Participants

Amar Maletira; President, CEO & Director; Rackspace Technology, Inc.

Naushaza Molu; Executive VP & CFO; Rackspace Technology, Inc.

Sagar Hebbar; Head of IR; Rackspace Technology, Inc.

Bradley Reiss Clark; Senior Associate; BMO Capital Markets Equity Research

Frank Garrett Louthan; MD of Equity Research; Raymond James & Associates, Inc., Research Division

Matthew Van Roswell; Assistant VP; RBC Capital Markets, Research Division

Ramsey Clark El-Assal; Research Analyst; Barclays Bank PLC, Research Division

Presentation

Operator

Good day, and thanks for standing by. Welcome to the Rackspace Technology Third Quarter 2023 Earnings Webcast. (Operator Instructions). Please be suggested at present’s convention is being recorded. I wish to hand the convention over to your speaker at present, Sagar Hebbar. Please go forward.

Sagar Hebbar

Thank you, and welcome to Rackspace Technologies Third quarter 2023 Earnings Conference Call. I’m Sagar Hebbar, Head of Investor Relations. Joining me on at present’s name are Amar Maletira, our Chief Executive Officer; and Bobby Molu, our Chief Financial Officer.
As a reminder, sure feedback we make on this name might be forward-looking. These statements contain dangers and uncertainties, which may trigger precise outcomes to vary. A dialogue of those dangers and uncertainties is included in our SEC filings. Rackspace Technology assumes no obligation to replace the data introduced on the decision, besides as required by regulation.
Our presentation consists of sure non-GAAP monetary measures and changes to those measures, which we imagine present helpful info to our traders. In accordance with SEC guidelines, we’ve offered a reconciliation of those measures to essentially the most instantly comparable GAAP measures within the earnings press launch and presentation, each of which can be found on our Investor Relations web site. Please observe that except acknowledged in any other case, all outcomes are introduced as non-GAAP besides revenues. I’ll now flip the decision over to Amar for an replace on the enterprise.

