Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2022 | May 05, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-39420 | |
Entity Registrant Name | RACKSPACE TECHNOLOGY, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 81-3369925 | |
Entity Address, Address Line One | 1 Fanatical Place | |
Entity Address, Address Line Two | City of Windcrest | |
Entity Address, City or Town | San Antonio | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78218 | |
City Area Code | 210 | |
Local Phone Number | 312-4000 | |
Title of 12(b) Security | Common stock, par value $0.01 per share | |
Trading Symbol | RXT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 210,859,524 | |
Entity Central Index Key | 0001810019 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 269.1 | $ 272.8 |
Accounts receivable, net of allowance for doubtful accounts and accrued customer credits of $18.4 and $16.9, respectively | 576.1 | 554.3 |
Prepaid expenses | 103.9 | 110 |
Other current assets | 57 | 52.4 |
Total current assets | 1,006.1 | 989.5 |
Property, equipment and software, net | 794.7 | 826.7 |
Goodwill, net | 2,708.6 | 2,706.8 |
Intangible assets, net | 1,423.6 | 1,466.5 |
Operating right-of-use assets | 153.6 | 161.8 |
Other non-current assets | 224.2 | 177.4 |
Total assets | 6,310.8 | 6,328.7 |
Current liabilities: | ||
Accounts payable and accrued expenses | 390.2 | 369.5 |
Accrued compensation and benefits | 70.7 | 104.5 |
Deferred revenue | 111 | 98.6 |
Debt | 23 | 23 |
Accrued interest | 27.7 | 27.6 |
Operating lease liabilities | 57.2 | 60.4 |
Finance lease liabilities | 66 | 64.6 |
Financing obligations | 40.1 | 48 |
Other current liabilities | 31.6 | 41.2 |
Total current liabilities | 817.5 | 837.4 |
Non-current liabilities: | ||
Debt | 3,307 | 3,310.9 |
Operating lease liabilities | 106.4 | 114.8 |
Finance lease liabilities | 332.1 | 345.1 |
Financing obligations | 63.1 | 62.9 |
Deferred income taxes | 222.9 | 205.8 |
Other non-current liabilities | 117.5 | 124.4 |
Total liabilities | 4,966.5 | 5,001.3 |
Commitments and Contingencies (Note 7) | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value per share: 5.0 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock, $0.01 par value per share: 1,495.0 shares authorized; 211.2 and 212.8 shares issued; 211.2 and 212.4 shares outstanding, respectively | 2.1 | 2.1 |
Additional paid-in capital | 2,517.5 | 2,500 |
Accumulated other comprehensive income | 48.9 | 6.9 |
Accumulated deficit | (1,220.1) | (1,181.6) |
Treasury stock, at cost; zero and 0.4 shares held, respectively | (4.1) | 0 |
Total stockholders' equity | 1,344.3 | 1,327.4 |
Total liabilities and stockholders' equity | $ 6,310.8 | $ 6,328.7 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts and accrued customer credits | $ 16.9 | $ 18.4 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,495,000,000 | 1,495,000,000 |
Common stock, shares issued (in shares) | 212,800,000 | 211,200,000 |
Common stock, shares outstanding (in shares) | 212,400,000 | 211,200,000 |
Treasury stock, at cost (in shares) | 400,000 | 0 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Revenue | $ 775.5 | $ 725.9 |
Cost of revenue | (549.5) | (490.6) |
Gross profit | 226 | 235.3 |
Selling, general and administrative expenses | (205.1) | (231) |
Gain on sale of land | 0 | 19.9 |
Income from operations | 20.9 | 24.2 |
Other income (expense): | ||
Interest expense | (50.1) | (52.6) |
Loss on investments, net | (0.1) | (3.7) |
Debt modification and extinguishment costs | 0 | (37) |
Other expense, net | (3.6) | (1.8) |
Total other income (expense) | (53.8) | (95.1) |
Loss before income taxes | (32.9) | (70.9) |
Benefit (provision) for income taxes | (5.6) | 6.9 |
Net loss | (38.5) | (64) |
Other comprehensive income (loss), net of tax | ||
Foreign currency translation adjustments | (4.6) | 3 |
Unrealized gain on derivative contracts | 42.3 | 9.4 |
Amount reclassified from accumulated other comprehensive income (loss) to earnings | 4.3 | 4 |
Other comprehensive income (loss) | 42 | 16.4 |
Comprehensive income (loss) | $ 3.5 | $ (47.6) |
Net loss per share: | ||
Basic (in dollars per share) | $ (0.18) | $ (0.31) |
Diluted (in dollars per share) | $ (0.18) | $ (0.31) |
Weighted average number of shares outstanding: | ||
Basic (in shares) | 211.4 | 204.6 |
Diluted (in shares) | 211.4 | 204.6 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash Flows From Operating Activities | ||
Net loss | $ (38.5) | $ (64) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 101.6 | 108.5 |
Amortization of operating right-of-use assets | 14.3 | 15.9 |
Deferred income taxes | 0.9 | (11.1) |
Share-based compensation expense | 17 | 17.2 |
Gain on sale of land | 0 | (19.9) |
Debt modification and extinguishment costs | 0 | 37 |
Unrealized loss on derivative contracts | 4.6 | 5.2 |
Loss on investments, net | 0.1 | 3.7 |
Provision for bad debts and accrued customer credits | (0.2) | (2.7) |
Amortization of debt issuance costs and debt discount | 2 | 2.7 |
Other operating activities | 0 | (0.4) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (19.8) | (2.6) |
Prepaid expenses and other current assets | 7.4 | 24.7 |
Accounts payable, accrued expenses, and other current liabilities | (19) | (7.8) |
Deferred revenue | 7.6 | 11.5 |
Increase (Decrease) in Operating Lease Liability | (17.7) | (16.1) |
Other non-current assets and liabilities | 4.2 | 1.4 |
Net cash provided by operating activities | 64.5 | 103.2 |
Cash Flows From Investing Activities | ||
Purchases of property, equipment and software | (19.2) | (36.9) |
Acquisitions, net of cash acquired | (7.7) | 0 |
Proceeds from sale of land | 0 | 31.3 |
Other investing activities | 1 | 1.3 |
Net cash used in investing activities | (25.9) | (4.3) |
Cash Flows From Financing Activities | ||
Proceeds from employee stock plans | 0.5 | 21.7 |
Shares of common stock repurchased | (4.1) | 0 |
Proceeds from borrowings under long-term debt arrangements | 0 | 2,838.5 |
Payments on long-term debt | (5.8) | (2,810.6) |
Payments for debt issuance costs | 0 | (32.3) |
Payments on financing component of interest rate swap | (4.3) | 0 |
Principal payments of finance lease liabilities | (15.9) | (10.5) |
Principal payments of financing obligations | (11.2) | (11.3) |
Net cash used in financing activities | (40.8) | (4.5) |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (1.6) | (0.7) |
Increase (decrease) in cash, cash equivalents, and restricted cash | (3.8) | 93.7 |
Cash, cash equivalents, and restricted cash at beginning of period | 275.4 | 108.1 |
Cash, cash equivalents, and restricted cash at end of period | 271.6 | 201.8 |
Supplemental Cash Flow Information | ||
Cash payments for interest, net of amount capitalized | 40.8 | 45.1 |
Cash payments for income taxes, net of refunds | 5.4 | 3.9 |
Non-cash Investing and Financing Activities | ||
Acquisition of property, equipment and software by finance leases | 6.5 | 13.9 |
Acquisition of property, equipment and software by financing obligations | 3.7 | 0 |
Increase in property, equipment and software accrued in liabilities | 1.5 | 8.1 |
Non-cash purchases of property, equipment and software | 11.7 | 22 |
Debt issuance costs included in accrued liabilities | 0 | 2.1 |
Other non-cash investing and financing activities | 0 | 0.2 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | ||
Cash and cash equivalents | 269.1 | 198.4 |
Restricted cash included in other non-current assets | 2.5 | 3.4 |
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ 271.6 | $ 201.8 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Treasury Stock, at Cost |
Beginning balance (in shares) at Dec. 31, 2020 | 201.8 | 0 | ||||
Beginning balance at Dec. 31, 2020 | $ 1,383.7 | $ 2 | $ 2,363.6 | $ (18.6) | $ (963.3) | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock (in shares) | 2.7 | |||||
Exercise of stock options and release of stock awards (in shares) | 2.5 | |||||
Exercise of stock options and release of stock awards | 21.9 | $ 0.1 | 21.8 | |||
Share-based compensation expense | 17.2 | 17.2 | ||||
Net loss | (64) | (64) | ||||
Other comprehensive income | 16.4 | 16.4 | ||||
Ending balance (in shares) at Mar. 31, 2021 | 207 | 0 | ||||
Ending balance at Mar. 31, 2021 | 1,375.2 | $ 2.1 | 2,402.6 | (2.2) | (1,027.3) | $ 0 |
Beginning balance (in shares) at Dec. 31, 2021 | 211.2 | 0 | ||||
Beginning balance at Dec. 31, 2021 | 1,327.4 | $ 2.1 | 2,500 | 6.9 | (1,181.6) | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Exercise of stock options and release of stock awards (in shares) | 1.6 | |||||
Exercise of stock options and release of stock awards | 0.5 | 0.5 | ||||
Share-based compensation expense | 17 | 17 | ||||
Net loss | (38.5) | (38.5) | ||||
Other comprehensive income | 42 | 42 | ||||
Repurchase of common stock (in shares) | 0.4 | |||||
Repurchase of common stock | (4.1) | $ (4.1) | ||||
Ending balance (in shares) at Mar. 31, 2022 | 212.8 | 0.4 | ||||
Ending balance at Mar. 31, 2022 | $ 1,344.3 | $ 2.1 | $ 2,517.5 | $ 48.9 | $ (1,220.1) | $ (4.1) |
Company Overview, Basis of Pres
Company Overview, Basis of Presentation, and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Company Overview, Basis of Presentation, and Summary of Significant Accounting Policies | 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 March 31, 2022, and for the three months ended March 31, 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 March 31, 2022, and our results of operations, cash flows and stockholders' equity for the three months ended March 31, 2021 and 2022. The results of operations for the three months ended March 31, 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. 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. 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 three months ended March 31, 2022. 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. |
Customer Contracts
