Welcome!

OpenStack Journal Authors: Carmen Gonzalez, Elizabeth White, Liz McMillan, Yeshim Deniz, Pat Romanski

News Feed Item

Rackspace Hosting Reports First Quarter 2014 Results

Rackspace® Hosting, Inc. (NYSE: RAX) announced financial results for the quarter ended March 31, 2014.

Net revenue for the first quarter of 2014 was $421 million, up 3.2% from the previous quarter and 16% from the first quarter of 2013. Net revenue for the first quarter of 2014 was positively impacted by currency exchange rates when compared to the previous quarter by $2.4 million and positively impacted when compared to the first quarter of 2013 by $6.6 million.

For the second quarter of 2014, the company is forecasting quarter-over-quarter sequential net revenue growth of 3% to 4.5%, resulting in net revenue in the range of $434 million to $440 million.

“Our first quarter revenue growth came in as expected and we expect growth to improve in the second quarter,” said Graham Weston, Chairman and CEO. “We are encouraged by qualitative factors, including the thousands of new customers we added in the quarter, including one of the largest we’ve ever landed. We also added significant new workloads for existing customers including Alex and Ani, Appboy, Clarks shoes, Under Armour and SunPower. Each of these customers values our managed cloud approach and chose us over providers of less expensive unmanaged infrastructure.”

Total server count increased to 106,229, up from 103,886 servers at the end of the previous quarter.

Adjusted EBITDA(1) for the quarter was $140 million, a 5.8% increase compared to the fourth quarter of 2013. Adjusted EBITDA margin for the quarter was 33.2% compared to 32.4% in the previous quarter.

The company expects Adjusted EBITDA margin to be in the range of 32% to 34% in the second quarter of 2014.

Net income was $25 million for the quarter, up 22.3% from the previous quarter. Net income margin for the quarter was 6.0% compared to 5.1% for the previous quarter.

Cash flow from operating activities was $142 million for the first quarter of 2014. Capital expenditures were $101 million, including $61 million for purchases of customer gear, $11 million for data center build outs, $9 million for office build outs and $20 million for capitalized software and other projects.

Adjusted Free Cash Flow(1) for the quarter was $40 million. Return on Capital(1) was 11.4% in the first quarter, compared to 9.6% in the prior quarter. Average monthly revenue per server was $1,336, compared to $1,322 in the prior quarter.

At the end of the first quarter of 2014, cash and cash equivalents were $314 million, and interest-bearing debt including capital lease obligations totaled $53 million.

On a worldwide basis, Rackspace employed 5,743 Rackers as of March 31, 2014, up from 5,651 in the previous quarter.

Rackspace Business Highlights

  • Rackspace appointed Ryan Neading chief information officer. Neading will be responsible for the Rackspace billing systems, internal IT systems and tools, technology operations, operational metrics and interfacing with external suppliers and resource providers. Neading brings with him over a decade of leadership experience and specialization in the high tech industry. Prior to joining Rackspace, Neading served as the co-leader of eBay’s development site in Austin.
  • Rackspace launched its Digital Services Practice to provide digital marketing expertise. Rackspace Digital delivers expertise to help companies more effectively engage with customers via a website, portal/extranet, mobile app or online store. By working hand-in-hand with software platforms and system integrators, Rackspace Digital provides reliable, fully managed service to help ensure the customer’s brand is never compromised.
  • Rackspace ranked No. 26 on the Sunday Times "Top 100 Best Companies to Work for in London" list. This is the ninth consecutive year Rackspace has received this award. The Sunday Times recognized Rackspace for its attitude towards Racker training and personal development and reports that Rackspace employees love their jobs, have competitive salaries, and have opportunities for personal career development.
  • Rackspace, along with Digital Realty Trust, Inc., broke ground on a new 130,000 square foot data center facility located in Crawley, West Sussex. The 15 acre campus will eventually consist of four data suites with 10 MW of total capacity. The initial outlay, which provides 6 MW across two data suites, is due to be delivered in the first half of 2015.
  • Rackspace launched ObjectRocket, its NoSQL MongoDB Database-as-a-Service (DBaaS), in its UK data center. With the open source-based MongoDB solution, Rackspace will broaden its portfolio to offer European customers a NoSQL DBaaS for big data applications. This offering will be built upon hardware optimized specifically for MongoDB and will be easily accessed and integrated into existing systems. ObjectRocket is a sharded and fully managed MongoDB service built with a set of tools and APIs designed to maximize uptime and reduce administration time - all supported by Rackspace Fanatical Support®.

