QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
☒ | Smaller reporting company | ||||||||||
Emerging growth company |
Page | ||||||||
Condensed Consolidated Statements of Changes in Shareholders’ Equity | ||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
Assets: | |||||||||||
Current assets: | |||||||||||
Cash | $ | $ | |||||||||
Accounts receivable, net of allowance of $ | |||||||||||
Prepaid and other current assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and shareholders’ equity: | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses | |||||||||||
Current portion of operating lease liabilities | |||||||||||
Current portion of long-term debt, finance leases and other financing obligations | |||||||||||
Deferred revenue | |||||||||||
Other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Operating leases liabilities, net of current portion | |||||||||||
Long-term debt, net of current portion | |||||||||||
Finance leases and other financing obligations, net of current portion | |||||||||||
Deferred income taxes | |||||||||||
Warrant liabilities | |||||||||||
Other liabilities | |||||||||||
Total liabilities | $ | $ | |||||||||
Commitments and contingencies (Note 16) | |||||||||||
Shareholders’ equity: | |||||||||||
Preferred Stock, $ | |||||||||||
Class A common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive (loss) income | ( | ||||||||||
Accumulated deficit | ( | ( | |||||||||
Total shareholders’ equity | |||||||||||
Total liabilities and shareholders’ equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||
Cost of revenues, excluding depreciation and amortization | ||||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||||||||
Restructuring, impairment, site closures and related costs | ||||||||||||||||||||||||||
Transaction-related costs | ||||||||||||||||||||||||||
Total operating costs and expenses | ||||||||||||||||||||||||||
Loss from operations | ( | ( | ( | ( | ||||||||||||||||||||||
Interest expense, net | ( | ( | ( | ( | ||||||||||||||||||||||
Other expenses, net | ( | ( | ( | ( | ||||||||||||||||||||||
Change in fair value of warrant liabilities | ( | ( | ||||||||||||||||||||||||
Loss from operations before income taxes | ( | ( | ( | ( | ||||||||||||||||||||||
Income tax benefit (expense) | ( | |||||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Loss Per Share | ||||||||||||||||||||||||||
Basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Weighted average number of shares outstanding | ||||||||||||||||||||||||||
Basic and diluted |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Other comprehensive loss: | ||||||||||||||||||||||||||
Foreign currency translation adjustment | ( | ( | ( | ( | ||||||||||||||||||||||
Other comprehensive loss | ( | ( | ( | ( | ||||||||||||||||||||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
Class A common stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Accumulated deficit | Total shareholders’ equity | |||||||||||||||||||||||||||||||
Share | Amount | ||||||||||||||||||||||||||||||||||
Balance as of December 31, 2021 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Issuance of shares related to exercise of warrants | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of shares related to exercise of optional shares purchase options | — | — | — | ||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Balance as of March 31, 2022 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Balance as of June 30, 2022 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Issuance of shares for Restrictive Stock Units vesting | — | — | — | — | — | ||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Balance as of September 30, 2022 | $ | $ | $ | ( | $ | ( | $ |
Class A common stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Accumulated deficit | Total shareholders’ equity | |||||||||||||||||||||||||||||||
Share | Amount | ||||||||||||||||||||||||||||||||||
Balance as of December 31, 2020 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
Retroactive application of recapitalization | — | — | — | — | |||||||||||||||||||||||||||||||
