Rackspace Technology, Inc. Q3 FY2021 Earnings Call

Good afternoon, and welcome to Rackspace Technology's Third Quarter 2021 Earnings Conference Call. As a reminder, today's call is being recorded. Kevin Jones, our CEO, and Amar Maletira, our President and CFO, are with us today. The slide deck we will reference can be found on our Investor Relations website. On Slide 2, some comments made during this call will be forward-looking. These statements are subject to risks and uncertainties, which could result in actual outcomes differing from our expectations. A discussion of these risks and uncertainties can be found in our SEC filings. Rackspace Technology does not have any obligation to update the information shared during the call, except as required by law. Our presentation includes non-GAAP financial measures and further adjustments to these measures, which we believe offer useful insights for our investors. In line with SEC regulations, we have provided a reconciliation of these measures to their respective GAAP measures. These reconciliations can be found in the tables included in our earnings release and presentation, both available on our website. After our prepared comments, we will address your questions. I will now hand it over to Kevin.

Good afternoon, and thanks for joining us. I'll discuss quarterly highlights and touch on some customer case studies, and then Amar will go into detail on the financial results. Turning to Slide 5. As a best-in-class, pure-play cloud solutions company, Rackspace Technology is well positioned in a market that is booming. Over the past five years, our cloud partners, AWS, Google Cloud and Microsoft Azure have grown their revenues tenfold. In the third quarter alone, AWS grew 39%, Azure grew 48% and Google Cloud grew 45%. To put things in context, in 2020, incremental new cloud spending with our hyperscaler partners was $22 billion. That total is expected to grow to $34 billion in 2021. And next year, analysts estimate that new cloud spending will grow again to approximately $44 billion. As they move their business to the cloud, customers are grappling with the pace of change, especially midsized and commercial businesses, and state and local governments. They need help and Rackspace Technology is poised to be their partner of choice, wherever they are in their cloud journey. In the third quarter, we took several steps to solidify our market-leading position. The financial results reflect this. Revenue, core revenue, non-GAAP operating profit and non-GAAP EPS all grew at a healthy year-over-year clip. We delivered strong operating cash flow of over $100 million for the third quarter in a row. For the first three quarters of 2021, operating cash flow is now in excess of $300 million. We continue to introduce timely new product and service offerings that help our customers get the most out of their cloud investments. Our new elastic engineering model has seen fast adoption, and we have expanded it to several new areas. And we are very excited about the launch of Rackspace Data Freedom, a new storage solution based on robust Rackspace-developed technology that gives customers a cloud-adjacent storage option to manage costs and increase data fluidity across multiple cloud platforms. Our broad customer base puts our finger on the pulse of the cloud market. Our service development strategy is driven by those insights. Because of this, Rackspace Data Freedom is targeted at a massive wide space in the cloud market and addresses a pain point that we see and hear about every day from our customers. Having our ears so close to such a diverse customer base, especially midsized and smaller businesses, is a key Rackspace advantage. On the ESG front, earlier this month, we launched our first comprehensive ESG report since returning to the public markets. I'll talk more about this later in the presentation. We are investing in our employees and culture to differentiate Rackspace Technology as an employer of choice in the current war for talent. This helps us attract prospective employees and retain our most valuable assets are dedicated Rackers. These investments are delivering results. In the third quarter alone, we were recognized as one of the 50 most engaged workplaces by Achievers, a top 50 workplace in the country for Latinas by Latina Style, and a Top Place to Work for Mothers, Fathers and Parents working remotely by Parents at Work. Turning to Slide 6. We continue to deliver revenue growth well into the double digits. Total revenue was up 12% and core revenue was up 15% compared to last year's third quarter. Non-GAAP operating profit was up 6%, and non-GAAP EPS was up 32%. We expect a strong fourth quarter for bookings and believe we will hit our full year new business bookings target of $1 billion. In the third quarter, new sales bookings were $200 million. On Slide 7, a key growth strategy for Rackspace Technology is to forge partnerships that bring best-in-class cloud solutions to our customers. Accordingly, in the third quarter, we strengthened our relationships with leading cloud solutions companies such as Snowflake, Datadog, Cloudflare and Platform 9 partner in Q3. We are investing in staffing up our team of Snowflake-certified engineers over the next few quarters. With Datadog, we were recently named a Gold Tier Partner and we're working closely with them to develop mutual go-to-market sales motions. We are developing a tailored Elastic Engineering service for Cloudflare to help our customers customize, optimize and manage their security platforms. As I noted on our most recent earnings call, channel partner development is a priority for Cloudflare in 2022. As you may remember, earlier this year, we invested in Platform 9, a SaaS-managed Kubernetes platform that builds and operates clusters across edge, private and public clouds. For Platform 9, we are bringing these solutions to market to help make Kubernetes simple to own, operate and scale. Strong partnerships like these and creative joint go-to-market solutions are exciting growth opportunities for Rackspace Technology alongside managed public cloud and our private cloud offerings. Now I'd like to share some case studies demonstrating the value that Rackspace Technology delivers for its customers. First, one from the Middle East. On Slide 8, BFC Group is a major Fintech company based in Bahrain, providing global money transfers, foreign exchange and currency and payment solutions. BFC needed to modernize its core applications to better support a physical business model, while accelerating a digital transformation and preparing for international expansion. At the recommendation of AWS, BFC Group selected Rackspace Technology as a support partner for migrating its core application to the cloud and providing ongoing management and consultancy services. Using a comprehensive solution, including AWS and a long-term contract for Rackspace Security Essentials, we helped the company create a flexible and stable platform, allowing it to focus on what it does best, helping customers move their money around the world. BFC Group saw an immediate uplift in critical measures of performance such as transactions processed per second and improved customer experience. On Slide 9, Arthrex is a privately-held medical device company based in Florida. Arthrex is a pioneer in the field of arthroscopic surgery and has developed over 13,000 innovative products addressing a range of orthopedic procedures. Arthrex wanted to reimagine and modernize the post-surgery experience by creating a digital communications portal that will give surgeons customizable templates that could quickly populate and make available for patients to access on demand. In just 12 months, Rackspace Technology built this communications portal on AWS alongside a mobile app to download media and metadata from Arthrex's medical imaging technology. The solution both increased patient satisfaction and reduced the administrative burden on surgeons. Turning to Slide 10. Last week, Rackspace Technology published its first comprehensive ESG report since going public in 2020. Suffice it to say, investing in ESG has always been part of the company's DNA and is an extremely high priority for me, our executive leadership team and our Board of Directors. ESG is not something we do because it's fashionable. It is part and parcel of our existence as a company and is rooted in how we work every day. The ESG report demonstrates that Rackspace Technology is 100% committed to being a thoughtful steward of our planet's natural resources and an employer of choice for the most talented professionals in the technology industry. Additionally, it highlights our focus on being a force for good in the communities we serve and a transparent shareholder and customer-focused publicly-traded company. This report is simply the first step in providing our constituents with improved transparency into our ESG initiatives. We are devoted to continuous improvement in this area, and those efforts will be fully visible to shareholders as we move forward. I encourage you to download and read the ESG Report, which can be found on our website. Now Amar will take you through the financials.

