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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Rackspace Hosting, (delisted) | NYSE:RAX | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 31.99 | 0 | 01:00:00 |
Delaware | 74-3016523 | |
(State or other jurisdiction of | (IRS Employer | |
incorporation) | Identification No.) |
Rackspace Hosting, Inc. | |||
Date: | February 16, 2016 | By: | /s/ Karl Pichler |
Karl Pichler | |||
Chief Financial Officer and Treasurer |
Exhibit No. | Description | |
EX-99.1 | Press Release of Rackspace Hosting, Inc., dated February 16, 2016, reporting financial results for the fourth quarter of 2015 and the year ended December 31, 2015. |
• | Rackspace launched support for Amazon Web Services (AWS), Microsoft's private cloud, Azure public cloud, and Microsoft Office 365. These strategic moves open up huge and fast-growing new markets, and strongly differentiate Rackspace as the only company that can provide expertise and service for the world's leading clouds. |
• | Since the October launch of Rackspace Fanatical Support for AWS, Rackspace has already secured 100 customers, while its technical support team has collectively earned more than 230 AWS technical certifications and more than 1,100 business and technical accreditations. |
• | Capital efficiency initiatives helped Rackspace reduce capital expenditures to 23 percent of revenue, and the company’s Adjusted Free Cash Flow rose to $196 million for 2015. |
• | Rackspace shared its increased Adjusted Free Cash Flow with stockholders through a major share buyback that is still underway. |
• | Rackspace hired key leadership talent. The company’s new global sales and marketing leader, Alex Pinchev, brings deep experience and proven success in the technology industry, including as a senior executive at Red Hat. Brian Stein, Rackspace’s new head of global engineering who joined in January 2016, commands great respect in the technology industry for his innovative work at Red Hat and Puppet Labs. |
Investor Relations: | Media Relations: |
Jessica Drought | Brandon Brunson |
210-312-4191 | 210-312-1357 |
jessica.drought@rackspace.com | brandon.brunson@rackspace.com |
Three Months Ended | Year Ended | |||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||
(In millions, except per share data) | December 31, 2014 | September 30, 2015 | December 31, 2015 | December 31, 2014 | December 31, 2015 | |||||||||||||||
Net revenue | $ | 472.5 | $ | 508.9 | $ | 522.8 | $ | 1,794.4 | $ | 2,001.3 | ||||||||||
Costs and expenses: | ||||||||||||||||||||
Cost of revenue | 153.9 | 171.2 | 179.1 | 582.3 | 675.5 | |||||||||||||||
Research and development | 31.4 | 29.9 | 29.8 | 117.0 | 124.9 | |||||||||||||||
Sales and marketing | 59.2 | 61.8 | 58.3 | 237.6 | 243.5 | |||||||||||||||
General and administrative | 82.8 | 88.2 | 90.1 | 322.1 | 351.4 | |||||||||||||||
Depreciation and amortization | 95.2 | 101.3 | 104.0 | 371.9 | 399.9 | |||||||||||||||
Total costs and expenses | 422.5 | 452.4 | 461.3 | 1,630.9 | 1,795.2 | |||||||||||||||
Income from operations | 50.0 | 56.5 | 61.5 | 163.5 | 206.1 | |||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense | (0.4 | ) | (2.8 | ) | (6.2 | ) | (1.9 | ) | (11.3 | ) | ||||||||||
Interest and other income (expense) | (0.3 | ) | (1.1 | ) | 0.5 | (2.0 | ) | (1.2 | ) | |||||||||||
Total other income (expense) | (0.7 | ) | (3.9 | ) | (5.7 | ) | (3.9 | ) | (12.5 | ) | ||||||||||
Income before income taxes | 49.3 | 52.6 | 55.8 | 159.6 | 193.6 | |||||||||||||||
Income taxes | 12.3 | 16.1 | 23.7 | 49.0 | 67.4 | |||||||||||||||
Net income | $ | 37.0 | $ | 36.5 | $ | 32.1 | $ | 110.6 | $ | 126.2 | ||||||||||
Net income per share | ||||||||||||||||||||
Basic | $ | 0.26 | $ | 0.26 | $ | 0.24 | $ | 0.78 | $ | 0.91 | ||||||||||
Diluted | $ | 0.26 | $ | 0.26 | $ | 0.24 | $ | 0.77 | $ | 0.90 | ||||||||||
Weighted average number of shares outstanding | ||||||||||||||||||||
Basic | 141.8 | 139.0 | 133.3 | 142.0 | 139.0 | |||||||||||||||
Diluted | 144.5 | 140.6 | 134.2 | 144.5 | 141.0 |
(In millions) | December 31, 2014 | December 31, 2015 | |||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 213.5 | $ | 484.7 | |||
Accounts receivable, net of allowance for doubtful accounts and customer credits of $5.3 as of December 31, 2014 and $7.3 as of December 31, 2015 | 156.5 | 174.4 | |||||
Prepaid expenses | 33.6 | 46.6 | |||||
