to valuation allowances. When computing this long-term rate for the 2023 and 2024 interim periods, we based it on an average of the 2022 and estimated 2023 tax rates and 2023 and estimated 2024 tax rates, respectively, recomputed to remove the tax effect of non-GAAP pre-tax adjustments and non-recurring tax adjustments, resulting in a structural non-GAAP tax rate of 26% for all periods. The non-GAAP tax rate could be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix including due to acquisition activity, or other changes to our strategy or business operations. We will re-evaluate our long-term non-GAAP tax rate as appropriate. We believe that making these adjustments facilitates a better evaluation of our current operating performance and comparisons to prior periods.
(j)			Primarily consists of foreign currency gains and losses and expense related to our accounts receivable purchase agreement.
(k)			Excludes accelerated depreciation expense related to facility closures.

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Non-GAAP Earnings (Loss) Per Share

We define Non-GAAP Earnings (Loss) Per Share as Non-GAAP Net Income (Loss) divided by our GAAP weighted average number of shares outstanding for the period on a diluted basis and further adjusted for the weighted average number of shares associated with securities which are anti-dilutive to GAAP loss per share but dilutive to Non-GAAP Earnings (Loss) Per Share. Management uses Non-GAAP Earnings (Loss) Per Share to evaluate the performance of our business on a comparable basis from period to period, including by adjusting for the impact of the issuance of shares that would be dilutive to Non-GAAP Earnings (Loss) Per Share.

			Three Months Ended June 30,												Six Months Ended June 30,
(In millions, except per share amounts)			2023						2024						2023						2024
Net income (loss) attributable to common stockholders			$	(27.2)					$	25.0					$	(639.2)					$	(615.6)
Non-GAAP Net Loss			$	(13.5)					$	(19.4)					$	(18.2)					$	(43.7)
Weighted average number of shares - Diluted			215.1						229.6						214.2						222.2
Effect of dilutive securities (a)			1.2						—						1.4						7.3
Non-GAAP weighted average number of shares - Diluted			216.3						229.6						215.6						229.5
Net earnings (loss) per share - Diluted			$	(0.13)					$	0.11					$	(2.98)					$	(2.77)
Per share impacts of adjustments to net income (loss) (b)			0.06						(0.19)						2.90						2.57
Per share impacts of shares dilutive after adjustments to net income (loss) (a)			0.01						0.00						0.00						0.01
Non-GAAP Earnings (Loss) Per Share			$	(0.06)					$	(0.08)					$	(0.08)					$	(0.19)

(a)			Reflects impact of awards that would have been anti-dilutive to net loss per share, and therefore not included in the calculation, but would be dilutive to Non-GAAP Earnings (Loss) Per Share and are therefore included in the share count for purposes of this non-GAAP measure. Potential common share equivalents consist of shares issuable upon the exercise of stock options, vesting of restricted stock units (including performance-based restricted stock units) or purchases under the Employee Stock Purchase Plan (the "ESPP"), as well as contingent shares associated with our acquisition of Datapipe Parent, Inc. Certain of our potential common share equivalents are contingent on Apollo achieving pre-established performance targets based on a multiple of their invested capital ("MOIC"), which are included in the denominator for the entire period if such shares would be issuable as of the end of the reporting period assuming the end of the reporting period was the end of the contingency period.
(b)			Reflects the aggregate adjustments made to reconcile Non-GAAP Net Income (Loss) to our net income (loss), as noted in the above table, divided by the GAAP diluted number of shares outstanding for the relevant period.

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Cover	Aug. 08, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	Aug. 08, 2024
Entity Registrant Name	RACKSPACE TECHNOLOGY, INC.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-39420
Entity Tax Identification Number	81-3369925
Entity Address, Address Line One	19122 US Highway 281N
Entity Address, Address Line Two	Suite 128
Entity Address, City or Town	San Antonio
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78258
City Area Code	800
Local Phone Number	961-4454
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	RXT
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0001810019
Amendment Flag	false

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