Fully managed private AI solution combines cutting-edge AI capabilities with enterprise-grade security and privacy protectionsSAN ANTONIO, March 25, 2025 (GLOBE NEWSWIRE) -- Rackspace Technology® (NASDAQ: RXT), a leading end-to-end hybrid cloud and AI solutions company, today announced Rackspace AI Business, a versatile, secure and high-performance AI-optimized hybrid cloud platform that targets customers with AI training and inferencing requirements to unlock the full potential of AI. In today's rapidly e ...

Customer Base and Market Presence - Rackspace Technology served over 81,000 customers across 120 countries as of December 31, 2024[41]. - The company operates in more than 60 cities globally, enhancing its ability to serve multinational clients[40]. - As of December 31, 2024, Rackspace Technology served over 81,000 customers across more than 120 countries, with no single customer representing 5% or more of total revenue[62][63]. - The company has a global direct sales team of over 170 representatives and over 570 service delivery managers as of December 31, 2024[66]. Financial Performance and Efficiency - Revenue per employee for the years ended December 31, 2023 and 2024 exceeded $500,000, indicating a strong operational efficiency[38]. - The company incurred net losses of $804.8 million, $837.8 million, and $858.2 million for the fiscal years ended December 31, 2022, 2023, and 2024, respectively[98]. - The company has $375.0 million available for additional borrowing under the New Revolving Credit Facility, with $23.5 million of letters of credit issued[184]. - The company’s substantial indebtedness could limit its ability to borrow for working capital, capital expenditures, and strategic initiatives, potentially resulting in an event of default under its debt agreements[180]. Product and Service Offerings - The company has invested over $1 billion and 12 million hours in developing Rackspace Fabric, its proprietary cloud software[35]. - Rackspace Technology differentiates itself by focusing solely on hybrid cloud solutions, unlike many competitors who charge based on labor costs[31]. - Rackspace Technology launched Foundry for Artificial Intelligence (FAIR) in June 2023, offering services to accelerate AI adoption across industries[52]. - The company focuses on expanding its private cloud business with new solutions, including Rackspace Software Defined Datacenter and Private AI Cloud[56]. Partnerships and Collaborations - The company partners with major cloud providers, including AWS, Google Cloud, and Microsoft Azure, to deliver a full suite of cloud services[38]. - The company has established partnerships with major cloud vendors like AWS, Microsoft Azure, and Google Cloud, enhancing its competitive advantage[65]. - The company has established non-exclusive managed service provider relationships with major cloud providers such as AWS, Microsoft, and Google, which are crucial for maintaining customer relationships and driving revenue[108]. Operational Challenges and Risks - The company faces risks related to customer retention and acquisition, which could adversely affect revenue and results of operations[87]. - The company operates in a highly competitive market with significant challenges from existing and new competitors[102]. - Cybersecurity threats are a significant concern, with past incidents causing service disruptions, which could harm the company's reputation and financial condition[115]. - The company faces significant risks related to service interruptions, which could lead to substantial customer dissatisfaction and loss of revenue[123]. Compliance and Regulatory Issues - Compliance with various data privacy laws, including the E.U. GDPR and U.K. GDPR, could result in fines up to €20 million or £17 million, and 4% of total annual revenue for non-compliance[143]. - The regulatory framework for privacy and security is complex and evolving, leading to potential increased costs and liability for the company[144]. - The company must maintain FISMA and FedRAMP certifications to meet federal government security compliance requirements, with failure potentially breaching contracts[152]. Corporate Governance and Ownership - Apollo beneficially owned approximately 57% of the voting power of the company's outstanding common stock as of December 31, 2024, allowing it to control significant corporate decisions[206]. - The company is classified as a "controlled company" under Nasdaq rules, allowing it to rely on exemptions from certain corporate governance requirements[207]. Environmental and Social Responsibility - The company logged over 22,000 volunteer hours for community service in the year ended December 31, 2024[74]. - Concerns about greenhouse gas emissions may lead to increased electricity prices, impacting the company's operational costs[164]. Debt and Financial Obligations - The company had $2,449.4 million in outstanding indebtedness, with total debt service payments of approximately $200.7 million and $162.1 million for the years ended December 31, 2023 and 2024, representing 53.5% and 406.2% of cash flow from operations respectively[179]. - The company’s ability to generate sufficient cash flow to service its indebtedness is uncertain, and failure to do so could lead to substantial liquidity problems[187]. - The company’s debt agreements contain restrictive covenants that limit its operational flexibility and ability to engage in favorable business activities[189].