Customer Contracts | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Customer Contracts | Customer Contracts The following table presents the balances related to customer contracts: (In millions) Consolidated Balance Sheets Account December 31, 2021 March 31, 2022 Accounts receivable, net Accounts receivable, net (1) $ 554.3 $ 576.1 Current portion of contract assets Other current assets $ 15.2 $ 15.0 Non-current portion of contract assets Other non-current assets $ 13.1 $ 10.5 Current portion of deferred revenue Deferred revenue $ 98.6 $ 111.0 Non-current portion of deferred revenue Other non-current liabilities $ 13.6 $ 8.6 (1) Allowance for doubtful accounts and accrued customer credits was $18.4 million and $16.9 million as of December 31, 2021 and March 31, 2022, respectively. Amounts recognized in revenue for the three months ended March 31, 2021 and 2022, which were included in deferred revenue as of the beginning of each period, totaled $34.6 million and $32.6 million, respectively. Cost Incurred to Obtain and Fulfill a Contract As of December 31, 2021 and March 31, 2022, the balances of capitalized costs to obtain a contract were $58.0 million and $58.6 million, respectively, and the balances of capitalized costs to fulfill a contract were $23.5 million and $22.0 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 March 31, (In millions) 2021 2022 Amortization of capitalized sales commissions $ 10.8 $ 11.2 Amortization of capitalized implementation costs $ 4.4 $ 4.4 Remaining Performance Obligations As of March 31, 2022, the aggregate amount of transaction price allocated to remaining performance obligations was $673.9 million, of which 57% 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. |
Net Loss Per Share
Net Loss Per Share | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | 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 March 31, (In millions, except per share data) 2021 2022 Basic and diluted net loss per share: Net loss attributable to common stockholders $ (64.0) $ (38.5) Weighted average shares outstanding: Common stock 204.6 211.4 Number of shares used in per share computations 204.6 211.4 Net loss per share $ (0.31) $ (0.18) 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 both periods presented, basic net loss per share is the same as diluted net loss per share for both periods as the inclusion of all potential common shares outstanding would have been anti-dilutive. We excluded 21.7 million and 24.8 million potential common shares from the computation of dilutive loss per share for the three months ended March 31, 2021 and 2022, respectively. |
Property, Equipment and Softwar
Property, Equipment and Software, net | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property, Equipment and Software, net | Property, Equipment and Software, net Property, equipment and software, net, consisted of the following: (In millions) December 31, March 31, Computers and equipment $ 1,206.5 $ 1,196.1 Software 465.6 462.2 Furniture and fixtures 21.9 21.0 Buildings and leasehold improvements 512.9 509.5 Land 21.2 21.2 Property, equipment and software, at cost 2,228.1 2,210.0 Less: Accumulated depreciation (1,413.4) (1,427.2) Work in process 12.0 11.9 Property, equipment and software, net $ 826.7 $ 794.7 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 Income (Loss) for the three months ended March 31, 2021. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The following table sets forth the changes in the carrying amounts of goodwill by reportable segment: (In millions) Multicloud Services Apps & Cross Platform OpenStack Public Cloud Total 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 (4.0) (0.1) — (4.1) Balance as of March 31, 2022 $ 2,380.3 $ 328.3 $ — $ 2,708.6 Gross goodwill $ 2,675.3 $ 328.3 $ 52.4 $ 3,056.0 Less: Accumulated impairment charges (295.0) — (52.4) (347.4) Goodwill, net as of March 31, 2022 $ 2,380.3 $ 328.3 $ — $ 2,708.6 The following table provides information regarding our intangible assets other than goodwill: December 31, 2021 March 31, 2022 (In millions) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Customer relationships $ 1,983.0 $ (784.1) $ 1,198.9 $ 1,981.4 $ (823.6) $ 1,157.8 Property tax abatement 16.0 (9.2) 6.8 16.0 (9.6) 6.4 Other 28.2 (17.4) 10.8 28.2 (18.8) 9.4 Total definite-lived intangible assets 2,027.2 (810.7) 1,216.5 2,025.6 (852.0) 1,173.6 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 $ 2,275.6 $ (852.0) $ 1,423.6 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt consisted of the following: (In millions, except %) December 31, 2021 March 31, 2022 Debt Instrument Maturity Date Interest Rate (1) Amount Interest Rate (1) Amount Term Loan Facility February 15, 2028 3.50% $ 2,282.8 3.50% $ 2,277.0 Revolving Credit Facility August 7, 2025 —% — —% — 3.50% Senior Secured Notes February 15, 2028 3.50% 550.0 3.50% 550.0 5.375% Senior Notes December 1, 2028 5.375% 550.0 5.375% 550.0 Less: unamortized debt issuance costs (36.3) (34.9) Less: unamortized debt discount (12.6) (12.1) Total debt 3,333.9 3,330.0 Less: current portion of debt (23.0) (23.0) Debt, excluding current portion $ 3,310.9 $ 3,307.0 (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 March 31, 2022, 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 12, "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. The fair value of the Term Loan Facility as of March 31, 2022 was $2,234.3 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 March 31, 2022, we were in compliance with all covenants under the Senior Facilities. The Revolving Credit Facility matures on August 7, 2025. As of March 31, 2022, we had total commitments of $375.0 million and no outstanding borrowings under the Revolving Credit Facility or letters of 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. The indenture governing the 3.50% Senior Secured Notes (the "3.50% Notes Indenture") describes certain terms and conditions under which other current and future domestic subsidiaries are required to become guarantors of the 3.50% Senior Secured Notes. 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 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 m ay 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 103.000%, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. 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 101.000% of the aggregate principal amount, plus accrued and unpaid interest, if any, to, but not including the purchase date. As of March 31, 2022, 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 March 31, 2022 was $492.3 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. The indenture governing the 5.375% Senior Notes (the "5.375% Notes Indenture") describes certain terms and conditions under which other current and future domestic subsidiaries are required to become guarantors of the 5.375% Senior 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 5.375% Notes Indenture and accrued and unpaid interest, if any, to but excluding the redemption date; from December 1, 2023 to November 30, 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 November 30, 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 101.000% of the aggregate principal amount, plus accrued and unpaid interest, if any, to, but not including the purchase date. As of March 31, 2022, 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 March 31, 2022 was $475.8 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. 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 Income (Loss) for the three months ended March 31, 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. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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. |
July 2021 Restructuring Plan
July 2021 Restructuring Plan | 3 Months Ended |
Mar. 31, 2022 | |
Restructuring and Related Activities [Abstract] | |
July 2021 Restructuring Plan | July 2021 Restructuring Plan On July 21, 2021, we committed to an internal restructuring plan (the "July 2021 Restructuring Plan") to drive a change in the type and location of certain positions that was 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 had exited the company as of March 31, 2022. During the three months ended March 31, 2022, we did not incur any material exit and disposal costs under Accounting Standards Codification ("ASC") No. 420, Exit or Disposal Cost Obligations (“ASC 420”). Liability activity for previously accrued restructuring costs that are expected to be settled in cash are presented in the table below. (In millions) Employee Related Other Total Liability as of December 31, 2021 $ 7.1 $ 0.6 $ 7.7 Charges — — — Cash payments (3.9) — (3.9) Liability as of March 31, 2022 $ 3.2 $ 0.6 $ 3.8 Total cumulative costs incurred as of March 31, 2022 $ 13.8 $ 6.0 $ 19.8 The liability for employee related costs primarily consists of one-time termination benefits and was recorded in "Accrued compensation and benefits" in the Consolidated Balance Sheets as of March 31, 2022 . The liability for other costs represents a contract termination cost and was recorded in "Accounts payable and accrued expenses" in the Consolidated Balance Sheets as of March 31, 2022 . We do not expect to incur any additional future ASC 420 exit and disposal costs related to the July 2021 Restructuring Plan. |
Share Repurchase Program