Adjusted balance, beginning of period | ( | ||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Capital redemption | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
Balance as of March 31, 2021 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
Balance as of June 30, 2021 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Reverse recapitalization, net of transaction costs | — | — | — | ||||||||||||||||||||||||||||||||
Capital contribution | — | — | — | — | |||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | ( | ||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Balance as of September 30, 2021 | $ | $ | $ | $ | ( | $ |
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Net loss | $ | ( | $ | ( | |||||||
Cash flows from operating activities: | |||||||||||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Restructuring, impairment, site closures and related costs | |||||||||||
Amortization of favorable/unfavorable leasehold interests, net | |||||||||||
Amortization of debt issuance costs and fees, net | |||||||||||
Equity-based compensation | |||||||||||
Reversal of allowance for doubtful accounts | ( | ( | |||||||||
Deferred income taxes | ( | ||||||||||
Change of fair value of warrant liabilities | ( | ||||||||||
Non-cash interest expense, net | |||||||||||
Changes in operating assets and liabilities, excluding impact of acquisitions and dispositions: | |||||||||||
Accounts receivable | ( | ||||||||||
Prepaid and other current assets | |||||||||||
Other assets | ( | ||||||||||
Operating lease right-of-use assets | |||||||||||
Operating lease liabilities | ( | ||||||||||
Accounts payable | ( | ||||||||||
Accrued expenses | ( | ||||||||||
Due to affiliates | ( | ||||||||||
Other liabilities | |||||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Amounts received from affiliate (Note 18) | |||||||||||
Net cash (used in) provided by investing activities | ( | ||||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from issuance of long-term debt and other financing obligations | |||||||||||
Proceeds from recapitalization, net of issuance costs | |||||||||||
Repayment of long-term debt | ( | ( | |||||||||
Repayment of finance leases and other financing obligations | ( | ( | |||||||||
Proceeds from sales leaseback financing | |||||||||||
Capital redemption | ( | ||||||||||
Capital contribution | |||||||||||
Proceeds from the exercise of warrants, net of redemptions | |||||||||||
Proceeds from the exercise of the optional share purchase options | |||||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
Effect of foreign currency exchange rates on cash | ( | ||||||||||
Net increase (decrease) in cash | ( | ||||||||||
Cash at beginning of period | |||||||||||
Cash at end of period | $ | $ | |||||||||
Supplemental cash flow information: | |||||||||||
Cash (refund) paid for income taxes, net | $ | ( | $ | ||||||||
Cash paid for interest | $ | $ | |||||||||
Non-cash purchases of property and equipment | $ | $ |
Balance Sheet | Balances at December 31, 2021 | Adjustments due to adoption of Topic 842 | Balances at January 1, 2022 | |||||||||||||||||
Assets | ||||||||||||||||||||
Operating lease right-of-use assets | $ | $ | $ | |||||||||||||||||
Intangible assets, net | ( | |||||||||||||||||||
Liabilities | ||||||||||||||||||||
Current portion of operating lease liabilities | ||||||||||||||||||||
Operating lease liabilities, less current portion | ||||||||||||||||||||
Other liabilities | ( |
Recapitalization (in millions) | ||||||||
SVAC’s trust and cash, net of redemptions | $ | |||||||
Cash - PIPE Investment | ||||||||
Cash - Forward Purchase | ||||||||
Less: transaction costs and advisory fees, net of tax benefit | ( | |||||||
Net proceeds from reverse recapitalization | ||||||||
Plus: non-cash net liabilities assumed (1) | ( | |||||||
Less: accrued transaction costs and advisory fees | ( | |||||||
Net contributions from reverse recapitalization | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2022 | 2022 | 2021 | 2021 | |||||||||||||||||||||||
Unvested employee stock options | ||||||||||||||||||||||||||
Unvested RSUs | ||||||||||||||||||||||||||
Unvested PSUs | ||||||||||||||||||||||||||
Unissued ESPP shares | ||||||||||||||||||||||||||
