Press Release
Rackspace Technology Taps Industry Veteran Amar Maletira as President and Chief Financial Officer
Maletira joins
“I am thrilled to welcome Amar to
Jones adds, “I want to take this opportunity to thank my partner Dustin for his key role in helping pivot the company and his leadership through our IPO. I wish him all the best.”
“I can’t imagine a more exciting time to join Rackspace Technology,” said
Maletira has more than 27 years of experience in the technology industry. Prior to serving as EVP and CFO of VIAVI, Maletira held a series of senior executive positions at Hewlett Packard Co. including CFO for Americas Enterprise Services, CFO for Application services, and Director of Investor Relations. Prior to HP, he led sales teams at Siemens and HCL in
Third Quarter Financial Update
Jones added, “The preliminary third quarter estimates provided today demonstrate that
The company is reaffirming its financial guidance for the full year 2020 and based on preliminary financial data is providing preliminary estimates of selected financial metrics for the third quarter:
Three Months Ended |
|||||||
Low (Estimated) |
High (Estimated) |
||||||
Unaudited, in millions, except per share data and percentages | |||||||
Consolidated Statement of Operations data: | |||||||
Revenue | $ | 681 | $ | 683 | |||
Net loss | $ | (108 | ) | $ | (88 | ) | |
Other Financial and Operating Data: | |||||||
Year over year revenue growth | 13 | % | 14 | % | |||
Year over year revenue growth on constant currency basis assuming acquisition of Onica as of |
6 | % | 7 | % | |||
Core Revenue (a) | $ | 625 | $ | 627 | |||
Year over year Core Revenue growth | 17 | % | 18 | % | |||
Year over year Core Revenue growth on constant currency basis assuming acquisition of Onica as of |
9 | % | 11 | % | |||
GAAP net loss per share diluted | $ | (0.58 | ) | $ | (0.47 | ) | |
Adjusted Earnings per Share (b) | $ | 0.17 | $ | 0.19 | |||
Adjusted EBITDA(b) | $ | 189 | $ | 191 |
(a) | Revenue from our Core Segments (“Core Revenue”), comprised of Multicloud Services and Apps & Cross Platform. |
(b) | Adjusted Earnings Per Share and Adjusted EBITDA are non-GAAP financial measures. For important information regarding our presentation of Adjusted Earnings Per Share and Adjusted EBITDA see the Non-GAAP Financial Measures section. |
The Company has provided ranges, rather than specific amounts, for the preliminary results described above primarily because it is still in the process of finalizing its financial results for the three months ended
with generally accepted accounting principles in
Full-year 2020 Financial Outlook
Low (Estimated) | High (Estimated) | |||||
Consolidated revenue growth, Year-over-Year in constant currency | 9.0 | % | 10 | % | ||
Core Revenue growth, Year-over-Year in constant currency | 12.5 | % | 13.5 | % | ||
Adjusted EBITDA | $ | 756 million | $ | 760 million | ||
Adjusted Earnings Per Share | $ | 0.75 | $ | 0.81 |
Definitions of non-GAAP financial measures and the reconciliations to the most directly comparable measures in accordance with GAAP are provided in the Non-GAAP Financial Measures section below.
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Investor Contact
Rackspace Technology Investor Relations
IR@rackspace.com
PR Contact
publicrelations@rackspace.com
Forward-looking Statements
Non-GAAP Financial Measures
This press release includes several non-GAAP financial measures such as constant currency revenue, Adjusted Net Income (Loss), Adjusted EBIT, Adjusted EBITDA and Adjusted Earnings Per Share (“EPS”). These non-GAAP financial measures exclude the impact of certain costs, losses and gains that are required to be included in our profit and loss measures under GAAP. Although we believe these measures are useful to investors and analysts
for the same reasons they are useful to management, as described in the accompanying pages, these measures are not a substitute for, or superior to, GAAP financial measures or disclosures. Other companies may calculate similarly-titled non-GAAP measures differently, limiting their usefulness as comparative measures. We have reconciled each of these non-GAAP measures to the applicable most comparable GAAP measure in the accompanying pages.
Constant Currency Revenue
We use constant currency revenue as an additional metric for understanding and assessing our growth excluding the effect of foreign currency rate fluctuations on our international business operations. Constant currency information compares results between periods as if exchange rates had remained constant period over period and is calculated by translating the non-
Adjusted Net Income (Loss), Adjusted EBIT and Adjusted EBITDA
We present Adjusted Net Income (Loss), Adjusted EBIT and Adjusted EBITDA because they are a basis upon which management assesses our performance and we believe they are useful to evaluating our financial performance. We believe that excluding items from net income that may not be indicative of, or are unrelated to, our core operating results, and that may vary in frequency or magnitude, enhances the comparability of our results and provides a better baseline for analyzing trends in our business.