Share Repurchase Program | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Share Repurchase Program | Share Repurchase Program On March 3, 2022, our board of directors authorized a program to repurchase up to $75.0 million of shares of our common stock from time to time through open-market transactions, privately negotiated transactions, accelerated share repurchases, and other transactions in accordance with applicable security laws. The program expires on September 30, 2023 and can be discontinued at any time. During the three months ended March 31, 2022, we repurchased $4.1 million, or 0.4 million shares, of our common stock on the open market under this program. Shares purchased pursuant to the program are recorded as treasury stock at cost in the Consolidated Balance Sheets . As of March 31, 2022, approximately $70.9 million of the amount authorized by the board under the current program remained available for additional purchases. |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | Share-Based Compensation During the three months ended March 31, 2022, we granted 7.8 million restricted stock units ("RSUs") under the Rackspace Technology, Inc. 2020 Equity Incentive Plan with a weighted-average grant date fair value of $11.04. The majority of the RSUs were granted as part of our annual compensation award process and vest ratably over a three-year period, subject to continued service. In addition, during the three months ended March 31, 2022, we granted 1.2 million performance stock units ("PSUs") under the Rackspace Technology, Inc. 2020 Equity Incentive Plan with a weighted-average grant date fair value of $11.70. These PSUs represent the target amount of grants, and the actual number of shares awarded upon vesting may vary depending upon the achievement of the relevant market condition which is based on Rackspace’s Total Shareholder Return (“TSR”) relative to the TSR of a comparator group of IT and Cloud Services Companies. The awards are eligible to vest in equal annual installments over three years based on the attainment of the market condition and the employee’s continued service through the end of the applicable measurement period and were valued using a Monte Carlo simulation. Share-based compensation expense recogniz ed was as follows: Three Months Ended March 31, (In millions) 2021 2022 Cost of revenue $ 4.9 $ 2.8 Selling, general and administrative expenses 12.3 14.2 Pre-tax share-based compensation expense 17.2 17.0 Less: Income tax benefit (3.6) (3.6) Total share-based compensation expense, net of tax $ 13.6 $ 13.4 As of March 31, 2022, there was $182.2 million of total unrecognized compensation cost related to stock options, RSUs, PSUs, and the ESPP, which will be recognized using the service period or over our best estimate of the period over which the performance condition will be met, as applicable. |
Taxes
Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Taxes | Taxes We are subject to U.S. federal income tax and various state, local, and international income taxes in numerous jurisdictions. The differences between our effective tax rate and the U.S. federal statutory rate of 21% generally result from various factors, including the geographical distribution of taxable income, tax credits, contingency reserves for uncertain tax p ositions, and permanent differences between the book and tax treatment of certain items. Additionally, the amount of income taxes paid is subject to our interpretation of applicable tax laws in the jurisdictions in which we file. For the three months ended March 31, 2022, our effective tax rate is lower than the U.S. federal statutory rate of 21% due to the net impact of the geographic distribution of our earnings, the application of the global intangible low-taxed income (“GILTI”) provisions that were implemented with the Tax Cuts and Jobs Act (the “Act”) that was passed on December 22, 2017, tax effects from share-based compensation and executive compensation that is nondeductible under Internal Revenue Code ("IRC") Section 162(m). |
Derivatives
Derivatives | 3 Months Ended |
Mar. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives We utilize derivative instruments, including interest rate swap agreements, to manage our exposure to interest rate risk. We only hold such instruments for economic hedging purposes, not for speculative or trading purposes. Our derivative instruments are transacted only with highly-rated institutions, which reduces our exposure to credit risk in the event of nonperformance. Interest Rate Swaps We are exposed to interest rate risk associated with fluctuations in interest rates on the floating-rate Term Loan Facility. The objective in using interest rate derivatives is to manage our exposure to interest rate movements. To accomplish this objective, we have entered into interest rate swap agreements as part of our interest rate risk management strategy. Interest rate swaps involve the receipt of variable amounts from a counterparty in exchange for the company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. On a quarterly basis, we net settle with the counterparty for the difference between the fixed rate specified in each swap agreement and the variable rate based upon the three-month LIBOR as applied to the notional amount of the swap. On January 9, 2020, we designated certain of our swaps as cash flow hedges. On the designation date, the cash flow hedges were in a $39.9 million liability position. The cash flow hedges were expected to be highly effective on the designation date and, on a quarterly basis, we performed retrospective and prospective regression assessments to determine whether the cash flow hedges continue to be highly effective. As long as the cash flow hedges are highly effective, changes in fair value are recorded to "Accumulated other comprehensive income (loss)" in the Consolidated Balance Sheets and reclassified to "Interest expense" in the period when the underlying transaction affects earnings. The income tax effects of cash flow hedges are released from "Accumulated other comprehensive income (loss)" in the period when the underlying transaction affects earnings. Any stranded income tax effects are released from “Accumulated other comprehensive income (loss)” into “Benefit (provision) for income taxes” under the portfolio a pproach. During the year ended December 31, 2021, we completed a series of transactions to modify our interest rate swap positions as follows: (i) All the interest rate swaps outstanding as of December 31, 2020, with the exception of the agreement that matured on February 3, 2021, were de-designated as cash flow hedges on January 31, 2021, (ii) on February 12, 2021, we entered into a $900.0 million receive-fixed interest rate swap which was designed to offset the terms of the remaining two December 2016 swaps, and (iii) on February 12, 2021, we terminated all December 2018 swaps and entered into a $1.35 billion pay-fixed interest rate swap, effectively blending the liability position of our existing interest rate swap agreements into the new swap and extending the term of our hedged position to February 2026. The amount remaining in “Accumulated other comprehensive income (loss)" for the de-designated December 2016 and December 2018 swaps at the de-designation date was app roximately $51.6 million, and will be amortized as an increase to "Interest expense" over the effective period of the original swap agreements. The new receive-fixed interest rate swap qualifies as a hybrid instrument in accordance with ASC No. 815, Derivatives and Hedging , consisting of a loan and an embedded derivative for which the fair value option has been elected. This $900.0 million swap will remain undesignated to economically offset the now undesignated December 2016 swaps. This new swap and the December 2016 swaps matured on February 3, 2022. Cash settlements related to this receive-fixed interest rate swap will offset and are classified as operating activities in the Consolidated Statements of Cash Flows. The new pay-fixed interest rate swap also qualifies as a hybrid instrument in accordance with ASC No. 815, Derivatives and Hedging , consisting of a loan and an embedded at-market derivative that was designated as a cash flow hedge. The loan is accounted for at amortized cost over the life of the swap while the embedded at-market derivative is accounted for at fair value. This new $1.35 billion swap is indexed to three-month LIBOR and will be net settled on a quarterly basis with the counterparty for the difference between the fixed rate of 2.3820% and the variable rate based upon three-month LIBOR (subject to a floor of 0.75%) as applied to the notional amount of the swap. In connection with the transactions discussed above, no cash was exchanged between us and the counterparty. The liability of the terminated interest rate swaps as well as the inception value of the receive-fixed interest rate swap was blended into the new pay-fixed interest rate swap. The cash flows related to the portion treated as debt will be classified as financing activities in the Consolidated Statements of Cash Flows while the portion treated as an at-market derivative will be classified as operating activities. As of December 31, 2021 and March 31, 2022, the cash flow hedge was highly effective. The key terms of interest rate swaps are presented below: Effective Date Fixed Rate Paid (Received) December 31, 2021 March 31, 2022 Notional Amount (in millions) Status Notional Amount (in millions) Status Maturity Date Entered into December 2016: February 3, 2017 1.9040% $ 450.0 Active $ — Matured February 3, 2022 February 3, 2017 1.9040% 450.0 Active — Matured February 3, 2022 Entered into December 2018: February 3, 2019 2.7490% — Terminated — Terminated November 3, 2023 February 3, 2020 2.7350% — Terminated — Terminated November 3, 2023 February 3, 2021 2.7360% — Terminated — Terminated November 3, 2023 February 3, 2022 2.7800% — Terminated — Terminated November 3, 2023 Entered into February 2021: February 3, 2021 (1.9040)% (900.0) Active — Matured February 3, 2022 February 9, 2021 2.3820% 1,350.0 Active 1,350.0 Active February 9, 2026 Total $ 1,350.0 $ 1,350.0 Our interest rate swap agreements, excluding the portion treated as debt, are recognized at fair value in the Consolidated Balance Sheets and are valued using pricing models that rely on market observable inputs such as yield curve data, which are classified as Level 2 inputs within the fair value hierarchy. Fair Values of Derivatives on the Consolidated Balance Sheets The fair values of our derivatives and their location on the Consolidated Balance Sheets as of December 31, 2021 and March 31, 2022 were as follows: December 31, 2021 March 31, 2022 (In millions) Assets Liabilities Assets Liabilities Derivatives not designated as hedging instruments Location Interest rate swaps Other current assets (1) $ 1.5 $ — $ — $ — Interest rate swaps Other current liabilities — 1.5 — — Total $ 1.5 $ 1.5 $ — $ — Derivatives designated as hedging instruments Location Interest rate swaps Other current assets $ — $ — $ 7.4 $ — Interest rate swaps Other non-current assets 23.6 — 70.7 — Interest rate swaps Other current liabilities (2) — 20.8 — 17.3 Interest rate swaps Other non-current liabilities (3) — 56.4 — 52.1 Total $ 23.6 $ 77.2 $ 78.1 $ 69.4 (1) The entire balance as of December 31, 2021 is comprised of the receive-fixed interest rate swap for which the fair value option has been elected. (2) The balance as of December 31, 2021 and March 31, 2022 includes $17.2 million and $17.3 