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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______.

Commission File Number: 001-39420

 RACKSPACE TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)

https://cdn.kscope.io/ad04927d51516ac49155dc47b0c20997-rxt-20210930_g1.jpg

Delaware
81-3369925
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1 Fanatical Place
City of Windcrest
San Antonio, Texas 78218
(Address of principal executive offices, including zip code)

(210) 312-4000
(Registrant's telephone number, including area code)

None
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.01 per shareRXTThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐




Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer," "accelerated filer," "smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☑

On November 10, 2021, 210,032,072 shares of the registrant’s common stock, par value $0.01 per share, were outstanding.



RACKSPACE TECHNOLOGY, INC.
 TABLE OF CONTENTS
 
Part I - Financial Information 
Item 1.Financial Statements: 
 
 
 
 
Item 2.
Item 3.
Item 4.
  
Part II - Other Information
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021 (this "Quarterly Report") contains certain information that may constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. While we have specifically identified certain information as being forward-looking in the context of its presentation, we caution you that all statements contained in this report that are not clearly historical in nature, including statements regarding anticipated financial performance, management’s plans and objectives for future operations, business prospects, market conditions, and other matters are forward-looking. Forward-looking statements are contained principally in the sections of this report entitled “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Without limiting the generality of the preceding sentence, any time we use the words “expects,” “intends,” “will,” “anticipates,” “believes,” “confident,” “continue,” “propose,” “seeks,” “could,” “may,” “should,” “estimates,” “forecasts,” “might,” “goals,” “objectives,” “targets,” “planned,” “projects,” and similar expressions, we intend to clearly express that the information deals with possible future events and is forward-looking in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking.

Forward-looking information involves risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such statements, including without limitation, the effects of the COVID-19 pandemic on our results of operations and business, and the risks and uncertainties disclosed or referenced in Part II Item 1A. of this report under the heading “Risk Factors.” Therefore, caution should be taken not to place undue reliance on any such forward-looking statements. Much of the information in this report that looks toward future performance of the company is based on various factors and important assumptions about future events that may or may not actually occur. As a result, our operations and financial results in the future could differ materially and substantially from those we have discussed in the forward-looking statements included in this Quarterly Report. We assume no obligation (and specifically disclaim any such obligation) to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

TRADEMARKS, TRADE NAMES AND SERVICE MARKS

“Rackspace,” “Rackspace Technology,” “Fanatical Experience,” and “Rackspace Fabric” are registered or unregistered trademarks of Rackspace US, Inc. in the United States and/or other countries. OpenStack® is a registered trademark of OpenStack, LLC and OpenStack Foundation in the United States. Solely for convenience, trademarks, trade names and service marks referred to in this Quarterly Report may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks, trade names and service marks. Other trademarks, trade names and service marks appearing in this Quarterly Report are the property of their respective holders. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.



Table of Contents
PART I – FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
RACKSPACE TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except per share data)December 31,
2020
September 30,
2021
ASSETS  
Current assets:  
Cash and cash equivalents$104.7 $260.0 
Accounts receivable, net of allowance for doubtful accounts and accrued customer credits of $28.3 and $15.5, respectively
483.0 533.6 
Prepaid expenses123.8 92.7 
Other current assets47.0 63.9 
Total current assets758.5 950.2 
Property, equipment and software, net884.6 861.2 
Goodwill, net2,761.1 2,759.5 
Intangible assets, net1,646.3 1,508.8 
Operating right-of-use assets171.1 143.7 
Other non-current assets156.2 168.1 
Total assets$6,377.8 $6,391.5 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses$285.4 $372.0 
Accrued compensation and benefits110.6 101.6 
Deferred revenue76.7 91.5 
Debt43.4 23.0 
Accrued interest 26.5 30.1 
Operating lease liabilities62.2 64.1 
Finance lease liabilities40.7 61.9 
Financing obligations48.8 54.5 
Other current liabilities47.9 47.7 
Total current liabilities742.2 846.4 
Non-current liabilities:
Debt3,319.3 3,314.8 
Operating lease liabilities118.2 90.6 
Finance lease liabilities358.1 354.9 
Financing obligations74.1 69.9 
Deferred income taxes236.7 208.5 
Other non-current liabilities145.5 135.4 
Total liabilities4,994.1 5,020.5 
Commitments and Contingencies (Note 7)
Stockholders' equity:
Preferred stock, $0.01 par value per share: 5.0 shares authorized; no shares issued or outstanding
  
Common stock, $0.01 par value per share: 1,495.0 shares authorized; 201.8 and 209.9 shares issued and outstanding, respectively
2.0 2.1 
Additional paid-in capital2,363.6 2,472.3 
Accumulated other comprehensive loss(18.6)(4.7)
Accumulated deficit(963.3)(1,098.7)
Total stockholders' equity1,383.7 1,371.0 
Total liabilities and stockholders' equity$6,377.8 $6,391.5 

See accompanying notes to the unaudited consolidated financial statements.
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RACKSPACE TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
 
