(State of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Exhibit Number | Exhibit Description | |||||||
99.1 | ||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL) |
RACKSPACE TECHNOLOGY, INC. | ||||||||||||||
Date: | February 22, 2022 | By: | /s/ Amar Maletira | |||||||||||
Amar Maletira | ||||||||||||||
President and Chief Financial Officer |
Q1 2022 Guidance | |||||
Revenue | $768 - $778 million | ||||
Core Revenue | $730 - $738 million | ||||
Non-GAAP Operating Profit | $108 - $112 million | ||||
Non-GAAP Earnings Per Share | $0.20 - $0.22 | ||||
Non-GAAP Other Income (Expense)1 | ($51) – ($52) million | ||||
Non-GAAP Tax Expense Rate | 26 | % | |||
Non-GAAP Weighted Average Shares | 214 – 216 million |
Three Months Ended December 31, | Year-Over-Year Comparison | ||||||||||||||||||||||||||||||||||
2020 | 2021 | ||||||||||||||||||||||||||||||||||
(In millions, except % and per share data) | Amount | % Revenue | Amount | % Revenue | Amount | % Change | |||||||||||||||||||||||||||||
Revenue | $ | 716.2 | 100.0 | % | $ | 777.3 | 100.0 | % | $ | 61.1 | 8.5 | % | |||||||||||||||||||||||
Cost of revenue | (468.8) | (65.5) | % | (543.0) | (69.9) | % | (74.2) | 15.8 | % | ||||||||||||||||||||||||||
Gross profit | 247.4 | 34.5 | % | 234.3 | 30.1 | % | (13.1) | (5.3) | % | ||||||||||||||||||||||||||
Selling, general and administrative expenses | (252.2) | (35.2) | % | (208.6) | (26.8) | % | 43.6 | (17.3) | % | ||||||||||||||||||||||||||
Impairment of goodwill | — | — | % | (52.4) | (6.7) | % | (52.4) | 100.0 | % | ||||||||||||||||||||||||||
Loss from operations | (4.8) | (0.7) | % | (26.7) | (3.4) | % | (21.9) | NM | |||||||||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||||||||||||||
Interest expense | (59.2) | (8.3) | % | (50.5) | (6.5) | % | 8.7 | (14.7) | % | ||||||||||||||||||||||||||
Gain (loss) on investments, net | (0.2) | (0.0) | % | 0.6 | 0.1 | % | 0.8 | NM | |||||||||||||||||||||||||||
Debt modification costs and extinguishment loss | (34.5) | (4.8) | % | — | — | % | 34.5 | (100.0) | % | ||||||||||||||||||||||||||
Other income, net | 2.1 | 0.3 | % | 0.1 | 0.0 | % | (2.0) | (95.2) | % | ||||||||||||||||||||||||||
Total other income (expense) | (91.8) | (12.8) | % | (49.8) | (6.4) | % | 42.0 | (45.8) | % | ||||||||||||||||||||||||||
Loss before income taxes | (96.6) | (13.5) | % | (76.5) | (9.8) | % | 20.1 | (20.8) | % | ||||||||||||||||||||||||||
Benefit (provision) for income taxes | 32.8 | 4.6 | % | (6.4) | (0.8) | % | (39.2) | NM | |||||||||||||||||||||||||||
Net loss | $ | (63.8) | (8.9) | % | $ | (82.9) | (10.7) | % | $ | (19.1) | 29.9 | % | |||||||||||||||||||||||
Net loss per share: | |||||||||||||||||||||||||||||||||||
Basic and diluted | $ | (0.32) | $ | (0.39) | |||||||||||||||||||||||||||||||
Weighted average number of shares outstanding: | |||||||||||||||||||||||||||||||||||
Basic and diluted | 200.7 | 210.3 | |||||||||||||||||||||||||||||||||
Year Ended December 31, | Year-Over-Year Comparison | ||||||||||||||||||||||||||||||||||
2020 | 2021 | ||||||||||||||||||||||||||||||||||
(In millions, except % and per share data) | Amount | % Revenue | Amount | % Revenue | Amount | % Change | |||||||||||||||||||||||||||||
Revenue | $ | 2,707.1 | 100.0 | % | $ | 3,009.5 | 100.0 | % | $ | 302.4 | 11.2 | % | |||||||||||||||||||||||