Core Insights - Domino's Pizza UK & Ireland Ltd. is leveraging a hybrid cloud environment to enhance its digital capabilities and support its expanding store network [1][5][8] - The company has transitioned from a traditional takeaway business to a technology-driven enterprise, with a significant portion of its sales now flowing through digital channels [2][8] - The partnership with Rackspace Technology aims to create a more flexible and scalable technology platform to accommodate increasing order volumes and support future growth [5][6][10] Digital Transformation - Domino's has modernized its e-commerce platform by shifting from a monolithic architecture to a microservices architecture on Azure Kubernetes Service, enabling efficient scaling during peak periods [7][8] - The implementation of Infrastructure-as-Code (IaC) practices has ensured consistent and reliable deployments across environments, facilitating rapid environment rebuilding [7][8] - The company has adopted Microsoft Dynamics 365 to modernize its supply chain and finance operations, enhancing overall digital operations [8] Operational Efficiency - During peak periods, Domino's systems can handle significant spikes in order volume while maintaining consistent service delivery across approximately 1,400 connected stores [4][6] - The hybrid cloud infrastructure supports all stores and manages traffic spikes without compromising performance, crucial for the company's rapid growth model [5][6] - The collaboration with Rackspace Technology has allowed Domino's to maintain operational stability while innovating to meet customer demands [9][10] Future Growth - Domino's is preparing to expand its store network from 1,400 to over 1,600 locations, necessitating an adaptable infrastructure to support this growth [4][6] - The partnership with Rackspace has been essential for the company's growth strategy, focusing on automation to keep platforms scalable and development cycles swift [10][11] - The ongoing cloud journey includes strengthening disaster recovery capabilities and expanding the cloud footprint to support future operational needs [9]

Core Insights - Rackspace Technology partners with Domino's Pizza UK & Ireland to enhance digital capabilities through a robust hybrid cloud environment [1][5] - Domino's has transformed into a technology-driven enterprise, with significant sales through digital channels and nearly six million active mobile app users [2][4] Company Overview - Domino's Pizza UK & Ireland is the leading pizza delivery company in the region, operating a network of franchisee-owned stores supported by centralized corporate operations [2][3] - The company is expanding its store network from approximately 1,400 to over 1,600 locations, necessitating a scalable infrastructure to meet increasing demands [4] Technology Transformation - The partnership with Rackspace aims to create a flexible and scalable technology platform, leveraging Microsoft Azure for a hybrid environment that combines private cloud stability with scalability [5][8] - Domino's modernized its e-commerce platform by transitioning to a microservices architecture on Azure Kubernetes Service, enabling efficient scaling and faster feature deployment [7][8] Operational Enhancements - The implementation of Infrastructure-as-Code (IaC) practices ensures consistent and reliable deployments across environments, facilitating rapid environment rebuilding [6][7] - Domino's is also modernizing its supply chain and finance operations through Microsoft Dynamics 365, enhancing digital operations and transitioning most orders to digital channels [8] Partnership Dynamics - Rackspace Technology has been a trusted partner for Domino's since 2011, providing essential technical expertise and support for innovation while maintaining operational stability [10][11] - The collaboration has been particularly beneficial during high-demand events, such as the 2022 FIFA World Cup, showcasing the effectiveness of the partnership [11][12]