Three Months Ended September 30,Nine Months Ended September 30,
(In millions, except per share data)2020202120202021
Revenue$681.7 $762.5 $1,990.9 $2,232.2 
Cost of revenue(435.9)(530.8)(1,253.9)(1,529.7)
Gross profit245.8 231.7 737.0 702.5 
Selling, general and administrative expenses(260.5)(234.6)(707.5)(698.2)
Gain on sale of land   19.9 
Income (loss) from operations(14.7)(2.9)29.5 24.2 
Other income (expense):
Interest expense(68.3)(51.5)(209.2)(154.6)
Gain (loss) on investments, net  0.9 (3.6)
Debt modification and extinguishment costs(37.0) (37.0)(37.5)
Other income (expense), net0.7 0.1 0.4 (1.1)
Total other income (expense)(104.6)(51.4)(244.9)(196.8)
Loss before income taxes(119.3)(54.3)(215.4)(172.6)
Benefit for income taxes18.1 19.5 33.4 37.2 
Net loss$(101.2)$(34.8)$(182.0)$(135.4)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments$11.7 $(8.8)$(7.8)$(3.1)
Unrealized gain (loss) on derivative contracts1.3 0.6 (46.2)4.0 
Amount reclassified from accumulated other comprehensive income (loss) to earnings3.2 4.5 4.5 13.0 
Other comprehensive income (loss)16.2 (3.7)(49.5)13.9 
Comprehensive loss$(85.0)$(38.5)$(231.5)$(121.5)
Net loss per share:
Basic and diluted$(0.54)$(0.17)$(1.05)$(0.65)
Weighted average number of shares outstanding:
Basic and diluted186.7209.3172.6207.3
 
See accompanying notes to the unaudited consolidated financial statements.
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RACKSPACE TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
(In millions)20202021
Cash Flows From Operating Activities
Net loss$(182.0)$(135.4)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization355.1 321.2 
Amortization of operating right-of-use assets50.7 51.4 
Deferred income taxes(40.2)(35.2)
Share-based compensation expense56.8 56.7 
Gain on sale of land (19.9)
Debt modification and extinguishment costs37.0 37.5 
Unrealized (gain) loss on derivative contracts(2.6)12.7 
(Gain) loss on investments, net(0.9)3.6 
Provision for bad debts and accrued customer credits11.0 (6.1)
Amortization of debt issuance costs and debt discount13.9 6.8 
Other operating activities(2.5)(1.3)
Changes in operating assets and liabilities:
Accounts receivable(92.7)(44.6)
Prepaid expenses and other current assets(13.7)20.1 
Accounts payable, accrued expenses, and other current liabilities(10.4)87.1 
Deferred revenue(7.2)14.4 
Operating lease liabilities(43.4)(49.1)
Other non-current assets and liabilities3.8 (8.7)
   Net cash provided by operating activities132.7 311.2 
Cash Flows From Investing Activities
Purchases of property, equipment and software(97.6)(87.2)
Proceeds from sale of land 31.3 
Other investing activities5.4 3.7 
Net cash used in investing activities(92.2)(52.2)
Cash Flows From Financing Activities
Proceeds from issuance of common stock, net659.1  
Proceeds from employee stock plans11.3 51.4 
Shares of common stock withheld for employee taxes(2.0) 
Proceeds from borrowings under long-term debt arrangements310.0 2,838.5 
Payments on long-term debt(811.3)(2,872.1)
Payments for debt issuance costs(1.4)(34.5)
Payments on financing component of interest rate swap (8.6)
Principal payments of finance lease liabilities(14.3)(35.7)
Proceeds from financing obligations20.9  
Principal payments of financing obligations(43.8)(40.6)
Net cash provided by (used in) financing activities128.5 (101.6)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash0.4 (2.1)
Increase in cash, cash equivalents, and restricted cash169.4 155.3 
Cash, cash equivalents, and restricted cash at beginning of period87.1 108.1 
Cash, cash equivalents, and restricted cash at end of period$256.5 $263.4 
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Supplemental Cash Flow Information
Cash payments for interest, net of amount capitalized$188.1 $132.3 
Cash payments for income taxes, net of refunds$13.3 $7.5 
Non-cash Investing and Financing Activities
Acquisition of property, equipment and software by finance leases$77.1 $52.6 
Acquisition of property, equipment and software by financing obligations20.5 42.7 
Decrease in property, equipment and software accrued in liabilities(21.1)(6.8)
Non-cash purchases of property, equipment and software$76.5 $88.5 
Non-cash increase in buildings within property, equipment and software, net due to lease modification$220.3 $ 
Offering costs included in accrued liabilities$1.3 $ 
Other non-cash investing and financing activities$2.8 $0.7 

The following table provides a reconciliation of cash, cash equivalents, and restricted cash to the total of such amounts shown on the Consolidated Statements of Cash Flows.

