Market Newsdesk

Continued Progress on COVID-19 and Immuno-Oncology Programs

ATLANTA, GA, Aug. 11, 2021 (GLOBE NEWSWIRE) — via NewMediaWire — GeoVax Labs, Inc. (Nasdaq: GOVX), a biotechnology company developing immunotherapies and vaccines against infectious diseases and cancers, today announced its financial results for the quarter ended June 30, 2021.

GeoVax’s management will host a live conference call and webcast at 4:30 p.m. Eastern Standard Time on Wednesday, August 11 to discuss financial results and provide a general business update. Details are provided below.  

2021 YTD Highlights and Development Program Status Update

COVID-19 Vaccine – GeoVax’s SARS-CoV-2 (COVID-19) vaccine is based on its GV-MVA-VLP^TM technology, which enables insertion of multiple antigen fragments, potentially allowing for broad-spectrum virus prevention. Unlike other vaccines that target only the COVID-19 spike protein, the Company’s vaccines are designed to provoke a response to multiple COVID-19 antigens, which means they could be less susceptible to viral mutations. The Company’s vaccines are intended to be used as either a primary vaccine or to boost other COVID-19 vaccines as part of vaccination strategies to provide immunity to a range of coronavirus variants. GeoVax believes a critical and significant opportunity exists for a pan-coronavirus vaccine with the attributes the GV-MVA-VLP technology can offer.  

In January 2021, the National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health (NIH), awarded GeoVax a Small Business Innovative Research (SBIR) grant for development of a COVID-19 vaccine.  The Phase 1 grant, titled, “Preclinical Development of GV-MVA-VLP Vaccines Against COVID-19,” supports the ongoing design, construction, and preclinical testing of GeoVax’s vaccine candidates in preparation for human clinical trials.

Small animal studies are continuing and results to date support the Company’s approach of using MVA as a vector for the design and production of  “next-generation” vaccines encoding multiple proteins. Details of the studies will be presented on August 19 during the European Society of Medicine (ESMED) General Assembly. Based on the encouraging results, the Company recently submitted an application to NIAID for additional support for advanced testing.

Cancer Immunotherapy – GeoVax’s cancer immunotherapy program is based on the concept of combining a tumor-associated antigen vaccine with a potent anti-tumor agent, such as an Immune Checkpoint Inhibitor (“ICI”), with the goal of achieving regression of tumor growth and development.  In February 2021, the Company filed a U.S. patent application, covering updates to its MVA viral vector technology to amplify an immune response to a cancer antigen via vaccination, which could strengthen the Company’s intellectual property position in this space. Immuno-oncology is an important focus area for the Company, and GeoVax is engaging with multiple collaborators. The initial animal studies, based upon a GeoVax-MUC1 vaccine/ICI combination, have been encouraging and additional studies are being planned with the goal of expanding the overall cancer immunotherapy program.  The Company expects to provide further details on its progress and plans to advance to human clinical testing in the near future.

Lassa Fever – Progress continues using grant funding from the U.S. Department of Defense for the Company’s Lassa Fever (LASV) vaccine program. The project award supports generation of immunogenicity and efficacy data for GeoVax’s vaccine candidate in both rodent and nonhuman primate models, as well as manufacturing process development and cGMP production of vaccine seed stock in preparation for human clinical trials. This work is in collaboration with U.S. Army Medical Research Institute of Infectious Diseases (USAMRIID) and the Geneva Foundation. Technical issues associated with the manufacturing process combined with the limited availability of nonhuman primates have resulted in delays to this program, but the work is advancing and results are now expected to be available in late 2021 or early 2022.

Sudan ebolavirus and Marburg virus – In July 2021, GeoVax announced results of preclinical efficacy studies of its Sudan ebolavirus (SUDV) vaccine candidate (MVA-VLP-SUDV). Immunogenicity and efficacy of MVA-VLP-SUDV were tested in a guinea pig lethal challenge model, in which asingle intramuscular dose of the GeoVax vaccine protected 100% of animals challenged with a lethal dose of SUDV. A comparison between prime and prime-boost vaccinations of guinea pigs showed that both regimens elicited SUDV-specific binding and neutralizing antibody responses, and that the second immunization enhanced these responses. Challenge of vaccinated animals with guinea pig-adapted SUDV demonstrated complete protection against death and disease by the prime and the prime-boost regimens. This is the first report that a replication-deficient MVA vector may confer full protection against SUDV after a single dose. This work was conducted in collaboration with researchers at the University of Texas Medical Branch (UTMB).

Separately, GeoVax is leading a multi-party collaboration for the development of its (SUDV) and Marburg virus (MARV) vaccine candidates. The collaboration, between GeoVax, researchers at UTMB and Battelle Memorial Institute, utilizes the suite of preclinical services from NIAID. Under the collaboration, GeoVax’s SUDV and MARV vaccine candidates are being tested for immunogenicity and efficacy in the benchmark nonhuman primate model. This work builds uponearlier studies in rodents and nonhuman primates for the Company’s Ebola virus (EBOV) vaccine candidate that demonstrated 100% protection against a lethal dose of EBOV following a single immunization. The Company expects to announce additional results during the second half of 2021.

Malaria Vaccine – Exploratory studies in collaboration with the Burnet Institute in Australia and Leidos, Inc. have been encouraging.We continue to evaluate advancing this program into formal product development since a Malaria vaccine is not currently a product development initiative.   

HIV Vaccine Programs – NIAID has funded multiple clinical trials of GeoVax’s HIV preventive vaccine (GOVX-B11) through the HIV Vaccine Trials Network (HVTN).  The next planned trial (HVTN 132) is designed to further evaluate the safety and immunogenicity of adding “protein boost” components to the GOVX-B11 vaccination regimen. The start of HVTN 132 has been delayed due to COVID-19, and the Company awaits further information from NIAID and HVTN on when the trial may commence. The Company is also part of efforts to develop a combination therapy to induce remission in HIV-positive individuals (a “functional cure”). In August 2020, a consortium led by researchers at the University of California, San Francisco (UCSF) began enrolling patients in a Phase 1 human clinical trial using our vaccine as part of a combination therapy intended to induce remission in HIV-positive individuals. Similar to HVTN 132, this trial has been affected by the pandemic, so we await further information regarding the status of patient enrollment and trial results.  Our prior collaboration with American Gene Technologies International, Inc. (AGT) was recently discontinued due to AGT’s remodeling of their clinical trial plans, but the Company remains open to additional collaborations.

