Rackspace Technology, Inc.

Good afternoon and thank you for standing by. Welcome to Rackspace Technologies' fourth quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. Please be advised that today's call is being recorded. I would now like to hand the call over to Robert Watson, Vice President of Corporate Finance. Please go ahead.

Thank you, and good afternoon. I am joined today by Amar Malatera, our Chief Executive Officer, and Bobby Maloo, our Chief Financial Officer, who recently joined in January. Supplemental materials to today's earnings announcement, as well as a replay of today's call, can be found on our investor relations website. As a reminder, certain comments we make on this call will be forward-looking. These statements involve risks and uncertainties which could cause actual results to differ. A discussion of these risks and uncertainties is included in our SEC filings. RAC space technology assumes no obligation to update the information presented on the call except as required by law. Our presentation includes certain non-GAAP financial measures and adjustments to those measures which we believe provide useful information to our investors. In accordance with SEC rules, we have provided a reconciliation of these measures to their most directly comparable GAAP measures in the earnings release and presentation, both of which are available on our IRA website. I will now turn the call over to Amar for an update on the business.

Thank you, Robert. First, I would like to quickly update you on the ransomware incident we experienced late in Q4. On December 2nd, Rackspace detected suspicious activity in our hosted exchange email environment, which triggered our incident response team to act immediately to contain the threat. We quickly engaged industry-leading cybersecurity firm CrowdStrike and other experts to assist us with the forensic investigation, which was completed in roughly 30 days. The investigation determined this was the result of a zero-day exploit, which means the attack vector was not previously known and it was a sophisticated attack. Due to our team's swift action to contain the threat, the impact was limited solely to the hosted exchange email environment, which makes up less than 1% of our total revenue. No enterprise customers were impacted and no other Rackspace products, platforms, solutions, or businesses were affected as a result of this incident. We provided our hosted exchange customers with a path to migrate their email services to Microsoft 365 and assisted many customers with both the email and data transition. Security is extremely critical for our business. and we have the right focus and investments to continue to provide our customers with a secure environment. With that, let me share what else I've been doing since taking the helm in September. I've been laser focused on transforming Rackspace technology into a customer-first, cloud-first company and changing the trajectory of our performance. In just the last few months, we have achieved many significant milestones, which include implementing a two-business unit operating model, adding new leadership, strengthening our board, and introducing new products and services. We are now poised to drive these changes throughout the company and bring our strategy to life. We are very focused on fixing this business for the long term, even if it requires near-term disruption. While the next few quarters may be choppy, our focus is on positioning the company for sustainable growth heading into 2024. I'm pleased to share some of the progress since our last earnings call. First, we delivered fourth quarter revenue and profitability above the high end of our guidance. This is a positive step as we continue to build a track record of meeting or exceeding our commitments. Second, I'm excited to welcome Bobby Maloo, our new CFO who joined in January and has hit the ground running given his services background and broad operational finance experience. Third, we have hired Brian Lilly as the president of a private cloud business and have previously announced DK Sinha as the president of the public cloud business unit. Given this, we now have strong leadership for each of these two core segments. Brian's deep technology experience and focus on strategy and execution will be instrumental in transforming our private cloud business. And finally, Anthony Roberts has joined our board of directors. Anthony's extensive experience as a senior technology executive will be a tremendous asset that together with the recent elevation of Shashank Samant to lead director will help define and fortify our position as the industry's leading provider of multi-cloud solutions. While we are only a couple of months into our new operating model, I am encouraged by the early signs of progress. Although it will take time to fully reflect this progress in our financial results, I strongly believe we are headed in the right direction. As we navigate the challenging macro environment, we are experiencing some of the same trends highlighted by others in our industry. Growth of the broader cloud market has slowed as customers are showing a heightened focus on efficiency. We are also experiencing longer sales cycles, The recent economic slowdown has also led many companies to take a more deliberate approach to evaluating whether workloads should operate in public or private cloud to optimize for performance and cost. With demand shifting to the right, we are taking advantage of current macro conditions to complete our transformation, improve execution, and launch new offerings. In public cloud, we continue our accelerated pivot from an infrastructure resale-led motion to a services-led motion with deeper customer engagement. As we change the mix of the business, we are experiencing some near-term disruptions. We are committed to building a services backlog that will yield sustained long-term growth and improved margins. We have already taken several steps to accelerate our shift to a higher margin suite of services and expand our existing offerings. Let me highlight a few examples. We recently announced an expanded long-term strategic partnership with Google Cloud. As part of this partnership, Rackspace will build out a Google Cloud Center of Excellence with 250 certified GCP resources. Together with GCP, we'll drive joint business development around Rackspace's Google Cloud services focused on areas such as application migration, modernization, data, and AI. We also recently launched Modern Operations, which is a new managed service offerings for public cloud that will provide customers across AWS, Azure, and GCP a 24 by 7 unified support model for a broad range of services. Modern Operations is a good example of the sticky annuity services we are focused on expanding. Our new operating model will ensure that we emerge from 2023 with a public cloud organization focused on the high value opportunities in this wide open market space. The growth of public cloud has also spurred new demand for private cloud solutions. Public Cloud is a great place for many new and emerging workloads. Companies are now realizing, however, that many workloads are most efficiently operated in their existing native environment. Many companies also no longer want to build or operate in-house data centers and need a safe, reliable partner to run mission-critical workloads. All that sums up to a significant opportunity for Rackspace as one of the largest scaled players in private cloud. To address demand across a broad range of private cloud customers, we recently launched software-defined data center offerings including enterprise, business, and flex options. These enhanced higher value offerings position us well to meet unmet demand in private cloud. As Rackspace moves forward, you should expect a continued focus on higher-value innovations in public and private cloud, which underpin our strategy and new operating model. In parallel, we are progressing on industry-specific offerings in both public and private cloud. We are building focused teams and solutions in verticals such as healthcare, telecom, tech and gaming, and public sector to better leverage our core multi-cloud strengths and address the complex challenges facing our customers. As an example, we recently signed an important memorandum of understanding with Sadiya, the Saudi Data and AI Authority, a government agency with a mission to unlock the value of data as a national asset. This MOU will enable Rackspace and Sadiya to collaborate on strategic technology initiatives in support of Saudi Arabia's Vision 2030, an ambitious blueprint for the kingdom's digital future. This partnership is an example of Rackspace's relevance in an exciting multi-cloud market. Before I conclude, I'd like to extend my heartfelt gratitude to each and every one of our talented Rackers, customers and partners around the world. Over the past five months, we have accomplished a great deal and initiated critical changes within the company. Our two-business unit structure is now fully operational, and we have assembled a strong leadership team to execute our strategy and plan. 2023 will be a transformational year for us as we continue to lay the foundation for long-term sustained performance in the future. I will now turn the call over to Bobby for an overview of our Q4 financials.