CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) Nine Months Ended September 30,(In millions) 2023 2024 Cash Flows From Operating Activities Net loss$(865.8) $(802.2)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 282.5 222.0 Amortization of operating right-of-use assets 57.9 51.4 Deferred income taxes (38.9) (46.4)Share-based compensation expense 51.9 47.8 Impairment of goodwill 708.8 714.9 Impairment of assets, net 48.4 20.0 Debt modification costs and gain on debt extinguishment (163.1) (147.2)Unrealized loss on derivative contracts 13.7 — Gain on investments, net (0.2) (0.2)Provision for bad debts and accrued customer credits 5.1 11.3 Amortization of debt issuance costs and debt discount and premium 6.0 3.5 Third party fees paid in connection with the Refinancing Transactions — (31.7)Non-cash fair value adjustments (1.0) (2.2)Other operating activities 0.3 (3.7)Changes in operating assets and liabilities: Accounts receivable 268.8 16.9 Prepaid expenses and other current assets 23.1 (2.1)Accounts payable, accrued expenses, and other current liabilities (65.6) (12.8)Deferred revenue (1.5) (13.1)Operating lease liabilities (48.6) (63.0)Other non-current assets and liabilities 20.9 22.4 Net cash provided by (used in) operating activities 302.7 (14.4)Cash Flows From Investing Activities Purchases of property, equipment and software (63.0) (91.2)Proceeds from sale of headquarters — 16.9 Other investing activities 0.7 5.4 Net cash used in investing activities (62.3) (68.9)Cash Flows From Financing Activities Proceeds from employee stock plans 0.8 0.4 Shares of common stock withheld for employee taxes (1.0) (4.3)Proceeds from borrowings under long-term debt arrangements 50.0 275.0 Payments on long-term debt (151.8) (138.5)Debt extinguishment costs — (22.1)Payments on financing component of interest rate swap (14.3) (13.0)Principal payments of finance lease liabilities (60.3) (44.0)Principal payments of financing obligations (14.8) (10.5)Net cash provided by (used in) financing activities (191.4) 43.0 Effect of exchange rate changes on cash, cash equivalents, and restricted cash 0.3 0.7 Increase (decrease) in cash, cash equivalents, and restricted cash 49.3 (39.6)Cash, cash equivalents, and restricted cash at beginning of period 231.4 199.7 Cash, cash equivalents, and restricted cash at end of period$280.7 $160.1 Supplemental Cash Flow Information Cash payments for interest, net of amount capitalized$166.2 $83.9 Cash payments for income taxes, net of refunds$9.9 $9.7 Non-cash Investing and Financing Activities Acquisition of property, equipment and software by finance leases$67.4 $22.0 Acquisition of property, equipment and software by financing obligations 8.5 — Increase (decrease) in property, equipment and software accrued in liabilities 4.9 (1.7)Other non-cash activity — (2.1)Non-cash purchases of property, equipment and software$80.8 $18.2 SEGMENT DATA (In millions, except %)Three Months Ended September 30, % ChangeRevenue by segment: 2023 2024 Actual Constant Currency (a) Public Cloud$431.5 $418.3 (3.1)% (3.1)%Private Cloud 300.9 257.5 (14.4)% (14.7)%Total consolidated revenue$732.4 $675.8 (7.7)% (7.9)% (In millions, except %)Nine Months Ended September 30, % ChangeRevenue by segment: 2023 2024 Actual Constant Currency (a) Public Cloud$1,308.7 $1,265.6 (3.3)% (3.4)%Private Cloud 928.7 785.9 (15.4)% (15.8)%Total consolidated revenue$2,237.4 $2,051.5 (8.3)% (8.5)% (a) Refer to "Non-GAAP Financial Measures" in this section for further explanation and reconciliation. Three Months Ended September 30, Year-Over-YearComparison(In millions, except %) 2023 2024 Segment operating profit (a):Amount % of Segment Revenue Amount % of Segment Revenue Amount % Change Public Cloud$20.3 4.7% $16.4 3.9% $(3.9) (19.2)%Private Cloud 86.2 28.6% 74.5 28.9% (11.7) (13.6)%Corporate functions (b) (61.0) (56.6) 4.4 (7.2)%Non-GAAP Operating Profit (c)$45.5 $34.3 $(11.2) (24.6)% Nine Months Ended September 30, Year-Over-YearComparison(In millions, except %) 2023 2024 Segment operating profit (a):Amount % of Segment Revenue Amount % of Segment Revenue Amount % Change Public Cloud$59.5 4.5% $37.5 3.0% $(22.0) (37.0)%Private Cloud 268.2 28.9% 215.9 27.5% (52.3) (19.5)%Corporate functions (b) (192.7) (180.1) 12.6 (6.5)%Non-GAAP Operating Profit (c)$135.0 $73.3 $(61.7) (45.7)% (a) Segment revenue less expenses directly attributable to running the respective segments’ business.
