Rackspace Technology, Inc. Q4 FY2024 earnings call

• Fourth quarter results exceeded guidance for revenue, profit, and EPS, marking tenth consecutive quarter of meeting or beating expectations. - Record-breaking quarterly sales booking in Q4, with bookings growing high double digits sequentially and year-over-year. - Full-year sales bookings grew 14% in fiscal 2024, fueled by strong Americas performance and hybrid cloud adoption. - Private cloud had record sales bookings in Q4, signed transformative deal with Seattle Children's Hospital, and launched Open Cloud. - Public cloud GAAP revenue surpassed guidance, sustained strong sales momentum, recognized by ISG as leader in AWS Ecosystem Partners category. - Leveraging momentum into 2025 with strategic focus, optimized operating model, and strong team. - Three key strategic priorities: operational turnaround, positioning as innovative hybrid cloud and AI solutions company, improving capital structure.

Private Cloud: Q4 2024 GAAP revenue was $269 million, exceeding the guided range. Total Private Cloud revenue was up 4% sequentially due to strength in the Healthcare segment. Bookings in Q4 more than doubled sequentially and grew high double digits year-over-year. Full-year 2024 private cloud sales bookings were up 4% year-over-year, with second-half bookings growing 42% over the first half. Public Cloud: Q4 2024 GAAP revenue was $417 million, surpassing the guided range due to higher cloud consumption. Full-year 2024 public cloud bookings grew 22% year-over-year, with both services and infrastructure resale posting double-digit growth, and data services bookings more than doubling.

• First-quarter 2025 GAAP revenue expected to be $653 million to $665 million. - Private cloud revenue expected $247 million to $253 million; public cloud revenue expected $406 million to $412 million. - Total non-GAAP operating profit expected $19 million to $21 million; non-GAAP loss per share expected $0.07 to $0.09. - Non-GAAP tax rate expected 26%; non-GAAP other expense $46 million to $50 million. - Non-GAAP share count expected approximately 245 million shares.

Q: Kevin McVeigh asked about private cloud trends and free cash flow in 2025.

A: Amar Maletira said private cloud revenues expected to show modest declines in 2025 but turnaround indicator, and Mark Marino anticipated positive operating and free cash flow in 2025.

Q: Ryan from Barclays asked about demand environment and infrastructure resale.

A: Amar Maletira said visibility improved, private cloud seeing green shoots with larger deals, and infrastructure resale had Q4 uptick due to seasonality with limited visibility into 2025.

Q: Frank Louthan asked about new logos and book-to-bill.

A: Amar Maletira said new logos across industries in private and public cloud, deal cycles in private cloud longer due to large deals, shorter in public cloud due to services deals.

Q: Irwin Liu asked about headcount and AI contribution.

A: Amar Maletira said public cloud has labor play but labor minus model with automation, AI contribution to data bookings less than 2% currently but expected to grow in next couple of years.