Story continues

Amar Maletira

Thank you, Sagar. Fiscal third quarter 2023 outcomes exceeded the midpoint of our income, working revenue and EPS steerage. Our 2 enterprise unit working mannequin is now absolutely applied and our management groups are executing to their plans. Additionally, we stay dedicated to aligning our value construction with our present wants. These measures proceed to enhance our working effectivity and execution.
As has been extensively famous, the general financial and demand atmosphere stays unsure. Organizations of all sizes and spanning numerous industries stay cautious on IT spending, Hence, we proceed to see prolonged gross sales cycles and delays in prospects’ new initiatives. In response, we proceed to deal with fine-tuning our group aiming for simpler execution of our present operations.
We are strengthening and getting ready Rackspace Technology to capitalize on an uptick in demand as and when it happens. As talked about within the final earnings name, we launched Foundry for AI by Rackspace or FAIR. Since launching in June, we’ve introduced choices with all 3 hyperscaler companions, AWS, GCP and Azure.
Among the choices is AWS FAIR, safe Landing Zone, an answer that assists our prospects throughout numerous industries in securely harnessing this platform’s native AI providers. We additionally showcased our AI capabilities on the Google Cloud Next occasion to a optimistic response from prospects.
In addition, we proceed to work with Dell and NVIDIA in implementing our non-public cloud AI reference structure for purchasers requiring safe, performant non-public cloud touchdown zones.
I’m happy with the progress we’ve made. AI is a long-term secular pattern. GenAI is about to revolutionize each aspect of corporations and their operations. Its implementation guarantees to raise enterprise efficiency bettering productiveness, enhancing enterprise agility and enriching buyer experiences. Companies are presently navigating the preliminary part of AI adoption, prioritizing the safety, security and reliability of their deployments.
Our FAIR initiative is distinctive in that it caters to each service and infrastructure necessities for AI, permitting for a secure, safe and accountable deployment. We are assured in our sturdy place inside this fast-evolving market.
Now turning to updates on our enterprise models. In Private Cloud, we proceed to see traction in our vertical market technique in industries reminiscent of healthcare and monetary providers throughout all areas. We maintained a pointy deal with constructing our pipeline with roughly 1/3 of it consisting of latest potential purchasers.
In healthcare, we gained a multiyear contract to host and handle the industry-leading digital well being report utility in our Private Cloud for a distinguished youngsters’s hospital within the U.S., Northwest. We gained this new shopper because of our differentiated excessive availability answer, fanatical buyer assist and years of expertise in internet hosting and managing mission-critical workloads.
We additionally entered right into a multiyear contract with a number one U.S. supplier of house medical gear consolidating the two information facilities right into a Rackspace information middle. This consolidation includes AS400 and different virtualized workloads migrated and managed in Rackspace’s managed hosted non-public cloud.
In monetary providers, we signed a multiyear contract with a number one Asian financial institution to advance their cloud transformation initiative and assist their development agenda. Rackspace is enabling this advanced transformation by offering a complete non-public cloud answer that delivers enterprise agility and monetary flexibility for the financial institution.
We additionally signed a cope with a number one cost expertise firm within the Americas for customized catastrophe restoration as a service, enabling full information replication and speedy restoration of their vital methods within the occasion of an outage or breach. In addition, we had 9 product launches and enhancements throughout the Private Cloud portfolio within the third quarter, together with catastrophe restoration options and SAP HANA certifications for software-defined information middle enterprise and enterprise environments.
We’re additionally enthusiastic about a number of progressive choices in our Private Cloud highway map which can be slated for launch over the subsequent 2 quarters. Here are just a few examples. First is the Software-Defined Data Center Anywhere providing. This is Rackspace VMware-based turnkey edge answer for enterprise and mid-market prospects which have delicate purposes and information locality and compliance wants.
This answer permits prospects to deploy compute the place they want them, on-premises, buyer colo or in any information facilities globally. Second providing is known as Spot. Spot is a real compute market trade service completely suited to a developer and cloud-native buyer base. It is a Kubernetes cluster suited to preemptable workloads. This answer gives real-time market pricing, empowering prospects to make use of compute capability on demand.
Now turning to Public Cloud. Despite a difficult atmosphere in Public Cloud, we noticed good traction in pipeline and bookings within the third quarter. We proceed to focus in direction of extra high-value providers, making notable strides in attracting a variety of consumers and introducing new progressive choices. On the shopper entrance, we’ve established a partnership with a number one Fortune 500 biotech firm dedicated to propelling medical innovation and enhancing affected person outcomes throughout 100 nations worldwide. Serving as their most well-liked cloud infrastructure accomplice in AWS, we have expanded our involvement to embody advisory {and professional} providers specializing in their multi-cloud technique, expertise modernization and utility migration, using our superior international supply mannequin. This collaborative initiative is empowering them to deal with buyer wants extra effectively and expedite the implementation of digital services and products finally resulting in improved affected person outcomes.
For 2 of the biggest multinational transportation logistics and warehousing corporations working out of Asia Pacific and the U.Ok., we’re providing a broad vary of cloud modernization providers together with trendy operations. These new purchasers had been a aggressive win in opposition to a few of the main international system integrators. What differentiated Rackspace Technology was a enterprise outcome-focused answer that drove enterprise agility and operational effectivity for our prospects.
On the choices entrance, we additionally launched 9 Public Cloud choices within the third quarter, together with full stack managed providers for hybrid multi-cloud permitting prospects to handle their complete workload life cycle in hybrid and multi-cloud environments. A complete managed safety answer combining cloud native detection and response with 24/7 cybersecurity specialists. We additionally partnered with Google to launch Google accelerated cloud migration and unique speedy and cost-effective path for migrating digital workloads to Google Cloud.
Overall, it was a great quarter for each our Private Cloud and Public Cloud companies on a number of fronts. We lately had a profitable Industry Analyst Day in Boston. We introduced our technique and showcased our full suite of personal cloud and public cloud services and products choices. This was nicely obtained and positions us strongly as a hybrid multi-cloud and AI options firm.
Before I wrap up, I wish to welcome Thomas Cole as the most recent member of our Board of Directors. Thomas has over 37 years of expertise in banking. This is one other instance of how we’re strengthening our group with extremely expert and achieved professionals.
Now let me wrap up by reiterating our prime 4 priorities we outlined at first of the 12 months, which we’re targeted on to show round our firm’s monetary efficiency. First, reverse the decline in Private Cloud and place this enterprise to capitalize on the expansion alternatives in a pretty market; second, develop our Public Cloud providers enterprise at or above market fee; third, construct a extremely environment friendly value construction, and finally drive sustained development in working revenue and free money circulate. With that, I’ll flip it over to Bobby.