Financial Data and Key Metrics Changes - In Q4 2024, total GAAP revenue was $686 million, exceeding guidance, with non-GAAP gross profit margin at 20.6%, down 50 basis points sequentially [28][29] - Non-GAAP operating profit was $39 million, with a non-GAAP operating margin of 5.7%, an increase of 94 basis points sequentially [29] - Cash flow from operations was $54 million, and free cash flow was $34 million in Q4 2024, ending the year with $144 million in cash on hand [30][31] Business Line Data and Key Metrics Changes - Private Cloud GAAP revenue for Q4 was $269 million, up 4% sequentially, driven by strong performance in healthcare [31][33] - Public Cloud GAAP revenue was $417 million, surpassing guidance, with bookings growing 22% year-over-year [18][33] - Private Cloud bookings grew 4% year-over-year, while public cloud bookings grew 22% year-over-year, indicating strong demand across both segments [8][18] Market Data and Key Metrics Changes - In the Americas, private cloud sales bookings grew more than 20%, with healthcare bookings increasing over 60% [41] - Public cloud bookings in Q4 grew in high double digits year-over-year, driven by robust performance in services and infrastructure resale [18][19] - The company signed 16 new master service agreements, enhancing growth opportunities in the public cloud segment [20] Company Strategy and Development Direction - The company is focusing on a services-led sales motion rather than low-margin infrastructure resale, which has led to improved sales execution [19][22] - A strategic focus on hybrid cloud solutions and AI is expected to drive future growth, with plans to launch new products and solutions targeting these areas [25][26] - The company aims to improve its capital structure to support sustainable profitable growth over the long term [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving demand environment and visibility for 2025, with expectations for positive operating cash flow and free cash flow [44][50] - The company anticipates modest declines in private cloud revenues in 2025, with expectations for flattish revenues in the second half of the year [16][42] - Management highlighted the importance of larger deals and multi-year contracts in building a sustainable revenue base [55] Other Important Information - The company launched several innovative solutions in 2024, including Edge Security and AWS accelerated migration analysis offerings [21][22] - AI-related projects significantly contributed to data services bookings, with expectations for AI revenue to grow from less than 2% to over 5% in the coming years [78][83] Q&A Session Summary Question: Trends within the private business and expectations for 2025 - Management noted strong sales bookings performance and increased interest in custom cloud solutions, with expectations for modest declines in private cloud revenues in 2025 [41][42] Question: Changes in the demand environment over the last 30 days - Management indicated improved visibility and strong momentum in both public and private cloud businesses, with expectations for continued growth in 2025 [50][54] Question: New logo growth in Q4 and deal cycles - Management reported over 250 new logos in private cloud, with longer deal cycles for larger private cloud deals and shorter cycles for public cloud services [65][67] Question: Headcount utilization and need for increases - Management stated that while there may be a need for increased headcount in professional services and data, it would be done surgically and with increased utilization of current resources [70][77] Question: Contribution of AI to booking strength - AI contributed to data services bookings, with expectations for AI revenue to grow significantly in the coming years as enterprise adoption increases [78][83]

Core Insights - Rackspace (RXT) reported a quarterly loss of $0.02 per share, better than the Zacks Consensus Estimate of a loss of $0.04, marking a 50% earnings surprise [1] - The company achieved revenues of $685.6 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.54%, although this represents a decline from $719.7 million year-over-year [2] - Rackspace has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Financial Performance - The company has shown a significant improvement in stock performance, with shares up approximately 31.2% year-to-date compared to the S&P 500's gain of 4.5% [3] - Current consensus EPS estimate for the upcoming quarter is -$0.08 on revenues of $637.6 million, with a breakeven point on revenues of $2.69 billion for the current fiscal year [7] Industry Outlook - The Technology Services industry, to which Rackspace belongs, is currently ranked in the top 36% of over 250 Zacks industries, indicating a favorable outlook [8] - The performance of Rackspace's stock may be influenced by the overall industry outlook, as top-ranked industries tend to outperform lower-ranked ones significantly [8]

