October 15, 2024
Amar Maletira
Chief Executive Officer
Rackspace Technology, Inc.
19122 US Highway 281N, Suite 128
San Antonio, Texas 78258
Re: Rackspace Technology, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2023
Filed March 15, 2024
File No. 001-39420
Dear Amar Maletira:
We have limited our review of your filing to the financial statements
and related
disclosures and have the following comments.
Please respond to this letter within ten business days by providing the
requested
information or advise us as soon as possible when you will respond. If you do
not believe a
comment applies to your facts and circumstances, please tell us why in your
response.
After reviewing your response to this letter, we may have additional
comments.
Form 10-K for the Fiscal Year Ended December 31, 2023
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations, page 55
1. We note on pages 57 and 63 that you present total consolidated segment
operating
profit (for example $431.2 million for the year ended December 31,
2023), which is a
non-GAAP measure. However, it would appear that such measure may include
adjustments that are inconsistent with the applicable non-GAAP guidance.
In this
regard, adjusting for Corporate functions" appears to present a
non-GAAP measure
that excludes normal, recurring, cash operating expenses. Therefore,
please revise to
remove this measure from your filings and earnings releases on Form 8-K.
Refer to
Questions 100.01 and 104.04 of the non-GAAP C&DIs.
October 15, 2024
Page 2
Non-GAAP Financial Measures, page 66
2. We note the adjustments for "special bonuses and other compensation
expense" in
each of your non-GAAP measures, which includes retention and signing
bonuses and
related payroll taxes as well as long-term incentive bonuses as a
component of your
annual compensation award process. Please quantify each of these items
for us for
each period presented and tell us whether any of these bonuses require
continued
employment. As part of your response please explain how you determined
that these
were not normal, recurring, cash operating expenses of your business.
Refer to
Question 100.01 of the non-GAAP C&DIs.
3. We note your adjustments for "restructuring and transformation" here and
in your
earnings releases, and your disclosure that they include 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, certain facility closure costs, and lease termination
expenses. Please
describe in detail, the specific nature of the transformation and
optimization activities.
Also, provide us with a quantitative breakdown of each category of costs
for the
periods presented here as well as for the six months ended June 30,
2024. As part of
your response, explain your consideration of whether these
transformation and
optimization costs represent normal, recurring, cash operating expenses
necessary to
operate your business. Refer to Question 100.01 of the non-GAAP C&DIs.
General
4. We note your presentation of the non-GAAP performance measure titled
"Non-GAAP
Net Revenue" in your earnings presentations on your website. Considering
this
measure adjusts your public cloud GAAP revenue from a gross basis to a
net basis,
please explain to us why you believe this measure does not substitute
individually
tailored revenue recognition and measurement methods for those of GAAP.
Refer to
Rule 100(b) of Regulation G.
In closing, we remind you that the company and its management are
responsible for
the accuracy and adequacy of their disclosures, notwithstanding any review,
comments,
action or absence of action by the staff.
Please contact Dave Edgar at 202-551-3459 or Christine Dietz at
202-551-3408 with
any questions.
Sincerely,
Division of
Corporation Finance
Office of
Technology
cc: Brian Janson