Cost of revenue | (1,722.7) | (63.6) | % | (2,072.7) | (68.9) | % | (350.0) | 20.3 | % | ||||||||||||||||||||||||||
Gross profit | 984.4 | 36.4 | % | 936.8 | 31.1 | % | (47.6) | (4.8) | % | ||||||||||||||||||||||||||
Selling, general and administrative expenses | (959.7) | (35.4) | % | (906.8) | (30.1) | % | 52.9 | (5.5) | % | ||||||||||||||||||||||||||
Impairment of goodwill | — | — | % | (52.4) | (1.7) | % | (52.4) | 100.0 | % | ||||||||||||||||||||||||||
Gain on sale of land | — | — | % | 19.9 | 0.7 | % | 19.9 | 100.0 | % | ||||||||||||||||||||||||||
Income (loss) from operations | 24.7 | 0.9 | % | (2.5) | (0.1) | % | (27.2) | NM | |||||||||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||||||||||||||
Interest expense | (268.4) | (9.9) | % | (205.1) | (6.8) | % | 63.3 | (23.6) | % | ||||||||||||||||||||||||||
Gain (loss) on investments, net | 0.7 | 0.0 | % | (3.0) | (0.1) | % | (3.7) | NM | |||||||||||||||||||||||||||
Debt modification costs and extinguishment loss | (71.5) | (2.6) | % | (37.5) | (1.2) | % | 34.0 | (47.6) | % | ||||||||||||||||||||||||||
Other income (expense), net | 2.5 | 0.1 | % | (1.0) | (0.0) | % | (3.5) | NM | |||||||||||||||||||||||||||
Total other income (expense) | (336.7) | (12.4) | % | (246.6) | (8.2) | % | 90.1 | (26.8) | % | ||||||||||||||||||||||||||
Loss before income taxes | (312.0) | (11.5) | % | (249.1) | (8.3) | % | 62.9 | (20.2) | % | ||||||||||||||||||||||||||
Benefit for income taxes | 66.2 | 2.4 | % | 30.8 | 1.0 | % | (35.4) | (53.5) | % | ||||||||||||||||||||||||||
Net loss | $ | (245.8) | (9.1) | % | $ | (218.3) | (7.3) | % | $ | 27.5 | (11.2) | % | |||||||||||||||||||||||
Net loss per share: | |||||||||||||||||||||||||||||||||||
Basic and diluted | $ | (1.37) | $ | (1.05) | |||||||||||||||||||||||||||||||
Weighted average number of shares outstanding: | |||||||||||||||||||||||||||||||||||
Basic and diluted | 179.6 | 208.0 | |||||||||||||||||||||||||||||||||
(In millions, except per share data) | December 31, 2020 | December 31, 2021 | ||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 104.7 | $ | 272.8 | ||||||||||
Accounts receivable, net of allowance for doubtful accounts and accrued customer credits of $28.3 and $18.4, respectively | 483.0 | 554.3 | ||||||||||||
Prepaid expenses | 123.8 | 110.0 | ||||||||||||
Other current assets | 47.0 | 52.4 | ||||||||||||
Total current assets | 758.5 | 989.5 | ||||||||||||
Property, equipment and software, net | 884.6 | 826.7 | ||||||||||||
Goodwill, net | 2,761.1 | 2,706.8 | ||||||||||||
Intangible assets, net | 1,646.3 | 1,466.5 | ||||||||||||
Operating right-of-use assets | 171.1 | 161.8 | ||||||||||||
Other non-current assets | 156.2 | 177.4 | ||||||||||||
Total assets | $ | 6,377.8 | $ | 6,328.7 | ||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable and accrued expenses | $ | 285.4 | $ | 369.5 | ||||||||||
Accrued compensation and benefits | 110.6 | 104.5 | ||||||||||||
Deferred revenue | 76.7 | 98.6 | ||||||||||||
Debt | 43.4 | 23.0 | ||||||||||||
Accrued interest | 26.5 | 27.6 | ||||||||||||
Operating lease liabilities | 62.2 | 60.4 | ||||||||||||
Finance lease liabilities | 40.7 | 64.6 | ||||||||||||
Financing obligations | 48.8 | 48.0 | ||||||||||||
Other current liabilities | 47.9 | 41.2 | ||||||||||||