Other current assets | 8.8 | 12.7 | |||||
Total current assets | 412.4 | 718.4 | |||||
Property and equipment, net | 1,057.7 | 1,148.0 | |||||
Goodwill | 81.1 | 81.1 | |||||
Intangible assets, net | 16.6 | 9.1 | |||||
Other non-current assets (1) | 48.3 | 57.6 | |||||
Total assets | $ | 1,616.1 | $ | 2,014.2 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 137.3 | $ | 136.3 | |||
Accrued compensation and benefits | 66.7 | 57.3 | |||||
Income and other taxes payable | 11.8 | 12.0 | |||||
Deferred revenue | 20.9 | 29.6 | |||||
Capital lease obligations | 15.0 | 1.7 | |||||
Debt | 25.1 | — | |||||
Total current liabilities | 276.8 | 236.9 | |||||
Non-current liabilities: | |||||||
Deferred revenue | 1.4 | 1.6 | |||||
Capital lease obligations (2) | 1.5 | 0.2 | |||||
Finance lease obligations for build-to-suit leases (2) | 117.4 | 164.3 | |||||
Debt | — | 492.4 | |||||
Deferred income taxes (1) | 63.0 | 60.0 | |||||
Deferred rent | 49.9 | 49.5 | |||||
Other liabilities | 32.3 | 32.8 | |||||
Total liabilities | 542.3 | 1,037.7 | |||||
Commitments and Contingencies | |||||||
Stockholders' equity: | |||||||
Common stock | 0.1 | 0.1 | |||||
Additional paid-in capital | 696.0 | 834.5 | |||||
Accumulated other comprehensive loss | (20.7 | ) | (36.2 | ) | |||
Retained earnings | 398.4 | 178.1 | |||||
Total stockholders’ equity | 1,073.8 | 976.5 | |||||
Total liabilities and stockholders’ equity | $ | 1,616.1 | $ | 2,014.2 |
(1) | December 31, 2014 amounts have been revised to reflect the impact of the adoption of accounting guidance related to balance sheet classification of deferred taxes to conform to the current period presentation. |
(2) | December 31, 2014 amounts have been revised to reflect the impact of a reclassification of certain finance obligations associated with build-to-suit leases to conform to the current period presentation. |
Three Months Ended | Year Ended | ||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||
(in millions) | December 31, 2014 | September 30, 2015 | December 31, 2015 | December 31, 2014 | December 31, 2015 | ||||||||||||||
Cash Flows From Operating Activities | |||||||||||||||||||
Net income | $ | 37.0 | $ | 36.5 | $ | 32.1 | $ | 110.6 | $ | 126.2 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 95.2 | 101.3 | 104.0 | 371.9 | 399.9 | ||||||||||||||
Deferred income taxes | 30.5 | (5.0 | ) | 30.1 | 0.4 | (4.0 | ) | ||||||||||||
Share-based compensation expense | 20.2 | 19.6 | 18.1 | 70.0 | 78.1 | ||||||||||||||
Excess tax benefits from share-based compensation arrangements | 10.8 | (12.7 | ) | 2.9 | (34.5 | ) | (48.6 | ) | |||||||||||
Other operating activities | 2.4 | 2.1 | 2.7 | 8.2 | 9.8 | ||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||
Accounts receivable | (26.0 | ) | (18.0 | ) | (2.0 | ) | (41.7 | ) | (28.3 | ) | |||||||||
Prepaid expenses and other current assets | 16.1 | (17.8 | ) | 7.9 | (1.1 | ) | (17.2 | ) | |||||||||||
Accounts payable, accrued expenses, and other current liabilities | (38.5 | ) | 2.8 | 3.5 | 55.4 | 49.2 | |||||||||||||
Deferred revenue | 1.3 | 2.5 | (0.4 | ) | (3.7 | ) | 9.1 | ||||||||||||
Deferred rent | 1.1 | — | 0.1 | 7.4 | 0.1 | ||||||||||||||
Other non-current assets and liabilities | 0.8 | 0.1 | 5.0 | (0.4 | ) | 9.3 | |||||||||||||
Net cash provided by operating activities | 150.9 | 111.4 | 204.0 | 542.5 | 583.6 | ||||||||||||||
Cash Flows From Investing Activities | |||||||||||||||||||
Purchases of property and equipment | (107.2 | ) | (134.7 | ) | (143.0 | ) | (430.3 | ) | (474.9 | ) | |||||||||
All other investing activities | 0.3 | (6.0 | ) | 0.1 | 2.2 | (4.5 | ) | ||||||||||||
Net cash used in investing activities | (106.9 | ) | (140.7 | ) | (142.9 | ) | (428.1 | ) | (479.4 | ) | |||||||||
Cash Flows From Financing Activities | |||||||||||||||||||
Proceeds from debt | 25.0 | 140.0 | 500.0 | 25.0 | 640.0 | ||||||||||||||
Repayments of debt | (0.1 | ) | — | (140.0 | ) | (1.9 | ) | (165.1 | ) | ||||||||||
Payments for debt issuance costs | — | — | (8.3 | ) | — | (8.3 | ) | ||||||||||||
Proceeds from finance lease obligations for build-to-suit leases | — | 2.5 | 3.7 | — | 6.2 | ||||||||||||||
Principal payments of capital and build-to-suit leases | (7.2 | ) | (3.3 | ) | (1.7 | ) | (39.7 | ) | (15.0 | ) | |||||||||
Payments for deferred acquisition obligations | — | (0.1 | ) | — | (0.2 | ) | (0.2 | ) | |||||||||||