Revenue Performance - Fourth quarter 2024 revenue was $686 million, a decrease of 5% year-over-year from $720 million in Q4 2023[4]. - Full year 2024 revenue totaled $2,737 million, a decrease of 7% from $2,957 million in 2023[8]. - Total revenue for the year ended December 31, 2024, was $2,737.1 million, a decrease of 7.4% compared to $2,957.1 million in 2023[39]. - Public Cloud revenue for Q4 2024 was $417 million, down 4% year-over-year[4][5]. - Private Cloud revenue for Q4 2024 was $269 million, down 6% year-over-year[4][5]. - Public Cloud revenue for the year ended December 31, 2024, was $1,682.6 million, down 3.4% from $1,742.7 million in 2023[39]. - Private Cloud revenue for the year ended December 31, 2024, was $1,054.5 million, a decrease of 13.2% from $1,214.4 million in 2023[39]. Profit and Loss - The net loss for Q4 2024 was $(60) million, compared to a net income of $28 million in Q4 2023, resulting in a net loss per diluted share of $(0.26)[5][6]. - Full year 2024 net loss was $(863) million, compared to a net loss of $(838) million in 2023, with a net loss per diluted share of $(3.84)[9]. - Non-GAAP Operating Profit for Q4 2024 was $39 million, a decrease of 13% compared to $45 million in Q4 2023[6]. - Non-GAAP Operating Profit for the year ended December 31, 2024, was $105.6 million, down 32.8% from $157.2 million in 2023[51]. - Non-GAAP Net Loss for Q4 2024 was $(4.4) million, an improvement from $(8.9) million in Q4 2023[50]. - Non-GAAP Net Loss for the year ended December 31, 2023 was $(52.1) million, with a projected increase in loss to $(63.5) million for 2024[57]. - The company reported a net income of $(60.4) million for Q4 2024, compared to a net income of $28.0 million in Q4 2023[50]. - Net income for Q4 2023 was $28.0 million, while the projected net loss for Q4 2024 is $(60.4) million, indicating a significant decline[52]. Cash Flow and Assets - Cash provided by operating activities for 2023 was $374.9 million, significantly higher than $39.9 million in 2024[30]. - Total assets as of December 31, 2023, were $4,096.2 million, compared to $3,051.0 million in 2024[28]. - Cash and cash equivalents at the end of 2023 were $199.7 million, down from $147.0 million in 2024[30]. Expenses and Liabilities - Capital expenditures in Q4 2024 were $27 million, down from $38 million in Q4 2023[7]. - Total liabilities for 2023 were $4,250.7 million, slightly up from $4,059.6 million in 2024[28]. - The company recognized $56.7 million in restructuring and transformation expenses for 2023, with an increase to $58.5 million expected in 2024[52]. - Interest expense for the year ended December 31, 2023 was $221.6 million, with a significant reduction to $98.0 million projected for 2024 due to refinancing transactions[52]. Future Guidance - The company expects Q1 2025 revenue guidance of $653 - $665 million, with Private Cloud revenue projected at $247 - $253 million and Public Cloud revenue at $406 - $412 million[13]. - Non-GAAP Loss Per Share for Q1 2025 is expected to be between $(0.07) and $(0.09)[13]. Bookings and Sales Performance - Fiscal 2024 bookings grew 14% year-over-year, indicating strong sales execution across both business units[3]. Impairment and Shareholder Impact - Impairment of goodwill for 2023 was $708.8 million, compared to $714.9 million in 2024, indicating a stable impairment level[25]. - The weighted average number of diluted shares increased from 215.3 million in 2023 to 224.8 million in 2024, indicating a dilution effect on earnings per share[57]. - Non-GAAP Loss Per Share for 2023 was $(0.24), with a projected loss of $(0.27) for 2024, reflecting a worsening performance[57]. - The company incurred $708.8 million in goodwill impairment for the year ended December 31, 2023, with an increase to $714.9 million expected in 2024[52]. Segment Performance - Public Cloud segment operating profit decreased by 60.9% year-over-year to $9.9 million in Q4 2024[35]. - Private Cloud segment operating profit increased by 5.1% year-over-year to $80.6 million in Q4 2024[35]. - Non-GAAP Gross Profit for Q4 2024 was $141.2 million, compared to $157.5 million in Q4 2023[41]. - Adjusted EBITDA for the year ended December 31, 2023 was $362.6 million, down from $244.8 million projected for 2024, reflecting a decrease of approximately 32.5%[52].