million, respectively, related to the financing component of the pay-fixed interest rate swap. (3) The entire balance is comprised of the financing component of the pay-fixed interest rate swap. For financial statement presentation purposes, we do not offset assets and liabilities under master netting arrangements and all amounts above are presented on a gross basis. The following table, however, is presented on a net asset and net liability basis: December 31, 2021 March 31, 2022 (In millions) Gross Amounts on Balance Sheet Effects of Counterparty Netting Net Amounts Gross Amounts on Balance Sheet Effects of Counterparty Netting Net Amounts Assets Interest rate swaps $ 25.1 $ (25.1) $ — $ 78.1 $ (69.4) $ 8.7 Liabilities Interest rate swaps $ 78.7 $ (25.1) $ 53.6 $ 69.4 $ (69.4) $ — Effect of Derivatives on the Consolidated Statements of Comprehensive Income (Loss) The effect of our derivatives and their location on the Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2022 was as follows: Three Months Ended March 31, (In millions) 2021 2022 Derivatives not designated as hedging instruments Location Interest rate swaps Interest expense $ (4.6) $ (4.6) Foreign currency contracts (1) Other expense, net $ (1.3) $ — Derivatives designated as hedging instruments Location Interest rate swaps Interest expense $ (2.3) $ (1.3) (1) Relates to two foreign currency forward contracts settled on November 30, 2021. As of December 31, 2021 and March 31, 2022, we do not have any outstanding foreign currency hedging contracts. Interest expense was $52.6 million and $50.1 million for the three months ended March 31, 2021 and 2022, respectively. As of March 31, 2022, the amount of cash flow hedge losses included within "Accumulated other comprehensive income (loss)" that is expected to be reclassified as an increase to "Interest expense" over the next 12 months is approximately $7.9 million. See Note 13, "Accumulated Other Comprehensive Income (Loss)," for information regarding changes in fair value of our derivatives designated as hedging instruments. Credit-risk-related Contingent Features We have agreements with interest rate swap counterparties that contain a provision whereby if we default on any of our material indebtedness, then we could also be declared in default of our interest rate swap agreements. As of March 31, 2022, our outstanding interest rate swap agreement was in a net asset position. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) consisted of the following: (In millions) Accumulated Foreign Currency Translation Adjustments Accumulated Loss on Derivative Contracts Accumulated Other Comprehensive Loss Balance at December 31, 2020 $ 20.8 $ (39.4) $ (18.6) Foreign currency translation adjustments, net of tax expense of $0.1 3.0 — 3.0 Unrealized gain on derivative contracts, net of tax expense of $3.2 — 9.4 9.4 Amount reclassified from Accumulated comprehensive income (loss) into earnings, net of tax benefit of $1.4 (1) — 4.0 4.0 Balance at March 31, 2021 $ 23.8 $ (26.0) $ (2.2) (1) Includes interest expense recognized of $2.8 million and amortization of off-market swap value and accumulated loss at hedge de-designation of $2.6 million for the three months ended March 31, 2021. (In millions) Accumulated Foreign Currency Translation Adjustments Accumulated Gain (Loss) on Derivative Contracts Accumulated Other Comprehensive Income Balance at December 31, 2021 $ 17.2 $ (10.3) $ 6.9 Foreign currency translation adjustments, net of tax benefit of $0.7 (4.6) — (4.6) Unrealized gain on derivative contracts, net of tax expense of $14.6 — 42.3 42.3 Amount reclassified from Accumulated comprehensive income (loss) into earnings, net of tax benefit of $1.5 (1) — 4.3 4.3 Balance at March 31, 2022 $ 12.6 $ 36.3 $ 48.9 (1) Includes interest expense recognized of $1.2 million and amortization of off-market swap value and accumulated loss at hedge de-designation of $4.6 million for the three months ended March 31, 2022. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Affiliates of ABRY Partners, LLC and ABRY Partners II, LLC (collectively, “ABRY”), are Term Loan Facility lenders under the First Lien Credit Agreement. As of March 31, 2022, the outstanding principal amount of the Term Loan Facility was $2,277.0 million, of which $54.5 million, or 2.4%, is due to ABRY affiliates. Investment funds affiliated with ABRY are also co-investors in Rackspace Technology. Apollo Global Securities, LLC, an affiliate of Apollo, received $0.6 million in connection with their role as an initial purchaser of the 3.50% Senior Secured Notes issued on February 9, 2021 and $2.3 million in arranger fees in connection with the entry into the Term Loan Facility on February 9, 2021. On February 2, 2021, we issued 2,665,935 shares of common stock to DPH 123, LLC, an ABRY affiliate, for no additional consideration pursuant to the Agreement and Plan of Merger, dated as of September 6, 2017, in connection with our November 15, 2017 acquisition of Datapipe Parent, Inc. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting We have organized our operations into the following three operating segments, which correspond directly to our reportable segments: Multicloud Services, Apps & Cross Platform, and OpenStack Public Cloud. Our segments are based upon a number of factors, including, the basis for our budgets and forecasts, organizational and management structure and the financial information regularly used by our Chief Operating Decision Maker to make key decisions and to assess performance. We assess financial performance of our segments on the basis of revenue and segment gross profit. For the calculation of segment gross profit, we allocate certain costs, such as data center operating costs, customer support costs, license expense, and depreciation, to our segments generally based on segment revenue. The table below presents a reconciliation of revenue by reportable segment to consolidated revenue and a reconciliation of consolidated segment gross profit to consolidated loss before income taxes for the three months ended March 31, 2021 and 2022. Three Months Ended March 31, (In millions) 2021 2022 Revenue by segment: Multicloud Services $ 579.6 $ 640.1 Apps & Cross Platform 97.3 94.8 OpenStack Public Cloud 49.0 40.6 Total consolidated revenue $ 725.9 $ 775.5 Segment gross profit: Multicloud Services $ 196.4 $ 188.2 Apps & Cross Platform 34.9 34.5 OpenStack Public Cloud 18.6 12.9 Total consolidated segment gross profit 249.9 235.6 Less: Share-based compensation expense (4.9) (2.8) Other compensation expense (1) (1.3) (0.8) Purchase accounting impact on expense (2) (1.2) (0.7) Restructuring and transformation expenses (3) (7.2) (5.3) Selling, general and administrative expenses (231.0) (205.1) Gain on sale of land 19.9 — Interest expense (52.6) (50.1) Loss on investments, net (3.7) (0.1) Debt modification and extinguishment costs (37.0) — Other expense, net (1.8) (3.6) Total consolidated loss before income taxes $ (70.9) $ (32.9) (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 Rackspace Acquisition on expenses. |
Company Overview, Basis of Pr_2
Company Overview, Basis of Presentation, and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | 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 | Unaudited Interim Financial Information The unaudited consolidated financial statements as of March 31, 2022, and for the three months ended March 31, 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 March 31, 2022, and our results of operations, cash flows and stockholders' equity for the three months ended March 31, 2021 and 2022. The results of operations for the three months ended March 31, 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. |
Use of Estimates | 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. |
Recent Accounting Pronouncements | 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. |
Net Loss Per Share | Net Loss Per ShareBasic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted average shares outstanding during the period. |
Derivatives | Derivatives We utilize derivative instruments, including interest rate swap agreements, to manage our exposure to interest rate risk. We only hold such instruments for economic hedging purposes, not for speculative or trading purposes. Our derivative instruments are transacted only with highly-rated institutions, which reduces our exposure to credit risk in the event of nonperformance. Interest Rate Swaps We are exposed to interest rate risk associated with fluctuations in interest rates on the floating-rate Term Loan Facility. The objective in using interest rate derivatives is to manage our exposure to interest rate movements. To accomplish this objective, we have entered into interest rate swap agreements as part of our interest rate risk management strategy. Interest rate swaps involve the receipt of variable amounts from a counterparty in exchange for the company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. On a quarterly basis, we net settle with the counterparty for the difference between the fixed rate specified in each swap agreement and the variable rate based upon the three-month LIBOR as applied to the notional amount of the swap. |
Customer Contracts (Tables)
Customer Contracts (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Balances Related to Customer Contracts | The following table presents the balances related to customer contracts: (In millions) Consolidated Balance Sheets Account December 31, 2021 March 31, 2022 Accounts receivable, net Accounts receivable, net (1) $ 554.3 $ 576.1 Current portion of contract assets Other current assets $ 15.2 $ 15.0 Non-current portion of contract assets Other non-current assets $ 13.1 $ 10.5 Current portion of deferred revenue Deferred revenue $ 98.6 $ 111.0 Non-current portion of deferred revenue Other non-current liabilities $ 13.6 $ 8.6 |