Receipt of Texas Enterprise Fund grant | — | — | — | 5.5 | — | ||||||||||||||
Repurchase of common stock | (200.0 | ) | (250.1 | ) | (116.9 | ) | (200.0 | ) | (367.0 | ) | |||||||||
Shares of common stock withheld for employee taxes | — | — | — | (13.6 | ) | — | |||||||||||||
Proceeds from employee stock plans | 15.1 | 0.7 | 3.1 | 33.1 | 32.3 | ||||||||||||||
Excess tax benefits from share-based compensation arrangements | (10.8 | ) | 12.7 | (2.9 | ) | 34.5 | 48.6 | ||||||||||||
Net cash provided by (used in) financing activities | (178.0 | ) | (97.6 | ) | 237.0 | (157.3 | ) | 171.5 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | (2.0 | ) | (1.2 | ) | (2.4 | ) | (3.3 | ) | (4.5 | ) | |||||||||
Increase (decrease) in cash and cash equivalents | (136.0 | ) | (128.1 | ) | 295.7 | (46.2 | ) | 271.2 | |||||||||||
Cash and cash equivalents, beginning of period | 349.5 | 317.1 | 189.0 | 259.7 | 213.5 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 213.5 | $ | 189.0 | $ | 484.7 | $ | 213.5 | $ | 484.7 | |||||||||
Supplemental Cash Flow Information | |||||||||||||||||||
Non-cash purchases of property and equipment (1) | $ | (2.6 | ) | $ | (7.0 | ) | $ | (46.5 | ) | $ | 4.8 | $ | (8.9 | ) |
(1) | Non-cash purchases of property and equipment primarily represents changes in amounts accrued but not yet paid. |
Key Metrics - Quarter to Date (Unaudited) | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
(Dollar amounts in millions, except average monthly revenue per server) | December 31, 2014 | March 31, 2015 | June 30, 2015 | September 30, 2015 | December 31, 2015 | ||||||||||||||
Growth | |||||||||||||||||||
Net revenue | $ | 472.5 | $ | 480.2 | $ | 489.4 | $ | 508.9 | $ | 522.8 | |||||||||
Revenue growth (year over year) | 15.8 | % | 14.1 | % | 11.0 | % | 10.7 | % | 10.7 | % | |||||||||
Constant currency revenue growth (year over year) | 16.4 | % | 16.6 | % | 13.7 | % | 12.9 | % | 12.0 | % | |||||||||
Number of employees (Rackers) at period end | 5,936 | 5,964 | 6,115 | 6,177 | 6,189 | ||||||||||||||
Number of servers deployed at period end (1) | 112,628 | 114,105 | 116,329 | 118,654 | 118,177 | ||||||||||||||
Average monthly revenue per server | $ | 1,412 | $ | 1,412 | $ | 1,416 | $ | 1,444 | $ | 1,472 | |||||||||
Profitability | |||||||||||||||||||
Income from operations | $ | 50.0 | $ | 44.4 | $ | 43.7 | $ | 56.5 | $ | 61.5 | |||||||||
Depreciation and amortization | $ | 95.2 | $ | 96.9 | $ | 97.7 | $ | 101.3 | $ | 104.0 | |||||||||
Share-based compensation expense | $ | 20.2 | $ | 20.0 | $ | 20.4 | $ | 19.6 | $ | 18.1 | |||||||||
Adjusted EBITDA (2) | $ | 165.4 | $ | 161.3 | $ | 161.8 | $ | 177.4 | $ | 183.6 | |||||||||
Adjusted EBITDA margin | 35.0 | % | 33.6 | % | 33.1 | % | 34.9 | % | 35.1 | % | |||||||||
Operating income margin | 10.6 | % | 9.3 | % | 8.9 | % | 11.1 | % | 11.8 | % | |||||||||
Income from operations | $ | 50.0 | $ | 44.4 | $ | 43.7 | $ | 56.5 | $ | 61.5 | |||||||||
Adjustment for build-to-suit lease impact (3) | $ | — | $ | — | $ | (0.4 | ) | $ | (1.1 | ) | $ | (2.3 | ) | ||||||
Income from operations, adjusted | $ | 50.0 | $ | 44.4 | $ | 43.3 | $ | 55.4 | $ | 59.2 | |||||||||
Effective tax rate | 25.1 | % | 32.4 | % | 32.4 | % | 30.6 | % | 42.5 | % | |||||||||
Net operating profit after tax (NOPAT) (2) | $ | 37.5 | $ | 30.0 | $ | 29.3 | $ | 38.4 | $ | 34.0 | |||||||||
NOPAT margin | 7.9 | % | 6.3 | % | 6.0 | % | 7.6 | % | 6.5 | % | |||||||||
Capital efficiency and returns | |||||||||||||||||||
Interest bearing debt (4) (5) | $ | 41.6 | $ | 10.8 | $ | 6.9 | $ | 143.6 | $ | 501.9 | |||||||||
Stockholders' equity | $ | 1,073.8 | $ | 1,152.9 | $ | 1,240.3 | $ | 1,049.4 | $ | 976.5 | |||||||||
Less: Excess cash | $ | (156.8 | ) | $ | (218.1 | ) | $ | (258.4 | ) | $ | (128.0 | ) | $ | (422.0 | ) | ||||
Capital base (4) | $ | 958.6 | $ | 945.6 | $ | 988.8 | $ | 1,065.0 | $ | 1,056.4 | |||||||||
Average capital base (4) | $ | 956.0 | $ | 952.1 | $ | 967.2 | $ | 1,027.0 | $ | 1,060.7 | |||||||||
Capital turnover (annualized) (4) | 1.98 | 2.02 | 2.02 | 1.98 | 1.97 | ||||||||||||||
Return on capital (annualized) (2) (4) | 15.7 | % | 12.6 | % | 12.1 | % | 15.0 | % | 12.8 | % | |||||||||
Key Metrics - Quarter to Date (Unaudited) | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
(Dollar amounts in millions, except average monthly revenue per server) | December 31, 2014 | March 31, 2015 | June 30, 2015 | September 30, 2015 | December 31, 2015 | ||||||||||||||
