What changed in this filing

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Item 1. Business

2024-03-15 compared with 2023-03-16 · 75 added, 79 removed, 234 unchanged (40% of the section changed)

ITEM 1 – BUSINESS

Rackspace Technology is a leading end-to-end multicloud technology services company.

Rackspace Technology is a leading end-to-end, hybrid, multicloud and AI solutions company.

We design, build, and operate our customers’ cloud environments across all major technology platforms, irrespective of technology stack or deployment model.

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• The need to compete with “digital natives” (technology companies that began their existence online in the digital age and do not have legacy infrastructure or technology to maintain and support).

• The emergence of cloud-based business tools, such as data analytics, machine learning and artificial intelligence, that help companies optimize business performance.

• The emergence of cloud-based business tools, such as data analytics, machine learning and AI, that help companies optimize business performance.

• A global pandemic that challenged companies to accommodate an increasingly remote workforce.

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the “hyperscalers” – AWS, Google Cloud and Microsoft Azure, which are the leading public cloud providers;

as well as VMware, which is a leading provider of private cloud technology.

as well as VMware by Broadcom, which is a leading provider of private cloud technology.

These technology providers operate cloud environments at a massive scale and have a significant cost-benefit advantage compared to a company-owned on-prem data center.

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As a result, businesses quickly find themselves in a multicloud paradigm that includes two or more hyperscaler platforms, private cloud and data and applications that are hosted on-premises or in a colocation or managed hosting facility.

In such a complex environment, even the most sophisticated IT organizations at the largest multinational companies require outside resources to manage their multicloud presence.

Rackspace Technology is a leading pure-play cloud solutions company.

We help companies of all sizes manage their transition to the cloud, make sense of their IT infrastructure, migrate their data to the cloud, optimize their cloud presence on an ongoing basis and manage the workloads best left to managed hosting or other mature platforms.

In such a complex environment, even the most sophisticated IT organizations at the largest multinational companies require outside resources to manage their multicloud strategy.

Rackspace Technology is a leading pure-play hybrid, multicloud and AI solutions company.

We help companies of all sizes manage their transition to the cloud, make sense of their IT infrastructure, migrate their data to the cloud, optimize their cloud presence on an ongoing basis, accelerate the responsible adoption of AI and manage the workloads best left to managed hosting or other mature platforms.

Few companies have the internal resources required to effectively manage a transition to the cloud.

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• modernize their legacy business applications so they are optimized to run in the cloud;

• accelerate the responsible adoption of AI in their organization;

• mine their business data for actionable insights using cloud data analytics tools.

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• providing our renowned Fanatical Experience for our customers;

• maintaining close relationships with the major cloud providers – AWS, Google Cloud, Microsoft Azure and VMware;

• maintaining close relationships with the major cloud providers – AWS, Google Cloud, Microsoft Azure and VMware by Broadcom;

• providing a full suite of cloud services across public and private cloud, as well as managed hosting and colocation services, so that enterprises can cost-effectively maintain legacy applications that are not cloud-ready while migrating their business to the cloud gradually.

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Our tight-knit relationships with leading cloud partners enable Rackers to be on the front lines of cloud technology and among the first to utilize the latest capabilities of the cloud when our cloud partners launch new solutions.

Our partnerships, Rackers and culture combine to ensure that we are at the forefront of major trends in technology, including cloud native application development, Internet of Things and containers.

We believe this expertise - and our ability to deliver it effectively - enables our customers to innovate faster and stay ahead of their competition.

Our partnerships, Rackers and culture combine to ensure that we are at the forefront of major trends in technology, including cloud native application development, Internet of Things, AI and containers.

We believe this expertise - and our ability to deliver it effectively - enables our customers to achieve their desired business outcomes, innovate faster and stay ahead of their competition.

Rackspace Fabric, our proprietary cloud software, is a significant differentiator.

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We believe it gives us a sustainable competitive advantage that would be difficult, if not impossible, for a competitor to replicate.

Rackspace Fabric serves as a single pane of glass through which customers can manage their entire cloud presence and delivers automation, artificial intelligence, predictive analytics and proprietary tools that make our services even more reliable and easier to use.

Rackspace Fabric serves as a single pane of glass through which customers can manage their entire cloud presence and delivers automation, AI, predictive analytics and proprietary tools that make our services even more reliable and easier to use.

Rackspace Fabric was built over the course of our two decades of experience in the cloud business.

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This is in direct contrast to our competition, many of whom charge for their services on a markup over labor costs, and therefore are not incentivized to employ automation in order to reduce customer costs.

