Rackspace Technology(US:RXT)2025-05-12 20:06Financial Performance - Revenue for the three months ended March 31, 2025, was $665.4 million, a decrease of 3.9% compared to $690.8 million for the same period in 2024[14] - Gross profit for the same period was $126.9 million, down from $132.8 million, reflecting a gross margin of approximately 19.1%[14] - Net loss for the three months ended March 31, 2025, was $71.5 million, significantly improved from a net loss of $640.6 million in the prior year[14] - The company reported a basic and diluted net loss per share of $0.31 for the three months ended March 31, 2025, compared to a loss of $2.91 per share in the prior year[14] - Rackspace Technology's comprehensive income for the three months ended March 31, 2025, included a loss of $5.0 million[21] - The company reported a net loss attributable to common stockholders of $71.5 million for the three months ended March 31, 2025, compared to a net loss of $640.6 million for the same period in 2024[53] Assets and Liabilities - Total assets decreased to $2,966.1 million as of March 31, 2025, down from $3,054.1 million at the end of 2024[13] - Total liabilities slightly decreased to $4,039.2 million from $4,058.3 million[13] - Cash and cash equivalents at the end of the period were $128.0 million, down from $144.0 million at the end of 2024[13] - As of March 31, 2025, Rackspace Technology had an accumulated deficit of $3,753.9 million, reflecting a net loss of $71.5 million for the quarter[29] - The company reported a total stockholders' deficit of $1,073.1 million as of March 31, 2025, with total paid-in capital of $2,690.3 million[21] - Rackspace Technology's total debt outstanding was $2,444.4 million as of March 31, 2025, including various senior secured notes and term loan facilities[29] Cash Flow and Expenses - Operating cash flow for the three months ended March 31, 2025, was $12.6 million, a significant recovery from a cash outflow of $90.3 million in the same period of 2024[17] - The company incurred $19.4 million in interest expense for the three months ended March 31, 2025, down from $43.7 million in the same period of 2024[14] - The company recognized $49.6 million in revenue from amounts included in deferred revenue as of the beginning of the period for the three months ended March 31, 2025[44] - The company incurred third-party fees of $28.4 million related to the refinancing transactions[71] - The company expensed approximately $9 million for utility companies to power its data centers in the three months ended March 31, 2025, representing about 1% of total revenue[295] Debt and Financing - The New Revolving Credit Facility allowed for up to $375.0 million in borrowings, with $30.0 million drawn as of March 31, 2025[29] - 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[64] - The new FLSO Term Loan Facility issued amounted to $1,687.2 million, with a contractual interest rate of 7.19% as of March 31, 2025[74][75] - The FLFO Term Loan Facility was issued for $275.0 million, with a contractual interest rate of 10.69% as of March 31, 2025[81][82] - The company was in compliance with all covenants under the New Senior Facilities as of March 31, 2025[91] - The company was in compliance with all covenants under the 5.375% Notes Indenture as of March 31, 2025[116] Segment Performance - Public Cloud segment revenue for the three months ended March 31, 2024, was $422.4 million, which slightly decreased to $415.6 million in 2025, a decline of about 1.9%[154] - Private Cloud segment revenue decreased from $268.4 million in Q1 2024 to $249.8 million in Q1 2025, representing a decline of approximately 6.9%[154] - Segment operating profit for the Public Cloud increased from $8.2 million in Q1 2024 to $17.3 million in Q1 2025, showing a significant improvement of 110.4%[154] - Segment operating profit for the Private Cloud decreased from $71.1 million in Q1 2024 to $61.0 million in Q1 2025, a decline of about 14.5%[154] - Total consolidated segment operating profit slightly decreased from $79.3 million in Q1 2024 to $78.3 million in Q1 2025, a decline of approximately 1.3%[154] Share-Based Compensation - The company reported share-based compensation expense of $7.6 million for equity classified awards during the same period[21] - Total share-based compensation expense for the three months ended March 31, 2025, was $12.0 million, down from $12.8 million in the same period of 2024, with equity classified awards decreasing from $13.0 million to $7.6 million[123] - As of March 31, 2025, there was $24.9 million of total unrecognized compensation cost related to RSUs, performance stock units, and the ESPP[123] - The total share-based compensation expense recognized in selling, general and administrative expenses for the three months ended March 31, 2025, was $10.2 million[123] Impairment and Valuation - Goodwill impairment charges of $385.4 million and $187.8 million were recorded for the Public Cloud and Private Cloud reporting units, respectively, in the first quarter of 2024[35] - The fair value of the company's goodwill as of March 31, 2025, was $3,042.9 million, with net goodwill of $737.3 million after accumulated impairment charges of $2,305.6 million[58] - The company recorded a non-cash impairment charge of $20.0 million related to its indefinite-lived intangible asset, the Rackspace trade name, as of February 29, 2024[37] Tax and Compliance - The effective tax rate for the three months ended March 31, 2025, was lower than the U.S. federal statutory rate of 21% primarily due to the tax impact associated with changes in valuation allowance and nondeductible share-based compensation[124] - The company is not a party to any litigation that would materially affect its business or financial position[121]