Capital expenditures | |||||||||||||||||||
Cash purchases of property and equipment | $ | 107.2 | $ | 92.5 | $ | 104.7 | $ | 134.7 | $ | 143.0 | |||||||||
Non-cash purchases of property and equipment (6) | $ | (2.6 | ) | $ | (2.3 | ) | $ | 46.9 | $ | (7.0 | ) | $ | (46.5 | ) | |||||
Total capital expenditures | $ | 104.6 | $ | 90.2 | $ | 151.6 | $ | 127.7 | $ | 96.5 | |||||||||
Customer gear | $ | 72.5 | $ | 58.7 | $ | 117.3 | $ | 87.1 | $ | 61.8 | |||||||||
Data center build outs | $ | 11.1 | $ | 13.4 | $ | 15.8 | $ | 18.8 | $ | 10.6 | |||||||||
Office build outs | $ | 1.6 | $ | 2.3 | $ | 3.3 | $ | 6.1 | $ | 7.8 | |||||||||
Capitalized software and other projects | $ | 19.4 | $ | 15.8 | $ | 15.2 | $ | 15.7 | $ | 16.3 | |||||||||
Total capital expenditures | $ | 104.6 | $ | 90.2 | $ | 151.6 | $ | 127.7 | $ | 96.5 | |||||||||
Infrastructure capacity and utilization | |||||||||||||||||||
Megawatts under contract at period end (7) | 58.1 | 63.2 | 63.6 | 63.6 | 62.2 | ||||||||||||||
Megawatts available for customer use at period end (8) | 49.7 | 52.0 | 54.1 | 55.3 | 54.4 | ||||||||||||||
Megawatts utilized at period end | 30.5 | 31.0 | 31.6 | 32.7 | 32.2 | ||||||||||||||
Annualized net revenue per average Megawatt of power utilized | $ | 62.6 | $ | 62.5 | $ | 62.5 | $ | 63.3 | $ | 64.5 |
(1) | During the fourth quarter of 2015, we decommissioned approximately 2,400 servers in order to replace older, less efficient gear and also as part of the migration of customers from existing data centers to our new London data center. |
(2) | See discussion and reconciliation of our Non-GAAP financial measures to the most comparable GAAP measures. |
(3) | Reflects additional expense we would have expected to record if our build-to-suit lease arrangements had been deemed operating leases instead of finance lease obligations for build-to-suit leases. Calculated as the excess of estimated straight-line rent expense over actual depreciation expense for completed real estate projects under build-to-suit lease arrangements. |
(4) | In the first quarter of 2015, we reclassified certain finance obligations associated with build-to-suit leases in the consolidated balance sheets. Prior period amounts have been revised to reflect the impact of this reclassification. |
(5) | Includes the outstanding principal amount of debt and capital lease obligations. |
(6) | Non-cash purchases of property and equipment primarily represents changes in amounts accrued but not yet paid. |
(7) | Megawatts under contract at period end represents data center capacity for which we have a contract enabling us to take control of the space. For our newest data center in London, beginning March 31, 2015, we have included four megawatts. |
(8) | Megawatts available for customer use at period end represents data center capacity that is built-out and is being used to provide service to customers. |
Key Metrics - Year to Date (Unaudited) | |||||||
Year Ended December 31, | |||||||
(Dollar amounts in millions, except average monthly revenue per server) | 2014 | 2015 | |||||
Growth | |||||||
Net revenue | $ | 1,794.4 | $ | 2,001.3 | |||
Revenue growth (year over year) | 16.9 | % | 11.5 | % | |||
Constant currency revenue growth (year over year) | 15.5 | % | 13.7 | % | |||
Number of employees (Rackers) at period end | 5,936 | 6,189 | |||||
Number of servers deployed at period end | 112,628 | 118,177 | |||||
Average monthly revenue per server | $ | 1,382 | $ | 1,438 | |||
Profitability | |||||||
Income from operations | $ | 163.5 | $ | 206.1 | |||
Depreciation and amortization | $ | 371.9 | $ | 399.9 | |||
Share-based compensation expense | $ | 70.0 | $ | 78.1 | |||
Adjusted EBITDA (1) | $ | 605.4 | $ | 684.1 | |||
Adjusted EBITDA margin | 33.7 | % | 34.2 | % | |||
Operating income margin | 9.1 | % | 10.3 | % | |||
Income from operations | $ | 163.5 | $ | 206.1 | |||
Adjustment for build-to-suit lease impact (2) | $ | — | $ | (3.8 | ) | ||
Income from operations, adjusted | $ | 163.5 | $ | 202.3 | |||
Effective tax rate | 30.7 | % | 34.8 | % | |||
Net operating profit after tax (NOPAT) (1) | $ | 113.3 | $ | 131.9 | |||
NOPAT margin | 6.3 | % | 6.6 | % | |||
Capital efficiency and returns | |||||||
Interest bearing debt (3) (4) | $ | 41.6 | $ | 501.9 | |||
Stockholders' equity | $ | 1,073.8 | $ | 976.5 | |||