Total current liabilities | 742.2 | 837.4 | ||||||||||||
Non-current liabilities: | ||||||||||||||
Debt | 3,319.3 | 3,310.9 | ||||||||||||
Operating lease liabilities | 118.2 | 114.8 | ||||||||||||
Finance lease liabilities | 358.1 | 345.1 | ||||||||||||
Financing obligations | 74.1 | 62.9 | ||||||||||||
Deferred income taxes | 236.7 | 205.8 | ||||||||||||
Other non-current liabilities | 145.5 | 124.4 | ||||||||||||
Total liabilities | 4,994.1 | 5,001.3 | ||||||||||||
Commitments and Contingencies | ||||||||||||||
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 211.2 shares issued and outstanding, respectively | 2.0 | 2.1 | ||||||||||||
Additional paid-in capital | 2,363.6 | 2,500.0 | ||||||||||||
Accumulated other comprehensive income (loss) | (18.6) | 6.9 | ||||||||||||
Accumulated deficit | (963.3) | (1,181.6) | ||||||||||||
Total stockholders' equity | 1,383.7 | 1,327.4 | ||||||||||||
Total liabilities and stockholders' equity | $ | 6,377.8 | $ | 6,328.7 |
Year Ended December 31, | |||||||||||
(In millions) | 2020 | 2021 | |||||||||
Cash Flows From Operating Activities | |||||||||||
Net loss | $ | (245.8) | $ | (218.3) | |||||||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 466.2 | 424.8 | |||||||||
Amortization of operating right-of-use assets | 70.7 | 65.9 | |||||||||
Deferred income taxes | (73.6) | (41.5) | |||||||||
Share-based compensation expense | 74.5 | 75.4 | |||||||||
Impairment of goodwill | — | 52.4 | |||||||||
Gain on sale of land | — | (19.9) | |||||||||
Debt modification costs and extinguishment loss | 71.5 | 37.5 | |||||||||
Unrealized (gain) loss on derivative contracts | (2.3) | 16.8 | |||||||||
(Gain) loss on investments, net | (0.7) | 3.0 | |||||||||
Provision for bad debts and accrued customer credits | 24.7 | (2.0) | |||||||||
Amortization of debt issuance costs and debt discount | 18.0 | 8.8 | |||||||||
Other operating activities | (1.4) | (2.1) | |||||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||||||
Accounts receivable | (156.0) | (69.5) | |||||||||
Prepaid expenses and other current assets | (58.0) | 9.5 | |||||||||
Accounts payable, accrued expenses, and other current liabilities | (7.4) | 88.1 | |||||||||
Deferred revenue | 9.9 | 21.6 | |||||||||
Operating lease liabilities | (58.0) | (61.4) | |||||||||
Other non-current assets and liabilities | (15.6) | (18.3) | |||||||||
Net cash provided by operating activities | 116.7 | 370.8 | |||||||||
Cash Flows From Investing Activities | |||||||||||
Purchases of property, equipment and software | (116.5) | (108.4) | |||||||||
Acquisitions, net of cash acquired | (9.5) | — | |||||||||
Proceeds from sale of land | — | 31.3 | |||||||||
Proceeds from sales of investments | 0.9 | — | |||||||||
Other investing activities | (3.3) | 8.1 | |||||||||
Net cash used in investing activities | (128.4) | (69.0) | |||||||||
Cash Flows From Financing Activities | |||||||||||
Proceeds from issuance of common stock, net | 657.8 | — | |||||||||
Proceeds from employee stock plans | 31.1 | 61.1 | |||||||||
Shares of common stock withheld for employee taxes | (2.1) | — | |||||||||
Proceeds from borrowings under long-term debt arrangements | 860.0 | 2,838.5 | |||||||||
Payments on long-term debt | (1,450.6) | (2,877.9) | |||||||||
