Rackspace Technology, Inc.

Good day, and thank you for standing by. Welcome to Rackspace Technologies' first quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Sagar Hebar, Head of Investor Relations. Please go ahead.

Thank you, and welcome to Rackspace Technologies' first quarter 2024 earnings conference call. I'm Sagar Hebar, Head of Investor Relations. Joining me on today's call are Amar Malatira, our Chief Executive Officer, and Mark Marino, our Chief Financial Officer. 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 these 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 gap measures in the earnings press release and presentation, both of which are available on our investor relations website. As previously announced, we successfully closed a series of debt refinancing transactions, which we will discuss in more detail during today's call. As a result of the size and complexity of the transactions, we are presenting selected financial data in the earnings press release and during today's call. Full financial data for Q1 will be included in our upcoming 10Q filing, which we expect to file with the SEC on or before the extended deadline of May 15, 2024. I will now turn the call over to Omar for an update on the business.

Thank you, Sagar, and welcome everyone to our first quarter 2024 conference call. We continue to make steady progress on a turnaround. Results in the first quarter of 2024 exceeded the high end of our guidance for revenue, profit, and EPS. We have now either met or exceeded guidance the last seven quarters, a track record that speaks to our execution and commitment to transparency with the investment community. Underneath these financial results, I'm encouraged by a progress on three strategic priorities. First, implementing an operational turnaround. Second, repositioning Rackspace as a forward-leaning and innovative hybrid multi-cloud and AI solutions company. And third, right-sizing our capital structure to ensure ample liquidity to support our key objective of driving long-term and sustainable profitable growth. Our recent debt refinancing and liquidity injection significantly improved our capital structure, giving us runway to execute our turnaround. Mark will provide more details in his comments. Our operational turnaround continues to gain momentum. We are building pipeline in both our businesses, growing bookings and finding additional opportunities to increase efficiency across the board. While the overall market remains cautious in the near term, we are well positioned and are leaning into the opportunities being created by secular market trends in public cloud, private cloud, and AI. Now, let me get into our business performance starting with private cloud. We had very strong double-digit year-over-year growth in first quarter bookings in private cloud with continued strength in healthcare. Sequentially, bookings were down due to normal seasonality in first quarter and an exceptional bookings performance in the fourth quarter of 2023. Private cloud is seeing continued success in implementing a healthcare vertical strategy. Falling on the heels of a strong fourth quarter bookings in this vertical, we won several new deals in healthcare in the first quarter. Among them were marquee names, including two of the country's 10 largest healthcare pairs, a large healthcare solutions provider, and a regional hospital and related services system provider. Many of these new engagements are for our unique and differentiated Epic as a services offerings. Rackspace holds all Epic certifications and is the perfect partner to host, operate, and manage electronic medical record workloads, one of the most critical workloads in the healthcare industry. Towards that end in April, we had a successful implementation of Epic electronic medical record system with Seattle's Children's Health Hospital, leveraging Rackspace's healthcare cloud solution. I'm proud of the partnership between Seattle Children's Hospital and our Rackspace team to provide a seamless migration of this workload to the Rackspace environment without impacting system availability or patient care. Private Cloud continues to launch a steady stream of new and innovative products and solutions. In the first quarter, we launched UK Servant Solutions. This is a digital servant platform with the Arc-branded data centers in the UK, offering a flexible number of configurations to suit varying budgets, performance, and workload sizes. All compute and storage for the Servant Cloud is dedicated to UK government and health care. I'm encouraged by the success of the private cloud strategy to defend and expand our private cloud business. We are executing well with continued growth in pipeline, bookings, and new products and solutions. However, the private cloud business unit is also working through the negative impact on today's results from customer exit decisions made in prior years on legacy solutions. Fortunately, we expect the dynamic to normalize over the coming quarters, and the next year at which point the revenue runoff should eventually be eclipsed by the continued new bookings and revenue conversion from that point forward as you start to leave the legacy effects behind we expect to see private cloud performance tip decisively towards stability and then steady sequential growth in an underserved market where rackspace brings unique capabilities great brand and two decades of experience in managing and operating a variety of hybrid cloud workloads delivered through our fanatical support. Now moving to public cloud. In the first quarter, total public cloud bookings showed solid double-digit growth year over year and were also up sequentially. Sequential growth in the first quarter, which is seasonally the weakest quarter, is very encouraging. This was a result of solid execution by our go-to-market teams in two of our largest regions, Americas and the UK. The major go-to-market refresh we did in this business in the second half of last year has started yielding results. I'm pleased with the go-to-market execution, especially in a tough services market. We are in the early innings and there's more to do to continue building on this momentum. Our public cloud strategic imperative is to lead with services. We offer an unparalleled ability to meet our customers' needs with a full stack multi-cloud solution spanning platform, applications, data, and security. This focus has yielded a number of new wins, such as a platform services and security engagement with a large international insurance company, We also won a platform services agreement with a large media company. And in data services, we have been engaged by another large insurance company to migrate and modernize an on-prem data warehouse to cloud. Public cloud also continues to develop many new innovative services and solutions. We are also being increasingly selective with infrastructure resale, including not recompeting some low-profit renewals. This may impact near-term revenue, but will improve our overall margins. While I want to make a few remarks specifically about AI, I also want to note that AI permeates the organization and is integrated into everything we do. So it is a part of both public and private cloud businesses, as well as our internal functions. Our opportunity base for AI or our fair offerings continues to grow since its launch in June, 2023, and is in excess of 30 opportunities. These opportunities are at varying stages of implementation across our ideate and incubate phases. In general, our customers are starting to turn to the hard work of making AI a reality that usually starts with data. You can't train and fine-tune an AI model and run inferencing without unified, normalized data. That data business represents significant near-term opportunity for Rackspace, but speaks to the long road ahead to full-scale AI implementation. We're also developing new capabilities. Earlier this year, Private Cloud launched Private AI Anywhere. And on a future roadmap later this year, we'll be introducing AI business an AI optimized platform for fine-tuning and inferencing AI workloads. We have broad and deep engagement with the AI ecosystem to quickly move on opportunities and help our customers in their AI journey. In summary, this quarter, we once again did a little better than expected. Our guidance shows an appropriately cautious but improving trajectory. Our goal for 2024 remains lock in a sustainable business model that generates consistent revenue and profit growth over the long term, building momentum that will put us on a profitable growth trajectory entering 2025. Before I wrap up, I'd like to thank our customers, partners, and all our rackers. I'm proud of all we have achieved together already. We are heading in the right direction. I will now turn it over to Mark for an overview of our financial results and guidance.