Schedule of Capitalized Contract Cost | Amortization of capitalized sales commissions and implementation costs was as follows: Three Months Ended March 31, (In millions) 2021 2022 Amortization of capitalized sales commissions $ 10.8 $ 11.2 Amortization of capitalized implementation costs $ 4.4 $ 4.4 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Net Loss Per Share | The following table sets forth the computation of basic and diluted net loss per share: Three Months Ended March 31, (In millions, except per share data) 2021 2022 Basic and diluted net loss per share: Net loss attributable to common stockholders $ (64.0) $ (38.5) Weighted average shares outstanding: Common stock 204.6 211.4 Number of shares used in per share computations 204.6 211.4 Net loss per share $ (0.31) $ (0.18) |
Property, Equipment and Softw_2
Property, Equipment and Software, net (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Equipment, and Software, net | Property, equipment and software, net, consisted of the following: (In millions) December 31, March 31, Computers and equipment $ 1,206.5 $ 1,196.1 Software 465.6 462.2 Furniture and fixtures 21.9 21.0 Buildings and leasehold improvements 512.9 509.5 Land 21.2 21.2 Property, equipment and software, at cost 2,228.1 2,210.0 Less: Accumulated depreciation (1,413.4) (1,427.2) Work in process 12.0 11.9 Property, equipment and software, net $ 826.7 $ 794.7 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Carrying Amounts of Goodwill by Reportable Segment | The following table sets forth the changes in the carrying amounts of goodwill by reportable segment: (In millions) Multicloud Services Apps & Cross Platform OpenStack Public Cloud Total 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 (4.0) (0.1) — (4.1) Balance as of March 31, 2022 $ 2,380.3 $ 328.3 $ — $ 2,708.6 Gross goodwill $ 2,675.3 $ 328.3 $ 52.4 $ 3,056.0 Less: Accumulated impairment charges (295.0) — (52.4) (347.4) Goodwill, net as of March 31, 2022 $ 2,380.3 $ 328.3 $ — $ 2,708.6 |
Schedule of Finite-Lived Intangible Assets Other Than Goodwill | The following table provides information regarding our intangible assets other than goodwill: December 31, 2021 March 31, 2022 (In millions) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Customer relationships $ 1,983.0 $ (784.1) $ 1,198.9 $ 1,981.4 $ (823.6) $ 1,157.8 Property tax abatement 16.0 (9.2) 6.8 16.0 (9.6) 6.4 Other 28.2 (17.4) 10.8 28.2 (18.8) 9.4 Total definite-lived intangible assets 2,027.2 (810.7) 1,216.5 2,025.6 (852.0) 1,173.6 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 $ 2,275.6 $ (852.0) $ 1,423.6 |
Schedule of Indefinite-Lived Intangible Assets Other Than Goodwill | The following table provides information regarding our intangible assets other than goodwill: December 31, 2021 March 31, 2022 (In millions) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Customer relationships $ 1,983.0 $ (784.1) $ 1,198.9 $ 1,981.4 $ (823.6) $ 1,157.8 Property tax abatement 16.0 (9.2) 6.8 16.0 (9.6) 6.4 Other 28.2 (17.4) 10.8 28.2 (18.8) 9.4 Total definite-lived intangible assets 2,027.2 (810.7) 1,216.5 2,025.6 (852.0) 1,173.6 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 $ 2,275.6 $ (852.0) $ 1,423.6 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Debt consisted of the following: (In millions, except %) December 31, 2021 March 31, 2022 Debt Instrument Maturity Date Interest Rate (1) Amount Interest Rate (1) Amount Term Loan Facility February 15, 2028 3.50% $ 2,282.8 3.50% $ 2,277.0 Revolving Credit Facility August 7, 2025 —% — —% — 3.50% Senior Secured Notes February 15, 2028 3.50% 550.0 3.50% 550.0 5.375% Senior Notes December 1, 2028 5.375% 550.0 5.375% 550.0 Less: unamortized debt issuance costs (36.3) (34.9) Less: unamortized debt discount (12.6) (12.1) Total debt 3,333.9 3,330.0 Less: current portion of debt (23.0) (23.0) Debt, excluding current portion $ 3,310.9 $ 3,307.0 (1) Interest rates are as of each respective balance sheet date. |
July 2021 Restructuring Plan (T
July 2021 Restructuring Plan (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Reserve by Type of Cost | Liability activity for previously accrued restructuring costs that are expected to be settled in cash are presented in the table below. (In millions) Employee Related Other Total Liability as of December 31, 2021 $ 7.1 $ 0.6 $ 7.7 Charges — — — Cash payments (3.9) — (3.9) Liability as of March 31, 2022 $ 3.2 $ 0.6 $ 3.8 Total cumulative costs incurred as of March 31, 2022 $ 13.8 $ 6.0 $ 19.8 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Share-based Compensation Expense Recognized Under the Incentive Plan | Share-based compensation expense recogniz ed was as follows: Three Months Ended March 31, (In millions) 2021 2022 Cost of revenue $ 4.9 $ 2.8 Selling, general and administrative expenses 12.3 14.2 Pre-tax share-based compensation expense 17.2 17.0 Less: Income tax benefit (3.6) (3.6) Total share-based compensation expense, net of tax $ 13.6 $ 13.4 |
Derivatives (Tables)
Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The key terms of interest rate swaps are presented below: Effective Date Fixed Rate Paid (Received) December 31, 2021 March 31, 2022 Notional Amount (in millions) Status Notional Amount (in millions) Status Maturity Date Entered into December 2016: February 3, 2017 1.9040% $ 450.0 Active $ — Matured February 3, 2022 February 3, 2017 1.9040% 450.0 Active — Matured February 3, 2022 Entered into December 2018: February 3, 2019 2.7490% — Terminated — Terminated November 3, 2023 February 3, 2020 2.7350% — Terminated — Terminated November 3, 2023 February 3, 2021 2.7360% — Terminated — Terminated November 3, 2023 February 3, 2022 2.7800% — Terminated — Terminated November 3, 2023 Entered into February 2021: February 3, 2021 (1.9040)% (900.0) Active — Matured February 3, 2022 February 9, 2021 2.3820% 1,350.0 Active 1,350.0 Active February 9, 2026 Total $ 1,350.0 $ 1,350.0 |
Schedule of Fair Values of Derivative Assets and Liabilities on the Consolidated Balance Sheets | The fair values of our derivatives and their location on the Consolidated Balance Sheets as of December 31, 2021 and March 31, 2022 were as follows: December 31, 2021 March 31, 2022 (In millions) Assets Liabilities Assets Liabilities Derivatives not designated as hedging instruments Location Interest rate swaps Other current assets (1) $ 1.5 $ — $ — $ — Interest rate swaps Other current liabilities — 1.5 — — Total $ 1.5 $ 1.5 $ — $ — Derivatives designated as hedging instruments Location Interest rate swaps Other current assets $ — $ — $ 7.4 $ — Interest rate swaps Other non-current assets 23.6 — 70.7 — Interest rate swaps Other current liabilities (2) — 20.8 — 17.3 Interest rate swaps Other non-current liabilities (3) — 56.4 — 52.1 Total $ 23.6 $ 77.2 $ 78.1 $ 69.4 (1) The entire balance as of December 31, 2021 is comprised of the receive-fixed interest rate swap for which the fair value option has been elected. (2) The balance as of December 31, 2021 and March 31, 2022 includes $17.2 million and $17.3 million, respectively, related to the financing component of the pay-fixed interest rate swap. (3) The entire balance is comprised of the financing component of the pay-fixed interest rate swap. |
Schedule Offsetting Assets Under Master Netting Arrangements | For financial statement presentation purposes, we do not offset assets and liabilities under master netting arrangements and all amounts above are presented on a gross basis. The following table, however, is presented on a net asset and net liability basis: December 31, 2021 March 31, 2022 (In millions) Gross Amounts on Balance Sheet Effects of Counterparty Netting Net Amounts Gross Amounts on Balance Sheet Effects of Counterparty Netting Net Amounts Assets Interest rate swaps $ 25.1 $ (25.1) $ — $ 78.1 $ (69.4) $ 8.7 Liabilities Interest rate swaps $ 78.7 $ (25.1) $ 53.6 $ 69.4 $ (69.4) $ — |
Schedule Offsetting Liabilities Under Master Netting Arrangements | For financial statement presentation purposes, we do not offset assets and liabilities under master netting arrangements and all amounts above are presented on a gross basis. The following table, however, is presented on a net asset and net liability basis: December 31, 2021 March 31, 2022 (In millions) Gross Amounts on Balance Sheet Effects of Counterparty Netting Net Amounts Gross Amounts on Balance Sheet Effects of Counterparty Netting Net Amounts Assets Interest rate swaps $ 25.1 $ (25.1) $ — $ 78.1 $ (69.4) $ 8.7 Liabilities Interest rate swaps $ 78.7 $ (25.1) $ 53.6 $ 69.4 $ (69.4) $ — |
Schedule of Derivative Instruments, Effect on Comprehensive Income (Loss) | The effect of our derivatives and their location on the Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2022 was as follows: Three Months Ended March 31, (In millions) 2021 2022 Derivatives not designated as hedging instruments Location Interest rate swaps Interest expense $ (4.6) $ (4.6) Foreign currency contracts (1) Other expense, net $ (1.3) $ — Derivatives designated as hedging instruments Location Interest rate swaps Interest expense $ (2.3) $ (1.3) (1) Relates to two foreign currency forward contracts settled on November 30, 2021. As of December 31, 2021 and March 31, 2022, we do not have any outstanding foreign currency hedging contracts. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | Accumulated other comprehensive income (loss) consisted of the following: (In millions) Accumulated Foreign Currency Translation Adjustments Accumulated Loss on Derivative Contracts Accumulated Other Comprehensive Loss Balance at December 31, 2020 $ 20.8 $ (39.4) $ (18.6) Foreign currency translation adjustments, net of tax expense of $0.1 3.0 — 3.0 Unrealized gain on derivative contracts, net of tax expense of $3.2 — 9.4 9.4 Amount reclassified from Accumulated comprehensive income (loss) into earnings, net of tax benefit of $1.4 (1) — 4.0 4.0 Balance at March 31, 2021 $ 23.8 $ (26.0) $ (2.2) (1) Includes interest expense recognized of $2.8 million and amortization of off-market swap value and accumulated loss at hedge de-designation of $2.6 million for the three months ended March 31, 2021. (In millions) Accumulated Foreign Currency Translation Adjustments Accumulated Gain (Loss) on Derivative Contracts Accumulated Other Comprehensive Income Balance at December 31, 2021 $ 17.2 $ (10.3) $ 6.9 Foreign currency translation adjustments, net of tax benefit of $0.7 (4.6) — (4.6) Unrealized gain on derivative contracts, net of tax expense of $14.6 — 42.3 42.3 Amount reclassified from Accumulated comprehensive income (loss) into earnings, net of tax benefit of $1.5 (1) — 4.3 4.3 Balance at March 31, 2022 $ 12.6 $ 36.3 $ 48.9 (1) Includes interest expense recognized of $1.2 million and amortization of off-market swap value and accumulated loss at hedge de-designation of $4.6 million for the three months ended March 31, 2022. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Reconciliation of Revenue from Segments to Consolidated | The table below presents a reconciliation of revenue by reportable segment to consolidated revenue and a reconciliation of consolidated segment gross profit to consolidated loss before income taxes for the three months ended March 31, 2021 and 2022. Three Months Ended March 31, (In millions) 2021 2022 Revenue by segment: Multicloud Services $ 579.6 $ 640.1 Apps & Cross Platform 97.3 94.8 OpenStack Public Cloud 49.0 40.6 Total consolidated revenue $ 725.9 $ 775.5 Segment gross profit: Multicloud Services $ 196.4 $ 188.2 Apps & Cross Platform 34.9 34.5 OpenStack Public Cloud 18.6 12.9 Total consolidated segment gross profit 249.9 235.6 Less: Share-based compensation expense (4.9) (2.8) Other compensation expense (1) (1.3) (0.8) Purchase accounting impact on expense (2) (1.2) (0.7) Restructuring and transformation expenses (3) (7.2) (5.3) Selling, general and administrative expenses (231.0) (205.1) Gain on sale of land 19.9 — Interest expense (52.6) (50.1) Loss on investments, net (3.7) (0.1) Debt modification and extinguishment costs (37.0) — Other expense, net (1.8) (3.6) Total consolidated loss before income taxes $ (70.9) $ (32.9) (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 Rackspace Acquisition on expenses. |
Schedule of Reconciliation of Gross Profit from Segments to Consolidated | The table below presents a reconciliation of revenue by reportable segment to consolidated revenue and a reconciliation of consolidated segment gross profit to consolidated loss before income taxes for the three months ended March 31, 2021 and 2022. Three Months Ended March 31, (In millions) 2021 2022 Revenue by segment: Multicloud Services $ 579.6 $ 640.1 Apps & Cross Platform 97.3 94.8 OpenStack Public Cloud 49.0 40.6 Total consolidated revenue $ 725.9 $ 775.5 Segment gross profit: Multicloud Services $ 196.4 $ 188.2 Apps & Cross Platform 34.9 34.5 OpenStack Public Cloud 18.6 12.9 Total consolidated segment gross profit 249.9 235.6 Less: Share-based compensation expense (4.9) (2.8) Other compensation expense (1) (1.3) (0.8) Purchase accounting impact on expense (2) (1.2) (0.7) Restructuring and transformation expenses (3) (7.2) (5.3) Selling, general and administrative expenses (231.0) (205.1) Gain on sale of land 19.9 — Interest expense (52.6) (50.1) Loss on investments, net (3.7) (0.1) Debt modification and extinguishment costs (37.0) — Other expense, net (1.8) (3.6) Total consolidated loss before income taxes $ (70.9) $ (32.9) (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 Rackspace Acquisition on expenses. |
Company Overview, Basis of Pr_3
Company Overview, Basis of Presentation, and Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Millions | Jan. 18, 2022 | Mar. 31, 2022 | Mar. 31, 2021 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Net purchase price | $ 7.7 | $ 0 | |
Just Analytics Pte. Ltd. | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Percentage of business acquired | 100.00% | ||
Net purchase price | $ 7.7 |
Customer Contracts - Schedule o
Customer Contracts - Schedule of Balances Related to Customer Contracts (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Revenue from Contract with Customer [Abstract] | ||
Accounts receivable, net | $ 576.1 | $ 554.3 |
Current portion of contract assets | 15 | 15.2 |
Non-current portion of contract assets | 10.5 | 13.1 |
Current portion of deferred revenue | 111 | 98.6 |
Non-current portion of deferred revenue | 8.6 | 13.6 |
Allowance for doubtful accounts and accrued customer credits | $ 16.9 | $ 18.4 |
Customer Contracts - Narrative
Customer Contracts - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Capitalized Contract Cost [Line Items] | |||
Revenue recognized included in deferred revenue | $ 32.6 | $ 34.6 | |
Cost To Obtain A Contract | |||
Capitalized Contract Cost [Line Items] | |||
Capitalized contract cost, net | 58.6 | $ 58 | |
Cost To Fulfill A Contract | |||
Capitalized Contract Cost [Line Items] | |||
Capitalized contract cost, net | $ 22 | $ 23.5 |
Customer Contracts - Schedule_2
Customer Contracts - Schedule of Amortization of Capitalized Contract Costs (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Amortization of capitalized sales commissions | ||
Capitalized Contract Cost [Line Items] | ||
Capitalized contract cost, amortization | $ 11.2 | $ 10.8 |
Amortization of capitalized implementation costs | ||
Capitalized Contract Cost [Line Items] | ||
Capitalized contract cost, amortization | $ 4.4 | $ 4.4 |
Customer Contracts - Remaining
Customer Contracts - Remaining Performance Obligations (Details) $ in Millions | Mar. 31, 2022USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 673.9 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation expected to be recognized, percentage | 57.00% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 9 months |
Net Loss Per Share - Computatio
Net Loss Per Share - Computation of Basic and Diluted Net Income (Loss) per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Basic and diluted net loss per share: | ||
Net loss attributable to common stockholders, basic | $ (38.5) | $ (64) |
Net loss attributable to common stockholders, diluted | $ (38.5) | $ (64) |
Weighted average number of shares outstanding: | ||
Common stock (in shares) | 211.4 | 204.6 |
Number of shares used in per share computations (in shares) | 211.4 | 204.6 |
Net loss per share, basic (in dollars per share) | $ (0.18) | $ (0.31) |
Net loss per share, diluted (in dollars per share) | $ (0.18) | $ (0.31) |
Net Loss Per Share - Narrative
Net Loss Per Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Anti-dilutive potential common shares excluded from computation of dilutive net income (loss) per share (in shares) | 24.8 | 21.7 |
Property, Equipment and Softw_3
Property, Equipment and Software, net - Schedule of Property, Equipment and Software, net (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property, equipment and software, at cost | $ 2,210 | $ 2,228.1 |
Less: Accumulated depreciation | (1,427.2) | (1,413.4) |
Property, equipment and software, net | 794.7 | 826.7 |
Computers and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and software, at cost | 1,196.1 | 1,206.5 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and software, at cost | 462.2 | 465.6 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and software, at cost | 21 | 21.9 |
Buildings and leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and software, at cost | 509.5 | 512.9 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and software, at cost | 21.2 | 21.2 |
Work in process | ||
Property, Plant and Equipment [Line Items] | ||
Work in process | $ 11.9 | $ 12 |
Property, Equipment and Softw_4
Property, Equipment and Software, net - Narrative (Details) - USD ($) $ in Millions | Jan. 15, 2021 | Mar. 31, 2021 | Jan. 14, 2021 |
Property, Plant and Equipment [Abstract] | |||
Land available-for-sale | $ 11.4 | ||
Proceeds from sale of land held-for-use | $ 32.2 | ||
Payments for brokerage fees and professional fees | 0.9 | ||
Proceeds from sale of land held-for-use, net of brokerage and professional fees | $ 31.3 | ||
Gain on sale of land | $ 19.9 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Changes in Carrying Amounts of Goodwill by Reportable Segment (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 2,706.8 |
Just Analytics acquisition | 5.9 |
Foreign currency translation | (4.1) |
Goodwill, ending balance | 2,708.6 |
Gross goodwill | 3,056 |
Less: Accumulated impairment charges | (347.4) |
Goodwill, net as of March 31, 2022 | 2,708.6 |
Multicloud Services | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 2,384.3 |
Just Analytics acquisition | 0 |
Foreign currency translation | (4) |
Goodwill, ending balance | 2,380.3 |
Gross goodwill | 2,675.3 |
Less: Accumulated impairment charges | (295) |
Goodwill, net as of March 31, 2022 | 2,380.3 |
Apps & Cross Platform | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 322.5 |
Just Analytics acquisition | 5.9 |
Foreign currency translation | (0.1) |
Goodwill, ending balance | 328.3 |
Gross goodwill | 328.3 |
Less: Accumulated impairment charges | 0 |
Goodwill, net as of March 31, 2022 | 328.3 |
OpenStack Public Cloud | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 0 |
Just Analytics acquisition | 0 |
Foreign currency translation | 0 |
Goodwill, ending balance | 0 |
Gross goodwill | 52.4 |
Less: Accumulated impairment charges | (52.4) |
Goodwill, net as of March 31, 2022 | $ 0 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible Assets Other Than Goodwill (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 2,025.6 | $ 2,027.2 |
Accumulated amortization | (852) | (810.7) |
Net carrying amount | 1,173.6 | 1,216.5 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Gross carrying amount | 2,275.6 | 2,277.2 |
Accumulated amortization | (852) | (810.7) |
Net carrying amount | 1,423.6 | 1,466.5 |
Trade name (indefinite-lived) | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Trade name (indefinite-lived) | 250 | 250 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 1,981.4 | 1,983 |
Accumulated amortization | (823.6) | (784.1) |
Net carrying amount | 1,157.8 | 1,198.9 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Accumulated amortization | (823.6) | (784.1) |
Property tax abatement | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 16 | 16 |
Accumulated amortization | (9.6) | (9.2) |
Net carrying amount | 6.4 | 6.8 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Accumulated amortization | (9.6) | (9.2) |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 28.2 | 28.2 |
Accumulated amortization | (18.8) | (17.4) |
Net carrying amount | 9.4 | 10.8 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Accumulated amortization | $ (18.8) | $ (17.4) |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 | Feb. 28, 2021 | Feb. 09, 2021 | Dec. 01, 2020 |
Debt Instrument [Line Items] | |||||