Payments for debt issuance costs | (8.8) | (34.5) | |||||||||
Payments on financing component of interest rate swap | — | (12.9) | |||||||||
Principal payments of finance lease liabilities | (24.0) | (50.6) | |||||||||
Proceeds from financing obligations | 20.9 | — | |||||||||
Principal payments of financing obligations | (54.4) | (55.9) | |||||||||
Net cash provided by (used in) financing activities | 29.9 | (132.2) | |||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 2.8 | (2.3) | |||||||||
Increase in cash, cash equivalents, and restricted cash | 21.0 | 167.3 | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 87.1 | 108.1 | |||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 108.1 | $ | 275.4 |
Supplemental Cash Flow Information | |||||||||||
Cash payments for interest, net of amount capitalized | $ | 262.8 | $ | 178.5 | |||||||
Cash payments for income taxes, net of refunds | $ | 15.6 | $ | 5.5 | |||||||
Non-cash Investing and Financing Activities | |||||||||||
Acquisition of property, equipment and software by finance leases | $ | 93.7 | $ | 60.4 | |||||||
Acquisition of property, equipment and software by financing obligations | 27.8 | 44.7 | |||||||||
Decrease in property, equipment and software accrued in liabilities | (13.4) | (10.6) | |||||||||
Non-cash purchases of property, equipment and software | $ | 108.1 | $ | 94.5 | |||||||
Non-cash increase in buildings within property, equipment and software, net due to lease modification | $ | 220.3 | $ | — | |||||||
Debt issuance costs included in accrued liabilities | $ | 0.6 | $ | — | |||||||
Other non-cash investing and financing activities | $ | 2.3 | $ | — |
Three Months Ended December 31, | % Change | |||||||||||||||||||||||||
(In millions, except %) | 2020 | 2021 | Actual | Constant Currency (1) | ||||||||||||||||||||||
Multicloud Services | $ | 572.5 | $ | 639.3 | 11.7 | % | 11.4 | % | ||||||||||||||||||
Apps & Cross Platform | 91.3 | 94.8 | 3.9 | % | 3.7 | % | ||||||||||||||||||||
Core Revenue | 663.8 | 734.1 | 10.6 | % | 10.3 | % | ||||||||||||||||||||
OpenStack Public Cloud | 52.4 | 43.2 | (17.7) | % | (18.2) | % | ||||||||||||||||||||
Total | $ | 716.2 | $ | 777.3 | 8.5 | % | 8.3 | % |
Year Ended December 31, | % Change | |||||||||||||||||||||||||
(In millions, except %) | 2020 | 2021 | Actual | Constant Currency (1) | ||||||||||||||||||||||
Multicloud Services | $ | 2,141.5 | $ | 2,449.1 | 14.4 | % | 13.2 | % | ||||||||||||||||||
Apps & Cross Platform | 336.6 | 377.6 | 12.2 | % | 11.6 | % | ||||||||||||||||||||
Core Revenue | 2,478.1 | 2,826.7 | 14.1 | % | 13.0 | % | ||||||||||||||||||||
OpenStack Public Cloud | 229.0 | 182.8 | (20.2) | % | (21.3) | % | ||||||||||||||||||||
Total | $ | 2,707.1 | $ | 3,009.5 | 11.2 | % | 10.1 | % |
Three Months Ended December 31, | Year-Over-Year Comparison | ||||||||||||||||||||||||||||||||||
(In millions, except %) | 2020 | 2021 | |||||||||||||||||||||||||||||||||
Segment gross profit: | Amount | % of Segment Revenue | Amount | % of Segment Revenue | Amount | % Change | |||||||||||||||||||||||||||||
Multicloud Services | $ | 210.2 | 36.7 | % | $ | 194.6 | 30.4 | % | $ | (15.6) | (7.4) | % | |||||||||||||||||||||||
Apps & Cross Platform | 30.7 | 33.6 | % | 35.2 | 37.1 | % | 4.5 | 14.7 | % | ||||||||||||||||||||||||||
