CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Year Ended December 31,(In millions)2023 2024Cash Flows From Operating Activities Net loss$(837.8) $(862.6) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 369.7 295.4 Amortization of operating right-of-use assets 73.2 67.6 Deferred income taxes (41.9) (30.6) Share-based compensation expense 65.4 63.4 Impairment of goodwill 708.8 714.9 Impairment of assets, net 52.2 20.0 Gain on debt extinguishment, net of debt modification costs (271.3) (147.2) Unrealized loss on derivative contracts 15.5 — Gain on investments, net (0.3) (0.1) Provision for bad debts and accrued customer credits 9.0 19.5 Amortization of debt issuance costs and debt discount and premium 7.9 2.2 Third party fees paid in connection with the March 2024 Refinancing Transactions — (31.7) Non-cash fair value adjustments (1.0) (2.2) Other operating activities 0.4 (6.5) Changes in operating assets and liabilities: Accounts receivable 275.1 20.5 Prepaid expenses and other current assets 24.6 10.5 Accounts payable, accrued expenses, and other current liabilities (44.2) (22.2) Deferred revenue (5.8) 2.4 Operating lease liabilities (65.6) (82.8) Other non-current assets and liabilities 41.0 9.4 Net cash provided by operating activities 374.9 39.9 Cash Flows From Investing Activities Purchases of property, equipment and software (96.9) (111.1) Proceeds from sale of headquarters — 16.9 Other investing activities 0.9 7.6 Net cash used in investing activities (96.0) (86.6)Cash Flows From Financing Activities Proceeds from employee stock plans 1.3 0.9 Shares of common stock withheld for employee taxes (1.0) (4.3) Proceeds from borrowings under long-term debt arrangements 50.0 275.0 Payments on long-term debt (241.9) (163.0) Debt extinguishment costs — (22.1) Payments on financing component of interest rate swap (18.8) (17.3) Principal payments of finance lease liabilities (79.7) (56.9) Principal payments of financing obligations (22.7) (15.3) Net cash used in financing activities (312.8) (3.0) Effect of exchange rate changes on cash, cash equivalents, and restricted cash 2.2 (3.0) Decrease in cash, cash equivalents, and restricted cash (31.7) (52.7) Cash, cash equivalents, and restricted cash at beginning of period 231.4 199.7 Cash, cash equivalents, and restricted cash at end of period$199.7 $147.0 Supplemental Cash Flow Information Cash payments for interest, net of amount capitalized$213.9 $103.6 Cash payments for income taxes, net of refunds$11.9 $10.8 Non-cash Investing and Financing Activities Acquisition of property, equipment and software by finance leases$67.7 $40.8 Acquisition of property, equipment and software by financing obligations 25.0 4.4 Decrease in property, equipment and software accrued in liabilities (13.6) (9.9) Other non-cash activity 5.3 (10.0) Non-cash purchases of property, equipment and software$84.4 $25.3 SEGMENT DATA (In millions, except %)Three Months Ended December 31, % ChangeRevenue by segment:2023 2024 Actual Constant Currency (a)Public Cloud$434.0 $417.0 (3.9)% (4.0)%Private Cloud 285.7 268.6 (6.0)% (6.7)%Total consolidated revenue$719.7 $685.6 (4.7)% (5.1)% (In millions, except %)Year Ended December 31, % ChangeRevenue by segment:2023 2024 Actual Constant Currency (a)Public Cloud$1,742.7 $1,682.6 (3.4)% (3.5)%Private Cloud 1,214.4 1,054.5 (13.2)% (13.6)%Total consolidated revenue$2,957.1 $2,737.1 (7.4)% (7.7)% (a) Refer to "Non-GAAP Financial Measures" in this section for further explanation and reconciliation. Three Months Ended December 31, (In millions, except %)2023 2024 Year-Over-Year ComparisonSegment operating profit (a):Amount % of Segment Revenue Amount % of Segment Revenue Amount % ChangePublic Cloud$25.3 5.8% $9.9 2.4% $(15.4) (60.9)%Private Cloud76.7 26.8% 80.6 30.0% 3.9 5.1%Corporate functions (b)(57.1) (51.4) 5.7 (10.0)%Non-GAAP Operating Profit (c)$44.9 $39.1 $(5.8) (12.9)% Year Ended December 31, (In millions, except %)2023 2024 Year-Over-Year ComparisonSegment operating profit (a):Amount % of Segment Revenue Amount % of Segment Revenue Amount % ChangePublic Cloud$81.8 4.7% $44.2 2.6% $(37.6) (46.0)%Private Cloud343.0 28.2% 294.4 27.9% (48.6) (14.2)%Corporate functions (b)(267.6) (233.0) 34.6 (12.9)%Non-GAAP Operating Profit (c)$157.2 $105.6 $(51.6) (32.8)% (a)Segment revenue less expenses directly attributable to running the respective segments’ business.
