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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 June 30, 2022.
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/7b5c41512c887cf6d5deb803166d47b5-rxt-20220630_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, a 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 August 2, 2022, 210,584,387 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 June 30, 2022 (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 under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. 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,” “Rackspace Fabric,” "Rackspace Data Freedom," "Rackspace Services for VMware CloudTM" and "My Rackspace" 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,
2021
June 30,
2022
ASSETS  
Current assets:  
Cash and cash equivalents$272.8 $261.3 
Accounts receivable, net of allowance for credit losses and accrued customer credits of $18.4 and $18.8, respectively
554.3 583.9 
Prepaid expenses110.0 87.1 
Other current assets52.4 81.9 
Total current assets989.5 1,014.2 
Property, equipment and software, net826.7 759.4 
Goodwill, net2,706.8 2,693.5 
Intangible assets, net1,466.5 1,379.0 
Operating right-of-use assets161.8 140.9 
Other non-current assets177.4 221.2 
Total assets$6,328.7 $6,208.2 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses$369.5 $388.0 
Accrued compensation and benefits104.5 87.4 
Deferred revenue98.6 106.0 
Debt23.0 23.0 
Accrued interest 27.6 27.4 
Operating lease liabilities60.4 55.5 
Finance lease liabilities64.6 64.6 
Financing obligations48.0 37.8 
Other current liabilities41.2 33.1 
Total current liabilities837.4 822.8 
Non-current liabilities:
Debt3,310.9 3,303.1 
Operating lease liabilities114.8 94.8 
Finance lease liabilities345.1 314.1 
Financing obligations62.9 53.1 
Deferred income taxes205.8 204.6 
Other non-current liabilities124.4 117.3 
Total liabilities5,001.3 4,909.8 
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; 211.2 and 213.5 shares issued; 211.2 and 210.4 shares outstanding, respectively
2.1 2.1 
Additional paid-in capital2,500.0 2,542.9 
Accumulated other comprehensive income6.9 45.1 
Accumulated deficit(1,181.6)(1,260.7)
Treasury stock, at cost; zero and 3.1 shares held, respectively
 (31.0)
Total stockholders' equity1,327.4 1,298.4 
Total liabilities and stockholders' equity$6,328.7 $6,208.2 

See accompanying notes to the unaudited consolidated financial statements.
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Table of Contents
RACKSPACE TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
 
Three Months Ended June 30,Six Months Ended June 30,
(In millions, except per share data)2021202220212022
Revenue$743.8 $772.2 $1,469.7 $1,547.7 
Cost of revenue(508.3)(548.2)(998.9)(1,097.7)
Gross profit235.5 224.0 470.8 450.0 
Selling, general and administrative expenses(232.6)(220.0)(463.6)(425.1)
Gain on sale of land  19.9  
Income from operations2.9 4.0 27.1 24.9 
Other income (expense):
Interest expense(50.5)(50.5)(103.1)(100.6)
Gain (loss) on investments, net0.1 (0.2)(3.6)(0.3)
Debt modification and extinguishment costs(0.5) (37.5) 
Other income (expense), net0.6 (5.9)(1.2)(9.5)
Total other income (expense)(50.3)(56.6)(145.4)(110.4)
Loss before income taxes(47.4)(52.6)(118.3)(85.5)
Benefit for income taxes10.8 12.0 17.7 6.4 
Net loss$(36.6)$(40.6)$(100.6)$(79.1)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments$2.7 $(18.2)$5.7 $(22.8)
Unrealized gain (loss) on derivative contracts(6.0)11.0 3.4 53.3 
Amount reclassified from accumulated other comprehensive income (loss) to earnings4.5 3.4 8.5 7.7 
Other comprehensive income (loss)1.2 (3.8)17.6 38.2 
Comprehensive loss$(35.4)$(44.4)$(83.0)$(40.9)
Net loss per share:
Basic and diluted$(0.18)$(0.19)$(0.49)$(0.38)
Weighted average number of shares outstanding:
Basic and diluted207.9209.5206.2210.5
 