OpenStack Public Cloud | 22.0 | 42.0 | % | 16.3 | 37.7 | % | (5.7) | (25.9) | % | ||||||||||||||||||||||||||
Non-GAAP Gross Profit (1) | $ | 262.9 | $ | 246.1 | $ | (16.8) | (6.4) | % |
Year Ended December 31, | Year-Over-Year Comparison | ||||||||||||||||||||||||||||||||||
(In millions, except %) | 2020 | 2021 | |||||||||||||||||||||||||||||||||
Segment gross profit: | Amount | % of Segment Revenue | Amount | % of Segment Revenue | Amount | % Change | |||||||||||||||||||||||||||||
Multicloud Services | $ | 810.2 | 37.8 | % | $ | 793.4 | 32.4 | % | $ | (16.8) | (2.1) | % | |||||||||||||||||||||||
Apps & Cross Platform | 115.5 | 34.3 | % | 135.9 | 36.0 | % | 20.4 | 17.7 | % | ||||||||||||||||||||||||||
OpenStack Public Cloud | 100.3 | 43.8 | % | 67.1 | 36.7 | % | (33.2) | (33.1) | % | ||||||||||||||||||||||||||
Non-GAAP Gross Profit (1) | $ | 1,026.0 | $ | 996.4 | $ | (29.6) | (2.9) | % |
(1) | Refer to "Non-GAAP Financial Measures" in this section for further explanation and reconciliation. |
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
(In millions, except %) | 2020 | 2021 | 2020 | 2021 | ||||||||||||||||||||||
Bookings | $ | 292.5 | $ | 328.5 | $ | 1,126.1 | $ | 1,030.5 | ||||||||||||||||||
Annualized Recurring Revenue (ARR) | $ | 2,711.1 | $ | 2,984.9 | $ | 2,711.1 | $ | 2,984.9 |
Three Months Ended December 31, 2020 | Three Months Ended December 31, 2021 | % Change | ||||||||||||||||||||||||||||||||||||
(In millions, except %) | Revenue | Revenue | Foreign Currency Translation (a) | Revenue in Constant Currency | Actual | Constant Currency | ||||||||||||||||||||||||||||||||
Multicloud Services | $ | 572.5 | $ | 639.3 | $ | (1.6) | $ | 637.7 | 11.7 | % | 11.4 | % | ||||||||||||||||||||||||||
Apps & Cross Platform | 91.3 | 94.8 | (0.2) | 94.6 | 3.9 | % | 3.7 | % | ||||||||||||||||||||||||||||||
OpenStack Public Cloud | 52.4 | 43.2 | (0.3) | 42.9 | (17.7) | % | (18.2) | % | ||||||||||||||||||||||||||||||
Total | $ | 716.2 | $ | 777.3 | $ | (2.1) | $ | 775.2 | 8.5 | % | 8.3 | % |
Year Ended December 31, 2020 | Year Ended December 31, 2021 | % Change | ||||||||||||||||||||||||||||||||||||
(In millions, except %) | Revenue | Revenue | Foreign Currency Translation (a) | Revenue in Constant Currency | Actual | Constant Currency | ||||||||||||||||||||||||||||||||
Multicloud Services | $ | 2,141.5 | $ | 2,449.1 | $ | (23.9) | $ | 2,425.2 | 14.4 | % | 13.2 | % | ||||||||||||||||||||||||||
Apps & Cross Platform | 336.6 | 377.6 | (2.1) | 375.5 | 12.2 | % | 11.6 | % | ||||||||||||||||||||||||||||||
OpenStack Public Cloud | 229.0 | 182.8 | (2.6) | 180.2 | (20.2) | % | (21.3) | % | ||||||||||||||||||||||||||||||
Total | $ | 2,707.1 | $ | 3,009.5 | $ | (28.6) | $ | 2,980.9 | 11.2 | % | 10.1 | % |
(a) | The effect of foreign currency is calculated by translating current period results using the average exchange rate from the prior comparative period. |
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
(In millions) | 2020 | 2021 | 2020 | 2021 | ||||||||||||||||||||||
Total consolidated gross profit | $ | 247.4 | $ | 234.3 | $ | 984.4 | $ | 936.8 | ||||||||||||||||||
Share-based compensation expense | 5.9 | 3.5 | 14.5 | 16.7 | ||||||||||||||||||||||
Other compensation expense (1) | 1.0 | 0.6 | 5.9 | 2.7 | ||||||||||||||||||||||