Nine Months Ended September 30,
(In millions)20202021
Cash and cash equivalents$253.2 $260.0 
Restricted cash included in other non-current assets3.3 3.4 
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows$256.5 $263.4 

See accompanying notes to the unaudited consolidated financial statements.
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RACKSPACE TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(In millions)Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders' Equity
SharesAmount
Balance at June 30, 2020165.6 $1.6 $1,619.2 $(53.7)$(798.3)$768.8 
Issuance of common stock33.5 0.4 657.4 — — 657.8 
Exercise of stock options and release of stock awards, net of shares withheld1.1 — 9.8 — — 9.8 
Share-based compensation expense— — 40.2 — — 40.2 
Net loss— — — — (101.2)(101.2)
Other comprehensive income— — — 16.2 — 16.2 
Balance at September 30, 2020200.2 $2.0 $2,326.6 $(37.5)$(899.5)$1,391.6 

(In millions)Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal Stockholders' Equity
SharesAmount
Balance at December 31, 2019165.4 $1.6 $1,602.7 $12.0 $(717.5)$898.8 
Issuance of common stock33.5 0.4 657.4 —  657.8 
Exercise of stock options and release of stock awards, net of shares withheld1.3 — 9.7 — — 9.7 
Share-based compensation expense— — 56.8 — — 56.8 
Net loss— — — — (182.0)(182.0)
Other comprehensive loss— — — (49.5)— (49.5)
Balance at September 30, 2020200.2 $2.0 $2,326.6 $(37.5)$(899.5)$1,391.6 

(In millions)Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders' Equity
SharesAmount
Balance at June 30, 2021209.0 $2.1 $2,445.3 $(1.0)$(1,063.9)$1,382.5 
Exercise of stock options and release of stock awards0.9 — 7.9 — — 7.9 
Share-based compensation expense— — 19.1 — — 19.1 
Net loss— — — — (34.8)(34.8)
Other comprehensive loss— — — (3.7)— (3.7)
Balance at September 30, 2021209.9 $2.1 $2,472.3 $(4.7)$(1,098.7)$1,371.0 

(In millions)Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders' Equity
SharesAmount
Balance at December 31, 2020201.8 $2.0 $2,363.6 $(18.6)$(963.3)$1,383.7 
Issuance of common stock2.7 — — — —  
Exercise of stock options and release of stock awards5.0 0.1 45.7 — — 45.8 
Issuance of shares from Employee Stock Purchase Plan0.4 — 6.3 — — 6.3 
Share-based compensation expense— — 56.7 — — 56.7 
Net loss— — — — (135.4)(135.4)
Other comprehensive income— — — 13.9 — 13.9 
Balance at September 30, 2021209.9 $2.1 $2,472.3 $(4.7)$(1,098.7)$1,371.0 

See accompanying notes to the unaudited consolidated financial statements.
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RACKSPACE TECHNOLOGY, INC.
 NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Company Overview, Basis of Presentation, and Summary of Significant Accounting Policies

Nature of Operations and Basis of Presentation

Rackspace Technology, Inc. ("Rackspace Technology") is a Delaware corporation controlled by investment funds affiliated with Apollo Global Management, Inc. and its subsidiaries (“Apollo”). Rackspace Technology was formed on July 21, 2016 but had no assets, liabilities or operating results until November 3, 2016 when Rackspace Hosting, Inc. (now named Rackspace Technology Global, Inc., or “Rackspace Technology Global”), a global provider of modern information technology-as-a-service, was acquired by Inception Parent, Inc., a wholly-owned entity indirectly owned by Rackspace Technology (the “Rackspace Acquisition”).

Rackspace Technology Global commenced operations in 1998 as a limited partnership, and was incorporated in Delaware in March 2000. Rackspace Technology serves as the holding company for Rackspace Technology Global and does not engage in any material business or operations other than those related to its indirect ownership of the capital stock of Rackspace Technology Global and its subsidiaries or business or operations otherwise customarily undertaken by a holding company.

For ease of reference, the terms “we,” “our company,” “the company,” “us,” or “our” as used in this report refer to Rackspace Technology and its consolidated subsidiaries.

The unaudited consolidated financial statements include the accounts of Rackspace Technology, Inc. and our wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.

Unaudited Interim Financial Information

The unaudited consolidated financial statements as of September 30, 2021, and for the three and nine months ended September 30, 2020 and 2021, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, certain financial information and disclosures required for financial statements prepared under GAAP have been omitted in accordance with the SEC disclosure rules and regulations that permit reduced disclosure for interim periods. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020 ("Annual Report on Form 10-K"). The unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements included in our Annual Report on Form 10-K and, in the opinion of management, reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of our financial position as of September 30, 2021, our results of operations and stockholders' equity for the three and nine months ended September 30, 2020 and 2021, and our cash flows for the nine months ended September 30, 2020 and 2021.

The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2021, or for any other interim period, or for any other future year.

Use of Estimates
 
The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates, including those related to the allowance for doubtful accounts, useful lives of property, equipment and software, software capitalization, incremental borrowing rates for lease liability measurement, fair values of intangible assets and reporting units, useful lives of intangible assets, share-based compensation, contingencies, and income taxes, among others. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from our estimates.
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Impact of COVID-19

In March 2020, the World Health Organization declared COVID-19 a global pandemic. The effects of COVID-19 (and any variations thereof) continue to evolve, and the full impact and duration of the virus are unknown. Currently, COVID-19 has not had a significant impact on our operations or financial performance; however, the ultimate extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and severity of the outbreak, the pace of economic recovery, the possible resurgence in the spread of the virus or any variant strain(s) of the virus, advances in testing, treatment, and prevention, including the efficacy and availability of vaccines, its impact on our customers, vendors and employees, and its impact on our sales cycles as well as industry events, all of which are uncertain and cannot be predicted. We continue to face a greater degree of uncertainty in making estimates and assumptions needed to prepare our consolidated financial statements and footnotes as a result of COVID-19.