Optional shares (1) | ||||||||||||||||||||||||||
Public and Private Placement Warrants (2) | ||||||||||||||||||||||||||
Total shares |
Nine Months Ended September 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Balance at beginning of the period | $ | $ | ||||||||||||
Lease termination costs | ||||||||||||||
Reclassification of deferred rent credits | ||||||||||||||
Reclassification of the restructuring liability reserve to ROU Asset | ( | |||||||||||||
Accretion | ||||||||||||||
Payments | ( | ( | ||||||||||||
Balance at end of the period | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Recurring revenue | $ | $ | $ | $ | |||||||||||||||||||
Non-recurring revenues | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Receivables | Contract asset, current | Contract asset, non-current | Deferred revenue, current | Deferred revenue, non-current | |||||||||||||||||||||||||
Closing balances as of December 31, 2020 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Net (decrease) increase during the three months ended March 31, 2021 | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Closing balances as of March 31, 2021 | |||||||||||||||||||||||||||||
Net increase (decrease) during the three months ended June 30, 2021 | ( | ( | ( | ( | |||||||||||||||||||||||||
Closing balances as of June 30, 2021 | |||||||||||||||||||||||||||||
Net increase (decrease) during the three months ended September 30, 2021 | ( | ( | |||||||||||||||||||||||||||
Closing balances as of September 30, 2021 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Closing balances as of December 31, 2021 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Net increase (decrease) during the three months ended March 31, 2022 | ( | ( | |||||||||||||||||||||||||||
Closing balances as of March 31, 2022 | |||||||||||||||||||||||||||||
Net increase (decrease) during the three months ended June 30, 2022 | ( | ||||||||||||||||||||||||||||
Closing balances as of June 30, 2022 | |||||||||||||||||||||||||||||
Net (decrease) increase during the three months ended September 30, 2022 | ( | ||||||||||||||||||||||||||||
Closing balances as of September 30, 2022 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
Beginning balance | $ | $ | |||||||||
(Write-offs) Recoveries | |||||||||||
Reversal of allowance | ( | ( | |||||||||
Ending balance | $ | $ |
September 30, 2022 | December 31, 2021 | ||||||||||
Contract asset, current | $ | $ | |||||||||
Prepaid expenses | |||||||||||
Other current assets | ( | ||||||||||
Total prepaid and other current assets | $ | $ |
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||
Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Favorable leasehold interests | ( | ||||||||||||||||||||||||||||||||||
Developed technology | ( | ( | |||||||||||||||||||||||||||||||||
Total intangibles | $ | $ | ( | $ | $ | $ | ( | $ |
2022 (3 months remaining) | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
Total amortization expense | $ |
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
Carrying value | Fair value | Carrying value | Fair value | ||||||||||||||||||||
2017 First Lien Term Facility | $ | $ | $ | $ | |||||||||||||||||||
2019 First Lien Term Facility | |||||||||||||||||||||||
Revolving Facility | |||||||||||||||||||||||
2021 Revolving Facility |
Nine Months Ended September 30, 2022 | ||||||||
Finance lease cost | ||||||||
Amortization of ROU assets (1) | $ | |||||||
Interest on lease liabilities (2) | ||||||||
Total finance lease cost | ||||||||
Operating lease cost (3)(6) | ||||||||
Variable lease cost (4) | ||||||||
Sublease income (5) | ( | |||||||
Total lease cost | $ |
Nine Months Ended September 30, 2022 | ||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows from finance leases | $ | |||||||
Operating cash flows from operating leases | ||||||||
Financing cash flows from finance lease | ||||||||
Right-of-use assets obtained in exchange for lease liabilities: | ||||||||
Finance leases | ||||||||
Operating leases | ||||||||
As of September 30, 2022 | ||||||||
Weighted-average remaining lease term (in years) - finance leases(1) | ||||||||
