Financial Data and Key Metrics Changes - Revenue for the first quarter of 2025 was $665 million, down 4% year over year, but met the high end of guidance [19] - Non-GAAP operating profit grew 83% year over year to $26 million, exceeding guidance [19] - Non-GAAP loss per share improved to $0.06 compared to a guided range of $0.07 to $0.09 [19] - Cash flow from operations was $13 million, and free cash flow was $4 million, showing significant improvement from the previous year [19] Business Line Data and Key Metrics Changes Private Cloud - Private cloud revenue for Q1 was $250 million, in line with guidance, but down 7% year over year [20] - Bookings in private cloud remained flat year over year, but would have grown 20% if not for the slippage of large deals into Q2 [8][20] - Non-GAAP gross margin for private cloud was 37.1%, down 1.8 points year over year [21] Public Cloud - Public cloud revenue reached $416 million, exceeding guidance, but down 2% year over year [21] - Public cloud bookings grew 16% year over year, driven by a 26% increase in The Americas [13] - Non-GAAP gross margin for public cloud was 9.5%, up 1 point year over year [21] Market Data and Key Metrics Changes - Strong performance in The Americas contributed to overall growth, with bookings in this region increasing by 13% [6] - Federal contracts accounted for only 1% of 2024 revenue, indicating minimal exposure to federal cost-cutting measures [7] Company Strategy and Development Direction - The company is focused on digital transformation, cloud, and AI, with a strategic partnership with Rubrik to enhance cyber resiliency [6][7] - Emphasis on expanding into regulated industries such as healthcare and energy, with notable wins in these sectors [10][55] - The company aims to build a sustainable business model that consistently delivers revenue, profit, and cash flow growth [18] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the macroeconomic environment, which may impact onboarding timelines and customer decision cycles [7][30] - Despite macro uncertainties, the company remains confident in its strong sales pipeline and execution [29] - The focus is on transitioning from low-margin infrastructure resale to high-margin services, with expectations for operating profit growth in public cloud [44] Other Important Information - The company launched several new products, including Rackspace AI Business and modern operations for data and AI, to enhance service offerings [17] - The company is actively working on CapEx efficiency and inventory reutilization to optimize capital structure [52] Q&A Session Summary Question: What are the macro perspectives affecting customer behavior? - Management noted that while there are some delays in onboarding, overall bookings remain strong and customers are not delaying transformational projects [28][30] Question: How has the sales pipeline evolved? - The sales pipeline has remained strong, with improved win rates and a focus on higher value, long-term contracts [34][35] Question: What is the outlook for public cloud services? - The company is seeing good wins in the services business, with a focus on managed services and data services [42][44] Question: Are larger customers still interested in upfront CapEx payments? - Yes, there is continued interest from larger customers in paying upfront CapEx for lower OpEx over the life of the deal [51] Question: How is the company performing in regulated industries? - The company is seeing good traction in regulated industries, particularly in healthcare and energy, with significant deals being closed [55][57]