Published on : Nov 10, 2022
Rackspace Technology, Inc. (Nasdaq: RXT), a leading end-to-end multicloud technology solutions company, today announced results for its third quarter ended September 30, 2022.
Amar Maletira, chief executive officer, stated, “We delivered third quarter revenue and profit above our guidance and reported solid cash flow. We continue to make good progress on the realignment to our two business unit model and remain on track to begin operating and reporting in this new structure beginning January 2023.”
Mr. Maletira added, “We know the road ahead will be challenging and the macro environment remains uncertain. But the long-term market opportunity for Rackspace Technology in public and private cloud remains promising. Our focus in 2023 is on positioning Rackspace to capture that potential. We have a diverse base of customers who need our help and truly want us to succeed. And we have a committed employee base and a world-class partner ecosystem ready to serve them.”
Third Quarter 2022 Results
Revenue was $788 million in the third quarter of 2022, an increase of 3% as compared to revenue of $763 million in the third quarter of 2021. Revenue for the third quarter of 2022 was positively impacted by new customer acquisitions and growing customer spend in our Multicloud Services and Apps & Cross Platform segments. On a constant currency basis, revenue increased 5% in the third quarter of 2022 as compared to the third quarter of 2021.
Revenue from our Core Segments (“Core Revenue”), comprised of Multicloud Services and Apps & Cross Platform, increased 5% on an actual basis and 7% on a constant currency basis, in the third quarter of 2022 as compared to the third quarter of 2021.
Impairment of goodwill and impairment of assets were $405 million and $59 million, respectively, in the third quarter of 2022. These impairments reflect a sustained decrease in our market capitalization and lowered projected operating results primarily due to product mix shifts and market concerns related to inflation, supply chain disruption issues and other macroeconomic factors. There were no such impairments in the third quarter of 2021.
Loss from operations was $(477) million in the third quarter of 2022, compared to loss from operations of $(3) million in the third quarter of 2021.
Net loss was $(512) million in the third quarter of 2022, compared to net loss of $(35) million in the third quarter of 2021.
Net loss per diluted share was $(2.43) in the third quarter of 2022, compared to net loss per diluted share of $(0.17) in the third quarter of 2021.
Non-GAAP Operating Profit was $80 million in the third quarter of 2022, a decrease of 36% compared to $124 million in the third quarter of 2021.
Non-GAAP Earnings Per Share was $0.10 in the third quarter of 2022, a decrease of 60% as compared to Non-GAAP Earnings Per Share of $0.25 in the third quarter of 2021.
Capital expenditures were $31 million in the third quarter of 2022, compared to $35 million in the third quarter of 2021.
As of September 30, 2022, we had cash and cash equivalents of $249 million with no balance outstanding on our Revolving Credit Facility.
Rackspace Technology is providing guidance as follows:
|Q4 2022 Guidance|
|Revenue||$772 - $782 million|
|Core Revenue||$738 - $746 million|
|Non-GAAP Operating Profit||$65 - $69 million|
|Non-GAAP Earnings Per Share||$0.04 - $0.06|
|Non-GAAP Other Income (Expense)1||($51) – ($53) million|
|Non-GAAP Tax Expense Rate||26%|
|Non-GAAP Weighted Average Shares||211 – 213 million|
1 Non-GAAP Other Income (Expense) is only expected to include interest expense.
Definitions of non-GAAP financial measures and the reconciliations to the most directly comparable measures in accordance with generally accepted accounting principles in the United States (“GAAP”) are provided in subsequent sections of this press release narrative and supplemental schedules. Rackspace Technology has not reconciled Non-GAAP Operating Profit, Non-GAAP Earnings Per Share, Non-GAAP Other Income (Expense) or Non-GAAP Tax Expense Rate guidance to the most directly comparable GAAP measure because it does not provide guidance on GAAP net income (loss) or the reconciling items between these Non-GAAP measures and GAAP net income (loss) as a result of the uncertainty regarding, and the potential variability of, certain of these items, such as share-based compensation expense. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort. With respect to Non-GAAP Operating Profit, Non-GAAP Earnings Per Share, Non-GAAP Other Income (Expense) and Non-GAAP Tax Expense Rate guidance, adjustments in future periods are generally expected to be similar to the kinds of charges and costs excluded from these Non-GAAP measures in prior periods, but the impact of such adjustments could be significant.
Conference Call and Webcast
Rackspace Technology will hold a conference call today, November 9, 2022, at 4:00pm CT / 5:00pm ET to discuss its third quarter 2022 results. Interested parties may access the conference call as follows:
To listen to the live webcast, please visit our IR website at the following link: https://ir.rackspace.com/news-
For listeners who would like to participate in the question and answer session, or need to obtain a dial-in number, please pre-register at the following link: https://register.vevent.com/
All registrants will receive dial-in information and a PIN allowing them to access the live call.
An audio replay of the conference call will be available on the Company’s website at ir.rackspace.com.