Less: unamortized debt issuance costs | $ (34.9) | $ (36.3) | |||
Less: unamortized debt discount | (12.1) | (12.6) | |||
Total debt | 3,330 | 3,333.9 | |||
Less: current portion of debt | (23) | (23) | |||
Debt, excluding current portion | $ 3,307 | $ 3,310.9 | |||
Term Loan Facility | Term loan facility | |||||
Debt Instrument [Line Items] | |||||
Effective interest rate | 3.50% | 3.50% | |||
Amount | $ 2,277 | $ 2,282.8 | |||
Senior Facilities | Term loan facility | |||||
Debt Instrument [Line Items] | |||||
Amount | $ 2,277 | ||||
3.50% Senior Secured Notes | |||||
Debt Instrument [Line Items] | |||||
Less: unamortized debt issuance costs | $ (6.8) | ||||
3.50% Senior Secured Notes | Senior notes | |||||
Debt Instrument [Line Items] | |||||
Interest Rate | 3.50% | 3.50% | 3.50% | ||
Amount | $ 550 | $ 550 | |||
5.375% Senior Notes | Senior notes | |||||
Debt Instrument [Line Items] | |||||
Interest Rate | 5.375% | 5.375% | 5.375% | ||
Amount | $ 550 | $ 550 |
Debt - Narrative (Details)
Debt - Narrative (Details) | Feb. 09, 2021USD ($) | Dec. 01, 2020USD ($) | Mar. 31, 2022USD ($) | Mar. 31, 2021USD ($) | Feb. 15, 2028USD ($) | Dec. 31, 2021USD ($) | Feb. 28, 2021USD ($) |
Debt Instrument [Line Items] | |||||||
Unamortized debt issuance cost | $ 34,900,000 | $ 36,300,000 | |||||
Debt modification and extinguishment costs | $ 0 | $ 37,000,000 | |||||
Loan modification fee | $ 27,600,000 | ||||||
Term loan facility | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, unamortized discount and debt issuance costs | 9,400,000 | ||||||
Line of credit | Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Total commitments | $ 375,000,000 | ||||||
Debt instrument, basis spread on variable rate floor | 1.00% | ||||||
Unused commitment fee percentage | 0.50% | ||||||
Term Loan Facility | Term loan facility | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, term | 7 years | ||||||
Aggregate principal amount | $ 2,300,000,000 | ||||||
Debt instrument, basis spread on variable rate floor | 0.75% | ||||||
Interest payment period (not exceed) | 90 days | ||||||
Effective interest rate | 3.50% | 3.50% | |||||
Fair value of debt | $ 2,234,300,000 | ||||||
Principal balance | $ 2,277,000,000 | $ 2,282,800,000 | |||||
Debt Instrument, unamortized discount and debt issuance costs | 41,000,000 | ||||||
Term Loan Facility | Term loan facility | Forecast | Subsequent event | |||||||
Debt Instrument [Line Items] | |||||||
Quarterly principal payment | $ 5,800,000 | ||||||
Term Loan Facility | Term loan facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 2.75% | ||||||
Term Loan Facility | Term loan facility | Base rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 1.75% | ||||||
3.50% Senior Secured Notes | |||||||
Debt Instrument [Line Items] | |||||||
Unamortized debt issuance cost | 6,800,000 | ||||||
Debt modification and extinguishment costs | $ 37,000,000 | ||||||
3.50% Senior Secured Notes | Senior notes | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal amount | $ 550,000,000 | ||||||
Interest rate | 3.50% | 3.50% | 3.50% | ||||
Fair value of debt | $ 492,300,000 | ||||||
Redemption price, percentage | 101.00% | ||||||
Principal balance | 550,000,000 | $ 550,000,000 | |||||
3.50% Senior Secured Notes | Senior notes | Prior to February 15, 2024 | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price, percentage | 100.00% | ||||||
Percent of redeemable debt | 40.00% | ||||||
3.50% Senior Secured Notes | Senior notes | From February 15, 2024 to February 14, 2025 | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price, percentage | 101.75% | ||||||
3.50% Senior Secured Notes | Senior notes | From February 15, 2025 to February 14, 2026 | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price, percentage | 100.875% | ||||||
3.50% Senior Secured Notes | Senior notes | from February 15, 2026 and thereafter | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price, percentage | 100.00% | ||||||
3.50% Senior Secured Notes | Senior notes | Commencing with February 9 | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price, percentage | 103.00% | ||||||
Percent of redeemable debt | 10.00% | ||||||
Senior Facilities | Term loan facility | |||||||
Debt Instrument [Line Items] | |||||||
Principal balance | 2,277,000,000 | ||||||
Senior Facilities | Term loan facility | Federal funds rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 0.50% | ||||||
Senior Facilities | Term loan facility | One-month Adjusted LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 1.00% | ||||||
Senior Facilities | Line of credit | Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, leverage ratio, maximum | 5 | ||||||
Debt instrument, covenant, undrawn letters of credit and cash collateralized letters of credit excluded from threshold trigger | $ 25,000,000 | ||||||
Debt instrument, covenant, percentage of outstanding borrowings trigger, minimum | 35.00% | ||||||
Outstanding borrowings | $ 0 | ||||||
Senior Facilities | Line of credit | Revolving Credit Facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 3.00% | ||||||
Senior Facilities | Line of credit | Revolving Credit Facility | Base rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 2.00% | ||||||
Forty Percent Of 3.50% Senior Secured Notes Due 2028 | Senior notes | Prior to February 15, 2024 | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price, percentage | 103.50% | ||||||
5.375% Senior Notes | Senior notes | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal amount | $ 550,000,000 | ||||||
Interest rate | 5.375% | 5.375% | 5.375% | ||||
Percent of redeemable debt | 40.00% | ||||||
Fair value | $ 475,800,000 | ||||||
Principal balance | $ 550,000,000 | $ 550,000,000 | |||||
5.375% Senior Notes | Senior notes | Prior to December 1, 2023 | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price, percentage | 100.00% | ||||||
5.375% Senior Notes | Senior notes | December 1, 2023 to November 30, 2024 | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price, percentage | 102.688% | ||||||
5.375% Senior Notes | Senior notes | December 1, 2024 to November 30, 2025 | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price, percentage | 101.344% | ||||||
5.375% Senior Notes | Senior notes | December 1, 2025 and thereafter | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price, percentage | 100.00% | ||||||
5.375% Senior Notes | Senior notes | Upon change of control | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price, percentage | 101.00% | ||||||
Forty Percent Of Senior Notes, 5.375%, Due 2028 | Senior notes | Prior to December 1, 2023 | |||||||
Debt Instrument [Line Items] | |||||||
Redemption price, percentage | 105.375% | ||||||
Prior Term Loan Facility | Term loan facility | |||||||
Debt Instrument [Line Items] | |||||||
Principal balance | $ 2,795,600,000 |
July 2021 Restructuring Plan -
July 2021 Restructuring Plan - Narrative (Details) | Jul. 21, 2021 |
July 2021 Restructuring Plan | |
Restructuring Cost and Reserve [Line Items] | |
Percent of workforce to be terminated | 10.00% |
July 2021 Restructuring Plan _2
July 2021 Restructuring Plan - Restructuring Reserves by Type of Cost (Details) - July 2021 Restructuring Plan $ in Millions | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Restructuring Reserve [Roll Forward] | |
Restructuring reserve, beginning balance | $ 7.7 |
Charges | 0 |
Cash payments | (3.9) |
Restructuring reserve, ending balance | 3.8 |
Total cumulative costs incurred as of March 31, 2022 | 19.8 |
Employee Related | |
Restructuring Reserve [Roll Forward] | |
Restructuring reserve, beginning balance | 7.1 |
Charges | 0 |
Cash payments | (3.9) |
Restructuring reserve, ending balance | 3.2 |
Total cumulative costs incurred as of March 31, 2022 | 13.8 |
Other | |
Restructuring Reserve [Roll Forward] | |
Restructuring reserve, beginning balance | 0.6 |
Charges | 0 |
Cash payments | 0 |
Restructuring reserve, ending balance | 0.6 |
Total cumulative costs incurred as of March 31, 2022 | $ 6 |
Share Repurchase Program (Detai
Share Repurchase Program (Details) - USD ($) shares in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 03, 2022 | |
Share-based Payment Arrangement [Abstract] | ||
Stock repurchase program, authorized amount | $ 75,000,000 | |
Treasury stock value | $ 4,100,000 | |
Repurchase of common stock (in shares) | 0.4 | |
Stock repurchase program | $ 70,900,000 |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended |
Mar. 31, 2022USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation cost | $ | $ 182.2 |
Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of awards granted in period | shares | 7.8 |
Weighted average grant date fair value, RSUs granted during period (in dollars per share) | $ / shares | $ 11.04 |
Vesting period | 3 years |
Phantom Share Units (PSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of awards granted in period | shares | 1.2 |
Weighted average grant date fair value, RSUs granted during period (in dollars per share) | $ / shares | $ 11.70 |
Vesting period | 3 years |
Share-Based Compensation - Sche
Share-Based Compensation - Schedule of Share Based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Pre-tax share-based compensation expense | $ 17 | $ 17.2 |
Less: Income tax benefit | (3.6) | (3.6) |
Total share-based compensation expense, net of tax | 13.4 | 13.6 |
Cost of revenue | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Pre-tax share-based compensation expense | 2.8 | 4.9 |
Selling, general and administrative expenses | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Pre-tax share-based compensation expense | $ 14.2 | $ 12.3 |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) | 3 Months Ended | ||||||
Mar. 31, 2022USD ($) | Mar. 31, 2021USD ($) | Dec. 31, 2021USD ($) | Feb. 12, 2021USD ($) | Jan. 31, 2021USD ($) | Jan. 09, 2020USD ($) | Dec. 31, 2016instrument | |
Derivative [Line Items] | |||||||
Accumulated other comprehensive loss | $ (48,900,000) | $ (6,900,000) | |||||
Interest expense | 50,100,000 | $ 52,600,000 | |||||
Cash flow hedge losses expected to be reclassified as an increase to interest expense over the next twelve months | 7,900,000 | ||||||
Derivatives designated as hedging instruments | |||||||
Derivative [Line Items] | |||||||
