On August 8, 2024, Rackspace Technology Inc (RXT, Financial) released its 8-K filing for the second quarter of 2024. Rackspace Technology Inc is an end-to-end, hybrid, multi-cloud technology services company that designs, builds, and operates its customers' cloud environments across all technology platforms. The company's solutions include Application Services, Data, Colocation, Cloud, Managed Hosting, Professional Services, and Security & Compliance. It operates in segments namely, Private Cloud, and Public Cloud.
Performance Overview
Rackspace Technology Inc reported revenue of $685 million for Q2 2024, an 8% decline from $746 million in Q2 2023. Despite this, the company exceeded analyst estimates of $673.58 million. The Private Cloud segment generated $260 million, down 17% year-over-year, while the Public Cloud segment brought in $425 million, a 2% decrease from the previous year.
Financial Achievements
Rackspace Technology Inc reported a net income of $25 million for Q2 2024, a significant improvement from a net loss of $27 million in Q2 2023. The net earnings per diluted share were $0.11, compared to a net loss per diluted share of $(0.13) in the same period last year. Non-GAAP Operating Profit was $23 million, a 41% decrease from $39 million in Q2 2023. Non-GAAP Loss Per Share was $(0.08), a 33% increase from $(0.06) in Q2 2023.
Key Financial Metrics
| Metric | Q2 2023 | Q2 2024 | % Change |
|---|---|---|---|
| Revenue | $746 million | $685 million | -8% |
| Private Cloud Revenue | $313 million | $260 million | -17% |
| Public Cloud Revenue | $434 million | $425 million | -2% |
| Net Income (Loss) | $(27) million | $25 million | NM |
| Net Earnings (Loss) Per Share | $(0.13) | $0.11 | NM |
| Non-GAAP Operating Profit | $39 million | $23 million | -41% |
| Non-GAAP Loss Per Share | $(0.06) | $(0.08) | 33% |
Income Statement Highlights
Loss from operations was $(54) million in Q2 2024, compared to $(64) million in Q2 2023. The company reported a gross profit of $131.4 million, down from $153.1 million in the same period last year. Selling, general, and administrative expenses decreased to $185.2 million from $216.9 million in Q2 2023.
Balance Sheet and Cash Flow
As of June 30, 2024, Rackspace Technology Inc had cash and cash equivalents of $190 million. The company reported $24 million in cash flow from operating activities for Q2 2024, with a trailing-twelve-month cash flow from operating activities of $273 million. Capital expenditures were $33 million, down from $45 million in Q2 2023.
Commentary and Outlook
"Our second quarter financial results once again exceeded guidance for revenue, operating profit, and EPS. We are focused on strengthening our pipeline in both Private and Public Cloud, stabilizing and growing revenue and profit while continuing to drive cost efficiencies. We are pleased with the steady progress on all fronts." - Amar Maletira, Chief Executive Officer
Analysis
Rackspace Technology Inc's ability to exceed revenue and EPS estimates despite a year-over-year decline in revenue highlights the company's operational efficiency and strategic focus. The improvement in net income and reduction in operating losses are positive indicators of financial health. However, the decline in both Private and Public Cloud revenues suggests challenges in market demand or competitive pressures. The company's focus on cost efficiencies and pipeline strengthening will be crucial in navigating these challenges.
For more detailed insights and to access the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Rackspace Technology Inc for further details.