Less: Excess cash | $ | (156.8 | ) | $ | (422.0 | ) | |
Capital base (3) | $ | 958.6 | $ | 1,056.4 | |||
Average capital base (3) | $ | 923.1 | $ | 1,002.9 | |||
Capital turnover (3) | 1.94 | 2.00 | |||||
Return on capital (1) (3) | 12.3 | % | 13.2 | % | |||
Key Metrics - Year to Date (Unaudited) | |||||||
Year Ended December 31, | |||||||
(Dollar amounts in millions, except average monthly revenue per server) | 2014 | 2015 | |||||
Capital expenditures | |||||||
Cash purchases of property and equipment | $ | 430.3 | $ | 474.9 | |||
Non-cash purchases of property and equipment (5) | $ | 4.8 | $ | (8.9 | ) | ||
Total capital expenditures | $ | 435.1 | $ | 466.0 | |||
Customer gear | $ | 276.6 | $ | 324.9 | |||
Data center build outs | $ | 50.6 | $ | 58.6 | |||
Office build outs | $ | 21.2 | $ | 19.5 | |||
Capitalized software and other projects | $ | 86.7 | $ | 63.0 | |||
Total capital expenditures | $ | 435.1 | $ | 466.0 | |||
Infrastructure capacity and utilization | |||||||
Megawatts under contract at period end (6) | 58.1 | 62.2 | |||||
Megawatts available for customer use at period end (7) | 49.7 | 54.4 | |||||
Megawatts utilized at period end | 30.5 | 32.2 | |||||
Net revenue per average Megawatt of power utilized | $ | 61.9 | $ | 63.3 |
(1) | See discussion and reconciliation of our Non-GAAP financial measures to the most comparable GAAP measures. |
(2) | Reflects additional expense we would have expected to record if our build-to-suit lease arrangements had been deemed operating leases instead of finance lease obligations for build-to-suit leases. Calculated as the excess of estimated straight-line rent expense over actual depreciation expense for completed real estate projects under build-to-suit lease arrangements. |
(3) | In the first quarter of 2015, we reclassified certain finance obligations associated with build-to-suit leases in the consolidated balance sheets. Prior period amounts have been revised to reflect the impact of this reclassification. |
(4) | Includes the outstanding principal amount of debt and capital lease obligations. |
(5) | Non-cash purchases of property and equipment primarily represents changes in amounts accrued but not yet paid. |
(6) | Megawatts under contract at period end represents data center capacity for which we have a contract enabling us to take control of the space. For our newest data center in London, beginning March 31, 2015, we have included four megawatts. |
(7) | Megawatts available for customer use at period end represents data center capacity that is built-out and is being used to provide service to customers. |
Three Months Ended | |||||||||||||||||||
(In millions) | December 31, 2014 | March 31, 2015 | June 30, 2015 | September 30, 2015 | December 31, 2015 | ||||||||||||||
Net revenue | $ | 472.5 | $ | 480.2 | $ | 489.4 | $ | 508.9 | $ | 522.8 | |||||||||
Costs and expenses: | |||||||||||||||||||
Cost of revenue | 153.9 | 161.3 | 163.9 | 171.2 | 179.1 | ||||||||||||||
Research and development | 31.4 | 32.0 | 33.2 | 29.9 | 29.8 | ||||||||||||||
Sales and marketing | 59.2 | 59.0 | 64.4 | 61.8 | 58.3 | ||||||||||||||
General and administrative | 82.8 | 86.6 | 86.5 | 88.2 | 90.1 | ||||||||||||||
Depreciation and amortization | 95.2 | 96.9 | 97.7 | 101.3 | 104.0 | ||||||||||||||
Total costs and expenses | 422.5 | 435.8 | 445.7 | 452.4 | 461.3 | ||||||||||||||
Income from operations | 50.0 | 44.4 | 43.7 | 56.5 | 61.5 | ||||||||||||||
Other income (expense): | |||||||||||||||||||
Interest expense | (0.4 | ) | (0.4 | ) | (1.9 | ) | (2.8 | ) | (6.2 | ) | |||||||||
Interest and other income (expense) | (0.3 | ) | (2.0 | ) | 1.4 | (1.1 | ) | 0.5 | |||||||||||
Total other income (expense) | (0.7 | ) | (2.4 | ) | (0.5 | ) | (3.9 | ) | (5.7 | ) | |||||||||
Income before income taxes | 49.3 | 42.0 | 43.2 | 52.6 | 55.8 | ||||||||||||||
Income taxes | 12.3 | 13.6 | 14.0 | 16.1 | 23.7 | ||||||||||||||
Net income | $ | 37.0 | $ | 28.4 | $ | 29.2 | $ | 36.5 | $ | 32.1 | |||||||||
Three Months Ended | |||||||||||||||||||
(Percent of net revenue) | December 31, 2014 | March 31, 2015 | June 30, 2015 | September 30, 2015 | December 31, 2015 | ||||||||||||||
Net revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
Costs and expenses: | |||||||||||||||||||
Cost of revenue | 32.6 | % | 33.6 | % | 33.5 | % | 33.7 | % | 34.3 | % | |||||||||