Approxim ately 75% of our workloads are automated today, an industry leading figure that increased dramatically in recent years.

Approximately 75% of our workloads are automated today, an industry leading figure that increased dramatically in recent years.

We continually strive to optimize our automation to drive further efficiency gains in our business.

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It ensures consistency in our customers’ experiences and allows our Rackers to automate key service and application management processes, freeing up resources to focus on strategic, high-value business opportunities.

This drives an efficient business model that has generated revenue per employee of over $450,000 for the years ended December 31, 2021 and 2022, which we believe is ahead of our competitors and in-line with leading SaaS companies.

This drives an efficient business model that has generated revenue per employee of over $450,000 for the year ended December 31, 2022 and over $500,000 for the year ended December 31, 2023, which we believe is ahead of our competitors and in-line with leading SaaS companies.

Our go-to-market and service-delivery strategy.

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We served over 95,000 customers across 120 countries as of December 31, 2023.

We are recognized as a Leader in the 2020 Gartner Magic Quadrant for Public Cloud Infrastructure Professional and Managed Services, Worldwide, Forrester Leader in its 2020 report, Forrester Wave Multicloud Managed Services Providers, Q4 2020, IDC 2021 Worldwide Managed Multicloud Services Marketspace, and 2021 ISG Public Cloud and Private Hybrid Cloud Data Services/Solutions.

In addition, we have also received several industry partner awards including the 2020 Google Cloud Breakthrough North America Partner of the Year Award, 2021, AWS Migration Partner of the Year (US), 2021, Kubernetes on Microsoft Azure Advanced Specialization, and Virtual Desktop Advanced Specialization, 2021, VMware CloudHealth Global Partner of the Year, 2021, and Dell Technologies Global Alliances – Excellence in Expansion, EMEA Award 2021.

In 2022 we received the following designations from ISG, a leading global technology research and advisory firm:

Provider Lens Leader in Cybersecurity - Solutions and Services Report, Provider Lens Leader in Google Cloud Partner Ecosystem Report, Provider Lens Leader in Microsoft Partner Ecosystem Report and Partner Lens Leader in Next-Gen Private/Hybrid Cloud - Data Center Services & Solutions.

We are recognized in leading analyst firm reports, including the Gartner Magic Quadrant and Critical Capabilities for Public Cloud IT Transformation Services, the Forrester Wave:

Multicloud Managed Services Providers, IDC Worldwide Managed Multicloud Services Marketscape, IDC Worldwide Managed Public Cloud Services Marketscape and multiple ISG Provider Lens reports focused on Public Cloud and Private/Hybrid Cloud and Data Center Solutions.

In 2023 we received the following Provider Lens Leader designations for reports by ISG, a leading global technology research and advisory firm:

Multi Public Cloud Services and Solutions, Cybersecurity Solutions and Services, Google Cloud Partner Ecosystem, AWS Partner Ecosystem, Microsoft Partner Ecosystem and Private/Hybrid Cloud - Data Center Services.

In addition, we have also received several industry partner awards including being awarded 3x Partner of the Year for Google- including the 2020 Google Cloud Breakthrough North America Partner of the Year Award, 2021, AWS Migration Partner of the Year (US), 2021, Kubernetes on Microsoft Azure Advanced Specialization, and Virtual Desktop Advanced Specialization, 2021, VMware CloudHealth Global Partner of the Year, 2021, and Dell Technologies Global Alliances – Excellence in Expansion, EMEA Award 2021.

In 2023 we received several industry partner awards including AWS SI Partner of the Year - NAMER, AWS Sustainability Partner of the Year - NAMER and AWS Education Partner of the Year – EMEA and VMware 2023 Lifecycle Services Award for the Americas Region, Dell Technologies Excellence in Server and Storage Sales, Americas and 2023 Microsoft Partner of the Year Azure Intelligent Data Platform, Data & AI- Singapore.

Rackspace Technology’s predecessor company was founded in 1998, and was focused primarily on providing outsourced, dedicated IT infrastructure, primarily for small and mid-sized businesses.

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During the time that Rackspace Technology was a private company from 2016 to 2020, management focused on transforming the business to serve companies that were migrating to the cloud.

This included forging and strengthening partnerships with the major infrastructure providers such as AWS, Google, Microsoft and VMware;

This included forging and strengthening partnerships with the major infrastructure providers such as AWS, Google, Microsoft and VMware by Broadcom;

enhancing the company’s service offerings, including professional services, managed security and data services;

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Today, we are a trusted partner to the global cloud ecosystem.