See accompanying notes to the unaudited consolidated financial statements.
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Table of Contents
RACKSPACE TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
(In millions)20212022
Cash Flows From Operating Activities
Net loss$(100.6)$(79.1)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization216.3 199.8 
Amortization of operating right-of-use assets36.0 28.6 
Deferred income taxes(23.1)(20.0)
Share-based compensation expense37.6 40.1 
Gain on sale of land(19.9) 
Debt modification and extinguishment costs37.5  
Unrealized loss on derivative contracts10.8 9.2 
Loss on investments, net3.6 0.3 
Provision for bad debts and accrued customer credits(8.0)3.5 
Amortization of debt issuance costs and debt discount4.8 4.0 
Other operating activities(0.6)(0.5)
Changes in operating assets and liabilities:
Accounts receivable(8.9)(34.3)
Prepaid expenses and other current assets11.5 12.5 
Accounts payable, accrued expenses, and other current liabilities19.1 1.3 
Deferred revenue16.5 3.6 
Operating lease liabilities(31.9)(32.1)
Other non-current assets and liabilities8.2 11.6 
   Net cash provided by operating activities208.9 148.5 
Cash Flows From Investing Activities
Purchases of property, equipment and software(66.0)(46.4)
Acquisitions, net of cash acquired (7.7)
Proceeds from sale of land31.3  
Other investing activities3.0 3.5 
Net cash used in investing activities(31.7)(50.6)
Cash Flows From Financing Activities
Proceeds from employee stock plans43.9 2.7 
Shares of common stock repurchased (31.0)
Proceeds from borrowings under long-term debt arrangements2,838.5  
Payments on long-term debt(2,866.4)(11.5)
Payments for debt issuance costs(34.5) 
Payments on financing component of interest rate swap(4.3)(8.5)
Principal payments of finance lease liabilities(21.4)(32.3)
Principal payments of financing obligations(22.6)(22.9)
Other financing activities (0.9)
Net cash used in financing activities(66.8)(104.4)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(0.4)(5.1)
Increase (decrease) in cash, cash equivalents, and restricted cash110.0 (11.6)
Cash, cash equivalents, and restricted cash at beginning of period108.1 275.4 
Cash, cash equivalents, and restricted cash at end of period$218.1 $263.8 
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Table of Contents
Supplemental Cash Flow Information
Cash payments for interest, net of amount capitalized$90.6 $84.6 
Cash payments for income taxes, net of refunds$6.5 $9.9 
Non-cash Investing and Financing Activities
Acquisition of property, equipment and software by finance leases$38.4 $9.3 
Acquisition of property, equipment and software by financing obligations40.1 7.1 
Increase (decrease) in property, equipment and software accrued in liabilities(3.7)5.3 
Non-cash purchases of property, equipment and software$74.8 $21.7 
Other non-cash investing and financing activities$0.3 $ 

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.

Six Months Ended June 30,
(In millions)20212022
Cash and cash equivalents$214.8 $261.3 
Restricted cash included in other non-current assets3.3 2.5 
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows$218.1 $263.8 

See accompanying notes to the unaudited consolidated financial statements.
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Table of Contents
RACKSPACE TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(In millions)Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitTreasury Stock, at CostTotal Stockholders' Equity
SharesAmountSharesAmount
Balance at March 31, 2021207.0 $2.1 $2,402.6 $(2.2)$(1,027.3) $ $1,375.2 
Exercise of stock options and release of stock awards1.6 — 16.0 — — — — 16.0 
Issuance of shares from Employee Stock Purchase Plan0.4 — 6.3 — — — — 6.3 
Share-based compensation expense— — 20.4 — — — — 20.4 
Net loss— — — — (36.6)— — (36.6)
Other comprehensive income— — — 1.2 — — — 1.2 
Balance at June 30, 2021209.0 $2.1 $2,445.3 $(1.0)$(1,063.9) $ $1,382.5 

(In millions)Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitTreasury Stock, at CostTotal Stockholders' Equity
SharesAmountSharesAmount
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 awards4.1 0.1 37.8 — — — — 37.9 
Issuance of shares from Employee Stock Purchase Plan0.4 — 6.3 — — — — 6.3 
Share-based compensation expense— — 37.6 — — — — 37.6 
Net loss— — — — (100.6)— — (100.6)
Other comprehensive income— — — 17.6 — — — 17.6 
Balance at June 30, 2021209.0 $2.1 $2,445.3 $(1.0)$(1,063.9) $ $1,382.5 