Conference Call and Webcast

Management will host a conference call to discuss the results starting today at 4:30 p.m. ET. To access the conference call from the United States and Canada please dial 877-246-4118, from the United Kingdom please dial 0800-496-0445, and from Hong Kong please dial 800-900-872.

A live webcast and a replay of the conference call will be available on Rackspace's website, located at http://ir.rackspace.com.

About Rackspace Hosting

Rackspace (NYSE: RAX) is a leader in managed cloud and founder of OpenStack®, the open-source operating system for the cloud. Hundreds of thousands of customers look to Rackspace to deliver the best-fit infrastructure for their IT needs, leveraging a product portfolio that allows workloads to run where they perform best—whether on the public cloud, private cloud, dedicated servers, or a combination of platforms. The company’s award-winning Fanatical Support® helps customers successfully architect, deploy and run their most critical applications. Headquartered in San Antonio, TX, Rackspace operates data centers on four continents. Rackspace is featured on Fortune’s list of 100 Best Companies to Work For. For more information, visit www.rackspace.com.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks, uncertainties and assumptions. If such risks or uncertainties materialize or such assumptions prove incorrect, the results of Rackspace Hosting could differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements concerning expected operational and financial results, long-term investment strategies, growth plans, expected results from the integration of technologies and acquired businesses, or the performance or market share relating to products and services; any statements of expectation or belief; and any statements or assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include infrastructure failures; the deterioration of economic conditions or fluctuations, disruptions, instability or downturns in the economy; the effectiveness of managing company growth; technological and competitive factors; regulatory factors; and other risks that are described in Rackspace Hosting's Form 10-K for the year ended December 31, 2013, filed with the SEC on March 3, 2014, and in Rackspace Hosting’s Form 10-Q for the quarter ended March 31, 2014. Except as required by law, Rackspace Hosting assumes no obligation to update these forward-looking statements publicly or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

   
Consolidated Statements of Income
(Unaudited)
 
Three Months Ended
(In thousands, except per share data)

March 31,
2013

   

December 31,
2013

   

March 31,
2014

Net revenue $ 362,200 $ 408,103 $ 421,047
Costs and expenses:
Cost of revenue (1) 113,610 133,821 140,417
Research and development (1) 18,375 24,849 25,192
Sales and marketing (1) 49,814 55,465 57,359
General and administrative (1) 67,477 79,128 71,150
Depreciation and amortization   70,111     87,683     87,805  
Total costs and expenses   319,387     380,946     381,923  
Income from operations   42,813     27,157     39,124  
Other income (expense):
Interest expense (940 ) (656 ) (495 )
Interest and other income (expense)   199     405     265  
Total other income (expense)   (741 )   (251 )   (230 )
Income before income taxes 42,072 26,906 38,894
Income taxes   14,811     6,108     13,448  
Net income $ 27,261   $ 20,798   $ 25,446  
 
Net income per share
Basic $ 0.20   $ 0.15   $ 0.18  
Diluted $ 0.19   $ 0.14   $ 0.18  
 
Weighted average number of shares outstanding
Basic   137,742     139,875     141,048  
Diluted   143,177     144,024     143,815  
 

(1) As previously reported in the 10-Q filing for the three months ended March 31, 2013, certain reclassifications have been made to prior period amounts in order to conform to the current period's presentation. For more information, refer to our Form 10-Q for the quarter ended March 31, 2014.