Core Insights - Rackspace Technology, Inc. reported its fourth quarter and full year results for 2024, highlighting a decline in revenue and increased net losses compared to the previous year [1][2][7]. Financial Performance - Fourth quarter revenue was $686 million, a decrease of 5% from $720 million in Q4 2023 [3][9]. - Full year revenue totaled $2,737 million, down 7% from $2,957 million in 2023 [7][22]. - Private Cloud revenue for Q4 2024 was $269 million, a decrease of 6% year-over-year, while full year revenue was $1,055 million, down 13% [3][7]. - Public Cloud revenue for Q4 2024 was $417 million, a decrease of 4% year-over-year, with full year revenue at $1,683 million, down 3% [4][8]. Profitability Metrics - The company reported a loss from operations of $(29) million in Q4 2024, compared to a loss of $(15) million in Q4 2023 [4][9]. - Net loss for Q4 2024 was $(60) million, compared to net income of $28 million in Q4 2023 [4][5]. - Non-GAAP Operating Profit for Q4 2024 was $39 million, a decrease of 13% from $45 million in Q4 2023 [5][10]. Capital Expenditures - Capital expenditures in Q4 2024 were $27 million, down from $38 million in Q4 2023 [6][11]. Guidance for Future Performance - For Q1 2025, the company provided revenue guidance of $653 - $665 million, with Private Cloud revenue expected between $247 - $253 million and Public Cloud revenue between $406 - $412 million [12].

Rackspace’s data center transformation program supports Seattle Children’s focus on innovation and enhancing patient careSAN ANTONIO, Feb. 20, 2025 (GLOBE NEWSWIRE) -- Rackspace Technology® (NASDAQ: RXT), a leading end-to-end, hybrid cloud and AI solutions company, today announced a significant partnership with Seattle Children's Hospital. Through the 10-year, multi-million-dollar agreement, Rackspace will provide an end-to-end managed cloud solution to transform Seattle Children’s data center operations an ...

Core Insights - Rackspace Technology has entered a significant 10-year partnership with Seattle Children's Hospital to provide a managed cloud solution aimed at transforming their data center operations and modernizing infrastructure for both clinical and non-clinical workloads [1][2] - The agreement is expected to enhance agility, reliability, scalability, and security while significantly reducing IT costs for Seattle Children's, allowing them to focus on improving patient care and advancing pediatric research initiatives [1][2] Company Overview - Rackspace Technology is recognized as a leading end-to-end hybrid cloud and AI solutions provider, capable of designing, building, and operating cloud environments across major technology platforms [4] Partnership Details - The partnership involves deploying Rackspace's Cost and Productivity Optimization (CPO) assessment framework to evaluate Seattle Children's IT infrastructure spending, leading to a transformation that simplifies operations and phases out legacy technologies [2] - Rackspace will manage Seattle Children's workloads on its private cloud and major platforms like Azure and AWS, ensuring a standardized managed services model across both private and public clouds [2][3] Strategic Goals - The collaboration aims to create a modern IT infrastructure on Rackspace's Healthcare Cloud, enhancing security, efficiency, and operational resilience for Seattle Children's [3] - The focus is on reducing costs and aligning with Seattle Children's mission and future growth, maximizing technological capabilities while driving innovation for patient care [3]