Naushaza Molu

Thanks, Amar. I’ll cowl the whole firm outcomes for the third quarter, then share some particulars on our phase efficiency, adopted by our This fall steerage. We preserve our dedication to enhancing the effectivity of each companies as a part of our disciplined monetary technique. We’ve successfully managed working capital and bolstered liquidity, notably by a extra detailed deal with collections and the implementation of a brand new accounts receivable securitization program. Additionally, we’ll proceed to determine further value discount alternatives in areas that don’t align with our present technique.
Now wanting on the outcomes for the quarter. Total firm GAAP income of $732 million was on the excessive finish of our steerage, down 2% sequentially and down 7% year-over-year, pushed by declines in each non-public cloud and public cloud. Total web income was $430 million, down 4% sequentially and down 12% year-over-year. Gross revenue of $162 million was 22% of GAAP income and 38% of web income. We stay on monitor with our prior steerage for sequential quarterly working revenue enchancment for the rest of 2023 off of the second quarter trough.
For the quarter, working revenue was $46 million, on the excessive finish of our steerage, up 17% sequentially. This was down 43% year-over-year, primarily because of income declines in our Private Cloud enterprise unit, working margin was 6% of GAAP income and 11% of web income. Loss per share was $0.04, which was inside our guided vary of $0.04 to $0.06 loss per share. In the third quarter, we recorded roughly $214 million of noncash impairment expenses primarily because of the lower in our market capitalization. Additional particulars of those noncash bills will be present in our SEC filings.
Cash circulate from operations was $267 million, and free money circulate was $239 million within the third quarter. Our reported money circulate consists of money obtained by the brand new AR securitization. Normalizing for the AR securitization, money circulate from operations would have been $61 million and free money circulate would have been $34 million, according to our expectations.
Let me present slightly extra perception on the AR securitization we executed on the finish of September. The major goal of this securitization was to bolster our already strong liquidity place and permit us to opportunistically make the most of the dislocation in our debt pricing. In the third quarter, we deployed $30 million of money to opportunistically repurchase one other $85 million of our senior unsecured notes within the market. Through October year-to-date, we’ve repurchased a complete of $274 million of senior unsecured notes utilizing $96 million of money at a median worth of $0.34 on the greenback. We imagine the mixture of this facility and these buybacks is optimistic for shareholders, permitting substantial low cost seize on our debt and growing our obtainable liquidity to $653 million, together with $278 million of money on our books.
We proceed to watch and assess additional alternatives to deploy capital in accretive draw back protected methods for shareholders. Total CapEx for the third quarter was $28 million with a CapEx depth of 4%. We proceed to anticipate CapEx in our typical 5% to 7% CapEx depth vary for the total 12 months.
Turning to our phase outcomes. For Private Cloud, GAAP income for the third quarter was $300 million, which was on the excessive finish of our steerage. This consists of legacy OpenStack income of $31 million. Total Private Cloud income was down 4% sequentially because of prospects rolling off outdated technology Private Cloud choices. Private Cloud gross margin was 38%, up 1 share level sequentially pushed by value reductions offsetting the influence of income declines. Segment working revenue was $85 million at an working margin of 28%, basically flat quarter-over-quarter.
In Public Cloud, GAAP income of $433 million, additionally on the excessive finish of our steerage was basically flat quarter-over-quarter, primarily because of consumption-driven development on infrastructure resale volumes offset by declines in providers. Public Cloud providers income was down 4% sequentially given the tightening of discretionary spending. We anticipate our pivot to a stronger services-led focus to pay dividends because the macro atmosphere improves and our go-to-market technique matures. Public Cloud web income, which incorporates our Public Cloud providers income and infrastructure resell revenue was $130 million, down 4% sequentially. Gross margin for our Public Cloud phase was 11% of GAAP income, up 1 share level sequentially. Gross margin was 37% of web income, up 3 share factors sequentially, pushed by utilization and efficiencies from value financial savings. Segment working revenue in public cloud was $22 million, which was 5% of complete phase income, up 1 share level sequentially and 17% of web income, up 4 share factors sequentially.
Now on to our This fall steerage. We anticipate the fourth quarter GAAP income to be roughly $710 million to $720 million. Total working revenue is predicted to be $46 million to $48 million and loss per share of $0.03 to $0.05. From a phase perspective, we anticipate Private Cloud income of $284 million to $289 million and Public Cloud income of $426 million to $431 million. Our tax fee is predicted to be 26% and different revenue and expense of roughly $57 million to $59 million in bills. The share rely is predicted to be round 221 million to 223 million shares.
We anticipate full 12 months money circulate from operations and free money circulate to be optimistic on each a reported and normalized foundation. I’ll now flip the decision over to Sagar.