Thank you, Kevin, and thank you, everyone, for joining our call today. Slide 12 recaps our financial results for the quarter. Revenue was $763 million, a 12% year-over-year increase. Core revenue grew 15% year-over-year to $718 million. Non-GAAP operating profit was $124 million, up 6% year-over-year. Non-GAAP operating margin was 16.2%, within our mid- to high-teens expected range and non-GAAP earnings per share was $0.25, up 32% from last year. Let me now touch on the third quarter bookings. As Kevin noted, bookings in the third quarter were $200 million, and we still expect to hit our $1 billion bookings target for fiscal 2021. We won a large competitive deal, which we have been working for some time early in the fourth quarter, and we expect to have it signed before year-end. Through 2021, bookings have run lower than 2020. This is because we changed our go-to-market strategy at the start of this year. Since pivoting to the fast-growing cloud market two years ago, we have followed the land-and-expand strategy. In 2020, we focused on the land part of this equation as we had a massive opportunity to establish beachheads with new customers. The deals we onboarded in 2020 were heavily weighted towards infrastructure in the early stages of these customer relationships, which drives higher dollar bookings. At the start of 2021, we aligned our sales and incentive plans more towards the expense side of this equation to deepen and grow revenue and profitability with our new customers, while also selectively adding new logos. This has tilted the sales equation towards contracts with relatively smaller gross bookings, but higher profitability. So to put a final point on this, Slide 13 provides additional details on how we have grown our business with the new managed public cloud customers that we onboarded in 2020. As this slide demonstrates, our land and expand strategy is working. Customers for all three 2020 cohorts have grown their business with Rackspace Technology well into the double digits over the past four quarters and the increase in sold gross margins on these bookings ranges from 200 to 400 basis points. In addition, we have seen cumulative bookings and sold gross margins increasing every quarter since these customers were onboarded. This validates our go-to-market strategy. Last year, we pressed the accelerator on growth to onboard new logos. Now we are benefiting from the installed base and each quarter, our customers buy additional high-value services from us. Looking ahead, we will be investing to broaden and deepen our portfolio of service offerings as the cloud market evolves at a rapid pace. This is a once-in-a-lifetime opportunity in a wide-open market space. We plan to take maximum advantage now while it's still early. Slide 14 shows the components of our revenue as well as the transition of our Multicloud revenue to growth businesses. Multicloud continues to represent the vast majority of our revenue at 82% of the mix, and it grew 15% year-over-year. Apps & Cross Platform at 12% of total revenue grew 11% year-on-year, driven by growth in application services, coupled with strength in our Data and Security Services business. OpenStack, which is our legacy business, declined 20%, and this segment represents only 6% of total revenue. Growth market offerings are now in the mid-70% range of the Multicloud segment and continue to grow between 30% and 40% year-over-year. As shown on Slide 15, we had another strong quarter for cash flow. GAAP cash from operations was $102 million, which is the third quarter in a row in which operating cash flow exceeded $100 million. Year-to-date, cash flow from operations was $311 million. Free cash flow, defined as GAAP cash from operations minus cash CapEx, was $81 million, up from $77 million in the second quarter. This splits the year-to-date total free cash flow to $224 million. Total CapEx was $35 million, and total CapEx intensity was 5%. Cash CapEx was $21 million, and cash CapEx intensity was 3% in the third quarter. For fiscal year 2021, we expect cash CapEx intensity in the 4% to 6% range. Total cash increased to $260 million at the quarter end. We had $375 million of unused revolving credit facility, bringing total liquidity towards $600 million. On Slide 16, we have our guidance for the fourth quarter. We expect revenue in the range of $766 million to $776 million, core revenue of $724 million to $732 million, non-GAAP operating profit of $118 million to $122 million and non-GAAP earnings per share in the range of $0.23 to $0.25. We also expect non-GAAP other expenses of $51 million to $52 million and non-GAAP tax expense rate of 26% and non-GAAP weighted average shares of 212 million to 214 million shares. With that, we'll take your questions. Joe, please go ahead and queue up the audience for Q&A.