       

Consolidated Balance Sheets

 
(In thousands)

December 31,
2013

March 31,
2014

(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 259,733 $ 313,835
Accounts receivable, net of allowance for doubtful accounts and customer credits of $3,891 as of December 31, 2013 and $4,548 as of March 31, 2014 123,898 118,507
Deferred income taxes 12,637 11,592
Prepaid expenses 30,782 27,175
Other current assets   11,918     12,277  
Total current assets 438,968 483,386
 
Property and equipment, net 890,776 925,136
Goodwill 81,084 81,084
Intangible assets, net 23,880 21,863
Other non-current assets   57,089     55,480  
Total assets $ 1,491,797   $ 1,566,949  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 122,047 $ 148,180
Accrued compensation and benefits 62,459 57,316
Income and other taxes payable 11,388 18,927
Current portion of deferred revenue 22,868 21,550
Current portion of capital lease obligations 37,885 31,462
Current portion of debt   1,861     1,888  
Total current liabilities 258,508 279,323
 
Non-current liabilities:
Deferred revenue 3,662 2,935
Capital lease obligations 25,048 19,905
Finance lease obligations for assets under construction 17,604
Debt 124 71
Deferred income taxes 69,729 61,282
Deferred rent 43,046 45,377
Other liabilities   36,268     40,440  
Total liabilities 436,385 466,937
 
COMMITMENTS AND CONTINGENCIES
 
Stockholders' equity:
Common stock 141 142
Additional paid-in capital 636,660 652,994
Accumulated other comprehensive loss (4,536 ) (1,717 )
Retained earnings   423,147     448,593  
Total stockholders’ equity   1,055,412     1,100,012  
Total liabilities and stockholders’ equity $ 1,491,797   $ 1,566,949  
 
   
Consolidated Statements of Cash Flows
(Unaudited)
 
Three Months Ended
(in thousands)

March 31,
2013

   

December 31,
2013

   

March 31,
2014

Cash Flows From Operating Activities
Net income $ 27,261 $ 20,798 $ 25,446
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 70,111 87,683 87,805
Loss on disposal of equipment, net 240 100 228
Provision for bad debts and customer credits 1,060 655 1,813
Deferred income taxes 6,553 (12,407 ) (10,119 )
Deferred rent 3,965 2,279 2,256
Share-based compensation expense 12,183 17,188 12,732
Excess tax benefits from share-based compensation arrangements (4,299 ) (16,156 ) (15,100 )
Changes in certain assets and liabilities:
Accounts receivable (6,268 ) (10,344 ) 3,870
Prepaid expenses and other current assets (5,637 ) 6,290 3,337
Accounts payable and accrued expenses 3,062 8,355 30,251
Deferred revenue 1,242 4,176 (2,110 )
All other operating activities   4,320     901     1,250  
Net cash provided by operating activities 113,793 109,518 141,659
 
Cash Flows From Investing Activities
Purchases of property and equipment (105,541 ) (126,723 ) (84,953 )
Acquisitions, net of cash acquired (6,203 ) (3,727 )
All other investing activities   8     110     455  
Net cash used in investing activities (111,736 ) (130,340 ) (84,498 )
 
Cash Flows From Financing Activities
Principal payments of capital leases (18,938 ) (14,652 ) (12,586 )
Principal payments of notes payable (51 ) (52 ) (52 )
Payments for deferred acquisition obligations (1,179 ) (57 ) (57 )
Receipt of Texas Enterprise Fund grant 5,500
Common shares withheld for employee withholding taxes (13,620 )
Proceeds from employee stock plans 1,714 8,971 2,122
Excess tax benefits from share-based compensation arrangements   4,299     16,156     15,100  
Net cash provided by (used in) financing activities (14,155 ) 10,366 (3,593 )
 
Effect of exchange rate changes on cash and cash equivalents (1,336 ) 194 534
     
Increase (decrease) in cash and cash equivalents (13,434 ) (10,262 ) 54,102
 
Cash and cash equivalents, beginning of period 292,061 269,995 259,733
     
Cash and cash equivalents, end of period $ 278,627   $ 259,733   $ 313,835  
 
Supplemental Cash Flow Information:
Non-cash purchases of property and equipment $ 19,858 $ (4,116 ) $ 15,741
 
   
Key Metrics - Quarter to Date
(Unaudited)
 