Intellectual Property – In February 2021, GeoVax filed international and U.S. patent applications in our key focus areas of SARS-CoV-2 (COVID-19) and cancer immunotherapy, and in July 2021 the Company announced the issuance of a U.S. patent covering our Hepatitis B vaccine. Following these filings, GeoVax’s wholly owned, co-owned, and in-licensed intellectual property portfolio now stands at over 70 granted or pending patent applications spread over 20 patent families.

Management Commentary

David Dodd, GeoVax’s Chairman and CEO, commented, “We remain enthusiastic about our development programs and expect several data announcements in the forthcoming weeks and months, most notably in our program areas of COVID-19, Lassa Fever virus, Sudan/Marburg virus and immuno-oncology. As with many other companies, the continuing COVID-19 pandemic has affected the timelines for some of our programs, most notably our HIV program. In addition, third-party technical disruptions have resulted in delays in completing various contracted animal studies. I look forward to sharing news of our progress as those studies are completed and other events occur. We remain encouraged and focused on completing these studies as soon as possible and announcing the various results.

“With our funding events from 2020 and early 2021, we are well-positioned to advance several of our development programs, with a continued focus on our COVID-19 vaccine and our cancer immunotherapy programs. The additional capital is allowing us to make infrastructure and personnel investments, as well as funding commitments in support of other programs, including manufacturing process development with a view toward cost-effective, large-scale production for clinical and commercial distribution.  Our focus and goal is to advance into clinical development both within the areas of infectious diseases and immuno-oncology, providing significant potential growth in value for our shareholders while providing new vaccines and therapies for critical areas of health worldwide,” concluded Mr. Dodd.

Financial Review

GeoVax reported a net loss of $1,314,033 ($0.21 per share) for the three months ended June 30, 2021, compared to a net loss of $455,204 ($0.66 per share) for the same period in 2020.  For the six months ended June 30, 2021, the Company’s net loss was $2,876,811 ($0.49 per share) as compared to a net loss of $1,050,898 ($2.27 per share) in 2020. 

Grant and collaboration revenues were $79,708 and $190,125 for the three-month and six-month periods of 2021, respectively, as compared to $440,602 and $1,156,579 reported for the comparable periods of 2020.  The 2021 period reflects amounts related to our grant from NIH in support of our COVID-19 vaccine program, while the 2020 period reflects amounts related to our grant from the U.S. Department of Defense (DoD) for our Lassa Fever vaccine and our collaboration with Leidos, Inc. for its malaria vaccine program.  As of June 30, 2021, there is $275,302 of approved funds remaining and available for use related to the COVID-19 and Lassa Fever grants.

Research and development expenses were $832,835 and $1,435,618 for the three-month and six-month periods of 2021, respectively, as compared to $461,421 and $1,270,357 for the comparable periods of 2020, with the increases primarily related to our COVID-19 vaccine program, manufacturing process development, and a generally higher level of activity, offset in part by the timing and amount of external expenditures related to our government grants.  General and administrative expenses were $733,499 and $1,805,209 for the three-month and six-month periods of 2021, respectively, as compared to $427,292 and $929,637 for the comparable periods of 2020, with the increase primarily attributable to higher Delaware franchise taxes; legal, accounting and patent costs; insurance costs; consulting fees; Nasdaq listing fees; investor relations costs; and personnel costs.

Other income (expense) was $172,593 and $173,891 for the three-month and six-month periods of 2021, respectively, as compared to $(7,093) and $(7,483) for the comparable periods of 2020.  The 2021 periods include a $172,056 gain on extinguishment of debt, reflecting forgiveness of the Company’s loan pursuant to the Paycheck Protection Program.

GeoVax reported cash balances of $19.5 million at June 30, 2021, as compared to $9.9 million at December 31, 2020.  Contributing to the increase in cash balances were net proceeds of $9.4 million from the sale of 1,644,000 shares of common stock, and $3.2 million from the exercise of warrants to purchase 690,034 shares of common stock.

Summarized financial information is included below. Further information concerning the Company’s financial position and results of operations are included in its Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission.

Conference Call

Management will host a conference call at 4:30 p.m. ET on Wednesday, August 11, 2021 to review financial results and provide an update on corporate developments.  Following management’s formal remarks, there will be a question and answer session.

Participants are asked to register for the call via the following link: https://dpregister.com/sreg/10159241/ebf4d52ffa

Please note that registered participants will receive their dial-in number upon registration and will dial directly into the call without delay.  Those without Internet access or who are unable to pre-register may dial in by calling 1-866-777-2509 (domestic) or 1-412-317-5413 (international).  All callers should dial in approximately 10 minutes prior to the scheduled start time and ask to be joined into the GeoVax Labs call. 

The conference call will be available through a live webcast found here:
https://services.choruscall.com/mediaframe/webcast.html?webcastid=xxw5fkQ6

A webcast replay of the call will be available via the same link as the live webcast approximately one hour after the end of the call through November 11, 2021.  A telephonic replay of the call can be accessed by calling 1-877-344-7529 (domestic) or 1-412-317-0088 (international) and using access code 10159241. The telephonic replay will be available until August 25, 2021.

About GeoVax

GeoVax Labs, Inc. is a clinical-stage biotechnology company developing human vaccines against infectious diseases and cancer using a novel patented Modified Vaccinia Ankara-Virus Like Particle (MVA-VLP) based vaccine platform. On this platform, MVA, a large virus capable of carrying several vaccine antigens, expresses proteins that assemble into VLP immunogens in the person receiving the vaccine. The production of VLPs in the person being vaccinated can mimic virus production in a natural infection, stimulating both the humoral and cellular arms of the immune system to recognize, prevent, and control the target infection. The MVA-VLP derived vaccines can elicit durable immune responses in the host similar to a live-attenuated virus, while providing the safety characteristics of a replication-defective vector. 