Significant Accounting Policies and Estimates

Our Annual Report on Form 10-K includes an additional discussion of the significant accounting policies and estimates used in the preparation of our consolidated financial statements. There were no material changes to our significant accounting policies and estimates during the nine months ended September 30, 2021, other than the addition of our policy regarding restructuring activities, discussed below.

Restructuring Activities

We record restructuring activities including costs for one-time termination benefits in accordance with Accounting Standards Codification ("ASC") No. 420, Exit or Disposal Cost Obligations (“ASC 420”). The timing of recognition for severance costs accounted for under ASC 420 depends on whether employees are required to render service until they are terminated in order to receive the termination benefits. If employees are required to render service until they are terminated in order to receive the termination benefits, a liability is recognized ratably over the future service period. Otherwise, a liability is recognized when management has committed to a restructuring plan and has communicated those actions to employees.

Under ASC 420-10, we establish a liability for a cost associated with an exit or disposal activity, including severance and non-lease contract termination obligations, and other related costs, when the liability is incurred, rather than at the date that we commit to an exit plan. We reassess the expected cost to complete the exit or disposal activities at the end of each reporting period and adjust our remaining estimated liabilities, if necessary.

See Note 8, "July 2021 Restructuring Plan," for additional information.

Change in Accounting Estimate

In March 2021, we completed an assessment of the useful lives of certain assets within the Computers and equipment asset class. The timing of this review was based on a combination of factors accumulating over time that provided the company with updated information to make a better estimate on the economic lives of certain property and equipment. These factors included changes in customer purchasing patterns, technological advancements and the availability of extended equipment warranties. The assessment resulted in a revision within our policy ranges for certain useful lives in this asset class. This change in accounting estimate was effective in the first quarter of 2021. The effect of this change was a reduction in depreciation expense of $5.3 million and $19.4 million for the three and nine months ended September 30, 2021, respectively.

Reclassifications

Certain reclassifications have been made to the prior period consolidated financial statements to conform to the current period presentation. The current portion of "Finance lease liabilities" is now presented separately from "Other current liabilities" in the Consolidated Balance Sheets.


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Recently Adopted Accounting Pronouncements

Simplifying the Accounting for Income Taxes

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes, which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. We adopted this guidance on January 1, 2021. The adoption of this guidance did not have a material impact on our consolidated financial statements.

2. Customer Contracts

The following table presents the balances related to customer contracts:
(In millions)Consolidated Balance Sheets AccountDecember 31, 2020September 30, 2021
Accounts receivable, net
Accounts receivable, net (1)
$483.0 $533.6 
Current portion of contract assetsOther current assets12.2 14.9 
Non-current portion of contract assetsOther non-current assets13.9 12.9 
Current portion of deferred revenueDeferred revenue76.7 91.5 
Non-current portion of deferred revenueOther non-current liabilities14.2 13.5 

(1)    Allowance for doubtful accounts and accrued customer credits was $28.3 million and $15.5 million as of December 31, 2020 and September 30, 2021, respectively.

Amounts recognized in revenue for the three months ended September 30, 2020 and 2021, which were included in deferred revenue as of the beginning of each period, totaled $28.0 million and $26.4 million, respectively. Amounts recognized in revenue for the nine months ended September 30, 2020 and 2021, which were included in deferred revenue as of the beginning of each period, totaled $55.6 million and $54.7 million, respectively.

Cost Incurred to Obtain and Fulfill a Contract

As of December 31, 2020 and September 30, 2021, the balances of capitalized costs to obtain a contract were $59.3 million and $55.8 million, respectively, and the balances of capitalized costs to fulfill a contract were $25.0 million and $24.9 million, respectively. These capitalized costs are included in “Other non-current assets” on the Consolidated Balance Sheets.

Amortization of capitalized sales commissions and implementation costs was as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(In millions)2020202120202021
Amortization of capitalized sales commissions$11.0 $11.1 $33.2 $32.6 
Amortization of capitalized implementation costs4.4 4.6 13.0 13.5 

Remaining Performance Obligations

As of September 30, 2021, the aggregate amount of transaction price allocated to remaining performance obligations was $754.0 million, of which 22% is expected to be recognized as revenue during 2021 and the remainder thereafter. These remaining performance obligations primarily relate to our fixed-term arrangements. Our other revenue arrangements are usage-based, and as such, we recognize revenue based on the right to invoice for the services performed.
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3. Net Loss Per Share

Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted average shares outstanding during the period.

