v3.26.1
Segment Reporting
 6 Months Ended
Jun. 30, 2026
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
We have organized our operations into two operating segments, which correspond directly to our reportable segments: Public Cloud, a services-centric, capital-light model providing value-added cloud solutions through managed services, Elastic Engineering and professional services offerings for customer environments hosted on the Amazon Web Services ("AWS"), Microsoft Azure and Google Cloud public cloud platforms; and Private Cloud, a technology-forward, capital-intensive model providing managed service offerings for customer environments hosted in one of our data centers as well as in those owned by customers or by third parties such as colocation providers.

This two-business unit operating model allows for each segment to be managed separately based on the different service offerings and respective operational and marketing strategies, ensuring increased focus, delivery, and service quality for our customers.

Our segments are based upon a number of factors, including, the basis for our budgets and forecasts, organizational and management structure and the financial information regularly provided to our Chief Operating Decision Maker ("CODM"), who we have determined to be our Chief Executive Officer. The CODM is responsible for making key operating and strategic decisions to assess performance for each segment. We assess financial performance of our segments on the basis of revenue and segment operating profit. The CODM utilizes both revenue and segment operating profit or loss before interest and income taxes to allocate resources and assesses performance of each segment by comparing actual revenue and operating profit or loss results, respectively, to historical results and previously forecasted financial information. Segment operating profit includes expenses directly attributable to running the respective segments' business. This excludes any corporate overhead expenses. We have centralized corporate functions that provide services to the segments in areas such as accounting, information technology, marketing, legal and human resources. Corporate function costs that are not allocated to the segments are included in the row labeled "Corporate functions" in the table below.
The table below presents revenue and segment operating profit by reportable segment and a reconciliation of consolidated segment operating profit to consolidated loss before income taxes for the three and six months ended June 30, 2025 and 2026.
Three Months Ended June 30,Six Months Ended June 30,
(In millions)2025202620252026
Public Cloud
Revenue
$416.6 $406.8 $832.2 $850.2 
Third party infrastructure (1)
(324.3)(322.3)(650.7)(676.2)
Other cost of revenue (2)
(52.4)(45.2)(102.1)(95.4)
Other segment items (3)
(23.7)(20.3)(45.9)(38.9)
Segment operating profit$16.2 $19.0 $33.5 $39.7 
Private Cloud
Revenue
$249.7 $263.3 $499.5 $498.0 
Cost of revenue
(157.7)(178.3)(314.9)(328.5)
Other segment items (3)
(30.5)(27.5)(62.1)(54.1)
Segment operating profit$61.5 $57.5 $122.5 $115.4 
Total Consolidated
Revenue
$666.3 $670.1 $1,331.7 $1,348.2 
Segment operating profit$77.7 $76.5 $156.0 $155.1 
Corporate functions(50.4)(49.1)(103.1)(97.0)
Share-based compensation expense(10.0)(10.4)(22.0)(17.0)
Transaction-related adjustments, net (4)
(0.4)(0.5)(1.9)(2.1)
Restructuring and transformation expenses (5)
(4.4)(18.4)(17.5)(27.4)
Amortization of intangible assets (6)
(37.6)(31.3)(75.0)(62.6)
Interest expense(21.3)(34.2)(40.7)(60.4)
Gain on investments, net0.3 0.1 0.2 — 
Gain on debt extinguishment— 6.7 — 62.5 
Other expense, net(3.8)(5.1)(9.2)(8.6)
Total consolidated loss before income taxes$(49.9)$(65.7)$(113.2)$(57.5)
(1)Represents usage charges from public cloud infrastructure providers.
(2)Other cost of revenue excludes third party infrastructure expenses and is comprised of certain license costs, labor, and other designated expenses.
(3)
Other segment items for each segment include directly allocable research and development expenses, sales and marketing expenses, and certain other general and administrative expenses.
(4)
Includes purchase accounting adjustments, exploratory acquisition and divestiture costs, and expenses related to financing activities.
(5)
Includes consulting and advisory fees related to business transformation and optimization activities, as well as associated severance, certain facility closure costs, and lease termination expenses. Also includes payroll taxes associated with the exercise of stock options and vesting of restricted stock. The three and six months ended June 30, 2026 also includes $12.1 million of severance and related expenses associated with the workforce realignment plan announced in June 2026. The workforce realignment plan is intended to accelerate our Enterprise AI strategy and is expected to result in the termination of approximately 15% of our global workforce, with estimated one-time expenses of approximately $14.0 million to $19.0 million to be incurred in 2026.
(6)
All of our intangible assets are attributable to acquisitions, including the Rackspace Acquisition in 2016.
The table below presents depreciation expense included in segment operating profit above for the three and six months ended June 30, 2025 and 2026.

Three Months Ended June 30,Six Months Ended June 30,
(In millions)2025202620252026
Public Cloud$1.7 $1.8 $3.4 $3.6 
Private Cloud30.6 32.1 60.3 65.9 
Corporate functions5.1 4.6 10.2 9.6 
    Total depreciation expense$37.4 $38.5 $73.9 $79.1 

Management does not use total assets by segment to evaluate segment performance or allocate resources. As such, total assets by segment are not disclosed.