We maintain close relationships with major cloud infrastructure and application vendors, enabling us to provide our customers with complete, unbiased multicloud services, all through our single customer interface.

We maintain close relationships with major cloud infrastructure and application vendors, enabling us to provide our customers with complete, unbiased hybrid and multicloud services, all through our single customer interface.

Our Integrated Services Portfolio

We serve our customers through an integrated services portfolio organized in two segments—Multicloud Services and Apps & Cross Platform Services.

Effective on January 1, 2023, Rackspace Technology reorganized around a two-business unit operating model, Public Cloud and Private Cloud.

Public Cloud and Private Cloud have very different business dynamics and require different skill sets and levels of investment to manage.

This two-business unit operating model ensures increased focus, delivery and service quality for our customers.

Beginning in 2023, we changed our segment reporting to reflect this reorganization under two reporting segments:

Public Cloud and Private Cloud.

The services across these two segments are described in more detail below:

• Multicloud Services:

Our Multicloud Services segment includes our public and private cloud managed services offerings, as well as professional services related to designing and building multicloud solutions and cloud-native applications.

We offer an integrated suite of managed services offerings across our private cloud, the leading public clouds and colocation.

Our managed cloud services help customers determine, manage and optimize the right infrastructure, platforms and services on which to deploy their applications to achieve the best performance, agility, security and cost efficiency.

We also help customers establish governance, operational and architectural frameworks to mitigate risks and reduce inefficiencies, so they can manage costs, achieve industry-specific compliance objectives and improve security.

Within our Multicloud Services segment, we offer the following services:

• Private Cloud :

These service offerings provide compute, storage and applications accessed by a specific customer, either with a cloud management layer (in managed private cloud) or without one (in managed hosting).

We offer managed private clouds powered by leading technologies like VMware, Microsoft and OpenStack in our data centers as well as in those owned by customers or by third parties such as colocation providers.

We also offer managed VMware on AWS, delivering an increasingly popular hybrid combination.

Our private cloud offerings can be used with or without virtualization software.

• Managed public cloud:

Rackspace Private Cloud enables our customers to achieve their business outcomes at our world class data centers or in a colocation or edge facility strategic to our customers’ success and connected by our RackConnect TM Global network service, virtual backbone, or provider-based network services.

The Private Cloud product portfolio includes:

• Programmatic Infrastructure :

Programmatic Infrastructure is the foundation of Private Cloud and includes hardware and services for compute, network, storage, and data protection services.

We partner with OEMs like Dell, Cisco, Palo Alto Networks, and NetApp to provide standard offers at scale or solutions tailored to our customers’ specific needs.

• Cloud Operating Systems :

These services provide the operating layer for physical devices with a software defined data center from VMware by Broadcom or OpenStack.

These offers include Enterprise, Business, Flex, and Anywhere packages to match our customers’ needs and locations.

• Platform-as-a-Service :

Our PaaS offers include RMPK (a managed Kubernetes service), RXDB (a privately hosted Database-as-a-Service solution specializing in High Availability NoSQL databases), RSDM (a team of database experts to manage and optimize your database estate), and SPOT (a unique cloud infrastructure offer auctioned in an open market as turnkey fully managed Kubernetes clusters).

• Private Cloud Solutions :

These solutions are specific to certain customer use cases including AI, ERP services like SAP and Oracle, Epic workloads for customers in our healthcare vertical, and Sovereign and Government compliant services.

• Private Cloud Services :

To solve our customers’ challenges and meet them where they are in their digital transformation, we provide managed services, professional services, Elastic Engineering services, and security services.

Additionally, our Rackspace Email service provides a fully managed email platform for customers and carriers.

• Public Cloud:

These offerings address the challenges of managing applications and data on the AWS, Microsoft Azure and Google Cloud public clouds.

We bundle the underlying public cloud infrastructure with our expertise and experience, managed services and proprietary tools.

While the infrastructure providers are responsible for their data centers, servers, storage, networking and operating system software, we help customers navigate, migrate, architect and deploy their applications on those leading public cloud platforms.

While the infrastructure providers are responsible for their data centers, servers, storage, networking and operating system software, we help customers navigate, migrate, modernize, architect and deploy their applications on those leading public cloud platforms.

After a migration, we manage, secure and optimize the customer’s environments on an ongoing basis using our tools, automation and expertise, while supporting the customer with robust service level agreements.

These offerings do not require us to commit significant capital expenditures given that third parties provide the infrastructure.