The following table sets forth the computation of basic and diluted net loss per share:
 Three Months Ended September 30,Nine Months Ended September 30,
(In millions, except per share data)2020202120202021
Basic and diluted net loss per share:  
Net loss attributable to common stockholders$(101.2)$(34.8)$(182.0)$(135.4)
Weighted average shares outstanding:
Common stock186.7209.3172.6207.3
Number of shares used in per share computations186.7209.3172.6207.3
Net loss per share$(0.54)$(0.17)$(1.05)$(0.65)

Potential common share equivalents consist of shares issuable upon the exercise of stock options, vesting of restricted stock or purchase under the Employee Stock Purchase Plan (the "ESPP"), as well as contingent shares associated with our acquisition of Datapipe Parent, Inc. Since we were in a net loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods as the inclusion of all potential common shares outstanding would have been anti-dilutive. We excluded 26.5 million and 20.7 million potential common shares from the computation of dilutive loss per share for the three months ended September 30, 2020 and 2021, respectively, and 26.5 million and 20.7 million potential shares for the nine months ended September 30, 2020 and 2021, respectively, because the effect would have been anti-dilutive.

4. Property, Equipment and Software, net
 
Property, equipment and software, net, consisted of the following: 
(In millions)December 31,
2020
September 30,
2021
Computers and equipment$1,191.8 $1,213.3 
Software472.4 463.6 
Furniture and fixtures22.4 21.9 
Buildings and leasehold improvements 513.1 513.2 
Land32.6 21.2 
Property, equipment and software, at cost2,232.3 2,233.2 
Less: Accumulated depreciation (1,366.8)(1,384.8)
Work in process19.1 12.8 
Property, equipment and software, net$884.6 $861.2 

On January 15, 2021, we completed the sale of a parcel of undeveloped land in the United Kingdom adjacent to one of our existing data centers. The net book value of the land prior to the sale was $11.4 million and we received cash proceeds of $32.2 million, less brokerage and professional fees of $0.9 million, resulting in net cash proceeds of $31.3 million. Therefore, we recorded a gain on sale of land of $19.9 million to "Gain on sale of land" in the Consolidated Statements of Comprehensive Loss for the nine months ended September 30, 2021.

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5. Goodwill and Intangible Assets

The following table sets forth the changes in the carrying amounts of goodwill by reportable segment:
(In millions)Multicloud ServicesApps & Cross PlatformOpenStack Public CloudTotal Consolidated
Balance as of December 31, 2020 (1)
$2,386.0 $322.6 $52.5 $2,761.1 
Foreign currency translation(1.4)(0.1)(0.1)(1.6)
Balance as of September 30, 2021
$2,384.6 $322.5 $52.4 $2,759.5 
(1)    Multicloud Services had accumulated impairment charges of $295.0 million as of December 31, 2020.

The following table provides information regarding our intangible assets other than goodwill:
December 31, 2020September 30, 2021
(In millions)Gross carrying amountAccumulated amortizationNet carrying amountGross carrying amountAccumulated amortizationNet carrying amount
Customer relationships$1,986.2 $(624.0)$1,362.2 $1,983.0 $(743.6)$1,239.4 
Property tax abatement 16.0 (7.4)8.6 16.0 (8.7)7.3 
Other47.7 (22.2)25.5 28.2 (16.1)12.1 
Total definite-lived intangible assets2,049.9 (653.6)1,396.3 2,027.2 (768.4)1,258.8 
Trade name (indefinite-lived)250.0 — 250.0 250.0 — 250.0 
Total intangible assets other than goodwill$2,299.9 $(653.6)$1,646.3 $2,277.2 $(768.4)$1,508.8 


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6. Debt

Debt consisted of the following:

(In millions, except %)December 31, 2020September 30, 2021
Debt InstrumentMaturity Date
Interest Rate(1)
Amount
Interest Rate(1)
Amount
Prior Term Loan FacilityNovember 3, 20234.00%$2,795.6 —%$— 
Term Loan FacilityFebruary 15, 2028—%— 3.50%2,288.5 
Revolving Credit FacilityAugust 7, 2025—%— —%— 
3.50% Senior Secured Notes
February 15, 2028—%— 3.50%550.0 
5.375% Senior Notes
December 1, 20285.375%550.0 5.375%550.0 
Receivables Financing FacilityJuly 19, 20222.37%65.0 —%— 
Less: unamortized debt issuance costs(44.2)(37.7)
Less: unamortized debt discount(3.7)(13.0)
Total debt3,362.7 3,337.8 
Less: current portion of debt(43.4)(23.0)
Debt, excluding current portion$3,319.3 $3,314.8 
(1)    Interest rates are as of each respective balance sheet date.

Senior Facilities

Our senior secured credit facilities include a first lien term loan facility (the "Term Loan Facility") and a revolving credit facility (the "Revolving Credit Facility" and, together with the Term Loan Facility, the "Senior Facilities").

On February 9, 2021, we amended and restated the credit agreement governing our Senior Facilities (the "First Lien Credit Agreement"), which included a new seven-year $2,300.0 million senior secured first lien term loan facility due on February 15, 2028 and our existing $375.0 million Revolving Credit Facility. We used the borrowings under the Term Loan Facility, together with the proceeds from the issuance of the 3.50% Senior Secured Notes described below (together, the "February 2021 Refinancing Transaction"), to repay all borrowings under our prior term loan facility (the "Prior Term Loan Facility"), to pay related fees and expenses and for general corporate purposes.