Weighted-average remaining lease term (in years) - operating leases(1) | ||||||||
Weighted-average discount rate - finance leases | % | |||||||
Weighted-average discount rate - operating lease | % |
Operating Leases(1) | Finance Leases | Total | |||||||||||||||
2022 (3 months remaining) | $ | $ | $ | ||||||||||||||
2023 | |||||||||||||||||
2024 | |||||||||||||||||
2025 | |||||||||||||||||
2026 | |||||||||||||||||
Thereafter | |||||||||||||||||
Total lease payments | $ | $ | $ | ||||||||||||||
Less: imputed interest | ( | ( | ( | ||||||||||||||
Total | $ | $ | $ |
Lease receipts | |||||
2022 (3 months remaining) | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
Total minimum lease receipts | $ |
For the year ended December 31, | Lease receipts | Lease commitments(1) | |||||||||
2022 | $ | $ | |||||||||
2023 | |||||||||||
2024 | |||||||||||
2025 | |||||||||||
2026 | |||||||||||
Thereafter | |||||||||||
Total minimum lease receipts/payments | $ | $ |
For the year ended December 31, | |||||
2022 | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
Total minimum lease payments | |||||
Less: amount representing interest | ( | ||||
Present value of net minimum lease payments | |||||
Less: current portion | ( | ||||
Capital leases, net of current portion | $ |
September 30, 2022 | December 31, 2021 | ||||||||||
2017 First Lien Term Facility due May 2024 | $ | $ | |||||||||
2019 First Lien Term Facility due May 2024 | |||||||||||
Revolving Facility due May 2022 | |||||||||||
2021 Revolving Facility due November 2023 | |||||||||||
Less: unamortized debt issuance costs | ( | ( | |||||||||
Less: current maturities of long-term debt | ( | ( | |||||||||
Long-term debt, net current portion | $ | $ |
Principal amount | |||||
2022 (3 months remaining) | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Total | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Interest expense on debt, net of capitalized interest | $ | $ | $ | $ | |||||||||||||||||||
Interest expense on finance leases | |||||||||||||||||||||||
Amortization of deferred financing costs and fees | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
(in millions) | Public Warrants (Level 1) | Private Placement Warrants (Level 2) | Total | |||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | |||||||||||||||||
Warrants exercised for Class A common stock | ( | ( | ( | |||||||||||||||||
Change in fair value of the warrant liabilities | ( | ( | ( | |||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Costs of revenues, excluding depreciation and amortization | $ | $ | $ | $ | |||||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
Shares Subject to Options | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Outstanding from January 1, 2022 | $ | — | $ | ||||||||||||||||||||
Granted | $ | ||||||||||||||||||||||
Exercised | $ | ||||||||||||||||||||||
Expired/forfeited | ( | $ | |||||||||||||||||||||
Outstanding at September 30, 2022 | $ | $ | |||||||||||||||||||||
Exercisable, September 30, 2022 | $ | — | $ | ||||||||||||||||||||
Ending vested and expected to vest, September 30, 2022 | $ | $ |
Shares Subject to RSUs | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | Weighted Average Grant Date Fair Value | |||||||||||||||||||||||||
Outstanding from January 1, 2022 | $ | — | — | $ | $ | ||||||||||||||||||||||||
Granted | $ | — | $ | ||||||||||||||||||||||||||
Vested | ( | $ | — | $ | |||||||||||||||||||||||||
Expired/forfeited | ( | $ | — | $ | |||||||||||||||||||||||||
Outstanding at September 30, 2022 | $ | — | $ | $ | |||||||||||||||||||||||||
Exercisable, September 30, 2022 | — | $ | — | — | $ | — | $ | — | |||||||||||||||||||||
Unvested and expected to vest, September 30, 2022 | $ | — | $ | $ |
Payout Percentage | ||||||||||||||||||||||||||
Metric | Weight | Performance Period | Vesting Period | Index | Below Threshold | Threshold | Target | Maximum | ||||||||||||||||||
TSR | Annual ( | Russell 1000 | ||||||||||||||||||||||||
Adj. EBITDA | Annual ( | N/A |
Inputs | As of March 23, 2022 | ||||||||||
Risk-free interest rate | % | ||||||||||
Volatility for Least-Square Monte Carlo Model | % | ||||||||||
Expected Term in Years | |||||||||||
