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v3.24.3

Segment Reporting (Tables) | 9 Months Ended
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Sep. 30, 2024
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 operating profit to consolidated loss before income taxes for the three and nine months ended September 30, 2023 and 2024.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(In millions) | 2023 |  | 2024 |  | 2023 |  | 2024
Revenue by segment: |  |  |  |  |  |  |
Public Cloud | $ | 431.5 |  |  | $ | 418.3 |  |  | $ | 1,308.7 |  |  | $ | 1,265.6 |
Private Cloud | 300.9 |  |  | 257.5 |  |  | 928.7 |  |  | 785.9 |
Total consolidated revenue | $ | 732.4 |  |  | $ | 675.8 |  |  | $ | 2,237.4 |  |  | $ | 2,051.5 |
Segment operating profit: |  |  |  |  |  |  |
Public Cloud | $ | 20.3 |  |  | $ | 16.4 |  |  | $ | 59.5 |  |  | $ | 37.5 |
Private Cloud | 86.2 |  |  | 74.5 |  |  | 268.2 |  |  | 215.9 |
Total consolidated segment operating profit | 106.5 |  |  | 90.9 |  |  | 327.7 |  |  | 253.4 |
Corporate functions | (61.0) |  |  | (56.6) |  |  | (192.7) |  |  | (180.1) |
Share-based compensation expense | (17.2) |  |  | (15.5) |  |  | (51.9) |  |  | (47.8) |
Special bonuses and other compensation expense (1) | (3.3) |  |  | (2.7) |  |  | (9.7) |  |  | (9.1) |
Transaction-related adjustments, net (2) | (1.6) |  |  | (1.8) |  |  | (4.1) |  |  | (4.4) |
Restructuring and transformation expenses (3) | (14.3) |  |  | (8.8) |  |  | (63.0) |  |  | (42.5) |
Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage | 5.3 |  |  | 1.2 |  |  | 0.4 |  |  | 1.1 |
Amortization of intangible assets (4) | (39.7) |  |  | (38.7) |  |  | (121.6) |  |  | (116.0) |
Impairment of goodwill | (165.7) |  |  | (141.7) |  |  | (708.8) |  |  | (714.9) |
UK office closure (5) | — |  |  | — |  |  | (12.1) |  |  | — |
Impairment of assets, net | (48.4) |  |  | — |  |  | (48.4) |  |  | (20.0) |
Interest expense | (56.5) |  |  | (18.0) |  |  | (170.7) |  |  | (80.1) |
Gain on investments, net | — |  |  | 0.1 |  |  | 0.2 |  |  | 0.2 |
Debt modification costs and gain on debt extinguishment | 55.4 |  |  | 18.0 |  |  | 163.1 |  |  | 147.2 |
Other expense, net | (2.6) |  |  | (1.0) |  |  | (0.3) |  |  | (11.8) |
Total consolidated loss before income taxes | $ | (243.1) |  |  | $ | (174.6) |  |  | $ | (891.9) |  |  | $ | (824.8) |
(1) | Includes expense related to retention bonuses, mainly relating to restructuring and integration projects, and the related payroll tax, senior executive signing bonuses and relocation costs, and payroll taxes associated with the exercise of stock options and vesting of restricted stock. Beginning in the second quarter of 2023, includes expense related to the one-time grant of long-term incentive bonuses as a component of our annual compensation award process.
(2) | Includes legal, professional, accounting and other advisory fees related to acquisitions, certain one-time compliance costs related to being a public company, integration costs of acquired businesses, purchase accounting adjustments, payroll costs for employees that dedicate significant time to supporting these projects and exploratory acquisition and divestiture costs and expenses related to financing activities.
(3) | Includes consulting and advisory fees related to business transformation and optimization activities, payroll costs for employees that dedicate significant time to these projects, as well as associated severance, certain facility closure costs, and lease termination expenses. The nine months ended September 30, 2024 also includes a $9.0 million MEIA early termination fee associated with the sale of our corporate headquarters in March 2024.
(4) | All of our intangible assets are attributable to acquisitions, including the Rackspace Acquisition in 2016.
(5) | Expense recognized related to the closure of a UK office that we exited in the second quarter of 2023 prior to the lease end date.