Borrowings under the Senior Facilities bear interest at an annual rate equal to an applicable margin plus, at our option, either (a) a LIBOR rate determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs, subject to a 0.75% floor, in the case of the Term Loan Facility, and a 1.00% floor, in the case of the Revolving Credit Facility, or (b) a base rate determined by reference to the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate of Citibank, N.A. and (iii) the one-month adjusted LIBOR plus 1.00%. The applicable margin for the Term Loan Facility is 2.75% for LIBOR loans and 1.75% for base rate loans and the applicable margin for the Revolving Credit Facility is 3.00% for LIBOR loans and 2.00% for base rate loans. Interest is due at the end of each interest period elected, not exceeding 90 days, for LIBOR loans and at the end of every calendar quarter for base rate loans.

In addition to paying interest on the outstanding principal under the Senior Facilities, the Revolving Credit Facility also includes a commitment fee equal to 0.50% per annum in respect of the unused commitments that is due quarterly. This commitment fee is subject to one step-down based on the net first lien leverage ratio.

As of September 30, 2021, the interest rate on the Term Loan Facility was 3.50%. We are required to make quarterly principal payments of $5.8 million, which began on June 30, 2021. See Note 11, "Derivatives," for information on interest rate swap agreements we utilize to manage the interest rate risk on the Term Loan Facility.

In addition to the quarterly amortization payments discussed above, the Senior Facilities require us to make certain mandatory prepayments, including using (i) a portion of annual excess cash flow, as defined in the First Lien Credit Agreement, to prepay the Term Loan Facility, (ii) net cash proceeds of certain non-ordinary assets sales or dispositions of property to prepay the Term Loan Facility and (iii) net cash proceeds of any issuance or incurrence of debt not permitted under the Senior Facilities to prepay the Term Loan Facility. We may make voluntary prepayments at any time without penalty, except in connection with a repricing event, as defined in the First Lien Credit Agreement.
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The fair value of the Term Loan Facility as of September 30, 2021 was $2,265.6 million, based on quoted market prices for identical assets that are traded in over-the-counter secondary markets that are not considered active. The fair value of the Term Loan Facility is classified as Level 2 within the fair value hierarchy.

Rackspace Technology Global is the borrower under the Senior Facilities, and all obligations under the Senior Facilities are (i) guaranteed by Inception Parent, Inc., Rackspace Technology Global’s immediate parent company, on a limited recourse basis and secured by the equity interests of Rackspace Technology Global held by Inception Parent, Inc. and (ii) guaranteed by Rackspace Technology Global’s wholly-owned domestic restricted subsidiaries and secured by substantially all material owned assets of Rackspace Technology Global and the subsidiary guarantors, including the equity interests held by each, in each case subject to certain exceptions. The only financial covenant is with respect to the Revolving Credit Facility which limits the net first lien leverage ratio to a maximum of 5.00 to 1.00; however, this covenant is only applicable and tested if the aggregate amount of outstanding borrowings under the Revolving Credit Facility and letters of credit issued thereunder (excluding $25.0 million of undrawn letters of credit and cash collateralized letters of credit) is equal to or greater than 35% of the Revolving Credit Facility commitments at the end of a fiscal quarter. Other covenants include limitations on restricted payments, indebtedness, investments, liens, asset sales and transactions with affiliates. As of September 30, 2021, we were in compliance with all covenants under the Senior Facilities.

The Revolving Credit Facility matures on August 7, 2025. As of September 30, 2021, we had total commitments of $375.0 million and no outstanding borrowings under the Revolving Credit Facility or letters or credit issued thereunder.

3.50% Senior Secured Notes due 2028

On February 9, 2021, Rackspace Technology Global issued $550.0 million aggregate principal amount of 3.50% Senior Secured Notes due 2028 (the “3.50% Senior Secured Notes”). The 3.50% Senior Secured Notes will mature on February 15, 2028 and bear interest at an annual fixed rate of 3.50%. Interest is payable semiannually on each February 15 and August 15, commencing on August 15, 2021. The 3.50% Senior Secured Notes are not subject to registration rights. As noted above, we used the net proceeds from the issuance of the 3.50% Senior Secured Notes, together with borrowings under the Term Loan Facility described above, to repay all borrowings outstanding under the Prior Term Loan Facility, to pay related fees and expenses and for general corporate purposes.

Rackspace Technology Global is the issuer of the 3.50% Senior Secured Notes, and obligations under the 3.50% Senior Secured Notes are fully and unconditionally guaranteed, jointly and severally, by all of Rackspace Technology Global’s wholly-owned domestic restricted subsidiaries (as subsidiary guarantors) that guarantee the Senior Facilities. The 3.50% Senior Secured Notes and the related guarantees are secured by first-priority security interests in substantially all material owned assets of Rackspace Technology Global and the subsidiary guarantors, including the equity interest held by each, subject to certain exceptions, which assets also secure the Senior Facilities.