Purchase accounting impact on expense (2) | 1.2 | 1.1 | 5.9 | 4.7 | ||||||||||||||||||||||
Restructuring and transformation expenses (3) | 7.4 | 6.6 | 15.3 | 35.5 | ||||||||||||||||||||||
Non-GAAP Gross Profit | $ | 262.9 | $ | 246.1 | $ | 1,026.0 | $ | 996.4 |
(1) | Adjustments for retention bonuses, mainly in connection with restructuring and transformation projects, and the related payroll tax, and payroll taxes associated with the exercise of stock options and vesting of restricted stock. | ||||
(2) | Adjustment for the impact of purchase accounting from the November 2016 merger on expenses. | ||||
(3) | Adjustment for the impact of business transformation and optimization activities, as well as associated severance, facility closure costs and lease termination expenses. This amount also includes certain costs associated with the July 2021 Restructuring Plan which are not accounted for as exit and disposal costs under ASC 420, including one-time offshore build out costs. |
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
(In millions) | 2020 | 2021 | 2020 | 2021 | ||||||||||||||||||||||
Net loss | $ | (63.8) | $ | (82.9) | $ | (245.8) | $ | (218.3) | ||||||||||||||||||
Share-based compensation expense | 17.7 | 18.7 | 74.5 | 75.4 | ||||||||||||||||||||||
Special bonuses and other compensation expense (a) | 18.4 | 2.7 | 37.5 | 11.8 | ||||||||||||||||||||||
Transaction-related adjustments, net (b) | 11.3 | 3.9 | 46.7 | 25.7 | ||||||||||||||||||||||
Restructuring and transformation expenses (c) | 45.1 | 28.6 | 104.8 | 161.5 | ||||||||||||||||||||||
Management fees (d) | — | — | 8.4 | — | ||||||||||||||||||||||
Impairment of goodwill | — | 52.4 | — | 52.4 | ||||||||||||||||||||||
Gain on sale of land | — | — | — | (19.9) | ||||||||||||||||||||||
Net (gain) loss on divestiture and investments (e) | 0.2 | (0.6) | (0.7) | 3.0 | ||||||||||||||||||||||
Debt modification costs and extinguishment loss (f) | 34.5 | — | 71.5 | 37.5 | ||||||||||||||||||||||
Other (income) expense, net (g) | (2.1) | (0.1) | (2.5) | 1.0 | ||||||||||||||||||||||
Amortization of intangible assets (h) | 44.0 | 42.3 | 176.3 | 179.7 | ||||||||||||||||||||||
Tax effect of non-GAAP adjustments (i) | (51.7) | (12.1) | (119.4) | (103.3) | ||||||||||||||||||||||
Non-GAAP Net Income | $ | 53.6 | $ | 52.9 | $ | 151.3 | $ | 206.5 |
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
(In millions) | 2020 | 2021 | 2020 | 2021 | ||||||||||||||||||||||
Income (loss) from operations | $ | (4.8) | $ | (26.7) | $ | 24.7 | $ | (2.5) | ||||||||||||||||||
Share-based compensation expense | 17.7 | 18.7 | 74.5 | 75.4 | ||||||||||||||||||||||
Special bonuses and other compensation expense (a) | 18.4 | 2.7 | 37.5 | 11.8 | ||||||||||||||||||||||
Transaction-related adjustments, net (b) | 11.3 | 3.9 | 46.7 | 25.7 | ||||||||||||||||||||||
Restructuring and transformation expenses (c) | 45.1 | 28.6 | 104.8 | 161.5 | ||||||||||||||||||||||
Management fees (d) | — | — | 8.4 | — | ||||||||||||||||||||||
Impairment of goodwill | — | 52.4 | — | 52.4 | ||||||||||||||||||||||
Gain on sale of land | — | — | — | (19.9) | ||||||||||||||||||||||
Amortization of intangible assets (h) | 44.0 | 42.3 | 176.3 | 179.7 | ||||||||||||||||||||||
Non-GAAP Operating Profit | $ | 131.7 | $ | 121.9 | $ | 472.9 | $ | 484.1 |