Great. Thanks so much and congratulations on the results. I wonder if you could help dimensionalize the large booking deal you awarded after quarter-end, and give us a sense of how that settles into 2022 as well. And again, congratulations on the results.

Hey, thank you very much, Kevin. It's Kevin Jones here. So look, on the big deal, we said we'd be very selective in terms of which new deals we would pursue. And as a cloud solutions provider, this deal is in our wheelhouse from a product standpoint and a services standpoint and fits into our strategy. So we ran hard after it. We were awarded the business in October and beat some of our largest competitors, and we were selected for the differentiated cloud solutions that we provide. So what we're doing now, Kevin, is we're working diligently with this customer to hammer out all the documentation and formally sign it by the end of the year. And we're very excited we won it, and we'll provide more details when we can formally announce the deal. But I can tell you, we believe it will be the largest deal in the history of the company.

That sounds great. And then obviously, it seems like you've made some progress, too, with some of these partnerships with Snowflake, Datadog, Cloudflare. Any sense of how that can ultimately impact and potentially translate to revenue as we think about the model going forward?

Yes. Thanks for that, Kevin. Yes, we're pretty excited about this. We want to forge partnerships that really bring best-in-class cloud solutions to our customers. So what we did is we strengthened our relationships with Snowflake, Datadog, Cloudflare and Platform 9. Let's talk about these for a minute. With Snowflake, we're a select partner and on our way to becoming a premier partner. We're actively hiring more Snowflake-certified engineers over the next few quarters. So that's exciting. With Datadog, we're recently named a Gold Tier Partner. And what we're doing there is we're jointly developing go-to-market sales motions. Cloudflare noted on their most recent earnings call that channel partner development is a priority for them. So I'm really excited to be early on that front. We're developing Elastic Engineering for Cloudflare to help our customers customize, optimize and manage their security platforms. And then earlier this year, we made the equity investment in Platform 9. Platform 9 is a SaaS-managed Kubernetes platform. And what we're doing with Platform 9 is we're bringing edge, private and public cloud solutions to market to help make Kubernetes simple to operate and scale. So these are really exciting partnerships, exciting growth opportunities for Rackspace Technology alongside managed public cloud and our private cloud solutions. So Kevin, we've had encouraging progress. I think it's a little early to forecast revenue contributions from the offerings, but we're on it.