Rackspace Technology Global may redeem the 3.50% Senior Secured Notes at its option, in whole at any time or in part from time to time, at the following redemption prices: prior to February 15, 2024, at a redemption price equal to 100.000% of the principal amount, plus the applicable premium described in the indenture governing the 3.50% Senior Secured Notes (the "3.50% Notes Indenture") and accrued and unpaid interest, if any, to but excluding the redemption date; from February 15, 2024 to February 14, 2025, at a redemption price equal to 101.750% of the principal amount, plus accrued and unpaid interest, if any, to but excluding the redemption date; from February 15, 2025 to February 14, 2026, at a redemption price equal to 100.875% of the principal amount, plus accrued and unpaid interest, if any, to but excluding the redemption date; and from February 15, 2026 and thereafter, at a redemption price equal to 100.000% of the principal amount, plus accrued and unpaid interest, if any, to but excluding the redemption date. Rackspace Technology Global may also redeem prior to February 15, 2024 up to 40.0% of the aggregate principal amount of the 3.50% Senior Secured Notes with funds in an aggregate amount not to exceed the net cash proceeds from certain equity offerings at a redemption price equal to 103.500% of the principal amount of the 3.50% Senior Secured Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. Notwithstanding the foregoing, Rackspace Technology Global may redeem during each twelve-month period, commencing with February 9, 2021, up to 10.0% of the original aggregate principal amount of the 3.50% Senior Secured Notes at a redemption price of 103.00%, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.


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The 3.50% Notes Indenture contains covenants that, among other things, limit our ability to incur certain additional debt, incur certain liens securing debt, pay certain dividends or make other restricted payments, make certain investments, make certain asset sales and enter into certain transactions with affiliates. These covenants are subject to a number of exceptions, limitations, and qualifications as set forth in the 3.50% Notes Indenture. Additionally, upon the occurrence of a change of control (as defined in the 3.50% Notes Indenture), we will be required to make an offer to repurchase all of the outstanding 3.50% Senior Secured Notes at a price in cash equal to 101% of the aggregate principal amount, plus accrued and unpaid interest, if any, to, but not including the purchase date.

As of September 30, 2021, Rackspace Technology Global was in compliance with all covenants under the 3.50% Notes Indenture.

The fair value of the 3.50% Senior Secured Notes as of September 30, 2021 was $529.4 million, based on quoted market prices for identical assets that are traded in over-the-counter secondary markets that are not considered active. The fair value of the 3.50% Senior Secured Notes are classified as Level 2 within the fair value hierarchy.

5.375% Senior Notes due 2028

On December 1, 2020, Rackspace Technology Global issued $550.0 million aggregate principal amount of 5.375% Senior Notes due 2028 (the "5.375% Senior Notes"). The 5.375% Senior Notes will mature on December 1, 2028 and bear interest at an annual fixed rate of 5.375%. Interest is payable semiannually on each June 1 and December 1, commencing on June 1, 2021. The 5.375% Senior Notes are not subject to registration rights.

Rackspace Technology Global is the issuer of the 5.375% Senior Notes, and obligations under the 5.375% Senior Notes are guaranteed on a senior unsecured basis by all of Rackspace Technology Global’s wholly-owned domestic restricted subsidiaries (as subsidiary guarantors) that guarantee the Senior Facilities. The 5.375% Senior Notes are effectively junior to the indebtedness under the Senior Facilities and the 3.50% Senior Secured Notes, to the extent of the collateral securing the Senior Facilities and the 3.50% Senior Secured Notes.

Rackspace Technology Global may redeem the 5.375% Senior Notes at its option, in whole at any time or in part from time to time, at the following redemption prices: prior to December 1, 2023, at a redemption price equal to 100.000% of the principal amount, plus the applicable premium described in the indenture governing the 5.375% Senior Notes (the "5.375% Notes Indenture") and accrued and unpaid interest, if any, to but excluding the redemption date; from December 1, 2023 to December 1, 2024, at a redemption price equal to 102.688% of the principal amount, plus accrued and unpaid interest, if any, to but excluding the redemption date; from December 1, 2024 to December 1, 2025, at a redemption price equal to 101.344% of the principal amount, plus accrued and unpaid interest, if any, to but excluding the redemption date; and from December 1, 2025 and thereafter, at a redemption price equal to 100.000% of the principal amount, plus accrued and unpaid interest, if any, to but excluding the redemption date. Rackspace Technology Global may also redeem prior to December 1, 2023 up to 40.0% of the aggregate principal amount of the 5.375% Senior Notes with funds in an aggregate amount not to exceed the net cash proceeds from certain equity offerings at a redemption price equal to 105.375% of the principal amount of the 5.375% Senior Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

The 5.375% Notes Indenture contains covenants that, among other things, limit our ability to incur certain additional debt, incur certain liens securing debt, pay certain dividends or make other restricted payments, make certain investments, make certain asset sales and enter into certain transactions with affiliates. These covenants are subject to a number of exceptions, limitations, and qualifications as set forth in the 5.375% Notes Indenture. Additionally, upon the occurrence of a change of control (as defined in the 5.375% Notes Indenture), we will be required to make an offer to repurchase all of the outstanding 5.375% Senior Notes at a price in cash equal to 101.0% of the aggregate principal amount, plus accrued and unpaid interest, if any, to, but not including the purchase date.