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Table of Contents
(In millions)Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTreasury Stock, at CostTotal Stockholders' Equity
SharesAmountSharesAmount
Balance at March 31, 2022212.8 $2.1 $2,517.5 $48.9 $(1,220.1)0.4 $(4.1)$1,344.3 
Exercise of stock options and release of stock awards0.4 — 0.2 — — — — 0.2 
Issuance of shares from Employee Stock Purchase Plans0.3 — 2.1 — — — — 2.1 
Share-based compensation expense— — 23.1 — — — — 23.1 
Net loss— — — — (40.6)—  (40.6)
Other comprehensive loss— — — (3.8)— — — (3.8)
Repurchase of common stock— — — — — 2.7 (26.9)(26.9)
Balance at June 30, 2022213.5 $2.1 $2,542.9 $45.1 $(1,260.7)3.1 $(31.0)$1,298.4 

(In millions)Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTreasury Stock, at CostTotal Stockholders' Equity
SharesAmountSharesAmount
Balance at December 31, 2021211.2 $2.1 $2,500.0 $6.9 $(1,181.6) $ $1,327.4 
Exercise of stock options and release of stock awards2.0 — 0.7 — — — — 0.7 
Issuance of shares from Employee Stock Purchase Plans0.3 — 2.1 — — — — 2.1 
Share-based compensation expense— — 40.1 — — — — 40.1 
Net loss— — — — (79.1)—  (79.1)
Other comprehensive income— — — 38.2 — — — 38.2 
Repurchase of common stock— — — — — 3.1 (31.0)(31.0)
Balance at June 30, 2022213.5 $2.1 $2,542.9 $45.1 $(1,260.7)3.1 $(31.0)$1,298.4 

See accompanying notes to the unaudited consolidated financial statements.
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Table of Contents
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.

On January 18, 2022, we acquired 100% of Just Analytics Pte. Ltd. ("Just Analytics"), a leading provider of cloud-based data, analytics, and artificial intelligence services based in the Asia, Pacific and Japan region. The acquisition was completed for $7.7 million in cash consideration, net of cash acquired, together with future deferred payments that are considered post-combination compensation costs and will be recognized over the next three years. The acquisition of Just Analytics was not material to the unaudited consolidated financial statements.

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 June 30, 2022, and for the three and six months ended June 30, 2021 and 2022, 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 Securities and Exchange Commission ("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, 2021 ("Annual Report"). The unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements included in our Annual Report 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 June 30, 2022, our results of operations and stockholders' equity for the three and six months ended June 30, 2021 and 2022, and our cash flows for the six months ended June 30, 2021 and 2022.

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2022, or for any other interim period, or for any other future year.

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Table of Contents
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 credit losses, 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.

Impact of COVID-19

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, there are remaining uncertainties as a result of COVID-19, particularly the possibility of new variant strain(s) of the virus, the potential resurgence in the spread of the virus and the pace of economic recovery, which continue to impact the estimates and assumptions needed to prepare our consolidated financial statements and footnotes.

Russia and Ukraine Conflict

Political and economic uncertainty surrounding the Russian conflict in Ukraine could have a material adverse effect on our business. Currently, the conflict has not had a significant impact on our operations or financial performance. However, our overall performance depends in part on worldwide economic and geopolitical conditions. We are monitoring the situation and the potential for the conflict to spread to other countries which could adversely impact our customers and operations, and we may take actions that modify our business operations as may be required by federal, state or local authorities, or that we determine are in the best interests of our employees, customers, partners, suppliers and stockholders.