GeoVax’s current development programs are focused on preventive vaccines against COVID-19, Zika Virus, hemorrhagic fever viruses (Ebola, Sudan, Marburg, and Lassa), HIV, and malaria, as well as therapeutic vaccines against multiple cancers. The Company has designed a preventive HIV vaccine candidate to fight against the subtype of HIV prevalent in the commercial markets of the Americas, Western Europe, Japan, and Australia; human clinical trials for this program are managed by the HIV Vaccine Trials Network (HVTN) with the support of the National Institutes of Health (NIH). GeoVax’s HIV vaccine is also part a separate collaborative effort to apply its vaccine approach toward a functional cure for HIV.

Forward-Looking Statements

This release and the related conference call contain forward-looking statements regarding GeoVax’s business plans and financial results. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Actual results may differ materially from those included in these statements due to a variety of factors, including whether: GeoVax and its collaborators are able to complete their work within the expected timeframes, GeoVax is able to obtain the patent protection sought, GeoVax’s COVID-19 vaccines can provoke responses to multiple COVID-19 antigens, and those vaccines can be used effectively as a primary or booster to other COVID-19 vaccines, GeoVax’s viral vector technology adequately amplifies immune responses to cancer antigens, GeoVax can develop and manufacture its vaccines with the desired characteristics in a timely manner, GeoVax’s vaccines will be safe for human use, GeoVax’s vaccines will effectively prevent targeted infections in humans, GeoVax’s vaccines will receive regulatory approvals necessary to be licensed and marketed, GeoVax raises required capital to complete vaccine development, there is development of competitive products that may be more effective or easier to use than GeoVax’s products, GeoVax will be able to enter into favorable manufacturing and distribution agreements, the impact of the COVID-19 pandemic continues, and other factors, over which GeoVax has no control. 

Further information on our risk factors is contained in our registration statement on Form S-3 and the periodic reports on Form 10-Q and Form 10-K that we have filed and will file with the SEC. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. 

Contact: 

GeoVax Labs, Inc.
[email protected]
678-384-7220

FINANCIAL TABLES FOLLOW

GEOVAX LABS, INC.
Condensed Consolidated Statements of Operations Information
(amounts in thousands, except per share data)
					Three Months Ended		Six Months Ended
					June 30,		June 30,
					2021	2020	2021	2020
Grant and collaboration revenue					$       80	$    441	$    190	$  1,157
Operating expenses:
	Research and development				833	462	1,436	1,270
	General and administrative				733	427	1,805	930
					1,566	889	3,241	2,200
Loss from operations					(1,486)	(448)	(3,051)	(1,043)
Other income (expense), net					172	(7)	174	(8)
Net loss					$ (1,314)	$    (455)	$ (2,877)	$ (1,051)
Loss per common share					$    (0.21)	$    (0.66)	$  (0.49)	$    (2.27)

Condensed Consolidated Balance Sheet Information
(amounts in thousands)
						June 30, 2021	Dec. 31, 2020
Assets:
	Cash and cash equivalents					$   19,539	$      9,884
	Other current assets					118	351
	Total current assets					19,657	10,235
	Property and other assets, net					160	159
	Total assets					$   19,817	$   10,394
Liabilities and stockholders’ equity
	Total liabilities					$        359	$         825
	Stockholders’ equity					19,458	9,569
	Total liabilities and stockholders’ equity					$   19,817	$    10,394
	Common Shares Outstanding					6,328	3,834

• Record Revenue of $744 million in the Second Quarter, up 13% Year-over-Year
• Core Revenue Grew 17% to $698 million
• Net loss of $(37) million, or $(0.18) per diluted share
• Non-GAAP Earnings Per Share Grew 14% Year-over-Year to $0.24
• Quarterly Cash Flow From Operating Activities of $106 million

SAN ANTONIO, Aug. 11, 2021 (GLOBE NEWSWIRE) — Rackspace Technology, Inc. (Nasdaq: RXT), a leading end-to-end multicloud technology solutions company, today announced results for its second quarter ended June 30, 2021.

Kevin Jones, Chief Executive Officer, commented, “Our second quarter financial results were solid, with double-digit revenue growth and strong operating profit margins. In addition, our working capital and cash management transformation programs have driven excellent results with more than $100 million of operating cash flow for the second consecutive quarter.”

Second Quarter 2021 Results

Revenue was $744 million in the second quarter of 2021, an increase of 13% as compared to revenue of $657 million in the second quarter of 2020. Revenue for the second quarter of 2021 was positively impacted by new customer acquisitions and growing customer spend in our Multicloud Services and Apps & Cross Platform segments. On a constant currency basis, revenue increased by 11% in the second quarter of 2021 as compared to the second quarter of 2020.

Revenue from our Core Segments (“Core Revenue”), comprised of Multicloud Services and Apps & Cross Platform, increased 17% in the second quarter of 2021 as compared to the second quarter of 2020. On a constant currency basis, Core Revenue increased 15% in the second quarter of 2021 as compared to the second quarter of 2020.

Bookings were $258 million in the second quarter of 2021, a decrease of 10% as compared to Bookings of $289 million in the second quarter of 2020. Bookings in the second quarter of 2020 included one large deal valued at approximately $38 million. Excluding this deal from the comparative period, Bookings growth was 3% year-over-year.

Net loss was $(37) million in the second quarter of 2021, compared to net loss of $(33) million in the second quarter of 2020.

Net loss per diluted share was $(0.18) in the second quarter of 2021, compared to net loss per diluted share of $(0.20) in the second quarter of 2020.

Non-GAAP Operating Profit was $119 million in the second quarter of 2021, an increase of 4% compared to $115 million in the second quarter of 2020.

Non-GAAP Earnings Per Share was $0.24 in the second quarter of 2021, an increase of 14% as compared to Non-GAAP Earnings Per Share of $0.21 in the second quarter of 2020.

Capital expenditures were $82 million in the second quarter of 2021, compared to $51 million in the second quarter of 2020.