Research and development | 6.6 | % | 6.7 | % | 6.8 | % | 5.9 | % | 5.7 | % | |||||||||
Sales and marketing | 12.5 | % | 12.3 | % | 13.2 | % | 12.1 | % | 11.2 | % | |||||||||
General and administrative | 17.5 | % | 18.0 | % | 17.7 | % | 17.3 | % | 17.2 | % | |||||||||
Depreciation and amortization | 20.2 | % | 20.2 | % | 20.0 | % | 19.9 | % | 19.9 | % | |||||||||
Total costs and expenses | 89.4 | % | 90.7 | % | 91.1 | % | 88.9 | % | 88.2 | % | |||||||||
Income from operations | 10.6 | % | 9.3 | % | 8.9 | % | 11.1 | % | 11.8 | % | |||||||||
Other income (expense): | |||||||||||||||||||
Interest expense | (0.1 | )% | (0.1 | )% | (0.4 | )% | (0.5 | )% | (1.2 | )% | |||||||||
Interest and other income (expense) | (0.1 | )% | (0.4 | )% | 0.3 | % | (0.2 | )% | 0.1 | % | |||||||||
Total other income (expense) | (0.1 | )% | (0.5 | )% | (0.1 | )% | (0.8 | )% | (1.1 | )% | |||||||||
Income before income taxes | 10.4 | % | 8.8 | % | 8.8 | % | 10.3 | % | 10.7 | % | |||||||||
Income taxes | 2.6 | % | 2.8 | % | 2.9 | % | 3.2 | % | 4.5 | % | |||||||||
Net income | 7.8 | % | 5.9 | % | 6.0 | % | 7.2 | % | 6.1 | % | |||||||||
Due to rounding, totals may not equal the sum of the line items in the table above. |
Three Months Ended | |||||||||||||||||||
(In millions) | December 31, 2014 | March 31, 2015 | June 30, 2015 | September 30, 2015 | December 31, 2015 | ||||||||||||||
Net revenue | $ | 472.5 | $ | 480.2 | $ | 489.4 | $ | 508.9 | $ | 522.8 | |||||||||
Income from operations | $ | 50.0 | $ | 44.4 | $ | 43.7 | $ | 56.5 | $ | 61.5 | |||||||||
Net income | $ | 37.0 | $ | 28.4 | $ | 29.2 | $ | 36.5 | $ | 32.1 | |||||||||
Plus: Income taxes | 12.3 | 13.6 | 14.0 | 16.1 | 23.7 | ||||||||||||||
Plus: Total other (income) expense | 0.7 | 2.4 | 0.5 | 3.9 | 5.7 | ||||||||||||||
Plus: Depreciation and amortization | 95.2 | 96.9 | 97.7 | 101.3 | 104.0 | ||||||||||||||
Plus: Share-based compensation expense | 20.2 | 20.0 | 20.4 | 19.6 | 18.1 | ||||||||||||||
Adjusted EBITDA | $ | 165.4 | $ | 161.3 | $ | 161.8 | $ | 177.4 | $ | 183.6 | |||||||||
Operating income margin | 10.6 | % | 9.3 | % | 8.9 | % | 11.1 | % | 11.8 | % | |||||||||
Adjusted EBITDA margin | 35.0 | % | 33.6 | % | 33.1 | % | 34.9 | % | 35.1 | % |
Year Ended December 31, | |||||||
(In millions) | 2014 | 2015 | |||||
Net revenue | $ | 1,794.4 | $ | 2,001.3 | |||
Income from operations | $ | 163.5 | $ | 206.1 | |||
Net income | $ | 110.6 | $ | 126.2 | |||
Plus: Income taxes | 49.0 | 67.4 | |||||
Plus: Total other (income) expense | 3.9 | 12.5 | |||||
Plus: Depreciation and amortization | 371.9 | 399.9 | |||||
Plus: Share-based compensation expense | 70.0 | 78.1 | |||||
Adjusted EBITDA | $ | 605.4 | $ | 684.1 | |||
Operating income margin | 9.1 | % | 10.3 | % | |||
Adjusted EBITDA margin | 33.7 | % | 34.2 | % |
Three Months Ended | Year Ended | |||||||||||||||||||||||
(In millions) | Net Revenue | Foreign Currency Translation | Net Revenue in Constant Currency | Net Revenue | Foreign Currency Translation | Net Revenue in Constant Currency | ||||||||||||||||||
December 31, 2015 | $ | 522.8 | $ | 6.3 | $ | 529.1 | $ | 2,001.3 | $ | 39.1 | $ | 2,040.4 | ||||||||||||
December 31, 2014 | 472.5 | — | 472.5 | 1,794.4 | — | 1,794.4 | ||||||||||||||||||
Dollar change | $ | 50.3 | $ | 56.6 | $ | 206.9 | $ | 246.0 | ||||||||||||||||
Percent change | 10.7 | % | 12.0 | % | 11.5 | % | 13.7 | % | ||||||||||||||||
September 30, 2015 | $ | 508.9 | $ | 10.2 | $ | 519.1 | ||||||||||||||||||
September 30, 2014 | 459.7 | — | 459.7 | |||||||||||||||||||||
Dollar change | $ | 49.2 | $ | 59.4 | ||||||||||||||||||||
Percent change | 10.7 | % | 12.9 | % | ||||||||||||||||||||
June 30, 2015 | $ | 489.4 | $ | 12.1 | $ | 501.5 | ||||||||||||||||||
June 30, 2014 | 441.2 | — | 441.2 | |||||||||||||||||||||
Dollar change | $ | 48.2 | $ | 60.3 | ||||||||||||||||||||
Percent change | 11.0 | % | 13.7 | % | ||||||||||||||||||||
March 31, 2015 | $ | 480.2 | $ | 10.9 | $ | 491.1 | ||||||||||||||||||
March 31, 2014 | 421.0 | — | 421.0 | |||||||||||||||||||||
Dollar change | $ | 59.2 | $ | 70.1 | ||||||||||||||||||||
Percent change | 14.1 | % | 16.6 | % | ||||||||||||||||||||
December 31, 2014 | $ | 472.5 | $ | 2.6 | $ | 475.1 | $ | 1,794.4 | $ | (22.4 | ) | $ | 1,772.0 | |||||||||||
December 31, 2013 | 408.1 | — | 408.1 | 1,534.8 | — | 1,534.8 | ||||||||||||||||||
Dollar change | $ | 64.4 | $ | 67.0 | $ | 259.6 | $ | 237.2 | ||||||||||||||||