Net income (loss) reconciliation to Non-GAAP Net Loss Three Months Ended December 31, Year Ended December 31,(In millions)2023 2024 2023 2024Net income (loss)$28.0 $(60.4) $(837.8) $(862.6)Share-based compensation expense 13.5 15.6 65.4 63.4 Transaction-related adjustments, net (a) 1.1 0.8 5.2 5.2 Restructuring and transformation expenses (b) 6.7 13.7 56.7 58.5 Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage (4.4) (0.3) (4.8) (1.4)Impairment of goodwill — — 708.8 714.9 UK office closure (c) — — 12.1 — Impairment of assets, net 3.8 — 52.2 20.0 Net (gain) loss on divestiture and investments (d) (0.1) 0.1 (0.3) (0.1)Gain on debt extinguishment, net of debt modification costs (108.2) — (271.3) (147.2)Interest expense impact from the March 2024 Refinancing Transactions (e) — (22.3) — (72.9)Other adjustments (f) (1.3) 5.0 (1.0) 1.2 Amortization of intangible assets (g) 39.4 38.1 161.0 154.1 Tax effect of non-GAAP adjustments (h) 12.6 5.3 1.7 3.4 Non-GAAP Net Loss$(8.9) $(4.4) $(52.1) $(63.5) Loss from operations reconciliation to Non-GAAP Operating Profit Three Months Ended December 31, Year Ended December 31,(In millions)2023 2024 2023 2024Loss from operations$(15.2) $(28.8) $(899.4) $(909.1)Share-based compensation expense 13.5 15.6 65.4 63.4 Transaction-related adjustments, net (a) 1.1 0.8 5.2 5.2 Restructuring and transformation expenses (b) 6.7 13.7 56.7 58.5 Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage (4.4) (0.3) (4.8) (1.4)Impairment of goodwill — — 708.8 714.9 UK office closure (c) — — 12.1 — Impairment of assets, net 3.8 — 52.2 20.0 Amortization of intangible assets (g) 39.4 38.1 161.0 154.1 Non-GAAP Operating Profit$44.9 $39.1 $157.2 $105.6 Net income (loss) reconciliation to Adjusted EBITDA Three Months Ended December 31, Year Ended December 31,(In millions)2023 2024 2023 2024Net income (loss)$28.0 $(60.4) $(837.8) $(862.6)Share-based compensation expense 13.5 15.6 65.4 63.4 Transaction-related adjustments, net (a) 1.1 0.8 5.2 5.2 Restructuring and transformation expenses (b) 6.7 13.7 56.7 58.5 Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage (4.4) (0.3) (4.8) (1.4)Impairment of goodwill — — 708.8 714.9 UK office closure (c) — — 12.1 — Impairment of assets, net 3.8 — 52.2 20.0 Net (gain) loss on divestiture and investments (d) (0.1) 0.1 (0.3) (0.1)Gain on debt extinguishment, net of debt modification costs (108.2) — (271.3) (147.2)Other expense, net (i) 4.7 9.9 5.0 21.7 Interest expense 50.9 17.9 221.6 98.0 Provision (benefit) for income taxes 9.5 3.7 (16.6) (18.9)Depreciation and amortization (j) 87.2 72.7 366.4 293.3 Adjusted EBITDA$92.7 $73.7 $362.6 $244.8 (a)Includes legal, professional, accounting and other advisory fees related to acquisitions, integration costs of acquired businesses, purchase accounting adjustments, and exploratory acquisition and divestiture costs and expenses related to financing activities.(b)Includes consulting and advisory fees related to business transformation and optimization activities, as well as associated severance, certain facility closure costs and lease termination expenses.
The year ended December 31, 2024 also includes a $9.0 million Master Economic Incentives Agreement early termination fee associated with the sale of our corporate headquarters in March 2024.(c)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.(d)Includes gains and losses on investment and from dispositions.(e)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.(f)Primarily consists of foreign currency gains and losses.(g)All of our intangible assets are attributable to acquisitions, including the November 2016 merger.(h)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.
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