Sagar Hebbar

Thank you, Bobby. Let us start the question-and-answer session. (Operator Instructions)

Question and Answer Session

Operator

(Operator Instructions). Our first query comes from Ramsey El-Assal with Barclays.

Ramsey Clark El-Assal

I used to be questioning if you happen to may touch upon how the shift in direction of promoting value-added providers versus infrastructure has been going. What was value-added providers development within the quarter? Or are purchasers more and more open to that method? Maybe how will you assist that technique going ahead?

Amar Maletira

Yes. Thanks, Ramsey. Great query. So the deal with promoting providers is left, proper and middle of what we’re doing within the Public Cloud enterprise. We have made a variety of structural adjustments within the firm. As you already know, we’re reorganized throughout 2 BUs and with deal with each private and non-private cloud.
And inside Public cloud, we’re very a lot targeted on promoting increased value-added providers. We have additionally aligned our go-to-market accordingly. Similar to Private Cloud, we even have go-to-market aligned throughout verticals in Public Cloud. We even have aligned it very near the hyperscalers, in order that we are able to go drive extra migration, modernization providers together with our hyperscalers. We have additionally modified our gross sales useful resource combine. We have pressured (inaudible) underperformance in gross sales. We proceed to rent providers and enterprise final result targeted gross sales execs. We launched plenty of new choices in providers, Ramsey. In the final 9 months, near 30 new choices. In the final quarter itself, we launched 9 new choices. One of that was managed providers for each hybrid and multi-cloud atmosphere.
So a variety of adjustments, a variety of structural adjustments which can be taking maintain. Now what we see in Public Cloud providers is we — like many of the providers corporations within the ecosystem, there’s a cyclical headwind in Public Cloud providers enterprise. And what we’re seeing is prospects are very a lot targeted on value optimization tasks, which we’re working with them very carefully. We are capturing these value optimization tasks.
New initiatives in providers are getting delayed. But as I all the time inform our salespeople throughout good occasions and dangerous occasions, you must keep near the shopper, however you must keep near the shopper throughout when the macro atmosphere is unsure. So we proceed to work with our prospects serving to them plan for brand new initiatives in order that we’ll be prepared once we can go seize these — that demand when it returns.
So I be ok with the structural pivot that we’re making from low-margin intra resale to higher-margin providers. Now you will notice our providers enterprise has declined year-on-year in addition to sequentially, and that is a results of the cyclical headwinds that we’re seeing typically within the providers enterprise.

Ramsey Clark El-Assal

I see. Okay. And I additionally needed to ask you for slightly bit extra commentary on the gross sales delays, which you is likely to be seeing on the market, which is according to lots of your friends. Are you seeing delays in signing new work or delays changing bookings to income or possibly on each side?

Amar Maletira

So I feel that is an ideal query. I feel what we’re seeing right here is the pipeline. If I see — take a look at the pipeline, each from Public Cloud and Private Cloud perspective, our pipeline is rising, it has sequentially grown. So on the prime of the funnel appears nice. But I feel the decision-making cycles have mainly prolonged and that is prolonged the gross sales cycle.
So the conversion from pipeline to bookings is taking extra time and since prospects are very cautious on their IT spend, and given the macro atmosphere, which stays unsure, I feel we all the time sometimes see providers enterprise are very cyclical. So that is what we’re seeing. So gross sales cycles are getting prolonged. Decision-making is taking extra time and — however the prime of the funnel appears okay. It’s simply the conversion of pipeline to bookings is taking extra time.

Operator

Our subsequent query comes from Frank Louthan with Raymond James.

Frank Garrett Louthan

Can you stroll us by what number of new logos you signed up in Public Cloud and Private Cloud? That’s my first query. And a follow-up query. You lately modified your gross sales comp for Public Cloud to drive slightly higher engagement in numerous providers. How has that gone within the third quarter? And how is that monitoring?