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
(In millions) | 2020 | 2021 | 2020 | 2021 | ||||||||||||||||||||||
Net loss | $ | (63.8) | $ | (82.9) | $ | (245.8) | $ | (218.3) | ||||||||||||||||||
Share-based compensation expense | 17.7 | 18.7 | 74.5 | 75.4 | ||||||||||||||||||||||
Special bonuses and other compensation expense (a) | 18.4 | 2.7 | 37.5 | 11.8 | ||||||||||||||||||||||
Transaction-related adjustments, net (b) | 11.3 | 3.9 | 46.7 | 25.7 | ||||||||||||||||||||||
Restructuring and transformation expenses (c) | 45.1 | 28.6 | 104.8 | 161.5 | ||||||||||||||||||||||
Management fees (d) | — | — | 8.4 | — | ||||||||||||||||||||||
Impairment of goodwill | — | 52.4 | — | 52.4 | ||||||||||||||||||||||
Gain on sale of land | — | — | — | (19.9) | ||||||||||||||||||||||
Net (gain) loss on divestiture and investments (e) | 0.2 | (0.6) | (0.7) | 3.0 | ||||||||||||||||||||||
Debt modification costs and extinguishment loss (f) | 34.5 | — | 71.5 | 37.5 | ||||||||||||||||||||||
Other (income) expense, net (g) | (2.1) | (0.1) | (2.5) | 1.0 | ||||||||||||||||||||||
Interest expense | 59.2 | 50.5 | 268.4 | 205.1 | ||||||||||||||||||||||
Provision (benefit) for income taxes | (32.8) | 6.4 | (66.2) | (30.8) | ||||||||||||||||||||||
Depreciation and amortization (j) | 111.1 | 103.6 | 466.2 | 421.4 | ||||||||||||||||||||||
Adjusted EBITDA | $ | 198.8 | $ | 183.2 | $ | 762.8 | $ | 725.8 |
(a) | Includes expense related to retention bonuses, mainly relating to restructuring and integration projects, and the related payroll tax, senior executive signing bonuses and relocation costs, and payroll taxes associated with the exercise of stock options and vesting of restricted stock. The three months and year ended December 31, 2020 also includes $13 million for one-time cash bonuses related to successful completion of the IPO. | ||||
(b) | Includes legal, professional, accounting and other advisory fees related to the acquisition of Onica in the fourth quarter of 2019 and the IPO in the third quarter of 2020, integration costs of acquired businesses, purchase accounting adjustments (including deferred revenue fair value discount), payroll costs for employees that dedicate significant time to supporting these projects and exploratory acquisition and divestiture costs and expenses related to financing activities. | ||||
(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. This amount also includes employee related costs and other costs related to the July 2021 Restructuring Plan of $2.9 million and $25.4 million for the three months and year ended December 31, 2021, respectively, which are accounted for as exit and disposal costs under ASC 420. In addition, it includes certain costs associated with the July 2021 Restructuring Plan which are not accounted for as exit and disposal costs under ASC 420, including one-time offshore build out costs. | ||||
(d) | Represents historical management fees pursuant to management consulting agreements. The management consulting agreements were terminated effective August 4, 2020, and therefore no management fees have accrued or will be payable for periods after August 4, 2020. | ||||
(e) | Includes gains and losses on investment and from dispositions. | ||||
