Good afternoon, and thank you for standing by. At this time, all participants are in a listen-only mode. After the presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the call over to Sagar Hebbar, Head of Investor Relations. You may begin.

Thank you. And welcome to Rackspace Technology's Fourth Quarter 2023 Earnings Conference Call. I am Sagar Hebbar, Head of Investor Relations. Joining me on today’s call are Amar Maletira, 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. Rackspace 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 GAAP measures in the earnings press release and presentation, both of which are available on our Investor Relations website. Please note that, unless stated otherwise, all results are presented as non-GAAP except revenues. I'll now turn the call over to Amar for an update on the business.

Thank you, Sagar. First of all, I'd like to introduce our new CFO, Mark Marino. Having worked with Mark since I joined Rackspace, I have witnessed firsthand, what a strong asset he is to our company. Mark's comprehensive understanding of the business, and extensive financial leadership experience, will continue to be instrumental, as we strengthen our position in an attractive, and growing hybrid multi-cloud and AI market. I look forward to collaborating with Mark, as we continue to execute our strategy, and deliver value to our customers, and our shareholders. I would also like to thank our former CFO, Bobby Molu, for his contributions this past year. I'm also pleased to welcome Mark Gross to our Board of Directors. Mark succeeds Thomas Cole, who unexpectedly passed away over the holidays. We are grateful for Tom's significant contributions in his short time on the Board. Mark comes to Rackspace with extensive business, and executive leadership experience, and with deep insight in leading business transformations. I look forward to working, with Mark. Before we get to our results, let me cover the three strategic priorities, I present to the Board, and the progress we have made against them. First, drive the operational turnaround. In 2023, we made major structural changes, needed for a turnaround. We set a clear vision, direction, and strategy for the company, operationalize our two business unit structure, and refresh leadership, and talent at various levels in the company. I'm happy with the progress and confident, we have the right strategy, team, and operating model in place, to ensure our turnaround succeeds. Second, reposition Rackspace as a forward-leaning, innovative, hybrid multi-cloud and AI solutions company that, makes informed bets in new technology trends. We caught the cloud wave, which is still in its infancy. We believe we are now…

Thanks, Amar. Having been with Rackspace over the past few years, I have seen and participated in many of the strategic changes, Amar has initiated. The changes happening throughout the organization, are transformational. So I'm excited, to have stepped into this role, at this important inflection point, and I look forward to continuing, to support the vision, and become an even more integral part, of the future of Rackspace. As Amar mentioned, we closed a very positive transaction with a group of our lenders and financial partners. Specifically, Rackspace closed a private debt exchange, with an ad hoc group representing more than 72%, of our first lien termed loan holders and more than 64% of our first lien noteholders, as well as 100% of our revolving credit facility lenders. In connection with this transaction, we plan to launch, a public debt exchange offer, to the rest of our outstanding lenders, and first lien noteholders in the coming days, and close that in the next month. Through the private exchange, we eliminated more than $375 million of net debt, and received $275 million of new money that, will come to the balance sheet, as additional liquidity, to advance our key strategic initiatives. We are extremely encouraged, by this injection of new money, as it reinforces our financial partners' conviction, in our turnaround strategy, and continued momentum in our execution. Through full participation in the public debt exchange, we have the opportunity, to eliminate more than $600 million in total debt, reducing annual interest expense, by more than $45 million. Since the end of fiscal year 2022, assuming full participation in the public debt exchange, and when combined with the company's open market purchases, over the past year, would result in a total debt reduction, of over $800 million and net debt…

Thank you, Mark. Let us begin the question-and-answer session. We ask everyone to limit discussion to one question and one follow-up. Please go ahead.

Thank you. [Operator Instructions] Our first question comes from the line of Frank Louthan with Raymond James. Your line is open.

Hi guys, this is [Rob Warren] for Frank. So, you know, beyond what you've shared with us already as it pertains to the debt deal, are there any other significant covenants we should know about such as, you know, say restricted payments baskets? And then my follow-up is, is the new debt callable? And if so, when and at what rate? Thank you.

So, I think we didn't follow the first one. It was not very clear. Can you repeat the question? I'm sorry. It was not very clear in the room.

Yes, yes. So other than what you've shared with us so far, about the debt deal, are there any other significant covenants we should know about such as, you know, any restricted payments baskets? And then my follow-up was about the debt being callable or not. And if so, when and at what rate?

Yes, so just relative to your first question there, about the restricted basket, right? Obviously, in a transaction like this, some of our covenants and baskets, did get tightened up throughout the transaction. But in no way, is there any restrictions that will impair our ability, to operate the company moving forward. So, I think from that perspective, we've got a latitude and flexibility, with those baskets and covenants. And then your second question?

It's new debt callable?

No.

The answer is no. Did that answer your question?

Yes. Yes. Thank you guys very much.

Thanks.

Thank you. Please stand by for our next question. Our next question comes from the line of Ramsey El-Assal with Barclays. Your line is open.

Hi. This is Ryan Campbell for Ramsey. Thank you for taking my question today. In your prepared remarks, you mentioned the six to nine-month lag, between bookings and revenue realization. And I was curious, to see how that compared to a more normalized demand environment? And what are you seeing today that gives you confidence that this lag won't elongate any further? Thank you.

Yes. I think the - so thank you very much for the question, Ron [ph]. And the six to nine months lag of - that commentary was mainly on our bookings converting to revenue. So the bookings, is what builds the backlog. Our Private Cloud business did very well, from a bookings perspective in Q4 in the fiscal Q4, where we grew sequentially 86%, grew 96% year-on-year. It was the highest quarter in the last eight quarters, and we entered the year, with a huge backlog. And the backlog actually grew 188%, year-on-year, compared to what we saw, when we entered fiscal '23. So that backlog to convert to revenue typically takes six to nine months, because we have to stand up the environment, we have to migrate the application, and once the application migrates to our data center. And we manage and operate, then that application and workload stays with us for the next five to 10 years. So that six to nine-month lag, is mainly for backlog converting to revenue. Now in terms of sales cycles, I think that's where your question is. Listen, I think the demand environment continues to remain uncertain. Entering 2023 - 2024, we see a similar - what we saw in 2023. We believe customers, will continue to spend on digital transformation, mainly enabled, by cloud and AI. However, we continue to see slower decision cycles, and the sales cycles are getting extended. In our Public Cloud services business, as you know, that it's a very - it's a cyclical business. Many companies in the services ecosystem, are reporting that they are facing, some cyclical headwinds, and so are we. But when you talk about our Private Cloud business, the dynamics are really different. Customers are looking, to move out of their data centers, and reduce both their CapEx and OpEx investments. And so - we see relatively better demand in Private Cloud. And the very fact that, we grew our overall bookings in 2023 at 20% year-on-year, is basically a proof point that, the Private Cloud demand, is pretty strong. Was that helpful, Ron?

Yes. Thank you.

Thank you. I would now like to turn the call back over to Sagar for closing remarks.

Thank you, everyone, for joining us. If we did not get to your question, or if you have a follow-up, please e-mail ir@rackspace.com. Have a great evening, everyone.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.