Three Months Ended
(Dollar amounts in thousands, except average monthly revenue per server)

March 31,
2013

   

June 30,
2013

   

September 30,
2013

   

December 31,
2013

   

March 31,
2014

Growth
Dedicated cloud, net revenue $ 271,311 $ 276,845 $ 280,215 $ 291,265 $ 299,689
Public cloud, net revenue $ 90,889   $ 99,002   $ 108,421   $ 116,838   $ 121,358  
Net revenue $ 362,200 $ 375,847 $ 388,636 $ 408,103 $ 421,047
Revenue growth (year over year) 20.2 % 17.8 % 15.7 % 15.6 % 16.2 %
 
Net upgrades (monthly average) 0.9 % 1.5 % 1.5 % 1.1 % 0.9 %
Churn (monthly average)   -0.8 %   -0.8 %   -0.8 %   -0.7 %   -0.6 %
Growth in installed base (monthly average) (2) 0.1 % 0.7 % 0.7 % 0.4 % 0.3 %
 
Number of employees (Rackers) at period end 5,043 5,272 5,450 5,651 5,743
Number of servers deployed at period end 94,122 98,884 101,967 103,886 106,229
Average monthly revenue per server $ 1,308 $ 1,298 $ 1,290 $ 1,322 $ 1,336
 
Profitability
Income from operations $ 42,813 $ 35,404 $ 27,762 $ 27,157 $ 39,124
Depreciation and amortization $ 70,111 $ 74,460 $ 80,753 $ 87,683 $ 87,805
Share-based compensation expense
Cost of revenue $ 2,519 $ 2,735 $ 3,453 $ 3,877 $ 3,791
Research and development $ 1,528 $ 1,813 $ 2,306 $ 2,521 $ 2,780
Sales and marketing $ 1,658 $ 1,744 $ 2,149 $ 1,766 $ 2,091
General and administrative $ 6,478   $ 7,023   $ 9,051   $ 9,024   $ 4,070  
Total share-based compensation expense $ 12,183   $ 13,315   $ 16,959   $ 17,188   $ 12,732  
Adjusted EBITDA (1) $ 125,107 $ 123,179 $ 125,474 $ 132,028 $ 139,661
 
Adjusted EBITDA margin 34.5 % 32.8 % 32.3 % 32.4 % 33.2 %
 
Operating income margin 11.8 % 9.4 % 7.1 % 6.7 % 9.3 %
 
Income from operations $ 42,813 $ 35,404 $ 27,762 $ 27,157 $ 39,124
Effective tax rate   35.2 %   34.7 %   40.7 %   22.7 %   34.6 %
Net operating profit after tax (NOPAT) (1) $ 27,743 $ 23,119 $ 16,463 $ 20,992 $ 25,587
NOPAT margin 7.7 % 6.2 % 4.2 % 5.1 % 6.1 %
 
Capital efficiency and returns
Interest bearing debt $ 105,807 $ 88,434 $ 72,579 $ 64,918 $ 53,326
Stockholders' equity $ 879,035 $ 933,897 $ 988,708 $ 1,055,412 $ 1,100,012
Less: Excess cash $ (235,163 ) $ (217,950 ) $ (223,359 ) $ (210,761 ) $ (263,309 )
Capital base $ 749,679 $ 804,381 $ 837,928 $ 909,569 $ 890,029
Average capital base $ 734,493 $ 777,030 $ 821,155 $ 873,749 $ 899,799
Capital turnover (annualized) 1.97 1.93 1.89 1.87 1.87
 
Return on capital (annualized) (1) 15.1 % 11.9 % 8.0 % 9.6 % 11.4 %
 
Capital expenditures
Cash purchases of property and equipment $ 105,541 $ 119,836 $ 100,496 $ 126,723 $ 84,953
Non-cash purchases of property and equipment (3) $ 19,858   $ (13,311 ) $ 17,062   $ (4,116 ) $ 15,741  
Total capital expenditures $ 125,399 $ 106,525 $ 117,558 $ 122,607 $ 100,694
 