Dividend Yield | % | ||||||||||
Fair Value of Class A Common Stock | $ |
Number of Units | Weighted-average grant date fair value | |||||||||||||
Non-vested as of January 1, 2022 | $ | |||||||||||||
Granted (1) | $ | |||||||||||||
Vested | $ | |||||||||||||
Forfeited | $ | |||||||||||||
Unvested as of September 30, 2022 | $ |
For the Nine Months Ended September 30, 2022 | |||||
Cash proceeds (in millions) | $ | ||||
Common shares issued | |||||
Fair value of ESPP at grant date | $ | ||||
Stock price at grant date | $ |
December 31, 2021 | ||||||||
Beginning balance | $ | |||||||
Provision for loan losses | ||||||||
Reversal of allowance | ||||||||
Net reversal of allowance for loan losses | ||||||||
Write offs | ( | |||||||
Ending balance | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Revenues (1) | $ | $ | $ | $ | |||||||||||||||||||
Selling, general and administrative expenses (2) | ( | ||||||||||||||||||||||
Other income, net (3) |
September 30, 2022 | December 31, 2021 | ||||||||||
Accounts receivable (1) | $ | $ | |||||||||
Accounts payable (2) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Recurring revenue | $ | 178.1 | $ | 169.3 | $ | 526.0 | $ | 501.2 | ||||||||||||||||||
Non-recurring revenues | 8.5 | 7.8 | 27.0 | 24.1 | ||||||||||||||||||||||
Total | $ | 186.6 | $ | 177.1 | $ | 553.0 | $ | 525.3 | ||||||||||||||||||
Bookings | $ | 2.8 | $ | 1.8 | $ | 7.4 | $ | 6.9 | ||||||||||||||||||
Churn | $ | 1.6 | $ | 1.1 | $ | 4.4 | $ | 4.3 |
Three Months Ended September 30, | |||||||||||||||||||||||
(in millions) | 2022 | 2021 | $ Change | % Change | |||||||||||||||||||
Revenues | $ | 186.6 | $ | 177.1 | $ | 9.5 | 5 | % | |||||||||||||||
Operating costs and expenses: | |||||||||||||||||||||||
Cost of revenue, excluding depreciation and amortization | 100.3 | 93.5 | 6.8 | 7 | % | ||||||||||||||||||
Selling, general and administrative expenses | 37.9 | 29.2 | 8.7 | 30 | % | ||||||||||||||||||
Depreciation and amortization | 60.0 | 59.4 | 0.6 | 1 | % | ||||||||||||||||||
Restructuring, impairment, site closures and related costs | 1.3 | 1.4 | (0.1) | nm | |||||||||||||||||||
Transaction-related costs | — | 5.2 | (5.2) | (100) | % | ||||||||||||||||||
Total operating costs and expenses | 199.5 | 188.7 | 10.8 | 6 | % | ||||||||||||||||||
Loss from operations | (12.9) | (11.6) | (1.3) | 11 | % | ||||||||||||||||||
Interest expense, net | (41.1) | (43.1) | 2.0 | (5) | % | ||||||||||||||||||
Other expenses, net | (2.4) | (0.4) | (2.0) | 500 | % | ||||||||||||||||||
Change of fair value of warrant liabilities | — | (2.7) | 2.7 | (100) | % | ||||||||||||||||||
Loss from continuing operations before income taxes | (56.4) | (57.8) | 1.4 | (2) | % | ||||||||||||||||||
Income tax benefit | 0.5 | 11.1 | (10.6) | (95) | % | ||||||||||||||||||
Net loss | $ | (55.9) | $ | (46.7) | $ | (9.2) | 20 | % |
Nine Months Ended September 30, | |||||||||||||||||||||||
(in millions) | 2022 | 2021 | $ Change | % Change | |||||||||||||||||||
Revenues | $ | 553.0 | $ | 525.3 | $ | 27.7 | 5 | % | |||||||||||||||
Operating costs and expenses: | |||||||||||||||||||||||
Cost of revenue, excluding depreciation and amortization | 296.7 | 287.4 | 9.3 | 3 | % | ||||||||||||||||||
Selling, general and administrative expenses | 103.8 | 79.7 | 24.1 | 30 | % | ||||||||||||||||||
Depreciation and amortization | 183.1 | 180.6 | 2.5 | 1 | % | ||||||||||||||||||
Restructuring, impairment, site closures and related costs | 3.9 | 68.4 | (64.5) | (94) | % | ||||||||||||||||||
Transaction-related costs | — | 5.2 | (5.2) | (100) | % | ||||||||||||||||||
Total operating costs and expenses | 587.5 | 621.3 | (33.8) | (5) | % | ||||||||||||||||||
Loss from operations | (34.5) | (96.0) | 61.5 | (64) | % | ||||||||||||||||||
Interest expense, net | (118.6) | (129.3) | 10.7 | (8) | % | ||||||||||||||||||
Other expenses, net | (2.0) | (1.2) | (0.8) | 67 | % | ||||||||||||||||||
Change of fair value of warrant liabilities | 11.8 | (2.7) | 14.5 | (537) | % | ||||||||||||||||||
Loss from continuing operations before income taxes | (143.3) | (229.2) | 85.9 | (37) | % | ||||||||||||||||||
Income tax (expense) benefit | (1.6) | 36.9 | (38.5) | (104) | % | ||||||||||||||||||
