Core Insights - Rackspace Technology has launched the Rackspace Cloud Management Platform, enhancing its Managed Cloud offering with next-gen upgrades that streamline workload operations and optimize cloud infrastructure through AI-enabled tools [1][3] Group 1: Platform Features - The new platform provides full-stack observability, intelligent application optimization, and compliance with stringent Service Level Agreements (SLAs) [2] - It offers a flexible consumption-based model, lowering the barrier to entry for customers [2] - The platform integrates agile and DevOps methodologies to enhance operational efficiency, scalability, and resilience in hybrid cloud environments [2] Group 2: Customer Benefits - The upgrades provide customers with greater insight into their cloud environments, improved efficiency, and the ability to innovate without fear [3] - Customers can choose to use their own IT tooling solutions or leverage the new platform for operations, dashboards, and tracking [3] - The Rackspace Managed Cloud delivers enterprise-grade SLAs and fully outsourced cloud operations, helping customers maximize their cloud investments [3] Group 3: Company Expertise - Rackspace Technology has over 25 years of experience in integrating emerging technologies and managing cloud operations, which is central to its business model [4] - The company emphasizes the importance of providing clients with tools, flexibility, and power to leverage cloud technology for competitive advantage [4] Group 4: Operational Efficiency - The platform ensures proactive management of all aspects of the cloud environment, allowing businesses to scale seamlessly [5] - It offers a structured approach to service integration and management, ensuring efficient IT service delivery across various cloud environments [5] - Cost efficiency is achieved through optimized resource usage and automated controls to minimize unnecessary spending [5]

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]

Financial Data and Key Metrics Changes - Total company GAAP revenue for Q1 2025 was $665 million, down 4% year over year, but met the high end of guidance [18] - Non-GAAP operating profit was $26 million, exceeding guidance and up 83% year over year, largely due to operational efficiencies [18] - Non-GAAP loss per share improved to $0.06 compared to the guided range of $0.07 to $0.09 [18] - Cash flow from operations was $13 million, and free cash flow was $4 million, showing significant improvement from the previous year [18] Business Line Data and Key Metrics Changes - Private Cloud revenue for Q1 was $250 million, in line with guidance, but down 7% year over year due to customers transitioning from older offerings [19] - Public Cloud revenue reached $416 million, surpassing guidance, but was down 2% year over year due to declines in infrastructure volumes and services [20] - Private Cloud bookings remained flat year over year, but would have grown 20% if not for the slippage of large deals into Q2 [7] - Public Cloud bookings grew 16% year over year, driven by strong performance in The Americas, which saw a 26% increase [12] Market Data and Key Metrics Changes - Federal contracts comprised only 1% of 2024 revenue, indicating minimal exposure to federal agency cost-cutting measures [6] - The company is seeing strong demand in regulated industries, particularly healthcare and energy, with significant new contracts secured [9][56] Company Strategy and Development Direction - The company is focused on driving digital transformation for customers through cloud and AI solutions, while also enhancing cyber resiliency [5] - A strategic partnership with Rubrik was announced to launch the Cyber Recovery Cloud, aimed at improving customer recovery capabilities post-cybersecurity breaches [6] - The company is expanding its offerings in private cloud, including new products like OpenStack Flex and UK Sovereign Secure, to meet compliance and security needs [10][11] 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 [6] - Despite macro uncertainties, the company remains well-positioned to capitalize on long-term trends in public cloud, private cloud, and AI [6] - The company aims to maintain a sustainable business model that consistently delivers revenue, profit, and cash flow growth in 2025 [17] Other Important Information - The company has made significant progress in stabilizing private cloud revenue, with a focus on higher value, long-term contracts [8] - The company is pivoting towards managed services and high-margin offerings, moving away from low-margin infrastructure resale [44] Q&A Session Summary Question: Changes in customer behavior due to macroeconomic factors - Management noted that while there are some delays in onboarding contracts, overall bookings remain strong and customers are not delaying decisions on transformational projects [25][28] Question: Evolution of the sales pipeline and win rates - The sales pipeline has remained strong, with improved win rates and a focus on higher value, long-term contracts in both public and private cloud segments [30][34] Question: Trends in public cloud services and infrastructure resale - The company is seeing good wins in services, particularly in data services driven by AI, while infrastructure resale is expected to decline purposefully to maintain profitability [42][44] Question: Upfront CapEx payments from larger customers and regulated industries - There is continued interest from large customers in upfront CapEx payments for lower OpEx, and traction in regulated industries is strong, particularly in healthcare and energy [52][56]