Significant Accounting Policies and Estimates

Our Annual Report 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 six months ended June 30, 2022.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets of businesses acquired. Our indefinite-lived intangible asset consists of our Rackspace trade name, which was recorded at fair value on our balance sheet at the date of the Rackspace Acquisition. Goodwill and indefinite-lived intangible assets are not amortized but are subject to impairment testing on an annual basis as of October 1st or more frequently if events or circumstances indicate a potential impairment. These events or circumstances could include a significant change in the business climate, regulatory environment, established business plans, operating performance indicators or competition. Potential impairment indicators may also include, but are not limited to, (i) significant changes to estimates and assumptions used in the most recent annual or interim impairment testing, (ii) downward revisions to internal forecasts, and the magnitude thereof, if any, and (iii) declines in our market capitalization below our book value, and the magnitude and duration of those declines, if any.

As of June 30, 2022, we determined that there were no indicators of impairment that more likely than not reduced the fair value of our reporting units or our indefinite-lived intangible asset to less than their respective carrying values. In reaching this conclusion, we noted that while our market capitalization has declined, it remained in excess of our book value as of June 30, 2022 and took this factor into consideration together with the other qualitative factors noted above. We will continue to evaluate whether circumstances indicate an impairment may exist each reporting period. If there are significant changes in events or circumstances, including (i) further declines in our market capitalization or deterioration in the equity and debt markets, and (ii) impacts to our forecasted results due to macroeconomic factors such as foreign currency exchange rate fluctuations, increased inflation rates, global supply chain constraints, and increases in the weighted-average cost of capital due to increases in interest rates, it is possible that an impairment charge may be recorded in the future, which could be material.

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Recent Accounting Pronouncements

Recently Adopted

Business Combinations

In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2021-08, Business Combinations (ASC 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification No. 606, Revenue from Contracts with Customers ("ASC 606"). At the acquisition date, an acquirer should account for the related revenue contracts in accordance with ASC 606 as if it had originated the contracts. To achieve this, an acquirer may assess how the acquiree applied ASC 606 to determine what to record for the acquired revenue contracts. This standard allows the company a practical expedient to remove the requirement to measure and recognize such contracts in accordance with ASC 606. The guidance is applied prospectively upon adoption. We early adopted this guidance on January 1, 2022 and applied the practical expedient to our accounting for the acquisition of Just Analytics. The adoption of the guidance did not have a material impact on our consolidated financial statements.

Not Yet Adopted

Reference Rate Reform

The United Kingdom's Financial Conduct Authority, which regulates the London Interbank Offered Rate ("LIBOR"), announced that it will not compel panel banks to contribute to the overnight 1, 3, 6 and 12 months U.S. dollar LIBOR tenors after June 30, 2023 and all other tenors after December 31, 2021. U.S. dollar LIBOR may be replaced by the Secured Overnight Financing Rate or other benchmark rates over the next several years. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (ASC 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting containing practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be applied from March 12, 2020 through December 31, 2022 as reference rate reform activities occur. In January 2021, the FASB issued an update that provides supplemental guidance and clarification of the reference rate reform. We have elected to apply certain practical expedients in the past. We continue to evaluate the impact of the guidance and may apply other elections prior to December 31, 2022, as applicable, as additional changes in the market occur. Currently, borrowings under our Senior Facilities use LIBOR as a benchmark for establishing the applicable interest rate, but the First Lien Credit Agreement includes provisions relating to the future discontinuance of LIBOR and sets forth mechanics for establishing the replacement of LIBOR with an alternative benchmark rate.
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Table of Contents
2. Customer Contracts

The following table presents the balances related to customer contracts:
(In millions)Consolidated Balance Sheets AccountDecember 31, 2021June 30, 2022
Accounts receivable, net
Accounts receivable, net (1)
$554.3 $583.9 
Current portion of contract assetsOther current assets$15.2 $14.2 
Non-current portion of contract assetsOther non-current assets$13.1 $11.4 
Current portion of deferred revenueDeferred revenue$98.6 $106.0 
Non-current portion of deferred revenueOther non-current liabilities$13.6 $8.8 

(1)    Allowance for credit losses and accrued customer credits was $18.4 million and $18.8 million as of December 31, 2021 and June 30, 2022, respectively.

Amounts recognized in revenue for the three months ended June 30, 2021 and 2022, which were included in deferred revenue as of the beginning of each period, totaled $25.2 million and $29.0 million, respectively. Amounts recognized in revenue for the six months ended June 30, 2021 and 2022, which were included in deferred revenue as of the beginning of each period, totaled $46.1 million and $47.0 million, respectively.