(f) | Includes modification costs and extinguishment losses related to repurchases of 8.625% Senior Notes, the February 2021 Refinancing Transaction and termination of the Receivables Financing Facility. | ||||
(g) | Reflects mainly changes in the fair value of foreign currency derivatives. | ||||
(h) | All of our intangible assets are attributable to acquisitions, including the November 2016 merger. | ||||
(i) | We utilize an estimated structural long-term non-GAAP tax rate in order to provide consistency across reporting periods, removing the effect of non-recurring tax adjustments, which include but are not limited to tax rate changes, U.S. tax reform, share-based compensation, audit conclusions and changes to valuation allowances. We used a structural non-GAAP tax rate of 26% for all periods which reflects the removal of the tax effect of non-GAAP pre-tax adjustments and non-recurring tax adjustments on a year-over-year basis. The non-GAAP tax rate could be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix including due to acquisition activity, or other changes to our strategy or business operations. We will re-evaluate our long-term non-GAAP tax rate as appropriate. We believe that making these adjustments facilitates a better evaluation of our current operating performance and comparisons to prior periods. | ||||
(j) | Excludes accelerated depreciation expense related to facility closures. |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
(In millions, except per share amounts) | 2020 | 2021 | 2020 | 2021 | |||||||||||||||||||
Net loss attributable to common stockholders | $ | (63.8) | $ | (82.9) | $ | (245.8) | $ | (218.3) | |||||||||||||||
Non-GAAP Net Income | $ | 53.6 | $ | 52.9 | $ | 151.3 | $ | 206.5 | |||||||||||||||
Weighted average number of shares - Diluted | 200.7 | 210.3 | 179.6 | 208.0 | |||||||||||||||||||
Effect of dilutive securities (a) | 6.2 | 2.1 | 3.7 | 4.2 | |||||||||||||||||||
Non-GAAP weighted average number of shares - Diluted | 206.9 | 212.4 | 183.3 | 212.2 | |||||||||||||||||||
Net loss per share - Diluted | $ | (0.32) | $ | (0.39) | $ | (1.37) | $ | (1.05) | |||||||||||||||
Per share impacts of adjustments to net loss (b) | 0.59 | 0.65 | 2.21 | 2.04 | |||||||||||||||||||
Per share impacts of shares dilutive after adjustments to net loss (a) | (0.01) | (0.01) | (0.01) | (0.02) | |||||||||||||||||||
Non-GAAP EPS | $ | 0.26 | $ | 0.25 | $ | 0.83 | $ | 0.97 |
(a) | Reflects impact of awards that would have been anti-dilutive to Net loss per share, and therefore not included in the calculation, but would be dilutive to Non-GAAP EPS and are therefore included in the share count for purposes of this non-GAAP measure. 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. Certain of our potential common share equivalents are contingent on Apollo achieving pre-established performance targets based on a multiple of their invested capital ("MOIC"), which are included in the denominator for the entire period if such shares would be issuable as of the end of the reporting period assuming the end of the reporting period was the end of the contingency period. | ||||
(b) | Reflects the aggregate adjustments made to reconcile Non-GAAP Net Income to our net loss, as noted in the above table, divided by the GAAP diluted number of shares outstanding for the relevant period. |