As of June 30, 2021, we had cash and cash equivalents of $215 million with no balance outstanding on our Revolving Credit Facility.

Financial Outlook

Rackspace Technology is providing guidance as follows:

	Q3 2021 Guidance
Revenue	$750 – $760 million
Core Revenue	$705 – $715 million
Non-GAAP Operating Profit	$118 – $122 million
Non-GAAP Earnings Per Share	$0.23 – $0.25
Non-GAAP Other Income (Expense) 1	($50) – ($52) million
Non-GAAP Tax Expense Rate	26
Non-GAAP Weighted Average Shares	213 – 215 million

¹ Non-GAAP Other Income (Expense) is only expected to include interest expense.

For the fourth quarter of 2021, the company expects:

• Sequential revenue growth of approximately 2% from the third quarter of 2021
• Non-GAAP Operating Profit and Non-GAAP Earnings Per Share flat compared to the third quarter of 2021

Definitions of non-GAAP financial measures and the reconciliations to the most directly comparable measures in accordance with generally accepted accounting principles in the United States (“GAAP”) are provided in subsequent sections of this press release narrative and supplemental schedules. Rackspace Technology has not reconciled Non-GAAP Operating Profit, Non-GAAP Earnings Per Share, Non-GAAP Other Income (Expense) or Non-GAAP Tax Expense Rate guidance to the most directly comparable GAAP measure because it does not provide guidance on GAAP net income (loss) or the reconciling items between these Non-GAAP measures and GAAP net income (loss) as a result of the uncertainty regarding, and the potential variability of, certain of these items, such as share-based compensation expense. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort. With respect to Non-GAAP Operating Profit, Non-GAAP Earnings Per Share, Non-GAAP Other Income (Expense) and Non-GAAP Tax Expense Rate guidance, adjustments in future periods are generally expected to be similar to the kinds of charges and costs excluded from these Non-GAAP measures in prior periods, but the impact of such adjustments could be significant.

Conference Call and Webcast

Rackspace Technology will hold a conference call today, August 11, 2021, at 4:00pm CT / 5:00pm ET to discuss its second quarter 2021 results. Interested parties may access the conference call as follows:

Via Zoom:

https://rackspace.zoom.us/j/95750453932?pwd=Q21HWis1T1k5UEQvemI2NlFEREp5UT09

Password: 112067

Via telephone (listen only mode):

+1 408 638 0968 (US Toll)
+1 646 558 8656 (US Toll)
+1 647 374 4685 (Canada)
+44 (0) 20 3695 0088 (United Kingdom Toll)
Webinar ID: 957 5045 3932

A live webcast of the call and audio replay will also be available on Rackspace Technology’s website at ir.rackspace.com.

About Rackspace Technology

Rackspace Technology is a leading end-to-end multicloud technology services company. We design, build and operate our customers’ cloud environments across all major technology platforms, irrespective of technology stack or deployment model. We partner with our customers at every stage of their cloud journey, enabling them to modernize applications, build new products and adopt innovative technologies.

IR Contact

Investor Relations
[email protected]

PR Contact

Natalie Silva
Rackspace Technology Corporate Communications
[email protected]

Forward-looking Statements

Rackspace Technology has made statements in this press release and other reports, filings, and other public written and verbal announcements that are forward-looking and therefore subject to risks and uncertainties. All statements, other than statements of historical fact, included in this document are, or could be, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are made in reliance on the safe harbor protections provided thereunder. These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions, our ability to successfully respond to the challenges posed by the COVID-19 pandemic, and other matters. Any forward-looking statement made in this presentation speaks only as of the date on which it is made. We undertake no obligation to publicly update or revise any forward- looking statement, whether as a result of new information, future developments or otherwise. Forward-looking statements can be identified by various words such as “expects,” “intends,” “will,” “anticipates,” “believes,” “confident,” “continue,” “propose,” “seeks,” “could,” “may,” “should,” “estimates,” “forecasts,” “might,” “goals,” “objectives,” “targets,” “planned,” “projects,” and similar expressions. These forward-looking statements are based on management’s current beliefs and assumptions and on information currently available to management. Rackspace Technology cautions that these statements are subject to risks and uncertainties, many of which are outside of our control, and could cause future events or results to be materially different from those stated or implied in this document, including among others, risk factors that are described in Rackspace Technology, Inc.’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the Securities and Exchange Commission, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein.

Non-GAAP Financial Measures

This press release includes several non-GAAP financial measures such as constant currency revenue, Non-GAAP Gross Profit, Non-GAAP Net Income (Loss), Non-GAAP Operating Profit, Adjusted EBITDA and Non-GAAP Earnings Per Share (“EPS”). These non-GAAP financial measures exclude the impact of certain costs, losses and gains that are required to be included in our profit and loss measures under GAAP. Although we believe these measures are useful to investors and analysts for the same reasons they are useful to management, as described in the accompanying pages, these measures are not a substitute for, or superior to, GAAP financial measures or disclosures. Other companies may calculate similarly-titled non-GAAP measures differently, limiting their usefulness as comparative measures. We have reconciled each of these non-GAAP measures to the applicable most comparable GAAP measure in the accompanying pages.

IR Contact

Joe Crivelli
Rackspace Technology Investor Relations
[email protected]

PR Contact

Natalie Silva
Rackspace Technology Corporate Communications
[email protected]

RACKSPACE TECHNOLOGY, INC.

