XML 31 R19.htm IDEA: XBRL DOCUMENT v3.24.3
Segment Reporting
 9 Months Ended
Sep. 30, 2024
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
We have organized our operations into two operating segments, which correspond directly to our reportable segments: Public Cloud, a services-centric, capital-light model providing value-added cloud solutions through managed services, Elastic Engineering and professional services offerings for customer environments hosted on the Amazon Web Services (“AWS”), Microsoft Azure and Google Cloud public cloud platforms; and Private Cloud, a technology-forward, capital-intensive model providing managed service offerings for customer environments hosted in one of our data centers as well as in those owned by customers or by third parties such as colocation providers. Private Cloud also includes our legacy OpenStack Public Cloud business that we ceased to actively market to customers in 2017.

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 operating profit. Segment operating profit includes expenses directly attributable to running the respective segments' business. This excludes any corporate overhead expenses. We have centralized corporate functions that provide services to the segments in areas such as accounting, information technology, marketing, legal and human resources. Corporate function costs that are not allocated to the segments are included in the row labeled "Corporate functions" in the table below.

During the first quarter of 2024, we identified that an immaterial amount of revenue for a certain Private Cloud product offering was incorrectly reported in the Public Cloud segment in historical periods. Revenue by segment has been corrected in the table below by reducing Public Cloud revenue by $1.3 million and increasing Private Cloud revenue by $1.3 million for the three months ended September 30, 2023 and reducing Public Cloud revenue by $3.6 million and increasing Private Cloud revenue by $3.6 million for the nine months ended September 30, 2023.
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)2023202420232024
Revenue by segment:
Public Cloud$431.5 $418.3 $1,308.7 $1,265.6 
Private Cloud300.9 257.5 928.7 785.9 
    Total consolidated revenue$732.4 $675.8 $2,237.4 $2,051.5 
Segment operating profit:
Public Cloud$20.3 $16.4 $59.5 $37.5 
Private Cloud86.2 74.5 268.2 215.9 
Total consolidated segment operating profit106.5 90.9 327.7 253.4 
Corporate functions(61.0)(56.6)(192.7)(180.1)
Share-based compensation expense(17.2)(15.5)(51.9)(47.8)
Special bonuses and other compensation expense (1)
(3.3)(2.7)(9.7)(9.1)
Transaction-related adjustments, net (2)
(1.6)(1.8)(4.1)(4.4)
Restructuring and transformation expenses (3)
(14.3)(8.8)(63.0)(42.5)
Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage5.3 1.2 0.4 1.1 
Amortization of intangible assets (4)
(39.7)(38.7)(121.6)(116.0)
Impairment of goodwill(165.7)(141.7)(708.8)(714.9)
UK office closure (5)
— — (12.1)— 
Impairment of assets, net(48.4)— (48.4)(20.0)
Interest expense(56.5)(18.0)(170.7)(80.1)
Gain on investments, net— 0.1 0.2 0.2 
Debt modification costs and gain on debt extinguishment55.4 18.0 163.1 147.2 
Other expense, net(2.6)(1.0)(0.3)(11.8)
Total consolidated loss before income taxes$(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.
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)2023202420232024
Public Cloud$2.4 $1.8 $7.0 $5.3 
Private Cloud42.2 28.6 131.0 85.6 
Corporate functions5.8 3.9 22.9 15.1 
    Total depreciation expense$50.4 $34.3 $160.9 $106.0 

Management does not use total assets by segment to evaluate segment performance or allocate resources. As such, total assets by segment are not disclosed.