Net loss | $ | (144.9) | $ | (192.3) | $ | 47.4 | (25) | % |
Nine Months Ended September 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Net cash provided by operating activities | $ | 74.0 | $ | 0.8 | ||||||||||
Net cash (used in) provided by investing activities | (100.4) | 73.0 | ||||||||||||
Net cash provided by (used in) financing activities | 61.1 | (125.2) |
Number | Description | ||||
2.1 | |||||
3.1 | |||||
3.2 | |||||
4.1 | |||||
4.2 | |||||
31.1* | |||||
31.2* | |||||
32.1** | |||||
32.2** | |||||
101.DEF* | Inline XBRL Document Definition Document | ||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Document | ||||
101.LAB* | Inline XBRL Taxonomy Extension Label Document | ||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Document | ||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | ||||
101.INS* | XBRL Instance Document | ||||
104* | Cover Page Interactive Data File—the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
/s/ Carlos Sagasta | |||||
Carlos Sagasta | |||||
Chief Financial Officer | |||||
(Principal Financial Officer and Authorized Signatory) |
/s/ Nelson Fonseca | |||||
Nelson Fonseca | |||||
Chief Executive Officer | |||||
Principal Executive Officer |
/s/ Carlos Sagasta | |||||
Carlos Sagasta | |||||
Chief Financial Officer | |||||
Principal Financial Officer |
/s/ Nelson Fonseca | |||||
Nelson Fonseca | |||||
Chief Executive Officer | |||||
Principal Executive Officer |
/s/ Carlos Sagasta | |||||
Carlos Sagasta | |||||
Chief Financial Officer | |||||
Principal Financial Officer |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Assets: | ||
Accounts receivable, allowance for credit loss, current | $ 0.2 | $ 0.3 |
Liabilities and shareholders’ equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock issued (in shares) | 0 | 0 |
Preferred stock outstanding (in shares) | 0 | 0 |
Common stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock issued (in shares) | 179,587,616 | 166,207,190 |
Common stock outstanding (in shares) | 179,587,616 | 166,207,190 |
Condensed Consolidated Statements of Operations - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Income Statement [Abstract] | ||||
Revenues | $ 186.6 | $ 177.1 | $ 553.0 | $ 525.3 |
Operating costs and expenses | ||||
Cost of revenues, excluding depreciation and amortization | 100.3 | 93.5 | 296.7 | 287.4 |
Selling, general and administrative expenses | 37.9 | 29.2 | 103.8 | 79.7 |
Depreciation and amortization | 60.0 | 59.4 | 183.1 | 180.6 |
Restructuring, impairment, site closures and related costs | 1.3 | 1.4 | 3.9 | 68.4 |
Transaction-related costs | 0.0 | 5.2 | 0.0 | 5.2 |
Total operating costs and expenses | 199.5 | 188.7 | 587.5 | 621.3 |
Loss from operations | (12.9) | (11.6) | (34.5) | (96.0) |
Interest expense, net | (41.1) | (43.1) | (118.6) | (129.3) |
Other expenses, net | (2.4) | (0.4) | (2.0) | (1.2) |
Change in fair value of warrant liabilities | 0.0 | (2.7) | 11.8 | (2.7) |
Loss from operations before income taxes | (56.4) | (57.8) | (143.3) | (229.2) |
Income tax benefit (expense) | 0.5 | 11.1 | (1.6) | 36.9 |
Net loss | $ (55.9) | $ (46.7) | $ (144.9) | $ (192.3) |
Loss Per Share | ||||
Basic (in dollars per share) | $ (0.31) | $ (0.32) | $ (0.82) | $ (1.58) |
Diluted (in dollars per share) | $ (0.31) | $ (0.32) | $ (0.82) | $ (1.58) |
Weighted average number of shares outstanding | ||||
Basic (in share) | 179,121,387 | 147,754,776 | 177,637,729 | 121,868,742 |
Diluted (in share) | 179,121,387 | 147,754,776 | 177,637,729 | 121,868,742 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (55.9) | $ (46.7) | $ (144.9) | $ (192.3) |
Other comprehensive loss: | ||||
Foreign currency translation adjustment | (12.7) | (6.1) | (28.7) | (4.4) |
Other comprehensive loss | (12.7) | (6.1) | (28.7) | (4.4) |
Comprehensive loss | $ (68.6) | $ (52.8) | $ (173.6) | $ (196.7) |
Organization and description of the business |
9 Months Ended |