CONSOLIDATED RESULTS OF OPERATIONS

(Unaudited)

	Three Months Ended June 30,														Year-Over-Year Comparison
	2021							2020
(In millions, except % and per share data)		Amount			% Revenue				Amount			% Revenue				Amount			% Change
Revenue	$	656.5			100.0	%		$	743.8			100.0	%		$	87.3			13.3	%
Cost of revenue	(414.6		)		(63.2	)%		(508.3		)		(68.3	)%		(93.7		)		22.6	%
Gross profit	241.9				36.8	%		235.5				31.7	%		(6.4		)		(2.6	)%
Selling, general and administrative expenses	(219.2		)		(33.4	)%		(232.6		)		(31.3	)%		(13.4		)		6.1	%
Income from operations	22.7				3.5	%		2.9				0.4	%		(19.8		)		(87.2	)%
Other income (expense):
Interest expense	(68.9		)		(10.5	)%		(50.5		)		(6.8	)%		18.4				(26.7	)%
Gain on investments, net	1.0				0.1	%		0.1				0.0	%		(0.9		)		(90.0	)%
Debt modification and extinguishment costs	—				—	%		(0.5		)		(0.1	)%		(0.5		)		100.0	%
Other income, net	0.3				0.0	%		0.6				0.1	%		0.3				100.0	%
Total other income (expense)	(67.6		)		(10.3	)%		(50.3		)		(6.8	)%		17.3				(25.6	)%
Loss before income taxes	(44.9		)		(6.8	)%		(47.4		)		(6.4	)%		(2.5		)		5.6	%
Benefit for income taxes	12.3				1.9	%		10.8				1.5	%		(1.5		)		(12.2	)%
Net loss	$	(32.6	)		(5.0	)%		$	(36.6	)		(4.9	)%		$	(4.0	)		12.3	%
Net loss per share:
Basic and diluted	$	(0.20	)					$	(0.18	)
Weighted average number of shares outstanding:
Basic and diluted	165.5							207.9

RACKSPACE TECHNOLOGY, INC.

CONSOLIDATED RESULTS OF OPERATIONS

(Unaudited)

	Six Months Ended June 30,														Year-Over-Year Comparison
	2021							2020
(In millions, except % and per share data)		Amount			% Revenue				Amount			% Revenue				Amount			% Change
Revenue	$	1,309.2			100.0	%		$	1,469.7			100.0	%		$	160.5			12.3	%
Cost of revenue	(818.0		)		(62.5	)%		(998.9		)		(68.0	)%		(180.9		)		22.1	%
Gross profit	491.2				37.5	%		470.8				32.0	%		(20.4		)		(4.2	)%
Selling, general and administrative expenses	(447.0		)		(34.1	)%		(463.6		)		(31.5	)%		(16.6		)		3.7	%
Gain on sale of land	—				—	%		19.9				1.4	%		19.9				100.0	%
Income from operations	44.2				3.4	%		27.1				1.8	%		(17.1		)		(38.7	)%
Other income (expense):
Interest expense	(140.9		)		(10.8	)%		(103.1		)		(7.0	)%		37.8				(26.8	)%
Gain (loss) on investments, net	0.9				0.1	%		(3.6		)		(0.2	)%		(4.5		)		NM
Debt modification and extinguishment costs	—				—	%		(37.5		)		(2.5	)%		(37.5		)		100.0	%
Other expense, net	(0.3		)		(0.0	)%		(1.2		)		(0.1	)%		(0.9		)		NM
Total other income (expense)	(140.3		)		(10.7	)%		(145.4		)		(9.9	)%		(5.1		)		3.6	%
Loss before income taxes	(96.1		)		(7.3	)%		(118.3		)		(8.0	)%		(22.2		)		23.1	%
Benefit for income taxes	15.3				1.2	%		17.7				1.2	%		2.4				15.7	%
Net loss	$	(80.8	)		(6.2	)%		$	(100.6	)		(6.8	)%		$	(19.8	)		24.5	%
Net loss per share:
Basic and diluted	$	(0.49	)					$	(0.49	)
Weighted average number of shares outstanding:
Basic and diluted	165.4							206.2

NM = not meaningful.

RACKSPACE TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions, except per share data)		December 31, 2020				June 30, 2021
ASSETS
Current assets:
Cash and cash equivalents		$	104.7			$	214.8
Accounts receivable, net of allowance for doubtful accounts and accrued customer credits of $28.3 and $16.0, respectively		483.0				501.1
Prepaid expenses		123.8				94.0
Other current assets		47.0				75.3
Total current assets		758.5				885.2
Property, equipment and software, net		884.6				892.0
Goodwill, net		2,761.1				2,765.8
Intangible assets, net		1,646.3				1,553.8
Operating right-of-use assets		171.1				151.3
Other non-current assets		156.2				164.2
Total assets		$	6,377.8			$	6,412.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses		$	285.4			$	324.4
Accrued compensation and benefits		110.6				91.5
Deferred revenue		76.7				93.0
Debt		43.4				23.0
Accrued interest		26.5				26.6
Operating lease liabilities		62.2				60.7
Finance lease liabilities		40.7				57.3
Financing obligations		48.8				59.8
Other current liabilities		47.9				53.0
Total current liabilities		742.2				789.3
Non-current liabilities:
Debt		3,319.3				3,318.7
Operating lease liabilities		118.2				103.8
Finance lease liabilities		358.1				361.8
Financing obligations		74.1				80.2
Deferred income taxes		236.7				219.1
Other non-current liabilities		145.5				156.9
Total liabilities		4,994.1				5,029.8
Commitments and Contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value per share: 5.0 shares authorized; no shares issued or outstanding		—				—
Common stock, $0.01 par value per share: 1,495.0 shares authorized; 201.8 and 209.0 shares issued and outstanding, respectively		2.0				2.1
Additional paid-in capital		2,363.6				2,445.3
Accumulated other comprehensive loss		(18.6		)		(1.0		)
Accumulated deficit		(963.3		)		(1,063.9		)
Total stockholders’ equity		1,383.7				1,382.5
Total liabilities and stockholders’ equity		$	6,377.8			$	6,412.3