Cost Incurred to Obtain and Fulfill a Contract

As of December 31, 2021 and June 30, 2022, the balances of capitalized costs to obtain a contract were $58.0 million and $56.8 million, respectively, and the balances of capitalized costs to fulfill a contract were $23.5 million and $20.2 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 June 30,Six Months Ended June 30,
(In millions)2021202220212022
Amortization of capitalized sales commissions$10.7 $11.0 $21.5 $22.3 
Amortization of capitalized implementation costs$4.4 $4.2 $8.9 $8.6 

Remaining Performance Obligations

As of June 30, 2022, the aggregate amount of transaction price allocated to remaining performance obligations was $700.1 million, of which 41% is expected to be recognized as revenue during the remainder of 2022 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 June 30,Six Months Ended June 30,
(In millions, except per share data)2021202220212022
Basic and diluted net loss per share:  
Net loss attributable to common stockholders$(36.6)$(40.6)$(100.6)$(79.1)
Weighted average shares outstanding:
Common stock207.9209.5206.2210.5
Number of shares used in per share computations207.9209.5206.2210.5
Net loss per share$(0.18)$(0.19)$(0.49)$(0.38)

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 19.4 million and 24.1 million potential common shares from the computation of dilutive loss per share for the three months ended June 30, 2021 and 2022, respectively, and 19.4 million and 24.1 million potential shares for the six months ended June 30, 2021 and 2022, 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,
2021
June 30,
2022
Computers and equipment$1,206.5 $1,165.7 
Software465.6 473.3 
Furniture and fixtures21.9 18.9 
Buildings and leasehold improvements 512.9 494.4 
Land21.2 20.4 
Property, equipment and software, at cost2,228.1 2,172.7 
Less: Accumulated depreciation (1,413.4)(1,424.3)
Work in process12.0 11.0 
Property, equipment and software, net$826.7 $759.4 

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 six months ended June 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, 2021
$2,384.3 $322.5 $ $2,706.8 
Just Analytics acquisition 5.9  5.9 
Foreign currency translation(18.8)(0.4) (19.2)
Balance as of June 30, 2022
$2,365.5 $328.0 $ $2,693.5 
Gross goodwill $2,660.5 $328.0 $52.4 $3,040.9 
Less: Accumulated impairment charges(295.0) (52.4)(347.4)
Goodwill, net as of June 30, 2022
$2,365.5 $328.0 $ $2,693.5 

The following table provides information regarding our intangible assets other than goodwill:
December 31, 2021June 30, 2022
(In millions)Gross carrying amountAccumulated amortizationNet carrying amountGross carrying amountAccumulated amortizationNet carrying amount
Customer relationships$1,983.0 $(784.1)$1,198.9 $1,976.4 $(861.1)$1,115.3 
Property tax abatement 16.0 (9.2)6.8 16.0 (10.1)5.9 
Other28.2 (17.4)10.8 27.7 (19.9)7.8 
Total definite-lived intangible assets2,027.2 (810.7)1,216.5 2,020.1 (891.1)1,129.0 
Trade name (indefinite-lived)250.0 — 250.0 250.0 — 250.0 
Total intangible assets other than goodwill$2,277.2 $(810.7)$1,466.5 $2,270.1 $(891.1)$1,379.0 


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6. Debt

Debt consisted of the following:

(In millions, except %)December 31, 2021June 30, 2022
Debt InstrumentMaturity Date
Interest Rate(1)
Amount
Interest Rate(1)
Amount
Term Loan FacilityFebruary 15, 20283.50%$2,282.8 4.16%$2,271.3 
Revolving Credit FacilityAugust 7, 2025—%— —% 
3.50% Senior Secured Notes
February 15, 20283.50%550.0 3.50%550.0 
5.375% Senior Notes
December 1, 20285.375%550.0 5.375%550.0 
Less: unamortized debt issuance costs(36.3)(33.5)
Less: unamortized debt discount(12.6)(11.7)
Total debt3,333.9 3,326.1 
Less: current portion of debt(23.0)(23.0)
Debt, excluding current portion$3,310.9 $3,303.1 
(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