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Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and description of the business | Organization and description of the business Cyxtera Technologies, Inc. (“Cyxtera”) is a global data center leader in retail colocation and interconnection services. Cyxtera’s data center platform consists of 66 data centers across 33 markets on three continents. Cyxtera was incorporated in Delaware as Starboard Value Acquisition Corp. (“SVAC”) on November 14, 2019. On July 29, 2021 (the “Closing Date”), SVAC consummated the previously announced business combination pursuant to the Agreement and Plan of Merger, dated February 21, 2021 (the “Merger Agreement”), by and among SVAC, Cyxtera Technologies, Inc., a Delaware corporation (now known as Cyxtera Technologies, LLC) (“Legacy Cyxtera”), Mundo Merger Sub 1, Inc., a Delaware corporation and wholly owned subsidiary of SVAC (“Merger Sub 1”), Mundo Merger Sub 2, LLC (now known as Cyxtera Holdings, LLC), a Delaware limited liability company and wholly owned subsidiary of SVAC (“Merger Sub 2”), and Mundo Holdings, Inc. (“NewCo”), a Delaware corporation and wholly owned subsidiary of SIS Holdings LP, a Delaware limited partnership (“SIS”). Pursuant to the Merger Agreement, Legacy Cyxtera was contributed to NewCo and then converted into a limited liability company and, thereafter, Merger Sub 1 was merged with and into NewCo, with NewCo surviving such merger as a wholly owned subsidiary of SVAC and immediately following such merger and as part of the same overall transaction NewCo was merged with and into Merger Sub 2, with Merger Sub 2 surviving such merger as a wholly owned subsidiary of SVAC (the “Business Combination” and, collectively with the other transactions described in the Merger Agreement, the “Transactions”). On the Closing Date, and in connection with the closing of the Business Combination, SVAC changed its name to Cyxtera Technologies, Inc. Unless otherwise indicated or the context otherwise requires, references in this Quarterly Report on Form 10-Q to “we,” “us,” “our,” the “Company” and “Cyxtera” refer to the consolidated operations of Cyxtera Technologies, Inc. and its subsidiaries. References to “SVAC” refer to Starboard Value Acquisition Corp. prior to the consummation of the Business Combination and references to “Legacy Cyxtera” refer to the former Cyxtera Technologies, Inc. (now known as Cyxtera Technologies, LLC) prior to the consummation of the Business Combination. Legacy Cyxtera was deemed the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. This determination was primarily based on Legacy Cyxtera’s shareholders prior to the Business Combination having a majority of the voting power in the combined company, Legacy Cyxtera having the ability to appoint a majority of the board of directors of the combined company, Legacy Cyxtera’s existing management comprising the senior management of the combined company, Legacy Cyxtera’s operations comprising the ongoing operations of the combined company, Legacy Cyxtera being the larger entity based on historical revenues and business operations and the combined company assuming Legacy Cyxtera’s name. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Cyxtera issuing stock for the net assets of SVAC, accompanied by a recapitalization. The net assets of SVAC are stated at historical cost, with no goodwill or other intangible assets recorded. While SVAC was the legal acquirer in the Business Combination, because Legacy Cyxtera was deemed the accounting acquirer, the historical financial statements of Legacy Cyxtera became the historical financial statements of the combined company upon the consummation of the Business Combination. As a result, the financial statements included in this report reflect: (i) the historical operating results of Legacy Cyxtera prior to the Business Combination; (ii) the consolidated results of SVAC and Legacy Cyxtera following the close of the Business Combination; (iii) the assets and liabilities of Legacy Cyxtera at their historical cost; and (iv) the Company’s equity structure for all periods presented. In accordance with guidance applicable to these circumstances, the equity structure has been restated in all comparative periods up to the Closing Date to reflect the number of shares of the Company’s Class A common stock, $0.0001 par value per share (the “Class A common stock”), issued to Legacy Cyxtera’s shareholders in connection with the Business Combination. As such, the shares and corresponding capital amounts and earnings per share related to Legacy Cyxtera common stock prior to the Business Combination have been retroactively restated as shares of Class A common stock reflecting the effective exchange ratio of 120,568,182 utilized in the Business Combination. Refer to Note 3 for further discussion of the Cyxtera and SVAC Business Combination.