Customer gear $ 85,690 $ 73,022 $ 73,784 $ 65,291 $ 60,688
Data center build outs $ 13,228 $ 10,085 $ 12,441 $ 22,524 $ 10,963
Office build outs $ 7,860 $ 1,683 $ 6,700 $ 14,860 $ 9,212
Capitalized software and other projects $ 18,621   $ 21,735   $ 24,633   $ 19,932   $ 19,831  
Total capital expenditures $ 125,399 $ 106,525 $ 117,558 $ 122,607 $ 100,694
 
Infrastructure capacity and utilization
Megawatts under contract at period end 59.4 59.6 60.0 60.0 58.1
Megawatts available for use at period end 38.8 44.4 46.9 46.9 45.3
Megawatts utilized at period end 24.7 26.0 27.0 27.4 28.1
Annualized net revenue per average Megawatt of power utilized $ 59,499 $ 59,305 $ 58,662 $ 60,015 $ 60,691
 

(1) See discussion and reconciliation of our Non-GAAP financial measures to the most comparable GAAP measures below.

(2) Due to rounding, totals may not equal the sum of the line items in the table above.

(3) Non-cash purchases of property and equipment represents changes in amounts accrued for purchases under vendor financing and other deferred payment arrangements.

   
Consolidated Quarterly Statements of Income
(Unaudited)
 
Three Months Ended
(In thousands)

March 31,
2013

   

June 30,
2013

   

September 30,
2013

   

December 31,
2013

   

March 31,
2014

Net revenue $ 362,200 $ 375,847 $ 388,636 $ 408,103 $ 421,047
Costs and expenses:
Cost of revenue 113,610 117,658 127,404 133,821 140,417
Research and development 18,375 23,216 23,773 24,849 25,192
Sales and marketing 49,814 52,269 50,869 55,465 57,359
General and administrative 67,477 72,840 78,075 79,128 71,150
Depreciation and amortization   70,111     74,460     80,753     87,683     87,805  
Total costs and expenses   319,387     340,443     360,874     380,946     381,923  
Income from operations   42,813     35,404     27,762     27,157     39,124  
Other income (expense):
Interest expense (940 ) (833 ) (689 ) (656 ) (495 )
Interest and other income (expense)   199     (303 )   440     405     265  
Total other income (expense)   (741 )   (1,136 )   (249 )   (251 )   (230 )
Income before income taxes 42,072 34,268 27,513 26,906 38,894
Income taxes   14,811     11,901     11,202     6,108     13,448  
Net income $ 27,261   $ 22,367   $ 16,311   $ 20,798   $ 25,446  
 
 
Three Months Ended
(Percent of net revenue)

March 31,
2013

June 30,
2013

September 30,
2013

December 31,
2013

March 31,
2014

Net revenue 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Costs and expenses:
Cost of revenue 31.4 % 31.3 % 32.8 % 32.8 % 33.3 %
Research and development 5.1 % 6.2 % 6.1 % 6.1 % 6.0 %
Sales and marketing 13.8 % 13.9 % 13.1 % 13.6 % 13.6 %
General and administrative 18.6 % 19.4 % 20.1 % 19.4 % 16.9 %
Depreciation and amortization   19.4 %   19.8 %   20.8 %   21.5 %   20.9 %
Total costs and expenses   88.2 %   90.6 %   92.9 %   93.3 %   90.7 %
Income from operations   11.8 %   9.4 %   7.1 %   6.7 %   9.3 %
Other income (expense):
Interest expense (0.3 )% (0.2 )% (0.2 )% (0.2 )% (0.1 )%
Interest and other income (expense)   0.1 %   (0.1 )%   0.1 %   0.1 %   0.1 %
Total other income (expense)   (0.2 )%   (0.3 )%   (0.1 )%   (0.1 )%   (0.1 )%
Income before income taxes 11.6 % 9.1 % 7.1 % 6.6 % 9.2 %
Income taxes   4.1 %   3.2 %   2.9 %   1.5 %   3.2 %
Net income   7.5 %   6.0 %   4.2 %   5.1 %   6.0 %
 
Due to rounding, totals may not equal the sum of the line items in the table above.
 