Net loss reconciliation to Non-GAAP Net Loss Three Months Ended September 30, Nine Months Ended September 30,(In millions) 2023 2024 2023 2024 Net loss$(226.6) $(186.6) $(865.8) $(802.2)Share-based compensation expense 17.2 15.5 51.9 47.8 Special bonuses and other compensation expense (a) 3.3 2.7 9.7 9.1 Transaction-related adjustments, net (b) 1.6 1.8 4.1 4.4 Restructuring and transformation expenses (c) 14.3 8.8 63.0 42.5 Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage (5.3) (1.2) (0.4) (1.1)Impairment of goodwill 165.7 141.7 708.8 714.9 UK office closure (d) — — 12.1 — Impairment of assets, net 48.4 — 48.4 20.0 Net gain on divestiture and investments (e) — (0.1) (0.2) (0.2)Debt modification costs and gain on debt extinguishment (55.4) (18.0) (163.1) (147.2)Interest expense impact from the Refinancing Transactions (f) — (25.0) — (50.6)Other adjustments (g) 2.6 (4.3) 0.3 (3.8)Amortization of intangible assets (h) 39.7 38.7 121.6 116.0 Tax effect of non-GAAP adjustments (i) (13.6) 15.7 (16.7) (3.6)Non-GAAP Net Loss$(8.1) $(10.3) $(26.3) $(54.0) Loss from operations reconciliation to Non-GAAP Operating Profit Three Months Ended September 30, Nine Months Ended September 30,(In millions) 2023 2024 2023 2024 Loss from operations$(239.4) $(173.7) $(884.2) $(880.3)Share-based compensation expense 17.2 15.5 51.9 47.8 Special bonuses and other compensation expense (a) 3.3 2.7 9.7 9.1 Transaction-related adjustments, net (b) 1.6 1.8 4.1 4.4 Restructuring and transformation expenses (c) 14.3 8.8 63.0 42.5 Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage (5.3) (1.2) (0.4) (1.1)Impairment of goodwill 165.7 141.7 708.8 714.9 Impairment of assets, net 48.4 — 48.4 20.0 Amortization of intangible assets (h) 39.7 38.7 121.6 116.0 UK office closure (d) — — 12.1 — Non-GAAP Operating Profit$45.5 $34.3 $135.0 $73.3 Net loss reconciliation to Adjusted EBITDA Three Months Ended September 30, Nine Months Ended September 30,(In millions) 2023 2024 2023 2024 Net loss$(226.6) $(186.6) $(865.8) $(802.2)Share-based compensation expense 17.2 15.5 51.9 47.8 Special bonuses and other compensation expense (a) 3.3 2.7 9.7 9.1 Transaction-related adjustments, net (b) 1.6 1.8 4.1 4.4 Restructuring and transformation expenses (c) 14.3 8.8 63.0 42.5 Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage (5.3) (1.2) (0.4) (1.1)Impairment of goodwill 165.7 141.7 708.8 714.9 UK office closure (d) — — 12.1 — Impairment of assets, net 48.4 — 48.4 20.0 Net gain on divestiture and investments (e) — (0.1) (0.2) (0.2)Debt modification costs and gain on debt extinguishment (55.4) (18.0) (163.1) (147.2)Other expense, net (j) 2.6 1.0 0.3 11.8 Interest expense 56.5 18.0 170.7 80.1 Provision (benefit) for income taxes (16.5) 12.0 (26.1) (22.6)Depreciation and amortization (k) 90.1 72.3 279.2 220.6 Adjusted EBITDA$95.9 $67.9 $292.6 $177.9 (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.
We define Non-GAAP Gross Profit as gross profit, adjusted to exclude the impact of share-based compensation expense and other non-recurring or unusual compensation items, purchase accounting-related effects, certain business transformation-related costs, and costs related to the Hosted Exchange incident. Three Months Ended September 30, Nine Months Ended September 30,(In millions) 2023 2024 2023 2024 Gross profit$152.0 $137.5 $474.7 $401.7 Share-based compensation expense 2.0 2.0 7.4 5.9 Special bonuses and other compensation expense (a) 1.2 0.7 3.3 2.6 Purchase accounting impact on expense (b) 0.6 0.3 1.9 1.5 Restructuring and transformation expenses (c) 6.2 2.6 16.0 11.8 Hosted Exchange incident expenses, net of proceeds received or expected to be received under our insurance coverage — — 0.3 — Non-GAAP Gross Profit$162.0 $143.1 $503.6 $423.5 (a) 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.
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