Percent change | 15.8 | % | 16.4 | % | 16.9 | % | 15.5 | % |
Three Months Ended | |||||||||||||||||||
(In millions) | December 31, 2014 | March 31, 2015 | June 30, 2015 | September 30, 2015 | December 31, 2015 | ||||||||||||||
Income from operations | $ | 50.0 | $ | 44.4 | $ | 43.7 | $ | 56.5 | $ | 61.5 | |||||||||
Adjustment for build-to-suit lease impact (1) | — | — | (0.4 | ) | (1.1 | ) | (2.3 | ) | |||||||||||
Income from operations, adjusted | $ | 50.0 | $ | 44.4 | $ | 43.3 | $ | 55.4 | $ | 59.2 | |||||||||
Effective tax rate | 25.1 | % | 32.4 | % | 32.4 | % | 30.6 | % | 42.5 | % | |||||||||
Net operating profit after tax (NOPAT) | $ | 37.5 | $ | 30.0 | $ | 29.3 | $ | 38.4 | $ | 34.0 | |||||||||
Net income | $ | 37.0 | $ | 28.4 | $ | 29.2 | $ | 36.5 | $ | 32.1 | |||||||||
Total assets at period end (2) | $ | 1,616.1 | $ | 1,685.4 | $ | 1,826.6 | $ | 1,749.2 | $ | 2,014.2 | |||||||||
Add: Unamortized debt issuance costs (3) | — | — | — | — | 7.6 | ||||||||||||||
Less: Excess cash (4) | (156.8 | ) | (218.1 | ) | (258.4 | ) | (128.0 | ) | (422.0 | ) | |||||||||
Less: Accounts payable and accrued expenses, accrued compensation and benefits, and income and other taxes payable | (215.8 | ) | (214.8 | ) | (256.4 | ) | (236.9 | ) | (205.6 | ) | |||||||||
Less: Deferred revenue (current and non-current) | (22.3 | ) | (26.1 | ) | (29.7 | ) | (31.8 | ) | (31.2 | ) | |||||||||
Less: Other non-current liabilities, deferred income taxes, deferred rent, and finance lease obligations for build-to-suit leases (2) (5) | (262.6 | ) | (280.8 | ) | (293.3 | ) | (287.5 | ) | (306.6 | ) | |||||||||
Capital base (5) | $ | 958.6 | $ | 945.6 | $ | 988.8 | $ | 1,065.0 | $ | 1,056.4 | |||||||||
Average total assets (2) | $ | 1,665.5 | $ | 1,650.7 | $ | 1,756.0 | $ | 1,787.9 | $ | 1,881.7 | |||||||||
Average capital base (5) | $ | 956.0 | $ | 952.1 | $ | 967.2 | $ | 1,027.0 | $ | 1,060.7 | |||||||||
Return on assets (annualized) (2) | 8.9 | % | 6.9 | % | 6.6 | % | 8.2 | % | 6.8 | % | |||||||||
Return on capital (annualized) (5) | 15.7 | % | 12.6 | % | 12.1 | % | 15.0 | % | 12.8 | % |
(1) | Reflects additional expense we would have expected to record if our build-to-suit lease arrangements had been deemed operating leases instead of finance lease obligations for build-to-suit leases. Calculated as the excess of estimated straight-line rent expense over actual depreciation expense for completed real estate projects under build-to-suit lease arrangements. |
(2) | In the fourth quarter of 2015, we elected to early adopt accounting guidance related to the balance sheet classification of deferred taxes. Prior period amounts have been revised to reflect the impact of this adoption. |
(3) | Amount recorded as a direct deduction from the carrying value of the long-term debt liability in the consolidated balance sheets. |
(4) | Defined as the amount of cash and cash equivalents that exceeds our operating cash requirements, which is calculated as three percent of our annualized net revenue for the three months prior to the period end. |
(5) | In the first quarter of 2015, we reclassified certain finance obligations associated with build-to-suit leases in the consolidated balance sheets. Prior period amounts have been revised to reflect the impact of this reclassification. |
Year Ended December 31, | |||||||
(In millions) | 2014 | 2015 | |||||
Income from operations | $ | 163.5 | $ | 206.1 | |||
Adjustment for build-to-suit lease impact (1) | — | (3.8 | ) | ||||
Income from operations, adjusted | $ | 163.5 | $ | 202.3 | |||
Effective tax rate | 30.7 | % | 34.8 | % | |||
Net operating profit after tax (NOPAT) | $ | 113.3 | $ | 131.9 | |||
Net income | $ | 110.6 | $ | 126.2 | |||
Total assets at period end (2) | $ | 1,616.1 | $ | 2,014.2 | |||
Add: Unamortized debt issuance costs (3) | — | 7.6 | |||||
Less: Excess cash (4) | (156.8 | ) | (422.0 | ) | |||
Less: Accounts payable and accrued expenses, accrued compensation and benefits, and income and other taxes payable | (215.8 | ) | (205.6 | ) | |||
Less: Deferred revenue (current and non-current) | (22.3 | ) | (31.2 | ) | |||
Less: Other non-current liabilities, deferred income taxes, deferred rent, and finance lease obligations for build-to-suit leases (2) (5) | (262.6 | ) | (306.6 | ) | |||
Capital base (5) | $ | 958.6 | $ | 1,056.4 | |||