Amar Maletira

Yes. So let me simply offer you some coloration on our bookings typically, and I can even reply your query across the new logos. So given the macro backdrop, Frank, we had a reasonably good quarter from a bookings perspective with over 200 new prospects throughout each Public Cloud and Private Cloud. Public Cloud bookings really grew sequentially. So this additionally solutions a few of the questions that Ramsey had concerning the prime of the funnel and the way we’re seeing the providers and (inaudible) Public Cloud the way it’s panning out.
In Private Cloud, we did see 2 giant deal slip into our December quarter, and we anticipate to shut these offers on this quarter. So we do anticipate This fall or a December quarter to be a powerful quarter for Private Cloud bookings. And simply as a reminder, as you guys know, giant Private Cloud offers are sometimes multiyear offers, anyplace between 3 to 7 years. It could be very sticky. It’s fairly lumpy, too. Hence, we’re very considerate in ensuring that we shut offers which can be a win-win for each the shoppers in addition to Rackspace. So feeling good concerning the bookings general and the way it may pan out in This fall for Private Cloud.
From a pipeline perspective, we see development in each Private Cloud and Public Cloud. And as you already know, we’re utilizing a vertical technique. Health care is the primary vertical that we double down on. And what we’re seeing is well being care vertical is a big contributor to the expansion in pipeline, and simply — which is now type of aligned to our general vertical technique and focus.
Regarding the gross sales comp adjustments, nicely, it — gross sales comp adjustments we made to make it possible for we pivot our gross sales focus from low-margin enterprise to higher-margin enterprise, which is especially providers. And that is working nicely. It is working by the system. Typically, it takes a while. But as I discussed in my earlier remarks and response to Ramsey’s query, the highest of the funnel appears good.
The conversion, particularly within the providers enterprise is taking time as choices are getting type of prolonged and gross sales cycles are getting elongated. But it’s, I feel, driving the fitting habits. That’s the important thing for us — driving the fitting habits in our gross sales group to pivot to increased margin providers.

Operator

Our subsequent query comes from Bradley Clark with BMO.

Bradley Reiss Clark

I wish to ask concerning the margin efficiency. For the primary time in plenty of quarters, you sequentially grew each adjusted gross margins and working margin. Can you discuss concerning the drivers of the margin enchancment between say, combine value efficiencies apart from that you simply’re doing internally?
And my second query could be, you have introduced your individual Generative AI answer partnership with hyperscalers. How are you serious about the time line that it takes for Generative AI providers to have a significant and even only a modest influence in your bookings and/or income ?

Naushaza Molu

Yes. Let me do the primary query on the margins and the growth and the gross margins. So that is proper. So we talked about the truth that we’re taking up a variety of value discount this 12 months because of the macro headwind. And we have seen that play out. We’ve talked about the truth that we’ll see working revenue enchancment on the again of value reductions, and that is precisely what we have executed.
Just to present you slightly coloration on Public Cloud, we even have talked about that we had staffed up in our supply group for an anticipated demand at first of the 12 months. But given the cyclical headwinds given the macro atmosphere, that wasn’t coming by and we had been experiencing an underutilization. So as a part of our value discount, we took some actions there. We’ve (inaudible) the utilization. As a consequence, we’re seeing that circulate by within the gross margins.
Also within the OpEx, you will see enhancements there as nicely. This quarter flowing by from the price actions we have taken. So a variety of it’s on the again of value discount, and you will see that as nicely in This fall.

Amar Maletira

So let me take the GenAI query. First of all, thanks for the query. This is a really thrilling area for Rackspace. As you already know, we’re a really workload-centric firm. And for us, AI and GenAI is the online new workload that did not exist earlier than. So it is a large TAM growth for us. And what we did to capitalize on this pattern, which we imagine is a secular pattern that can speed up very quickly. We launched Foundry for AI by Rackspace or FAIR again in June. And since as we launched FAIR, we refenced part of the group, we spun up the group with sources inside the firm. We had a variety of sources who had been very nicely versed with AI, and we noticed good traction within the final 6 months.
Let me offer you slightly little bit of coloration on what — from a bookings perspective the place we landed. The curiosity in GenAI has elevated. We roughly have about 900 energetic leads in our pipeline. And that is 2x what we noticed once we reported final quarter. We had been near about 100 certified alternatives in all probability throughout all 3 areas, Americas, Europe and Asia Pac. We gained about 10 offers. Now these are pure GenAI offers, that are paid engagement after we launched FAIR. And most of those offers are in what we name it the ideation, which is a discovery and incubation phases. And the deal sizes are typically smaller as anticipated since we’re in early phases of GenAI adoption.
So once we begin transferring into what we name as an industrialization or manufacturing area, which is able to contain each fine-tuning and inferencing the fashions, we anticipate this to scale. So as I discussed in my ready remarks, we work with all 3 hyperscalers to launch joint AI options on Public Cloud, and we’ve gained offers throughout all of the hyperscalers. We are additionally engaged on implementing the non-public AI cloud reference structure collaborating with each Dell in addition to NVIDIA.
So early levels, early phases, so to talk, in all probability it can take time, however most essential factor for us is to go get the thought management, which is able to result in extra thoughts share, which is able to lead then lastly to pockets share. And we will help prospects wherever they’re within the AI journey. Today, it is all about consulting providers. It’s all about constructing and serving to them constructing these purposes. Ultimately, it has to work on sure infrastructure, and the touchdown zones will be both Public Cloud or Private Cloud, and that is the place the true monetization occurs.
And now we’ve actually began driving thought management on this place. So I’d say nonetheless extra to come back. And we’re simply within the early innings, so to talk.