And just to add there, Kevin, if I may. This is, again, in line with our strategy of moving up the stack. Right now, what's going on in the market is a lot of business is coming at the infrastructure layer. The next opportunity is on the cloud-native application and then data. So you can see here all this partnership is at an early stage, and this is in line with us moving up the stack from a strategy perspective.

Congratulations again.

Tien-Tsin Huang from JPMorgan, you're up. And Ramsey El-Assal from Barclays is on deck. Tien-Tsin, we have you.

I think I'm unmuted. Can you hear me?

Here you go.

Hey, Tien-Tsin.

Terrific. Thanks, Joe, for moderating. Good to talk to you, guys. So yes, the second half bookings, I'm just focusing in on that, the $500 million or so implied in your guidance. Can we annualize that as a good baseline to consider for 2022 since this captures your more selective client prospecting criteria you just talked about? Or is that dangerous to do, given the large deal you expect to close in the fourth quarter?

So why don't I just give you a little color, Tien-Tsin. Thanks for the question on bookings momentum and a little bit about the pipeline, and then I'll have Amar jump in as well. So we feel good about the bookings momentum. We're focused this year on optimizing our bookings mix for bookings dollars and profitability. We've seen good results in the sold gross margins in the third quarter were the highest level that we've seen in years. And we think $1 billion of new business bookings is the right number to go after, and we see plenty of business in the pipeline to accomplish this goal. And then in terms of our pipeline, it's healthy. We continue to refine our sales focus. And what we're seeing with customers is they're really grappling with the pace of change, right, particularly mid-sized commercial businesses and state and local governments. And we're seeing them come to Rackspace to help them on their cloud journey. The other thing is lots of interest, Tien-Tsin, our new product offerings. So Elastic Engineering delivery model is redefining how managed services are delivered in the cloud. We've got Data Freedom, which is extremely exciting. This is the offering we launched in September, and we launched that directly as a result of feedback that we're hearing from our customers, the massive pain points that they're experiencing on the cloud journey. So feeling good about bookings momentum and solid pipeline.

Great. Thanks a lot, Kevin. Just maybe for you, Amar, if you don't mind, on the SG&A leverage showing some strength there to help offset some of the gross margin pressure, as you said you would do. Is there more to go there? Anything unusual in the third quarter to call out?

No, I think it came in line with our expectation, Tien-Tsin. And so as I had indicated in the previous earnings call, we are focused on making sure that we also make investments on both OpEx as well as cost of revenue as we see huge opportunity in the marketplace. So to answer your question, the SG&A came in line with our expectations.

Very good. Well done. Thank you.

Thanks, Tien-Tsin.

Ramsey El-Assal from Barclays, you're up. And Amit Daryanani from Evercore, you're on deck.

Can you hear me, gentlemen?

Yes.

Hey, how are you tonight? I wanted to ask about the Apps & Cross Platform growth, excluding the nonstrategic exit. What was the impact from that in the quarter? And do you see any other pockets of the business that are similarly nonstrategic?

Last quarter, we shared some details regarding the nonstrategic part of the business, which had a quarterly run rate of approximately $3.5 million to $4 million, translating to about 3 to 4 points of growth. Since we phased this out, it created some headwind. However, within that portfolio, we have data segments that are growing very quickly, and our security services are also experiencing rapid growth. We will continue to evaluate that portfolio to ensure we maintain the strategic components that align with our cloud strategy. We constantly assess and seek to streamline the portfolio, and currently, there is nothing else we plan to deemphasize, as we already addressed that in the restructuring we carried out in July.