Average total assets (2) (6) | $ | 1,601.4 | $ | 1,778.3 | |||
Average capital base (5) (6) | $ | 923.1 | $ | 1,002.9 | |||
Return on assets (Net income/Average total assets) (2) | 6.9 | % | 7.1 | % | |||
Return on capital (NOPAT/Average capital base) (5) | 12.3 | % | 13.2 | % |
(1) | Reflects additional expense we would have expected to record if our build-to-suit lease arrangements had been deemed operating leases instead of finance lease obligations for build-to-suit leases. Calculated as the excess of estimated straight-line rent expense over actual depreciation expense for completed real estate projects under build-to-suit lease arrangements. |
(2) | In the fourth quarter of 2015, we elected to early adopt accounting guidance related to the balance sheet classification of deferred taxes. Prior period amounts have been revised to reflect the impact of this adoption. |
(3) | Amount recorded as a direct deduction from the carrying value of the long-term debt liability in the consolidated balance sheets. |
(4) | Defined as the amount of cash and cash equivalents that exceeds our operating cash requirements, which is calculated as three percent of our annualized net revenue for the three months prior to the period end. |
(5) | In the first quarter of 2015, we reclassified certain finance obligations associated with build-to-suit leases in the consolidated balance sheets. Prior period amounts have been revised to reflect the impact of this reclassification. |
(6) | Average based on ending balances for the most recent five quarters. |
Three Months Ended | Year Ended | ||||||||||||||
(In millions) | December 31, 2014 | December 31, 2015 | December 31, 2014 | December 31, 2015 | |||||||||||
Adjusted EBITDA | $ | 165.4 | $ | 183.6 | $ | 605.4 | $ | 684.1 | |||||||
Non-cash deferred rent | 1.1 | 0.1 | 7.4 | 0.1 | |||||||||||
Total capital expenditures | (104.6 | ) | (96.5 | ) | (435.1 | ) | (466.0 | ) | |||||||
Cash payments for interest, net of interest received | (0.4 | ) | (1.9 | ) | (1.7 | ) | (4.0 | ) | |||||||
Cash payments for income taxes, net of refunds | (6.7 | ) | (0.8 | ) | (13.5 | ) | (17.8 | ) | |||||||
Adjusted free cash flow | $ | 54.8 | $ | 84.5 | $ | 162.5 | $ | 196.4 |
Three months ended | |||||||||||||||||||
(In millions, except per share data) | December 31, 2014 | March 31, 2015 | June 30, 2015 | September 30, 2015 | December 31, 2015 | ||||||||||||||
Net income | $ | 37.0 | $ | 28.4 | $ | 29.2 | $ | 36.5 | $ | 32.1 | |||||||||
Adjustment: | |||||||||||||||||||
Share-based compensation expense | 20.2 | 20.0 | 20.4 | 19.6 | 18.1 | ||||||||||||||
Income tax benefit (1) | (5.0 | ) | (6.5 | ) | (6.6 | ) | (5.9 | ) | (8.2 | ) | |||||||||
Total share-based compensation expense, net of tax | 15.2 | 13.5 | 13.8 | 13.7 | 9.9 | ||||||||||||||
Non-GAAP net income | $ | 52.2 | $ | 41.9 | $ | 43.0 | $ | 50.2 | $ | 42.0 | |||||||||
Net income per share ("GAAP EPS") | |||||||||||||||||||
Basic | $ | 0.26 | $ | 0.20 | $ | 0.20 | $ | 0.26 | $ | 0.24 | |||||||||
Diluted | $ | 0.26 | $ | 0.20 | $ | 0.20 | $ | 0.26 | $ | 0.24 | |||||||||
Non-GAAP net income per share ("Non-GAAP EPS") | |||||||||||||||||||
Basic | $ | 0.37 | $ | 0.30 | $ | 0.30 | $ | 0.36 | $ | 0.32 | |||||||||
Diluted | $ | 0.36 | $ | 0.29 | $ | 0.30 | $ | 0.36 | $ | 0.31 | |||||||||
Weighted average number of shares outstanding | |||||||||||||||||||
Basic | 141.8 | 141.4 | 142.4 | 139.0 | 133.3 | ||||||||||||||
Diluted | 144.5 | 144.2 | 144.5 | 140.6 | 134.2 |
(1) | Based on the GAAP effective tax rate for the period. |
Year Ended | |||||||
(In millions, except per share data) | December 31, 2014 | December 31, 2015 | |||||
Net income | $ | 110.6 | $ | 126.2 | |||
Adjustment: | |||||||
Share-based compensation expense | 70.0 | 78.1 | |||||
Income tax benefit (1) | (21.5 | ) | (27.2 | ) | |||
Total share-based compensation expense, net of tax | 48.5 | 50.9 | |||||
Non-GAAP net income | $ | 159.1 | $ | 177.1 | |||
Net income per share ("GAAP EPS") | |||||||
Basic | $ | 0.78 | $ | 0.91 | |||
Diluted | $ | 0.77 | $ | 0.90 | |||
Non-GAAP net income per share ("Non-GAAP EPS") | |||||||
Basic | $ | 1.12 | $ | 1.27 | |||
Diluted | $ | 1.10 | $ | 1.26 | |||
Weighted average number of shares outstanding | |||||||
Basic | 142.0 | 139.0 | |||||
Diluted | 144.5 | 141.0 |
(1) | Based on the GAAP effective tax rate for the period. |
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