We define Adjusted Net Income (Loss) as net income (loss) adjusted to exclude the impact of non-cash charges for share-based compensation and cash charges related to the settlement of share- based awards in connection with the
We define Adjusted EBIT as net income (loss), plus interest expense and income taxes, further adjusted to exclude the impact of non-cash charges for share-based compensation and cash charges related to the settlement of share-based awards in connection with the
We define Adjusted EBITDA as Adjusted EBIT plus depreciation and amortization.
Adjusted EBIT and Adjusted EBITDA are management’s principal metrics for measuring our underlying financial performance. Adjusted EBITDA, along with other quantitative and qualitative information, is also the principal financial measure used by management and our board of directors in determining performance-based compensation for our management and key employees.
These non-GAAP measures are not intended to imply that we would have generated higher income or avoided net losses if the
Three Months Ended September 30, 2020 |
||||||
Low (Estimated) |
High (Estimated) |
|||||
Unaudited, in millions | ||||||
Net income (loss) | $ | (108 | ) | $ | (88 | ) |
Share-based compensation expense | 41 | 40 | ||||
Cash settled equity and special bonuses (a) | 6 | 4 | ||||
Transaction-related adjustments, net (b) | 14 | 13 | ||||
Restructuring and transformation expenses (c) | 24 | 22 | ||||
Management fees (d) | 1 | 1 | ||||
Net (gain) loss on divestiture and investments | (1 | ) | — | |||
Net loss on extinguishment of debt (e) | 38 | 36 | ||||
Other (income) expense (f) | (2 | ) | (1 | ) | ||
Amortization of intangible assets | 45 | 44 | ||||
Tax effect of non-GAAP adjustments | (26 | ) | (34 | ) | ||
Adjusted Net Income (Loss) | 32 | 37 | ||||
Interest expense | 69 | 68 | ||||
Benefit for income taxes | (12 | ) | (21 | ) | ||
Tax effect of non-GAAP adjustments | 26 | 34 | ||||
Adjusted EBIT | 115 | 118 | ||||
Depreciation and amortization | 119 | 117 | ||||
Amortization of intangible assets | (45 | ) | (44 | ) | ||
Adjusted EBITDA | $ | 189 | $ | 191 |
(a) | Includes retention bonuses, mainly relating to restructuring and integration projects, and senior executive signing bonuses and relocation costs. | |
(b) | Includes legal, professional, accounting and other advisory fees related to completed acquisitions (mostly Onica, consummated in the fourth quarter of 2019), and integration costs of acquired businesses (mainly |
|
(c) | Includes consulting and advisory fees related to business transformation and optimization activities, payroll costs for employees that dedicate significant time to these projects, as well as associated severance, facility closure costs and lease termination expenses. We assessed these activities and determined that they did not qualify under the scope of ASC 420 (Exit or Disposal costs). | |
(d) | Represents historical management fees pursuant to management consulting agreements. The management consulting agreements were terminated effective |
|
(e) | Includes losses on our repurchases of 8.625% Senior Notes. | |
(f) | Reflects mainly changes in the fair value of foreign currency derivatives. |
Adjusted Earnings Per Share (EPS)
We define Adjusted EPS as Adjusted Net Income (Loss) divided by our GAAP average number of shares outstanding for the period on a diluted basis and further adjusted for the average number of shares associated with securities which are anti-dilutive to GAAP earnings per share but dilutive to Adjusted EPS. Management uses Adjusted EPS to evaluate the performance of our business on a comparable basis from period to period, including by adjusting for the impact of the issuance of shares that would be dilutive to Adjusted EPS.
Three Months Ended September 30, 2020 |
|||||||
Low (Estimated) |
High (Estimated) |
||||||
(In whole dollars) | |||||||
GAAP net loss per share diluted | $ | (0.58 | ) | $ | (0.47 | ) | |
Per share impacts of adjustments to net loss(a) | 0.74 | 0.65 | |||||
Impact of shares dilutive after adjustments to net loss (b) | 0.01 | 0.01 | |||||
Adjusted EPS | $ | 0.17 | $ | 0.19 |
(a) | Reflects the aggregate adjustments made to reconcile Adjusted Net Income (Loss) to our net loss, as noted in the above table, divided by the GAAP diluted number of shares outstanding for the relevant period, as adjusted for the company’s twelve-for-one stock split effected on |
(b) | Reflects the impact of approximately 6 million shares of common stock relating to equity awards for the three months ended |
Source: Rackspace Technology, Inc.