Rackspace Technology(RXT) - 2024 Q1 - Quarterly Report

Financial Performance - Revenue for Q1 2024 was $690.8 million, a decrease of 8.9$758.7 million in Q1 2023[14] - Gross profit for Q1 2024 was $132.8 million, down from$169.6 million in Q1 2023, reflecting a gross margin decline[14] - Net loss for Q1 2024 was $640.6 million, compared to a net loss of$612.0 million in Q1 2023[14] - Total consolidated revenue decreased by 8.9% from $758.7 million in Q1 2023 to$690.8 million in Q1 2024[190] - Net loss increased from $612.0 million in Q1 2023 to$640.6 million in Q1 2024, reflecting a rise of 4.7%[190] - Total consolidated segment operating profit fell from $117.4 million in Q1 2023 to$81.0 million in Q1 2024, a decrease of 30.9%[190] Assets and Liabilities - Total assets decreased from $4,096.2 million as of December 31, 2023, to$3,516.0 million as of March 31, 2024[13] - Total liabilities increased from $4,250.7 million to$4,303.2 million during the same period[13] - Total stockholders' equity (deficit) decreased to $(787.2) million as of March 31, 2024, from$(154.5) million as of December 31, 2023[20] - The company had $2,598.2 million in aggregate principal amount outstanding under debt instruments as of March 31, 2024[28] Cash Flow and Financing - Cash and cash equivalents rose from$196.8 million at the end of 2023 to $282.6 million by March 31, 2024[13] - Operating cash flow for Q1 2024 was a net cash used of$90.3 million, compared to a net cash used of $1.9 million in Q1 2023[16] - Cash flows from financing activities provided$188.2 million in Q1 2024, compared to a cash outflow of $41.3 million in Q1 2023[16] - As of March 31, 2024, total cash, cash equivalents, and restricted cash amounted to$285.5 million, up from $177.4 million as of March 31, 2023, representing a 61$573.2 million in Q1 2024, compared to $543.1 million in Q1 2023[14] - The company recorded a non-cash goodwill impairment charge of$270.8 million in Q1 2023 due to impairment within the Private Cloud reporting unit[33] - The company recorded additional non-cash goodwill impairment charges of $272.3 million in Q1 2023, bringing total impairments for the Private Cloud unit to$543.1 million for the period[38] - The estimated fair value of the Rackspace trade name was determined to be less than its carrying value, resulting in a non-cash impairment charge of $20.0 million in Q1 2024[40] Revenue Segmentation - Public Cloud revenue increased from$422.4 million in Q1 2023 to $443.5 million in Q1 2024, representing a growth of 5.2$315.2 million in Q1 2023 to $268.4 million in Q1 2024, a decline of 14.8$31 million, or 5%, to $558 million, primarily due to a reduction in personnel costs and lower severance expenses[194] - Selling, general and administrative expenses decreased by$15 million, or 7%, to $192 million, influenced by lower personnel costs and a reduction in severance and commissions expenses[197] - For the three months ended March 31, 2024, total share-based compensation expense was$12.8 million, down from $15.2 million in the same period of 2023[132] Debt and Interest Rates - The company completed a private debt exchange on March 12, 2024, involving$331.4 million of Existing Secured Notes and $1,588.8 million of Existing Term Loans[66] - The FLSO Term Loan Facility issued on March 12, 2024, has an aggregate principal amount of$1,687.2 million and matures on May 15, 2028[76] - The contractual interest rate on the FLSO Term Loan Facility was 8.18% as of March 31, 2024, with quarterly principal payments of $4.2 million starting on the same date[77] - Interest expense decreased from$56.9 million in Q1 2023 to $43.7 million in Q1 2024, a reduction of 23.2%[190] Strategic Focus - The company aims to expand its Public Cloud segment operating margins by driving cost efficiencies and growing higher-margin services revenue[180] - The shift in revenue mix from Private Cloud to Public Cloud is expected to continue, with a focus on defending and expanding revenue in Private Cloud[180] - The company emphasizes the importance of customer retention and the development of new opportunities to drive revenue growth in a competitive market[179]