(1) Non-GAAP Financial Measures

Adjusted EBITDA (Non-GAAP financial measure)

We use Adjusted EBITDA as a supplemental measure to review and assess our performance. We define Adjusted EBITDA as net income, plus income taxes, total other (income) expense, depreciation and amortization, and non-cash charges for share-based compensation.

Adjusted EBITDA is a metric that is used in our industry by the investment community for comparative and valuation purposes. We disclose this metric in order to support and facilitate the dialogue with research analysts and investors.

Note that Adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States (GAAP) and should not be considered a substitute for operating income, which we consider to be the most directly comparable GAAP measure. Adjusted EBITDA has limitations as an analytical tool, and when assessing our operating performance, you should not consider Adjusted EBITDA in isolation or as a substitute for net income or other consolidated income statement data prepared in accordance with GAAP. Other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

See our reconciliation of Adjusted EBITDA to net income in the table below:

    Three Months Ended
(Dollars in thousands)

March 31,
2013

   

June 30,
2013

   

September 30,
2013

   

December 31,
2013

   

March 31,
2014

Net revenue $ 362,200 $ 375,847 $ 388,636 $ 408,103 $ 421,047
 
Income from operations $ 42,813 $ 35,404 $ 27,762 $ 27,157 $ 39,124
 
Net income $ 27,261 $ 22,367 $ 16,311 $ 20,798 $ 25,446
Plus: Income taxes 14,811 11,901 11,202 6,108 13,448
Plus: Total other (income) expense 741 1,136 249 251 230
Plus: Depreciation and amortization 70,111 74,460 80,753 87,683 87,805
Plus: Share-based compensation expense   12,183     13,315     16,959     17,188     12,732  
Adjusted EBITDA $ 125,107 $ 123,179 $ 125,474 $ 132,028 $ 139,661
 
Operating income margin 11.8 % 9.4 % 7.1 % 6.7 % 9.3 %
 
Adjusted EBITDA margin 34.5 % 32.8 % 32.3 % 32.4 % 33.2 %
 

Return on Capital (ROC) (Non-GAAP financial measure)

We define Return on Capital (ROC) as follows:

ROC = Net operating profit after tax (NOPAT)

Average capital base

NOPAT = Income from operations x (1 – effective tax rate)

Average capital base = Average of (interest bearing debt + stockholders’ equity – excess cash) = Average of (total assets – excess cash – accounts payable and accrued expenses, accrued compensation and benefits, and income and other taxes payable – deferred revenue – other non-current liabilities, deferred income taxes, deferred rent and finance lease obligations for assets under construction); calculated on a quarterly basis.

We define excess cash as the amount of cash and cash equivalents that exceeds our operating cash requirements, which is calculated as three percent of our annualized net revenue for the three months prior to the period end. We will periodically review the calculation and adjust it to reflect our projected cash requirements for the upcoming year.

We believe that ROC is an important metric for investors in evaluating our company’s performance. ROC relates after-tax operating profits with the capital that is placed into service. It is therefore a performance metric that incorporates both the Statement of Comprehensive Income and the Balance Sheet. ROC measures how successfully capital is deployed within a company.

Note that ROC is not a measure of financial performance under GAAP and should not be considered a substitute for return on assets, which we calculate directly from amounts on the Statement of Comprehensive Income and the Balance Sheet. ROC has limitations as an analytical tool, and when assessing our operating performance, you should not consider ROC in isolation or as a substitute for other financial data prepared in accordance with GAAP. Other companies may calculate ROC differently than we do, limiting its usefulness as a comparative measure.