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 operating profit to consolidated loss before income taxes for the three and nine months ended September 30, 2023 and 2024.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(In millions) | 2023 |  | 2024 |  | 2023 |  | 2024
Revenue by segment: |  |  |  |  |  |  |
Public Cloud | $ | 431.5 |  |  | $ | 418.3 |  |  | $ | 1,308.7 |  |  | $ | 1,265.6 |
Private Cloud | 300.9 |  |  | 257.5 |  |  | 928.7 |  |  | 785.9 |
Total consolidated revenue | $ | 732.4 |  |  | $ | 675.8 |  |  | $ | 2,237.4 |  |  | $ | 2,051.5 |
Segment operating profit: |  |  |  |  |  |  |
Public Cloud | $ | 20.3 |  |  | $ | 16.4 |  |  | $ | 59.5 |  |  | $ | 37.5 |
Private Cloud | 86.2 |  |  | 74.5 |  |  | 268.2 |  |  | 215.9 |
Total consolidated segment operating profit | 106.5 |  |  | 90.9 |  |  | 327.7 |  |  | 253.4 |
Corporate functions | (61.0) |  |  | (56.6) |  |  | (192.7) |  |  | (180.1) |
Share-based compensation expense | (17.2) |  |  | (15.5) |  |  | (51.9) |  |  | (47.8) |
Special bonuses and other compensation expense (1) | (3.3) |  |  | (2.7) |  |  | (9.7) |  |  | (9.1) |
Transaction-related adjustments, net (2) | (1.6) |  |  | (1.8) |  |  | (4.1) |  |  | (4.4) |
Restructuring and transformation expenses (3) | (14.3) |  |  | (8.8) |  |  | (63.0) |  |  | (42.5) |
Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage | 5.3 |  |  | 1.2 |  |  | 0.4 |  |  | 1.1 |
Amortization of intangible assets (4) | (39.7) |  |  | (38.7) |  |  | (121.6) |  |  | (116.0) |
Impairment of goodwill | (165.7) |  |  | (141.7) |  |  | (708.8) |  |  | (714.9) |
UK office closure (5) | — |  |  | — |  |  | (12.1) |  |  | — |
Impairment of assets, net | (48.4) |  |  | — |  |  | (48.4) |  |  | (20.0) |
Interest expense | (56.5) |  |  | (18.0) |  |  | (170.7) |  |  | (80.1) |
Gain on investments, net | — |  |  | 0.1 |  |  | 0.2 |  |  | 0.2 |
Debt modification costs and gain on debt extinguishment | 55.4 |  |  | 18.0 |  |  | 163.1 |  |  | 147.2 |
Other expense, net | (2.6) |  |  | (1.0) |  |  | (0.3) |  |  | (11.8) |
Total consolidated loss before income taxes | $ | (243.1) |  |  | $ | (174.6) |  |  | $ | (891.9) |  |  | $ | (824.8) |
(1) | Includes expense related to retention bonuses, mainly relating to restructuring and integration projects, and the related payroll tax, senior executive signing bonuses and relocation costs, and payroll taxes associated with the exercise of stock options and vesting of restricted stock. Beginning in the second quarter of 2023, includes expense related to the one-time grant of long-term incentive bonuses as a component of our annual compensation award process.
(2) | Includes legal, professional, accounting and other advisory fees related to acquisitions, certain one-time compliance costs related to being a public company, integration costs of acquired businesses, purchase accounting adjustments, payroll costs for employees that dedicate significant time to supporting these projects and exploratory acquisition and divestiture costs and expenses related to financing activities.
(3) | Includes consulting and advisory fees related to business transformation and optimization activities, payroll costs for employees that dedicate significant time to these projects, as well as associated severance, certain facility closure costs, and lease termination expenses. The nine months ended September 30, 2024 also includes a $9.0 million MEIA early termination fee associated with the sale of our corporate headquarters in March 2024.
(4) | All of our intangible assets are attributable to acquisitions, including the Rackspace Acquisition in 2016.
(5) | Expense recognized related to the closure of a UK office that we exited in the second quarter of 2023 prior to the lease end date.
Schedule of Property, Equipment, and Software, net | Property, equipment and software, net, consisted of the following:
(In millions) | December 31, 2023 |  | September 30, 2024
Computers and equipment | $ | 1,154.9 |  |  | $ | 1,170.8 |
Software | 452.8 |  |  | 446.2 |
Furniture and fixtures | 14.5 |  |  | 12.3 |
Buildings and leasehold improvements | 411.8 |  |  | 418.5 |
Property, equipment and software, at cost | 2,034.0 |  |  | 2,047.8 |
Less: Accumulated depreciation | (1,442.1) |  |  | (1,441.5) |
Work in process | 16.9 |  |  | 10.0 |
Property, equipment and software, net | $ | 608.8 |  |  | $ | 616.3 |
The table below presents depreciation expense included in segment operating profit above for the three and nine months ended September 30, 2023 and 2024.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(In millions) | 2023 |  | 2024 |  | 2023 |  | 2024
Public Cloud | $ | 2.4 |  |  | $ | 1.8 |  |  | $ | 7.0 |  |  | $ | 5.3 |
Private Cloud | 42.2 |  |  | 28.6 |  |  | 131.0 |  |  | 85.6 |
Corporate functions | 5.8 |  |  | 3.9 |  |  | 22.9 |  |  | 15.1 |
Total depreciation expense | $ | 50.4 |  |  | $ | 34.3 |  |  | $ | 160.9 |  |  | $ | 106.0 |

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