RACKSPACE TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(In millions)	2020				2021
Cash Flows From Operating Activities
Net loss	$	(80.8	)		$	(100.6	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	237.6				216.3
Amortization of operating right-of-use assets	36.3				36.0
Deferred income taxes	(19.2		)		(23.1		)
Share-based compensation expense	16.6				37.6
Gain on sale of land	—				(19.9		)
Debt modification and extinguishment costs	—				37.5
Unrealized (gain) loss on derivative contracts	(2.7		)		10.8
(Gain) loss on investments, net	(0.9		)		3.6
Provision for bad debts and accrued customer credits	10.1				(8.0		)
Amortization of debt issuance costs and debt discount	9.4				4.8
Other operating activities	(1.8		)		(0.6		)
Changes in operating assets and liabilities:
Accounts receivable	(47.1		)		(8.9		)
Prepaid expenses and other current assets	2.9				11.5
Accounts payable, accrued expenses, and other current liabilities	(31.8		)		19.1
Deferred revenue	(9.0		)		16.5
Operating lease liabilities	(33.7		)		(31.9		)
Other non-current assets and liabilities	12.9				8.2
Net cash provided by operating activities	98.8				208.9
Cash Flows From Investing Activities
Purchases of property, equipment and software	(66.4		)		(66.0		)
Proceeds from sale of land	—				31.3
Other investing activities	3.6				3.0
Net cash used in investing activities	(62.8		)		(31.7		)
Cash Flows From Financing Activities
Proceeds from issuance of common stock, net	0.5				—
Proceeds from employee stock plans	—				43.9
Shares of common stock withheld for employee taxes	(0.6		)		—
Proceeds from borrowings under long-term debt arrangements	310.0				2,838.5
Payments on long-term debt	(259.5		)		(2,866.4		)
Payments for debt issuance costs	(1.0		)		(34.5		)
Payments on financing component of interest rate swap	—				(4.3		)
Principal payments of finance lease liabilities	(7.1		)		(21.4		)
Proceeds from financing obligations	20.9				—
Principal payments of financing obligations	(19.9		)		(22.6		)
Net cash provided by (used in) financing activities	43.3				(66.8		)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(1.7		)		(0.4		)
Increase in cash, cash equivalents, and restricted cash	77.6				110.0
Cash, cash equivalents, and restricted cash at beginning of period	87.1				108.1
Cash, cash equivalents, and restricted cash at end of period	$	164.7			$	218.1

Supplemental Cash Flow Information
Cash payments for interest, net of amount capitalized	$	131.4			$	90.6
Cash payments for income taxes, net of refunds	$	8.1			$	6.5
Non-cash Investing and Financing Activities
Acquisition of property, equipment and software by finance leases	$	42.5			$	38.4
Acquisition of property, equipment and software by financing obligations	19.9				40.1
Decrease in property, equipment and software accrued in liabilities	(2.6		)		(3.7		)
Non-cash purchases of property, equipment and software	$	59.8			$	74.8
Non-cash increase in buildings within property, equipment and software, net due to lease modification	$	220.3			$	—
Other non-cash investing and financing activities	$	2.3			$	0.3

REVENUE BY SEGMENT

		Three Months Ended June 30,								% Change
(In millions, except %)		2020				2021				Actual			Constant Currency (1)
Multicloud Services		$	519.0			$	605.1			16.6	%		14.6	%
Apps & Cross Platform		79.9				92.7				16.1	%		15.0	%
Core Revenue		598.9				697.8				16.5	%		14.6	%
OpenStack Public Cloud		57.6				46.0				(20.1	)%		(21.9	)%
Total		$	656.5			$	743.8			13.3	%		11.4	%

(1)   Refer to “Non-GAAP Financial Measures” in this section for further explanation and reconciliation.

		Six Months Ended June 30,								% Change
(In millions, except %)		2020				2021				Actual			Constant Currency (1)
Multicloud Services		$	1,026.9			$	1,184.7			15.4	%		13.7	%
Apps & Cross Platform		161.4				190.0				17.8	%		16.9	%
Core Revenue		1,188.3				1,374.7				15.7	%		14.1	%
OpenStack Public Cloud		120.9				95.0				(21.4	)%		(22.8	)%
Total		$	1,309.2			$	1,469.7			12.3	%		10.7	%

(1)   Refer to “Non-GAAP Financial Measures” in this section for further explanation and reconciliation.

NON-GAAP GROSS PROFIT BY SEGMENT

	Three Months Ended June 30,														Year-Over-Year Comparison
(In millions, except %)	2021							2021
Non-GAAP gross profit by segment:	Amount				% of Segment Revenue			Amount				% of Segment Revenue			Amount				% Change
Multicloud Services	$	200.7			38.7	%		$	202.0			33.4	%		$	1.3			0.6	%
Apps & Cross Platform	27.0				33.8	%		32.0				34.5	%		5.0				18.5	%
OpenStack Public Cloud	23.7				41.1	%		16.1				35.0	%		(7.6		)		(32.1	)%
Non-GAAP Gross Profit (1)	251.4							250.1							(1.3		)		(0.5	)%
Less:
Share-based compensation expense	(2.3		)					(4.3		)
Other compensation expense (2)	(1.5		)					(0.4		)
Purchase accounting impact on expense (3)	(1.6		)					(1.2		)
Restructuring and transformation expenses (4)	(4.1		)					(8.7		)
Total consolidated gross profit	$	241.9						$	235.5

(1	)	Refer to “Non-GAAP Financial Measures” in this section for further explanation.
(2	)	Adjustments for retention bonuses, mainly in connection with restructuring and transformation projects, and the related payroll tax, and payroll taxes associated with the exercise of stock options and vesting of restricted stock.
(3	)	Adjustment for the impact of purchase accounting from the November 2016 merger on expenses.
(4	)	Adjustment for the impact of business transformation and optimization activities, as well as associated severance, facility closure costs and lease termination expenses.

	Three Months Ended June 30,														Year-Over-Year Comparison
(In millions, except %)	2021							2020
Non-GAAP gross profit by segment:		Amount			% of Segment Revenue				Amount			% of Segment Revenue				Amount			% Change
Multicloud Services	$	397.5			38.7	%		$	398.4			33.6	%		$	0.9			0.2	%
Apps & Cross Platform	57.1				35.4	%		66.9				35.2	%		9.8				17.2	%
OpenStack Public Cloud	53.0				43.8	%		34.7				36.5	%		(18.3		)		(34.5	)%
Non-GAAP Gross Profit (1)	507.6							500.0							(7.6		)		(1.5	)%
Less:
Share-based compensation expense	(4.1		)					(9.2		)
Other compensation expense (2)	(3.4		)					(1.7		)
Purchase accounting impact on expense (3)	(3.5		)					(2.4		)
Restructuring and transformation expenses (4)	(5.4		)					(15.9		)
Total consolidated gross profit	$	491.2						$	470.8

(1	)	Refer to “Non-GAAP Financial Measures” in this section for further explanation.
(2	)	Adjustments for retention bonuses, mainly in connection with restructuring and transformation projects, and the related payroll tax, and payroll taxes associated with the exercise of stock options and vesting of restricted stock.
(3	)	Adjustment for the impact of purchase accounting from the November 2016 merger on expenses.
(4	)	Adjustment for the impact of business transformation and optimization activities, as well as associated severance, facility closure costs and lease termination expenses.

