Rackspace Technology (RXT) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01If we are unable to attract new customers, retain existing customers and sell additional services at comparable gross margins to customers, our revenue and results of operations could be adversely affected
2. 02Our business is affected by general economic conditions and uncertainties affecting markets in which we operate and economic volatility could adversely impact our business
3. 03If we are unable to successfully execute our strategies and continue to develop and sell the services and solutions our customers demand, our business, financial condition and results of operations may suffer
4. 04Our strategies require significant investments that may adversely affect our near-term revenue growth and results of operations
5. 05We have a history of losses and may not be able to achieve profitability in the future
6. 06We may be required to recognize goodwill, intangible assets or other long-lived asset impairment charges
7. 07Our results of operations have historically varied and may fluctuate significantly, which could make our future results difficult to predict and could cause our results of operations to fall below investor or analyst expectations
8. 08The market for our services is highly competitive, quickly evolving and subject to rapid changes in technology. We expect to continue to face intense competition from our existing competitors as well as additional competition from new market entrants in the future as the market for our services continues to grow
9. 09To the extent we face increased price competition, we may have to lower the prices of certain of our services in the future to stay competitive, while simultaneously seeking to maintain or improve our revenue and gross margin
10. 10Our business is highly dependent on our ability to maintain favorable relationships with our third-party cloud infrastructure providers and the ability of those third-party cloud infrastructure providers to provide the services and features that our customers desire
11. 11Our referral and reseller partners provide revenue to our business, and we benefit from our association with them. The loss of these participants could adversely affect our business
12. 12If we fail to hire and retain qualified employees and management personnel, our strategies and our business could be harmed
13. 13Our inability to prevent service disruptions and ensure network uptime could lead to significant costs and could harm our business reputation and have a material and adverse effect on our business, financial condition and results of operations
14. 14Our ability to operate our data centers relies on access to sufficient and reliable electric power
15. 15Failure to have reliable Internet, telecommunications and fiber optic network connectivity and capacity may adversely affect our results of operations
16. 16We have overestimated our data center capacity requirements in the past. If we overestimate or underestimate our data center capacity requirements, our business, financial condition and results of operations could be adversely affected
17. 17Real or perceived errors, failures or bugs in our customer solutions, software or technology could adversely affect our business, financial condition and results of operations
18. 18We rely on third-party software that may be difficult to replace, or which could cause errors or failures of our service that could lead to lost customers or harm to our reputation
19. 19If our third-party vendors, including our third-party software licensors, increase their prices and we are unable to pass those increased costs to our customers, it could have a material and adverse effect on our results of operations
20. 20Our services depend in part on intellectual property and proprietary rights and technology licensed from third parties
21. 21Sales to enterprise customers involve risks that may not be present in or that are present to a greater extent than sales to smaller entities
22. 22Some of our professional services engagements with our clients are based on estimated pricing terms. If our estimates are incorrect, these terms could become unprofitable
23. 23If we fail to maintain, enhance and protect our brand, our ability to expand our customer base will be impaired and our business, financial condition and results of operations may suffer
24. 24Our ability to operate and expand our business is susceptible to risks associated with international sales and operations
25. 25Failure to develop and maintain adequate internal systems could cause us to be unable to properly provide service to our customers, causing us to lose customers, suffer harm to our reputation and incur additional costs
26. 26We may not be able to renew the leases on our existing facilities on terms acceptable to us, if at all, which could adversely affect our business, financial condition and results of operations
27. 27We rely on a number of third-party providers for data center space, equipment, maintenance and other services, and the loss of, or problems with, one or more of these providers may impede our growth or cause us to lose customers
28. 28We are subject to various laws, directives, regulations, contractual obligations and policies regarding the protection of confidentiality and appropriate use of personal information
29. 29Customers could potentially expose us to lawsuits for their lost profits or damages, which could impair our results of operations
30. 30Our clients include national, provincial, state and local governmental entities
31. 31The occurrences or conditions described above could affect not only our business with the government entities involved, but also our business with other entities of the same or other governmental bodies or with certain commercial clients and could have a material and adverse effect on our results of operations
32. 32Certain of our international operations are conducted in countries or regions experiencing corruption or instability, which subjects us to heightened legal and economic risks
33. 33We may be liable for the material that content providers distribute over our network, and we may have to terminate customers that provide content that is determined to be illegal, which could adversely affect our results of operations
34. 34Government regulation is continuously evolving and, depending on its evolution, may adversely affect our business, financial condition and results of operations
35. 35Any failure by us to identify, manage, complete and integrate acquisitions and other significant transactions, including dispositions, successfully could harm our business, financial condition and results of operations
36. 36Our results of operations could be materially and adversely affected by fluctuations in foreign currency exchange rates
37. 37We are exposed to commodity and market price risks that affect our results of operations
38. 38Concerns about greenhouse gas emissions and global climate change may result in environmental taxes, charges, assessments or penalties, resulting in increased electricity prices
39. 39Third-party claims of intellectual property or proprietary right infringement, misappropriation or other violation may be costly to defend and may limit or disrupt our ability to sell our services
40. 40We may have additional tax liabilities
41. 41Changes in cross border trade policies, including the imposition of tariffs and the resulting consequences, may have a material and adverse impact on our business, financial condition and results of operations

Risks Related to Our Indebtedness

1. 42Our substantial indebtedness could materially and adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from making debt service payments
2. 43Despite our substantial indebtedness, we may still be able to incur significantly more debt, including secured debt, which could intensify the risks associated with our indebtedness
3. 44We may not be able to generate sufficient cash to service all of our indebtedness and to fund our working capital and capital expenditures and may be forced to take other actions to satisfy our obligations under our indebtedness that may not be successful
4. 45Our debt agreements contain restrictions that limit our flexibility in operating our business
5. 46In addition, the New Revolving Credit Facility requires us to comply with a super-priority net senior secured leverage ratio under certain circumstances
6. 47any of which could result in an event of default under the 3.50% FLSO Senior Secured Notes Indenture, 5.375% Notes Indenture and the 3.50% Notes Indenture
7. 48Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly
8. 49Any downgrade in our credit ratings could limit our ability to obtain future financing, increase our borrowing costs and adversely affect the market price of our existing debt securities or otherwise impair our business, financial condition and results of operations

Risks Related to Ownership of Our Common Stock

1. 50Our stock price may fluctuate significantly
2. 51Future sales of our common stock in the public market, or the perception in the public market that such sales may occur, could reduce our stock price
3. 52If we do not maintain effective internal controls, our financial statements may be inaccurate and the value of your investment in our common stock could decrease
4. 53We continue to be controlled by Apollo, and Apollo’s interests may conflict with our interests and the interests of other stockholders
5. 54We are a “controlled company” within the meaning of the Nasdaq’s rules and, as a result, qualify for and intend to rely on exemptions from certain corporate governance requirements
6. 55We are a holding company and rely on dividends, distributions and other payments, advances and transfers of funds from our subsidiaries to meet our obligations
7. 56We do not anticipate paying dividends on our common stock in the foreseeable future
8. 57If securities or industry analysts do not publish research or reports about our business or publish negative reports, our stock price could decline