• Managed hosting and colocation:

For customers that require infrastructure on mature cloud platforms, we also offer them the option to place their own servers and networking hardware in our data centers (colocation) or to utilize dedicated servers provided by us in our data centers (managed hosting).

However, demand for these services has lessened in recent years as more and more customers move their data and applications to the cloud.

In some cases, we are proactively approaching customers and encouraging them to move from these mature services to the cloud in order to preserve the customer relationship.

• Apps & Cross Platform:

Our Apps & Cross Platform segment includes managed applications, managed security and data services, as well as professional services related to designing and implementing application, security and data services.

• Managed applications:

Our managed application services include running large-scale SaaS applications for customers on our and public cloud infrastructure, such as Oracle, SAP and Office 365.

This includes key functions such as:

managing a customer’s applications and performing key functions such as account management and scaling up or down of required cloud resources.

Additionally, we manage productivity and collaboration applications such as email and hosted Microsoft SharePoint.

• Managed security:

Within Public Cloud, we deliver innovative Cloud Offerings (pre-defined playbooks) that are delivered using services (Professional Services, Elastic Engineering, and Managed Services) to provide solutions to customer problems across all three public clouds (AWS, Azure, and Google Cloud).

These solutions accelerate a "Do With" approach to cloud transformation and are enabled by Rackspace assets and accelerators.

We take these solutions to our customers through four service lines - Cloud Platform, Cloud Apps, Cloud Security and Cloud Data.

• Cloud Platform:

The Cloud Platform Service Line focuses on providing platform-related services such as cloud strategy and architecture, platform and infrastructure migrations, and modern cloud infrastructure.

The outcomes are to have a well-architected, optimized sustainable workloads on a cloud platform.

• Cloud Apps:

The application service line is focused on building and managing applications within a cloud technology stack.

It involves building new cloud-native applications on AWS, Azure, and Google Cloud, as well as modernizing legacy applications through methods like re-platforming, container adoption, refactoring, and rewriting.

• Cloud Security:

We provide fully-integrated security solutions that combine cutting-edge technology with our in-house Security Operations Center to provide customers with threat detection, analysis and remediation capabilities.

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Our 24x7x365 Customer Security Operations Center is staffed by experienced Global Information Assurance Certification (GIAC) security analysts.

• Data services:

We help customers use their data to further innovate by providing services and expertise for data extraction, transformation, ingestion, storage and analysis.

We utilize both traditional analytics platforms and new, machine learning technologies to build repeatable, scalable and automated platforms that extract meaningful insights.

Our developers, administrators and cloud and data analytics architects are skilled across a full range of database services, including managed relational databases (Oracle, SAP, SQL Server and MySQL), big data (Hadoop), managed NoSQL (MongoDB) and managed SAP HANA.

Our data services are offered both through our managed services subscriptions and through our professional services offerings.

We offer professional services across our entire portfolio, including multicloud solutions, applications, security and data.

• Cloud Data:

Cloud Data Services are dedicated to helping customers accelerate the adoption of modern data solutions while enabling their business transformation.

Leveraging our IP, delivery frameworks, and reference architectures, we provide professional services and managed services across Data Modernization, Cloud Native Data Platforms, Self Service Analytics, AI, and Machine Learning across AWS, Azure, and Google Cloud.

In June 2023, we launched Foundry for Artificial Intelligence (FAIR TM ), a groundbreaking practice dedicated to helping organizations accelerate the responsible and sustainable adoption of AI solutions across all industries.

FAIR offers three service offerings designed to meet the needs of every industry and organizational requirement.

FAIR Ideate is an interactive and collaborative ideation workshop that helps organizations uncover actionable use cases for generative AI with defined business impacts.

AI readiness diagnostics provide critical considerations for successful AI adoption.

FAIR Incubate is an agile and iterative program that co-creates an enterprise's first generative AI solution.

It establishes the technology stack and assesses the viability of AI, ensuring seamless integration into organizational processes.

FAIR Industrialize is a systematic effort to transform the AI solution into a product, implementing governance, defining metrics, and optimizing the AI model and Distributed Cloud Infrastructure for continuous improvement.

We offer professional services across our entire portfolio, including hybrid, multicloud solutions, applications, security and data.

As part of our professional services process, we meet customers at every stage of their cloud journey and design solutions focused on modernizing their infrastructure and applications to enhance the value of their cloud technologies.

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in these cases, our customer success sales team is tasked with up-selling and cross-selling additional services, including professional services, to enhance the overall customer relationship.

In addition to our integrated services portfolio described above, we also offer customers our OpenStack Public Cloud solution, our third reporting segment, which represents our legacy business prior to our pivot to multicloud.

