Rackspace Technology(US:RXT)2025-11-10 21:36Revenue and Profitability - Revenue for the three months ended September 30, 2025, was $671.2 million, a slight decrease of 0.9% compared to $675.8 million in the same period of 2024[14] - Gross profit for the three months ended September 30, 2025, was $129.9 million, down from $137.5 million in the prior year, reflecting a gross margin of approximately 19.3%[14] - Net loss for the three months ended September 30, 2025, was $67.1 million, compared to a net loss of $186.6 million in the same period of 2024, indicating a significant improvement[14] - Total consolidated revenue for the three months ended September 30, 2024, was $675.8 million, slightly higher than $671.2 million in 2025, with nine-month revenue at $2,051.5 million compared to $2,002.9 million[168] - The company reported a total consolidated loss before income taxes of $174.6 million for the three months ended September 30, 2024, compared to a loss of $59.0 million in 2025, with a nine-month loss of $824.8 million versus $172.2 million[168] Assets and Liabilities - Total assets as of September 30, 2025, were $2,845.0 million, a decrease from $3,054.1 million as of December 31, 2024[13] - Total liabilities as of September 30, 2025, were $4,032.2 million, slightly down from $4,058.3 million at the end of 2024[13] - Cash and cash equivalents at the end of September 30, 2025, were $99.5 million, down from $144.0 million at the end of 2024[13] - As of September 30, 2025, the company had $2,434.3 million in outstanding debt, including various senior secured notes and term loan facilities[30] - Total debt as of September 30, 2025, was $2,772.5 million, down from $2,785.6 million as of December 31, 2024[70] Cash Flow and Liquidity - Operating cash flow for the nine months ended September 30, 2025, was $91.7 million, a significant increase compared to a cash outflow of $14.4 million in the same period of 2024[17] - The company reported cash and cash equivalents of $99.5 million as of September 30, 2025, indicating sufficient liquidity for at least the next twelve months[30] - Total cash, cash equivalents, and restricted cash amounted to $160.1 million, up from $101.3 million, reflecting a 58.0% increase[19] Shareholder Equity and Stock Performance - The weighted average number of shares outstanding for the three months ended September 30, 2025, was 240.4 million, compared to 226.4 million in the same period of 2024[14] - The company’s total stockholders' deficit reached $949.7 million as of September 30, 2024, compared to $756.2 million at June 30, 2024, marking an increase of 25.6%[21] - Basic net loss per share improved to $(0.28) for the three months ended September 30, 2025, compared to $(0.82) for the same period in 2024[61] Impairment and Goodwill - The company incurred impairment of goodwill of $141.7 million in the three months ended September 30, 2024, with no such impairment reported in 2025[14] - Goodwill, net as of September 30, 2025, was $739.7 million, with accumulated impairment charges totaling $2,305.6 million[66] - The company recognized impairment charges of $20.0 million related to its trade name indefinite-lived intangible asset during the nine months ended September 30, 2024[68] Segment Performance - The company has organized its operations into two segments: Public Cloud and Private Cloud, focusing on different service offerings and operational strategies[162] - Public Cloud revenue for the three months ended September 30, 2024, was $418.3 million, a slight increase from $421.6 million in 2025, while the nine-month revenue was $1,265.6 million compared to $1,253.8 million[168] - Private Cloud revenue for the three months ended September 30, 2024, was $257.5 million, up from $249.6 million in 2025, with nine-month revenue at $785.9 million compared to $749.1 million[168] Debt and Financing - The New Revolving Credit Facility allows for borrowings up to $375.0 million, with $65.0 million drawn as of September 30, 2025[30] - The New Borrower issued $1,687.2 million in the FLSO Term Loan Facility, which matures on May 15, 2028, with a contractual interest rate of 7.04% as of September 30, 2025[82][83] - 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[72] Tax and Regulatory Matters - The effective tax rate for the three months ended September 30, 2025, was lower than the U.S. federal statutory rate of 21% due to various factors including changes in valuation allowance and nondeductible executive compensation[138] - The company is currently evaluating the impact of ASU No. 2023-09 on income tax disclosures, effective for the 2025 Form 10-K[45] Compensation and Employee Costs - Total share-based compensation expense for the three months ended September 30, 2025, was $18.2 million, compared to $15.5 million for the same period in 2024[137] - The company recorded an increase in expense of $10.0 million due to the accelerated vesting of awards related to the former CEO's departure[135] - As of September 30, 2025, there was $28.7 million of total unrecognized compensation cost related to RSUs, PSUs, stock options, and the ESPP[137]