See our reconciliation of the calculation of ROC to the calculation of return on assets in the table below:

    Three Months Ended
(Dollars in thousands)

March 31,
2013

   

June 30,
2013

   

September 30,
2013

   

December 31,
2013

   

March 31,
2014

Income from operations $ 42,813 $ 35,404 $ 27,762 $ 27,157 $ 39,124
Effective tax rate   35.2 %   34.7 %   40.7 %   22.7 %   34.6 %
Net operating profit after tax (NOPAT) $ 27,743 $ 23,119 $ 16,463 $ 20,992 $ 25,587
 
Net income $ 27,261 $ 22,367 $ 16,311 $ 20,798 $ 25,446
 
Total assets at period end $ 1,348,350 $ 1,377,928 $ 1,451,769 $ 1,491,797 $ 1,566,949
Less: Excess cash (235,163 ) (217,950 ) (223,359 ) (210,761 ) (263,309 )
Less: Accounts payable and accrued expenses, accrued compensation and benefits, and income and other taxes payable (197,686 ) (178,552 ) (213,268 ) (195,894 ) (224,423 )
Less: Deferred revenue (current and non-current) (21,811 ) (22,636 ) (22,211 ) (26,530 ) (24,485 )
Less: Other non-current liabilities, deferred income taxes, deferred rent, and finance lease obligations for assets under construction   (144,011 )   (154,409 )   (155,003 )   (149,043 )   (164,703 )
Capital base $ 749,679 $ 804,381 $ 837,928 $ 909,569 $ 890,029
 
Average total assets $ 1,321,951 $ 1,363,139 $ 1,414,849 $ 1,471,783 $ 1,529,373
Average capital base $ 734,493 $ 777,030 $ 821,155 $ 873,749 $ 899,799
 
Return on assets (annualized) 8.2 % 6.6 % 4.6 % 5.7 % 6.7 %
Return on capital (annualized) 15.1 % 11.9 % 8.0 % 9.6 % 11.4 %
 

Adjusted Free Cash Flow (Non-GAAP financial measure)

We define Adjusted Free Cash Flow as Adjusted EBITDA plus non-cash deferred rent, less total capital expenditures (including non-cash purchases of property and equipment), cash payments for interest, net, and cash payments for income taxes, net.

We believe that Adjusted Free Cash Flow is a performance metric used by investors to evaluate the strength and performance of a company's ongoing business. Note that Adjusted Free Cash Flow is not a measure of financial performance under GAAP and may not be comparable to similarly titled measures reported by other companies.

See our reconciliation of Adjusted Free Cash Flow to Adjusted EBITDA below, as well as our reconciliation of Adjusted EBITDA to net income provided above.

    Three Months Ended     Three Months Ended
(In thousands) March 31, 2013 March 31, 2014
Adjusted EBITDA $ 125,107 $ 139,661
Non-cash deferred rent 3,965 2,256
Total capital expenditures (125,399 ) (100,694 )
Cash payments for interest, net (1,051 ) (432 )
Cash payments for income taxes, net   (3,839 )   (886 )
Adjusted free cash flow $ (1,217 ) $ 39,905  