KEY OPERATING METRICS

	Three Months Ended June 30,
(In millions, except %)	2020				2021
Bookings	$	288.5			$	258.2
Annualized Recurring Revenue (ARR)	$	2,492.9			$	2,817.1

NON-GAAP FINANCIAL MEASURES

Constant Currency Revenue

We use constant currency revenue as an additional metric for understanding and assessing our growth excluding the effect of foreign currency rate fluctuations on our international business operations. Constant currency information compares results between periods as if exchange rates had remained constant period over period and is calculated by translating the non-U.S. dollar income statement balances for the most current period to U.S. dollars using the average exchange rate from the comparative period rather than the actual exchange rates in effect during the respective period. We also believe this is an important metric to help investors evaluate our performance in comparison to prior periods.

		Three Months Ended June 30, 2020				Three Months Ended June 30, 2021												% Change
(In millions, except %)		Revenue				Revenue				Foreign Currency Translation (a)				Revenue in Constant Currency				Actual			Constant Currency
Multicloud Services		$	519.0			$	605.1			$	(10.5	)		$	594.6			16.6	%		14.6	%
Apps & Cross Platform		79.9				92.7				(0.9		)		91.8				16.1	%		15.0	%
OpenStack Public Cloud		57.6				46.0				(1.0		)		45.0				(20.1	)%		(21.9	)%
Total		$	656.5			$	743.8			$	(12.4	)		$	731.4			13.3	%		11.4	%

(a)	The effect of foreign currency is calculated by translating current period results using the average exchange rate from the prior comparative period.

		Six Months Ended June 30, 2020				Six Months Ended June 30, 2021												% Change
(In millions, except %)		Revenue				Revenue				Foreign Currency Translation (a)				Revenue in Constant Currency				Actual			Constant Currency
Multicloud Services		$	1,026.9			$	1,184.7			$	(17.2	)		$	1,167.5			15.4	%		13.7	%
Apps & Cross Platform		161.4				190.0				(1.4		)		188.6				17.8	%		16.9	%
OpenStack Public Cloud		120.9				95.0				(1.6		)		93.4				(21.4	)%		(22.8	)%
Total		$	1,309.2			$	1,469.7			$	(20.2	)		$	1,449.5			12.3	%		10.7	%

(a)	The effect of foreign currency is calculated by translating current period results using the average exchange rate from the prior comparative period.

Non-GAAP Gross Profit

Our principal measure of segment profitability is segment non-GAAP gross profit. We also present Non-GAAP Gross Profit, which is the aggregate of segment non-GAAP gross profit, because we believe the measure is useful in analyzing trends in our underlying, recurring gross margins. We define Non-GAAP Gross Profit as our consolidated gross profit, adjusted to exclude the impact of share-based compensation expense and other non-recurring or unusual compensation items, purchase accounting-related effects, and certain business transformation-related costs. For a reconciliation of our Non-GAAP Gross Profit to our total consolidated gross profit, see “Non-GAAP Gross Profit by Segment” above.

Non-GAAP Income (Loss), Non-GAAP Operating Profit and Adjusted EBITDA

We present Non-GAAP Net Income (Loss), Non-GAAP Operating Profit and Adjusted EBITDA because they are a basis upon which management assesses our performance and we believe they are useful to evaluating our financial performance. We believe that excluding items from net income that may not be indicative of, or are unrelated to, our core operating results, and that may vary in frequency or magnitude, enhances the comparability of our results and provides a better baseline for analyzing trends in our business.

We define Non-GAAP Net Income (Loss) as net income (loss) adjusted to exclude the impact of non-cash charges for share-based compensation, special bonuses and other compensation expense, transaction-related costs and adjustments, restructuring and transformation charges, management fees, the amortization of acquired intangible assets and certain other non-operating, non-recurring or non-core gains and losses, as well as the tax effects of these non-GAAP adjustments.

We define Non-GAAP Operating Profit as net income (loss), plus interest expense and income taxes, further adjusted to exclude the impact of non-cash charges for share-based compensation, special bonuses and other compensation expense, transaction-related costs and adjustments, restructuring and transformation charges, management fees, the amortization of acquired intangible assets and certain other non-operating, non-recurring or non-core gains and losses.

We define Adjusted EBITDA as Non-GAAP Operating Profit plus depreciation and amortization.

Non-GAAP Operating Profit and Adjusted EBITDA are management’s principal metrics for measuring our underlying financial performance. Adjusted EBITDA, along with other quantitative and qualitative information, is also the principal financial measure used by management and our board of directors in determining performance-based compensation for our management and key employees.

These non-GAAP measures are not intended to imply that we would have generated higher income or avoided net losses if the November 2016 merger and the subsequent transactions and initiatives had not occurred. In the future we may incur expenses or charges such as those added back to calculate Non-GAAP Net Income (Loss), Non-GAAP Operating Profit or Adjusted EBITDA. Our presentation of Non-GAAP Net Income (Loss), Non-GAAP Operating Profit and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by these items. Other companies, including our peer companies, may calculate similarly-titled measures in a different manner from us, and therefore, our non-GAAP measures may not be comparable to similarly-titled measures of other companies. Investors are cautioned against using these measures to the exclusion of our results in accordance with GAAP.