Operator

Our subsequent query comes from Matthew Roswell with RBC.

Matthew Van Roswell

Two questions. I assume, first, pricing and competitors for each Public and Cloud, what are you seeing this quarter and the way has it modified over the past couple of quarters? And then following up on the AI dialog, are you discovering as you go in and do these ideation offers that purchasers typically have to type of do preliminary work, for instance, transfer extra of their workflow to the cloud, issues like that earlier than they’ll even make the most of GenAI?

Amar Maletira

Yes. Let me — so what was the primary query round pricing (inaudible).

Matthew Van Roswell

Correct pricing and competitors.

Amar Maletira

Yes, pricing and competitors. So pay attention, I feel in Public Cloud, we play in markets. So let me offer you slightly little bit of coloration on the markets we play in, so that you simply get an understanding of who we compete in opposition to, proper? So we tackle all 3 market segments: enterprise, mid-market and business.
In enterprise, we’re very targeted as a result of enterprise is the place you discover a large GSIs, international system integrators. And we’re very targeted. We take into consideration 50 accounts, and we’ve a selective penetration technique in enterprise. So we do not go head on with the GSIs. When it involves mid-market, that is a candy spot. Mid-market is prospects with between $300 million to about $3 billion in income, you do not have giant GSI name on these prospects. These prospects have the identical complexity and challenges that an enterprise (inaudible) can have. This is a candy spot for Rackspace. This is the place we wish to increase, and that is the place we’ve constructed a giant enterprise.
And business is $300 million and decrease. It’s additionally a candy spot for us. So once you assume to have a look at competitors, we see — relying on which markets we play, we see competitors in that market. Obviously, the providers enterprise proper now has a cyclical headwind and so all people is chasing the identical enterprise. But it is extra essential for us to stay engaged with the shoppers in order that when the demand returns, we’ll go and seize the demand. That’s how we’re approaching this, okay.
Now speaking about AI and your query round ideation and whether or not prospects are prepared for incubation and — that is an ideal query, by the way in which, as a result of proper now, I feel a variety of prospects are on the lookout for use circumstances. In truth, we’re additionally very shocked that a few of the prospects have already got use circumstances. So we really go into the incubation tempo with this buyer, the place we assist them to select what we name as the big language fashions, however it’s an open mannequin or it’s a proprietary mannequin will assist them to architect the information after which make it possible for we have skilled these fashions on the information. So as an alternative of information coming to AI, AI is — AI purposes are going to the information in order that we are able to go — however the true monetization will occur with industrialization and the manufacturing part, as I discussed earlier. That’s once I assume you must create large information lakes.
But what we’re seeing is, at the moment, prospects are utilizing the present information and working what we name as co-pilots. So we’ve created many clever co-pilots for enterprise. We name it as ICE I-C-E, and that is the place we’re profitable a variety of offers. In truth, we’ve created a variety of clever co-pilot for enterprise even internally at Rackspace. And we ran a giant AI readiness program at Rackspace.
Five months in the past, we determined and took a really daring step in ensuring that we get complete 6,500 of our staff AI-ready. And we stated we ought to be AI-ready by 12 months. To be sincere, within the final 4 or 5 months since we applied it, we about 3/4, 75% of our 6,000-plus workforce is AI prepared. So a variety of issues to come back right here, and that is what we’re additionally going and serving to our prospects.
So loads to do right here. I feel that is an early part, nevertheless it’s a great query.

Operator

And I’m not exhibiting any additional questions at the moment. I’d like to show the decision again over to Sagar for any closing remarks.

Sagar Hebbar

Thank you, everybody, for becoming a member of us. If we didn’t get to your query or when you have a follow-up, please e-mail us at ir.rackspace.com. Have an ideal night, everybody.

Operator

Ladies and gents, this does conclude at present’s presentation. You could now disconnect, and have a beautiful day.