While we expect to continue to offer our OpenStack Public Cloud solution, we ceased to actively market it to customers in 2017.

Effective on January 1, 2023, Rackspace Technology reorganized around a two-business unit operating model, Public Cloud and Private Cloud.

Public Cloud and Private Cloud have very different business dynamics and require different skill sets and levels of investment to manage.

This two-business unit operating model ensures increased focus, delivery and service quality for our customers.

Beginning in 2023, Rackspace Technology will change its segment reporting to reflect this reorganization under three reporting segments:

Public Cloud, Private Cloud and OpenStack Public Cloud.

Our Technology Platform

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UIPath Robotic Process Automation is deployed across our business to automate repetitive tasks.

We can automate 75% of customer support workloads based upon the automation of thousands of unique processes across our support organization.

We can aut omate 75% of cus tomer support workloads based upon the automation of thousands of unique processes across our support organization.

• AIOps is a new field of software that combines monitoring, machine learning and automation to enhance IT operations.

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In order to continue to drive growth and capture our large market opportunity, key elements of our growth strategies include:

• growing our private cloud business with new solutions, such as Rackspace Services for VMware Cloud and Rackspace Data Freedom;

• growing our private cloud business with new solutions, such as Rackspace Software Defined Datacenter, Industry Cloud, Sovereign Cloud, Private AI Cloud and Edge;

• building innovative solutions to broaden our portfolio, including scaled cloud-native solutions on our public cloud platforms and full-stack cloud offerings for infrastructure, applications and data;

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• Cloud service providers and digital systems integrators provide either consultation and implementation services for digital workflows or cloud services for a single cloud vendor.

The solutions offered by these companies are often narrow in scope and are not well-suited for companies with complex multicloud objectives.

The solutions offered by these companies are often narrow in scope and are not well-suited for companies with complex hybrid, multicloud objectives.

• Regional managed services providers use a local go-to-market approach, and provide cloud services within a single region or few regions.

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no customer represent ed 4% or more of our total revenue in 2023.

Representative customers by industry vertical are listed below:

Financial Services

Media & Technology

Retail, Consumer & Leisure

Apria Healthcare

Everest Insurance

Teva Pharmaceuticals

Intrado Walmart

BFC Group Holdings Arthrex Flextech Awaze

Our Approach to Partnerships

We benefit from differentiated partnerships with all major public and private cloud vendors, including AWS, Microsoft Azure, Google Cloud and VMware.

We benefit from differentiated partnerships with all major public and private cloud vendors, including AWS, Microsoft Azure, Google Cloud and VMware by Broadcom.

These partnerships provide us with a competitive advantage unmatched by our competitors, spanning across multiple disciplines, including:

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This critical input allows us and our partners to develop complementary services and technology.

This has helped us arrive and stay at the forefront of innovation well before our competitors, and develop services and tools related to emerging technologies such as cloud-native application development, machine learning and artificial intelligence (AI).

We believe these relationships are beneficial to us, our partners and our customers.

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Additionally, in 2023 we were recognized with several workplace-related awards:

• America's Most Loved Workplaces, published by Newsweek Magazine and the Best Practice Institute

• #1 Most Inspiring Workplace – Global, published by Inspiring Workplaces

• Top 50 Most Inspiring Workplaces – EMEA, published by Inspiring Workplaces

• Top 50 Most Inspiring Workplaces – North America, published by Inspiring Workplaces

• Top 10 Most Inspiring Workplaces – Australasia, published by Inspiring Workplace

• Achievers 50 Most Engaged Workplaces, published by Achievers Workforce Institute

• Best Places to Work for Women, published by Great Place to Work Institute – Mexico

• Top 50 Best Companies for Latinas to Work for in the U.S., published by Latina Style Magazine

• Best Places to Work for LGBTQ+ Equality, published by the Human Rights Campaign

• Company Culture & Mental Health Initiative, awarded by the SDC Awards

• Talent Management – Gold winner, awarded by Brandon Hall Group

• Talent Management – Silver winner, awarded by Brandon Hall Group

• Most Loved Workplaces-certified by Best Practice Institute

• Tech Cares Awardee, published by Trust Radius

• Great Place to Work-certified by Great Place to Work Mexico

• Great Place to Work-certified by Great Place to Work India

• Best HR Teams, awarded by Comparably

• Best Companies to Work for Work-Life Balance, awarded by Comparably

• Corporate University Team of the Year Finalist, published by Corporate Learning Network

Our Rackers are passionate about serving our communities as well.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business