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
The 20th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held June 6-8, 2017, at the Javits Center in New York City, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal ...
You have great SaaS business app ideas. You want to turn your idea quickly into a functional and engaging proof of concept. You need to be able to modify it to meet customers' needs, and you need to deliver a complete and secure SaaS application. How could you achieve all the above and yet avoid unforeseen IT requirements that add unnecessary cost and complexity? You also want your app to be responsive in any device at any time. In his session at 19th Cloud Expo, Mark Allen, General Manager of...
The Internet of Things (IoT) promises to simplify and streamline our lives by automating routine tasks that distract us from our goals. This promise is based on the ubiquitous deployment of smart, connected devices that link everything from industrial control systems to automobiles to refrigerators. Unfortunately, comparatively few of the devices currently deployed have been developed with an eye toward security, and as the DDoS attacks of late October 2016 have demonstrated, this oversight can ...
"ReadyTalk is an audio and web video conferencing provider. We've really come to embrace WebRTC as the platform for our future of technology," explained Dan Cunningham, CTO of ReadyTalk, in this SYS-CON.tv interview at WebRTC Summit at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Major trends and emerging technologies – from virtual reality and IoT, to Big Data and algorithms – are helping organizations innovate in the digital era. However, to create real business value, IT must think beyond the ‘what’ of digital transformation to the ‘how’ to harness emerging trends, innovation and disruption. Architecture is the key that underpins and ties all these efforts together. In the digital age, it’s important to invest in architecture, extend the enterprise footprint to the cl...
Bert Loomis was a visionary. This general session will highlight how Bert Loomis and people like him inspire us to build great things with small inventions. In their general session at 19th Cloud Expo, Harold Hannon, Architect at IBM Bluemix, and Michael O'Neill, Strategic Business Development at Nvidia, discussed the accelerating pace of AI development and how IBM Cloud and NVIDIA are partnering to bring AI capabilities to "every day," on-demand. They also reviewed two "free infrastructure" pr...
"Dice has been around for the last 20 years. We have been helping tech professionals find new jobs and career opportunities," explained Manish Dixit, VP of Product and Engineering at Dice, in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smar...
Extracting business value from Internet of Things (IoT) data doesn’t happen overnight. There are several requirements that must be satisfied, including IoT device enablement, data analysis, real-time detection of complex events and automated orchestration of actions. Unfortunately, too many companies fall short in achieving their business goals by implementing incomplete solutions or not focusing on tangible use cases. In his general session at @ThingsExpo, Dave McCarthy, Director of Products...
Successful digital transformation requires new organizational competencies and capabilities. Research tells us that the biggest impediment to successful transformation is human; consequently, the biggest enabler is a properly skilled and empowered workforce. In the digital age, new individual and collective competencies are required. In his session at 19th Cloud Expo, Bob Newhouse, CEO and founder of Agilitiv, drew together recent research and lessons learned from emerging and established compa...
Businesses and business units of all sizes can benefit from cloud computing, but many don't want the cost, performance and security concerns of public cloud nor the complexity of building their own private clouds. Today, some cloud vendors are using artificial intelligence (AI) to simplify cloud deployment and management. In his session at 20th Cloud Expo, Ajay Gulati, Co-founder and CEO of ZeroStack, will discuss how AI can simplify cloud operations. He will cover the following topics: why clou...
The WebRTC Summit New York, to be held June 6-8, 2017, at the Javits Center in New York City, NY, announces that its Call for Papers is now open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 20th International Cloud Expo and @ThingsExpo. WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web ...
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life sett...
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web communications world. The 6th WebRTC Summit continues our tradition of delivering the latest and greatest presentations within the world of WebRTC. Topics include voice calling, video chat, P2P file sharing, and use cases that have already leveraged the power and convenience of WebRTC.
Amazon has gradually rolled out parts of its IoT offerings, but these are just the tip of the iceberg. In addition to optimizing their backend AWS offerings, Amazon is laying the ground work to be a major force in IoT - especially in the connected home and office. In his session at @ThingsExpo, Chris Kocher, founder and managing director of Grey Heron, explained how Amazon is extending its reach to become a major force in IoT by building on its dominant cloud IoT platform, its Dash Button strat...
Internet-of-Things discussions can end up either going down the consumer gadget rabbit hole or focused on the sort of data logging that industrial manufacturers have been doing forever. However, in fact, companies today are already using IoT data both to optimize their operational technology and to improve the experience of customer interactions in novel ways. In his session at @ThingsExpo, Gordon Haff, Red Hat Technology Evangelist, will share examples from a wide range of industries – includin...
"We build IoT infrastructure products - when you have to integrate different devices, different systems and cloud you have to build an application to do that but we eliminate the need to build an application. Our products can integrate any device, any system, any cloud regardless of protocol," explained Peter Jung, Chief Product Officer at Pulzze Systems, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
The cloud promises new levels of agility and cost-savings for Big Data, data warehousing and analytics. But it’s challenging to understand all the options – from IaaS and PaaS to newer services like HaaS (Hadoop as a Service) and BDaaS (Big Data as a Service). In her session at @BigDataExpo at @ThingsExpo, Hannah Smalltree, a director at Cazena, provided an educational overview of emerging “as-a-service” options for Big Data in the cloud. This is critical background for IT and data professionals...
"Once customers get a year into their IoT deployments, they start to realize that they may have been shortsighted in the ways they built out their deployment and the key thing I see a lot of people looking at is - how can I take equipment data, pull it back in an IoT solution and show it in a dashboard," stated Dave McCarthy, Director of Products at Bsquare Corporation, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.