I would agree. I would just add, Ramsey, security and data services are pretty hot areas of the business right now, particularly given all the challenges that our customers are facing with high-profile hacks and ransomware, and every company really needs to be hyper vigilant with regard to security. And then data, of course, as companies move to the cloud, eager to mine this data for valuable insights. And we've got a strong data services practice. And then more broadly within the app development world, we're focused on cloud-native application development. A lot of companies have lifted and shifted applications to the cloud without optimizing those applications. So this is another hot area for us.

Thanks for that. And one quick follow-up for me. Can you talk about the CapEx levels in the quarter that came in a lot lower than our model? And anything to read into there in terms of a new run rate or any type of lumpiness there that we should be aware of?

Yes. So Ramsey, from a CapEx perspective, again, it is in line with our expectation. If you recall, I said for the full year, we should be in the 7% to 9% range. In Q3, it came exactly in line with what we were expecting. I expect now for the full year to be at the low end of the 7% to 9% range, in line with us moving towards a more capital light model. So it's going as per plan.

Okay. Thank you very much.

Thanks, Ramsey.

Amit Daryanani from Evercore, you're up. Frank Louthan from Raymond James, you're on deck.

Perfect. Hopefully, you can hear me. I have two questions as well. I guess, first off, given the nice look at these investments you've talked about on the cloud solutions that you're making, accelerating them, and you've talked about Cloudflare, Snowflake, et cetera there. I'm curious, is the demand for these solutions really coming from your existing customers, existing logos, to use Rackspace for infrastructure and they want to scale this into helping them build and manage the cloud data solutions? Or are these relationships actually helping you go out and get new logos that you will eventually bring on the infrastructure side?

Yes. Very good. So maybe I'll start, and then Amar can talk about some of the investments. So yes, absolutely. We do see momentum with both the installed base of customers that we have on it and the new logos. If you just look at Q3 bookings, thousands of individual deals, very diversified across geos and segments, 30% bookings from international markets. And year-to-date, to your point, we've actually seen good growth in new logos signed as we talked about, sold margin, high spend in a couple of years. So we're pleased with our new logo progress. And we've made, I think, really good progress on our installed base account planning as we've gone forward and looked at retraining, upskilling our account executives. We've got much more sophisticated account planning. This is all three regions of the world. And so we're seeing pipeline develop from that as well. So really, it's a combination of new logos and installed base.

Got it. And then if I can just follow-up in '21, as we so far, right, we've seen gross margins have had some downside pressure. I think it's been a big focus among folks. But your free cash flow, I think, on the other hand, has been remarkably consistent. You mentioned you've seen expansion of free cash flow margins and EBIT dollars, total free cash to dollars. I'm wondering, as we sort of think about calendar '22, do you think we are likely to see gross margins and free cash flow both improve in a much more consistent manner? Or do you think you can continue to expand free cash flow even if you don't see gross margins move higher next year?

I will provide more details on 2022 when we announce our Q4 results. Regarding gross margins, in the third quarter, they aligned with our expectations and the guidance I shared. This is a temporary phase due to internal changes rather than external market factors. As we shift to a cloud-centric business model, we're making necessary adjustments, and we anticipate that gross margins will stabilize once this transition is complete. We expect profitability to rise with a favorable shift towards higher-value cloud services. We have already seen strong traction; our land and expand strategy has significantly improved sold gross margins, which serves as a positive indicator and gives us confidence that margins will increase with higher-margin products as we expand into our existing customer base. We are investing in cloud-native application development and data services, focusing on opportunities as customers shift more workloads from on-premises to a multicloud environment. Regarding cash flow, we have made significant progress. Our cash flow from operations and free cash flow have improved considerably, driven by a lot of working capital improvements. I believe cash flow from operations should align with about 70% of operating profits on a non-GAAP basis, which reflects the quality of earnings we are focused on.

Perfect. Thanks very much.

Rob Palmisano from Raymond James, you're up. And we have on deck, Keith Bachman from BMO. You're on deck.

This is Rob on for Frank. So how are the cost savings initiatives tracking? And can you give us an update on where you guys are at with your offshoring process?

Yes, thank you, Rob. As we mentioned, we're targeting gross run rate savings of $95 million to $100 million. Most of these savings will come from labor actions, and by the end of Q3, we have completed the majority of those actions. There will be some non-labor initiatives that will continue and are expected to be largely finished by the end of Q4 or in our fiscal Q1 2022. Consequently, we will realize the full annualized benefit in 2022. We have started to see those savings already and are reinvesting them back into the business. Overall, we are on track with our plan; offshoring is progressing very well, and we are developing a strong global presence, which we have accelerated as planned. I am very pleased with the progress we have made.