		Three Months Ended June 30,								Six Months Ended June 30,
(In millions)		2020				2021				2020				2021
Net loss		$	(32.6	)		$	(36.6	)		$	(80.8	)		$	(100.6	)
Share-based compensation expense		9.1				20.4				16.6				37.6
Special bonuses and other compensation expense (a)		5.8				3.0				14.1				7.0
Transaction-related adjustments, net (b)		8.1				6.9				16.5				15.3
Restructuring and transformation expenses (c)		22.1				39.1				37.1				77.7
Management fees (d)		3.5				—				7.1				—
Gain on sale of land		—				—				—				(19.9		)
Net (gain) loss on divestiture and investments (e)		(1.0		)		(0.1		)		(0.9		)		3.6
Debt modification and extinguishment costs (f)		—				0.5				—				37.5
Other (income) expense, net (g)		(0.3		)		(0.6		)		0.3				1.2
Amortization of intangible assets (h)		44.0				47.1				88.2				93.5
Tax effect of non-GAAP adjustments (i)		(24.4		)		(28.8		)		(36.9		)		(52.9		)
Non-GAAP Net Income		34.3				50.9				61.3				100.0
Interest expense		68.9				50.5				140.9				103.1
Benefit for income taxes		(12.3		)		(10.8		)		(15.3		)		(17.7		)
Tax effect of non-GAAP adjustments (i)		24.4				28.8				36.9				52.9
Non-GAAP Operating Profit		115.3				119.4				223.8				238.3
Depreciation (j)		72.3				59.9				149.4				121.2
Adjusted EBITDA		$	187.6			$	179.3			$	373.2			$	359.5

(a)	Includes expense related to retention bonuses, mainly relating to restructuring and integration projects, and the related payroll tax, senior executive signing bonuses and relocation costs, and payroll taxes associated with the exercise of stock options and vesting of restricted stock.
(b)	Includes legal, professional, accounting and other advisory fees related to the acquisition of Onica in the fourth quarter of 2019 and the IPO in the third quarter of 2020, integration costs of acquired businesses, purchase accounting adjustments (including deferred revenue fair value discount), payroll costs for employees that dedicate significant time to supporting these projects and exploratory acquisition and divestiture costs and expenses related to financing activities.
(c)	Includes consulting and advisory fees related to business transformation and optimization activities, payroll costs for employees that dedicate significant time to these projects, as well as associated severance, facility closure costs and lease termination expenses.
(d)	Represents historical management fees pursuant to management consulting agreements. The management consulting agreements were terminated effective August 4, 2020, and therefore no management fees have accrued or will be payable for periods after August 4, 2020.
(e)	Includes gains and losses on investment and from dispositions.
(f)	Includes expenses related to the February 2021 Refinancing Transaction and termination of the Receivables Financing Facility.
(g)	Reflects mainly changes in the fair value of foreign currency derivatives.
(h)	All of our intangible assets are attributable to acquisitions, including the November 2016 merger.
(i)	We utilize an estimated structural long-term non-GAAP tax rate in order to provide consistency across reporting periods, removing the effect of non-recurring tax adjustments, which include but are not limited to tax rate changes, U.S. tax reform, share-based compensation, audit conclusions and changes to valuation allowances. When computing this long-term rate for the 2020 and 2021 interim periods, we based it on an average of the 2019 and estimated 2020 tax rates and 2020 and estimated 2021 tax rates, respectively, recomputed to remove the tax effect of non-GAAP pre-tax adjustments and non-recurring tax adjustments, resulting in a structural non-GAAP tax rate of 26% for all periods. The non-GAAP tax rate could be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix including due to acquisition activity, or other changes to our strategy or business operations. We will re-evaluate our long-term non-GAAP tax rate as appropriate. We believe that making these adjustments facilitates a better evaluation of our current operating performance and comparisons to prior periods.
(j)	Excludes accelerated depreciation expense related to facility closures.

Non-GAAP Earnings Per Share (EPS)

We define Non-GAAP EPS as Non-GAAP Net Income divided by our GAAP weighted average number of shares outstanding for the period on a diluted basis and further adjusted for the weighted average number of shares associated with securities which are anti-dilutive to GAAP earnings per share but dilutive to Non-GAAP EPS. Management uses Non-GAAP EPS to evaluate the performance of our business on a comparable basis from period to period, including by adjusting for the impact of the issuance of shares that would be dilutive to Non-GAAP EPS.

	Three Months Ended June 30,								Six Months Ended June 30,
(In millions, except per share amounts)	2020				2021				2020				2021
Net loss attributable to common stockholders	$	(32.6	)		$	(36.6	)		$	(80.8	)		$	(100.6	)
Non-GAAP Net Income	$	34.3			$	50.9			$	61.3			$	100.0
Weighted average number of shares – Diluted	165.5				207.9				165.4				206.2
Effect of dilutive securities (a)	1.9				5.4				1.4				6.0
Non-GAAP weighted average number of shares – Diluted	167.4				213.3				166.8				212.2
Net loss per share – Diluted	$	(0.20	)		$	(0.18	)		$	(0.49	)		$	(0.49	)
Per share impacts of adjustments to net loss (b)	0.41				0.42				0.86				0.97
Per share impacts of shares dilutive after adjustments to net loss (a)	(0.00		)		(0.00		)		(0.00		)		(0.01		)
Non-GAAP EPS	$	0.21			$	0.24			$	0.37			$	0.47

(a)

Reflects impact of awards that would have been anti-dilutive to Net loss per share, and therefore not included in the calculation, but would be dilutive to Non-GAAP EPS and are therefore included in the share count for purposes of this non-GAAP measure. Potential common share equivalents consist of shares issuable upon the exercise of stock options, vesting of restricted stock or purchase under the Employee Stock Purchase Plan (the “ESPP”), as well as contingent shares associated with our acquisition of Datapipe Parent, Inc. Certain of our potential common share equivalents are contingent on Apollo achieving pre-established performance targets based on a multiple of their invested capital (“MOIC”), which are included in the denominator for the entire period if such shares would be issuable as of the end of the reporting period assuming the end of the reporting period was the end of the contingency period.

(b)

Reflects the aggregate adjustments made to reconcile Non-GAAP Net Income to our net loss, as noted in the above table, divided by the GAAP diluted number of shares outstanding for the relevant period.