As of September 30, 2021, Rackspace Technology Global was in compliance with all covenants under the 5.375% Notes Indenture.

The fair value of the 5.375% Senior Notes as of September 30, 2021 was $539.0 million, based on quoted market prices for identical assets that are traded in over-the-counter secondary markets that are not considered active. The fair value of the 5.375% Senior Notes are classified as Level 2 within the fair value hierarchy.


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Accounts Receivable Financing Agreement

Under the accounts receivable financing agreement (the "Receivables Financing Facility") entered into in 2020, a bankruptcy-remote special purpose vehicle ("SPV") indirectly wholly owned by Rackspace Technology Global granted a security interest in all of its current and future receivables and related assets in exchange for a credit facility permitting borrowings of up to a maximum aggregate amount of $100.0 million from time to time. Rackspace Technology Global was the primary beneficiary of the SPV.

During the nine months ended September 30, 2021, the SPV repaid the outstanding balance of $50.0 million and terminated the Receivables Financing Facility. The termination resulted in expense of $0.5 million recorded within "Debt modification and extinguishment costs" in our Consolidated Statements of Comprehensive Loss for the nine months ended September 30, 2021. The expense was comprised of the write-off of the unamortized debt issuance costs, as well as third party fees associated with the termination.

February 2021 Refinancing Transaction

The February 2021 Refinancing Transaction represented an extinguishment and modification of debt. We derecognized $2,795.6 million of the Prior Term Loan Facility and wrote off $9.4 million in unamortized debt issuance costs and debt discount associated with the portion of the Prior Term Loan Facility that was deemed extinguished. We recognized $2,300.0 million borrowed under the Term Loan Facility and $41.0 million of associated debt issuance costs and debt discount, including amounts allocated from the Prior Term Loan Facility, both classified as a direct deduction from the carrying value of non-current debt on our Consolidated Balance Sheets. We recognized $550.0 million aggregate principal amount of the 3.50% Senior Secured Notes due 2028 and $6.8 million of associated debt issuance costs, including amounts allocated from the Prior Term Loan Facility. The February 2021 Refinancing Transaction resulted in expense of $37.0 million recorded within "Debt modification and extinguishment costs" in our Consolidated Statements of Comprehensive Loss for the nine months ended September 30, 2021. The expense was comprised of the write-off of unamortized debt issuance costs and debt discount associated with the portion of the Prior Term Loan Facility that was deemed extinguished, as well as $27.6 million in third party fees associated with the modification.

7. Commitments and Contingencies

We have contingencies that arise from various litigation, claims and commitments, none of which we consider to be material.

From time to time, we are a party to various claims asserting that certain of our services and technologies infringe the intellectual property rights of others. Adverse results in these lawsuits may include awards of substantial monetary damages, costly royalty or licensing agreements, or orders preventing us from offering certain features, products, or services, and may also cause us to change our business practices and require development of non-infringing products or technologies, which could result in a loss of revenue for us or otherwise harm our business.

We record an accrual for a loss contingency when a loss is considered probable and reasonably estimable. As additional facts concerning a loss contingency become known, we reassess our position and make appropriate adjustments to a recorded accrual. The amount that will ultimately be paid related to a matter may differ from the recorded accrual, and the timing of such payments, if any, may be uncertain.

We are not a party to any litigation, the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material and adverse effect on our business, financial position or results of operations.

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8. July 2021 Restructuring Plan

On July 21, 2021, we committed to an internal restructuring plan (the "July 2021 Restructuring Plan") which will drive a change in the type and location of certain positions and is expected to result in the termination of approximately 10% of our workforce. Substantially all of the employees impacted by the reduction in workforce were notified of the reduction on July 22, 2021 and will exit the company over the next 12 months.

During the three and nine months ended September 30, 2021, we incurred employee related costs, primarily consisting of one-time termination benefits and certain contractual termination benefits with executives, and other costs, which are accounted for as exit and disposal costs under ASC 420. Other costs consisted of professional fees, asset write-offs, and the impact of a contract termination with a third-party. These costs are recorded within "Selling, general and administrative expenses" in the Consolidated Statements of Comprehensive Loss, the components of which were as follows:

(In millions)Three Months Ended September 30, 2021Nine Months Ended September 30, 2021
Employee related costs$8.6 $11.1 
Other7.5 11.4 
Total restructuring charges$16.1 $22.5 

A portion of the other costs are non-cash charges, representing $4.4 million and $5.4 million in the three and nine months ended September 30, 2021, respectively. These amounts are related to asset write-offs and the contract termination.

Liability activity for restructuring costs that are expected to be settled in cash are presented in the table below.

(In millions)Employee RelatedOtherTotal
Liability as of March 31, 2021$ $ $ 
Charges2.5 2.9 5.4 
Cash payments   
Liability as of June 30, 2021$2.5 $