Liabilities | 69,400,000 | 77,200,000 | |||||
Interest rate swaps | |||||||
Derivative [Line Items] | |||||||
Liabilities | 69,400,000 | 78,700,000 | |||||
Derivative, notional amount | $ 1,350,000,000 | $ 1,350,000,000 | $ 900,000,000 | ||||
Accumulated other comprehensive loss | $ 51,600,000 | ||||||
Derivative, fixed interest rate | 2.382% | ||||||
Interest rate swaps | LIBOR | |||||||
Derivative [Line Items] | |||||||
Variable interest rate | 0.75% | ||||||
Interest rate swaps | Derivatives designated as hedging instruments | Cash flow hedging | |||||||
Derivative [Line Items] | |||||||
Liabilities | $ 39,900,000 | ||||||
Receive fixed interest rate swap | |||||||
Derivative [Line Items] | |||||||
Derivative, notional amount | $ 900,000,000 | ||||||
Number of derivative instruments | instrument | 2 | ||||||
Pay-fixed interest rate swap | |||||||
Derivative [Line Items] | |||||||
Derivative, notional amount | $ 1,350,000,000 |
Derivatives - Interest Rate Swa
Derivatives - Interest Rate Swaps Outstanding (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 | Feb. 12, 2021 |
Interest rate swaps | |||
Derivative [Line Items] | |||
Fixed Rate Paid (Received) | 2.382% | ||
Notional amount | $ 1,350,000,000 | $ 1,350,000,000 | $ 900,000,000 |
Interest Rate Swap - Entered in December 2016 | |||
Derivative [Line Items] | |||
Fixed Rate Paid (Received) | 1.904% | ||
Notional amount | 0 | $ 450,000,000 | |
Interest Rate Swap - Entered in December 2016 | |||
Derivative [Line Items] | |||
Fixed Rate Paid (Received) | 1.904% | ||
Notional amount | 0 | $ 450,000,000 | |
Interest Rate Swap - Entered in December 2018 | |||
Derivative [Line Items] | |||
Fixed Rate Paid (Received) | 2.749% | ||
Notional amount | $ 0 | ||
Interest Rate Swap - Entered in December 2018 | |||
Derivative [Line Items] | |||
Fixed Rate Paid (Received) | 2.735% | ||
Notional amount | $ 0 | ||
Interest Rate Swap - Entered in December 2018 | |||
Derivative [Line Items] | |||
Fixed Rate Paid (Received) | 2.736% | ||
Notional amount | $ 0 | ||
Interest Rate Swap - Entered in December 2018 | |||
Derivative [Line Items] | |||
Fixed Rate Paid (Received) | 2.78% | ||
Notional amount | $ 0 | ||
Interest Rate Swap - Entered in February 2021 | |||
Derivative [Line Items] | |||
Fixed Rate Paid (Received) | (1.904%) | ||
Notional amount | 0 | $ (900,000,000) | |
Interest Rate Swap - Entered in February 2021 | |||
Derivative [Line Items] | |||
Fixed Rate Paid (Received) | 2.382% | ||
Notional amount | $ 1,350,000,000 | $ 1,350,000,000 |
Derivatives - Schedule of Fair
Derivatives - Schedule of Fair Values of Derivatives on the Consolidated Balance Sheets (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Interest rate swaps | ||
Derivatives, Fair Value [Line Items] | ||
Assets | $ 78.1 | $ 25.1 |
Liabilities | 69.4 | 78.7 |
Derivatives not designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Assets | 0 | 1.5 |
Liabilities | 0 | 1.5 |
Derivatives not designated as hedging instruments | Other current assets | Interest rate swaps | ||
Derivatives, Fair Value [Line Items] | ||
Assets | 0 | 1.5 |
Liabilities | 0 | 0 |
Derivatives not designated as hedging instruments | Other current liabilities | Interest rate swaps | ||
Derivatives, Fair Value [Line Items] | ||
Assets | 0 | 0 |
Liabilities | 0 | 1.5 |
Derivatives designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Assets | 78.1 | 23.6 |
Liabilities | 69.4 | 77.2 |
Derivatives designated as hedging instruments | Other current assets | Interest rate swaps | ||
Derivatives, Fair Value [Line Items] | ||
Assets | 7.4 | 0 |
Liabilities | 0 | 0 |
Derivatives designated as hedging instruments | Other non-current assets | Interest rate swaps | ||
Derivatives, Fair Value [Line Items] | ||
Assets | 70.7 | 23.6 |
Liabilities | 0 | 0 |
Derivatives designated as hedging instruments | Other current liabilities | Interest rate swaps | ||
Derivatives, Fair Value [Line Items] | ||
Assets | 0 | 0 |
Liabilities | 17.3 | 20.8 |
Derivatives designated as hedging instruments | Other current liabilities | Pay-fixed interest rate swap | ||
Derivatives, Fair Value [Line Items] | ||
Liabilities | 17.3 | 17.2 |
Derivatives designated as hedging instruments | Other noncurrent liabilities | Interest rate swaps | ||
Derivatives, Fair Value [Line Items] | ||
Assets | 0 | 0 |
Liabilities | $ 52.1 | $ 56.4 |
Derivatives - Derivatives Prese
Derivatives - Derivatives Presented on a Net Asset and Net Liability basis (Details) - Interest rate swaps - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Gross Amounts on Balance Sheet | $ 78.1 | $ 25.1 |
Effects of Counterparty Netting | (69.4) | (25.1) |
Net Amounts | 8.7 | 0 |
Liabilities | ||
Gross Amounts on Balance Sheet | 69.4 | 78.7 |
Effects of Counterparty Netting | (69.4) | (25.1) |
Net Amounts | $ 0 | $ 53.6 |
Derivatives - Effect of Derivat
Derivatives - Effect of Derivatives on the Consolidated Statements of Comprehensive Income (Loss) (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2022USD ($) | Mar. 31, 2021USD ($) | Nov. 30, 2021instrument | |
Interest expense | Interest rate swaps | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivatives not designated as hedging instruments | $ (4.6) | $ (4.6) | |
Derivatives designated as hedging instruments | (1.3) | (2.3) | |
Other expense, net | Foreign currency contracts | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivatives not designated as hedging instruments | $ 0 | $ (1.3) | |
Number of derivative instruments settled | instrument | 2 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Schedule of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | $ 1,327.4 | $ 1,383.7 |
Foreign currency translation adjustments, net of tax expense (benefit) | (4.6) | 3 |
Unrealized gain on derivative contracts, net of tax expense | 42.3 | 9.4 |
Amount reclassified from Accumulated comprehensive income (loss) into earnings, net of tax benefit | 4.3 | 4 |
Ending balance | 1,344.3 | 1,375.2 |
Foreign currency translation adjustment, tax expense (benefit) | 0.7 | 0.1 |
Unrealized gain on derivative contracts, before reclassification, tax expense | 14.6 | 3.2 |
Tax benefit, reclassification from AOCI | 1.5 | 1.4 |
Interest expense | 50.1 | 52.6 |
Reclassification out of Accumulated Other Comprehensive Income | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Interest expense | 1.2 | 2.8 |
Amortization of off-market swap | 4.6 | 2.6 |
Accumulated Foreign Currency Translation Adjustments | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 17.2 | 20.8 |
Foreign currency translation adjustments, net of tax expense (benefit) | (4.6) | 3 |
Unrealized gain on derivative contracts, net of tax expense | 0 | 0 |
Amount reclassified from Accumulated comprehensive income (loss) into earnings, net of tax benefit | 0 | 0 |
Ending balance | 12.6 | 23.8 |
Accumulated Gain (Loss) on Derivative Contracts | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (10.3) | (39.4) |
Foreign currency translation adjustments, net of tax expense (benefit) | 0 | 0 |
Unrealized gain on derivative contracts, net of tax expense | 42.3 | 9.4 |
Amount reclassified from Accumulated comprehensive income (loss) into earnings, net of tax benefit | 4.3 | 4 |
Ending balance | 36.3 | (26) |
Accumulated Other Comprehensive Income (Loss) | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 6.9 | (18.6) |
Ending balance | $ 48.9 | $ (2.2) |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) - USD ($) $ in Millions | Feb. 09, 2021 | Feb. 02, 2021 | Mar. 31, 2022 | Dec. 31, 2021 |
Datapipe Parent Inc | ||||
Related Party Transaction [Line Items] | ||||
Equity issued in acquisition (in shares) | 2,665,935 | |||
Apollo Global Securities, LLC | Arranger fees | ||||
Related Party Transaction [Line Items] | ||||
Underwriting fees | $ 2.3 | |||
Senior notes | Apollo Global Securities, LLC | ||||
Related Party Transaction [Line Items] | ||||
Underwriting fees | $ 0.6 | |||
Senior Facilities | Term loan facility | ||||
Related Party Transaction [Line Items] | ||||
Principal balance | $ 2,277 | |||
Senior Facilities | Term loan facility | Affiliates of ABRY | Affiliated entity | ||||
Related Party Transaction [Line Items] | ||||
Principal balance | $ 54.5 | |||
Percentage of debt due to related party | 2.40% | |||
3.50% Senior Secured Notes | Senior notes | ||||
Related Party Transaction [Line Items] | ||||
Principal balance | $ 550 | $ 550 | ||
Interest rate | 3.50% | 3.50% | 3.50% |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) | 3 Months Ended |
Mar. 31, 2022segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
Number of reportable segments | 3 |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation of Revenue and Gross Profits from Segments to Consolidated (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue | $ 775.5 | $ 725.9 |
Gross profit | 226 | 235.3 |
Share-based compensation expense | (17) | (17.2) |
Selling, general and administrative expenses | (205.1) | (231) |
Gain on sale of land | 0 | 19.9 |
Interest expense | (50.1) | (52.6) |
Loss on investments, net | (0.1) | (3.7) |
Debt modification and extinguishment costs | 0 | (37) |
Other expense, net | (3.6) | (1.8) |
Total consolidated loss before income taxes | (32.9) | (70.9) |
Operating Segments | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Gross profit | 235.6 | 249.9 |
Corporate And Reconciling Items | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Share-based compensation expense | (2.8) | (4.9) |
Other compensation expense | (0.8) | (1.3) |
Purchase accounting impact on expense | (0.7) | (1.2) |
Restructuring and transformation expenses | (5.3) | (7.2) |
Multicloud Services | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue | 640.1 | 579.6 |
Multicloud Services | Operating Segments | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Gross profit | 188.2 | 196.4 |
Apps & Cross Platform | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue | 94.8 | 97.3 |
Apps & Cross Platform | Operating Segments | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Gross profit | 34.5 | 34.9 |
OpenStack Public Cloud | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue | 40.6 | 49 |
OpenStack Public Cloud | Operating Segments | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Gross profit | $ 12.9 | $ 18.6 |