Rackspace Technology, Inc.

Good day and thank you for standing by. Welcome to the RACspace second quarter 2025 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 withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Sagar Habar, Head of Investor Relations. Please go ahead.

Thank you, and welcome to Rackspace Technologies' second quarter 2025 earnings conference call. I'm Sagar Habar, 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 compatible GAAP measures in the earnings press release and presentation, both of which are available on our investor relations website. I will now turn the call over to Omar for an update on the business.

Thank you, Sagar, and welcome everyone to our second quarter 2025 earnings conference call. Results for the second quarter met our expectations across all key metrics. Revenue and operating profit exceeded the midpoint of a guided range, while EPS was within our guided range, marking our 12th consecutive quarter of meeting or exceeding guidance. Sales pipeline generation remains strong across both the business units, with bookings as measured by annual contract value growing 2% sequentially and 16% year-over-year. The outperformance was primarily driven by private cloud, which secured several key wins. Non-GAAP operating profit grew 34% year-over-year, and we delivered positive cash from operations of $8 million for the quarter, reflecting our operational and financial discipline. Now, let me get into our segment performance, starting with private cloud. Private cloud bookings in the second quarter of 2025 grew 24% sequentially and 42% year-over-year, driven by several large long-term deals across key industries, including healthcare, BFSI, and telecom. We also saw double-digit year-over-year bookings growth across both the Americas and EMEA, underscoring the broad-based strength of our go-to-market efforts. This solid bookings performance was despite a large healthcare deal that got pushed, and we expect this opportunity to close within the third quarter. Revenue for the private cloud segment came in at $250 million in line with guidance and down 4% year over year. We are seeing continued revenue stabilization as prior year bookings convert into revenue, reflecting the strength of our underlying business. Our disciplined focus on revenue retention and growing bookings momentum continues to lay a solid foundation for a long-term sustainable growth. We're also making strong progress in our strategic expansion into the mid-market and enterprise segments, positioning us to capture new opportunities and drive future scale. In April, we signed a long-term agreement with a leading healthcare provider in the U.S. to host their virtual desktop infrastructure supporting clinical kiosks. This was previously hosted on a hyperscale public cloud. The customer is getting enhanced control, consistent performance, predictable and highly competitive costs by transitioning the environment to Rackspace's secure private cloud. This win underscores Rackspace's expertise in delivering compliant, high-performance infrastructure for critical healthcare and other enterprise workloads. we also expanded our relationship with a large uk bank through a strategic engagement to modernize its entire edge infrastructure we have been engaged to deploy a secure network solution across approximately 80 branch locations our engagement is a comprehensive end-to-end managed service over five years our private cloud team continues to deliver innovative solutions in the second quarter we had 13 product releases and 28 enhancements More notably, we announced Rackspace OpenStack Business, a new open source dedicated solution for organizations running mission-critical or regulated workloads. This fully managed offering delivers enhanced performance, improved security, and comprehensive operational support, all without the overhead and complexity of managing your own infrastructure. Overall go-to-market and solutions momentum in the private cloud segment remains strong, reflected in both our results and customer wins. We remain focused on expanding our footprint while continuing to defend and grow our private cloud business. Now turning to public cloud. In the second quarter, bookings for public cloud grew 1% year over year, primarily driven by strong performance in EMEA. Services bookings increased 6% sequentially, reflecting our disciplined focus on higher value engagements. Revenue for the segment totaled $417 million, exceeding our guided range. Revenue declined 2% year-over-year due to expected declines in lower margin infrastructure resale. We continue to focus on services revenue, which grew 3% sequentially and remained flat year-over-year. We are also seeing success in increasing our footprint with existing relationships. In the second quarter, we expanded our engagement with a top-tier aircraft leasing company. They are leveraging Rackspace's data modernization and engineering services to accelerate their data transformation strategy and platform implementation. Additionally, we expanded our offering with a mid-size cybersecurity company through a long-term deal that bundles infrastructure and services, demonstrating a continued ability to deliver integrated solutions that align with client needs. On the product side, we introduced Rackspace CloudOps, a managed service that offers 24 by 7 operational support in the cloud. CloudOps is purpose-built for mid-market organizations at any stage of their cloud journey, helping them drive operational excellence, optimize performance, and maximize cloud efficiency. This expands the service offerings that can be attached to infrastructure resale. In summary, our focus on higher value services, strategic bundling, and expanding existing customer relationship is yielding positive results. Our services revenue continued to grow sequentially, underscoring continued progress in a public cloud business. Turning to AI, we continue to make good progress with FAIR, which is Foundry for AI by Rackspace, with over 80 wins and over 235 opportunities in our pipeline, of which over 20% are already in advanced stages, along with several active leads we are pursuing. Last month, we announced a strategic alliance with enterprise AI agent innovators Semaphore.ai, bringing together Rackspace's application and infrastructure management expertise with Semaphore.ai's advanced safe AI agent platform. Through this partnership, organizations will be able to rapidly deploy scalable production-grade AI agents across key business functions built on a foundation of strong governance, transparency, and security. Additionally, we launched the Fair Model Context Protocol Enterprise Accelerator on the AWS marketplace, empowering organizations to deploy AI agents at scale with robust security and seamless integration. This solution delivers 70% plus reduction in legacy application integration time, accelerating value realization, and enabling real-world impact across healthcare, finance, and manufacturing sectors. We are also driving AI innovation across our service offerings in public cloud. AI integration within our services spans three areas. Accelerating cloud migration timelines by 20 to 30 percent, reducing operational overhead for our managed services teams by 10 to 20 percent, and automating security operations at scale. For example, we recently reduced migration time by 40% using SnowConvert AI for a leading healthcare services company. These AI at scale initiatives are accelerating time to value for customers and strengthening our position in enterprise transformation through intelligent automation. Before I wrap up, I want to sincerely thank our customers, partners, and all our actors. I'm pleased with what we have achieved this quarter and encouraged to see momentum in acquiring new and expanding with existing customers. We remain laser focused on our key strategic priorities for 2025, building a sustainable business model that consistently delivers revenue, profit, and cash flow growth. With that, I will turn it over to Mark to walk us through the financial results and guidance.