Great. Thank you.

Thanks, Ramsey.

Keith Bachman from BMO you're up. And then our final question will come from Bryan Keane at Deutsche Bank.

Hi, thank you. I wanted to follow up on the gross margin question. Last quarter, you provided a specific number for the September quarter, and I was hoping you could do the same for Q4 to help us keep our models aligned. Additionally, you mentioned last quarter that gross margins would reach a low point and potentially improve after 4 to 5 quarters. Should we consider the September and December quarters of '22 in that context? I found Slide 15 particularly interesting because of the solid gross margin performance related to your cohort trends from 2020. Could you please revisit those gross margin trends? I also have a follow-up question.

Yes. So I would say gross margins were in line with our expectations for Q3, as you indicated. And last quarter earnings call, I provided some color on gross margins and expected trend, and have no changes from that position at this time.

Okay. But any specific gross margins you want us to think about for Q4?

So I think I gave that color last quarter, so I think I'll go with that, whatever I had mentioned last quarter.

Okay. All right. Then turning to cash flow, if I could, too. Also, you're taking some restructuring charges and whatnot this year. And so the question is really geared towards how much of that is cash? And so the reason I'm asking the question, could that be presumably lower restructuring charges in '22? Is that a potential tailwind to your reported free cash flow metrics in '22?

Yes, I think that's a great question, Keith. Yes, that will be a tailwind in fiscal '22 because some of those restructuring charges were accrued and some of those cash could also go out the door in fiscal 2021. We will have some of it in the first half of 2022, but then it should serve as a tailwind thereafter.

Okay. Any quantifications on the amount that's impacting '21 versus early '22 on a cash basis?

I don't have the numbers right in front of me, but I'll give you that color when we announce our Q4 earnings so that you have more attractive.

Okay, I’ll jump back in queue. Thank you.

Hi everyone. I want to ask how you are measuring your market share. In those high-growth markets, although you are experiencing significant growth, I believe it ranges from 30% to 40%, accounting for about 70% to 75% of multicloud. Are you capturing enough of that market share, or is there still potential for expansion? As you mentioned, this segment continues to grow rapidly, sometimes even reaching 50%. Additionally, regarding the non-growth markets, specifically the non-VMware private cloud and managed hosting, do you expect that area to show relatively flat growth while the cloud side of the business grows the most?

I will provide some additional insight based on our previous comments. The growth market, which makes up approximately 70% to 75% of our multicloud mix, is expanding at a rate of 30% to 40%. When we compare ourselves to our competitors and the hyperscalers in this area, we are actually experiencing faster growth. This indicates that we are gaining market share. However, due to the broad and fragmented nature of the market, it is challenging to assess our exact market share. Nonetheless, our growth rate suggests that we are succeeding in the marketplace. Regarding the mature side of our product, I won't provide specific guidance. By analyzing the numbers, it's clear that this business is declining, which is expected as we are shifting our focus to the growth side. We are assisting customers in transitioning since that is where the future lies. The sooner we move to the new growth side, particularly our good therapy portfolio, the better upsell opportunities we have with clients. We can offer cloud-native applications, data services, and more migration services as clients develop new initiatives. Our goal is to help them create modern applications, and that is our strategy moving forward. This reflects the dynamics within the two sub-portfolios of our multicloud offerings.

Yes. Because what I'm thinking about is thinking about the big picture here with the mix of business being pulled higher for those high-growth markets as they become a bigger percentage of revenue and some of the mature market shrinks in Multicloud plus OpenStack shrinks as a percentage, I think, down to 6% of the mix. And it doesn't naturally the revenue growth accelerate a little bit just based on mix alone?

I would say that if you think through that rationally, that's probably the case. We will provide more details on that and what happens in fiscal '22 when we announce our Q4 results. I think you're thinking the right way.

Yes, I think that's the intention of our strategy, of the company, exactly. I think you summarized it well is to move to the hyper growth areas of the market, and that's where our investment and our focus is, Bryan.

Well, thanks, everybody, for joining us today. If you have follow-up questions or if you want to schedule additional time with the team, please reach out to me at ir@rackspace.com. Have a great rest of your day, and we'll talk to you soon.