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Basis of presentation and significant accounting policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of presentation and significant accounting policies | Basis of presentation and significant accounting policies a)Basis of presentation and use of estimates The accompanying unaudited condensed consolidated financial statements have been prepared by Cyxtera and reflect all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary to fairly state the financial position and the results of operations for the interim periods presented. The unaudited condensed consolidated balance sheet data as of December 31, 2021 has been derived from audited consolidated financial statements as of that date. The unaudited condensed consolidated financial statements have been prepared in accordance with the regulations of the Securities and Exchange Commission (“SEC”) but omit certain information and footnote disclosure necessary to present the statements in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). For further information, refer to the Company’s consolidated financial statements as of and for the year ended December 31, 2021, included in the Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report on Form 10-K”). Results for the interim periods are not necessarily indicative of the results for the entire fiscal year. b)Risks and uncertainties Preparing financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Examples include, but are not limited to, asset and goodwill impairments, allowance for doubtful accounts, future asset retirement obligations and the potential outcome of future tax consequences of events that have been recognized in the unaudited condensed consolidated financial statements. Actual results and outcomes may differ from these estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment. Coronavirus (COVID-19) Update During the three and nine months ended September 30, 2022, the COVID-19 pandemic did not have a material impact on our unaudited condensed consolidated financial statements. The full impact that the ongoing COVID-19 pandemic will have on our future unaudited condensed consolidated financial statements remains uncertain and ultimately will depend on many factors, including the duration and potential cyclicity of the health crisis, further public policy actions to be taken in response, as well as the continued impact of the pandemic on the global economy and our customers and vendors. We will continue to evaluate the nature and extent of these potential impacts to our business and unaudited condensed consolidated financial statements. c)Update to significant accounting policies The Company’s significant accounting policies are detailed in Note 2 - Summary of Significant Accounting Policies of the Company’s consolidated financial statements as of and for the year ended December 31, 2021 included within the Company’s Annual Report on Form 10-K. Significant updates to our accounting policies as a result of the adoption of Accounting Standard Update (“ASU”) 2016-12, Leases, as well as the initial implementation guidance and subsequent amendments to ASU 2017-13, ASU 2018-01, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2020-05 (collectively referred to as “Topic 842”) for the three and nine months ended September 30, 2022 are discussed below. Leases The Company determines if an arrangement is or contains a lease at its inception. The Company enters into lease arrangements primarily for data center spaces, office spaces and equipment. The Company recognizes a right-of-use (“ROU”) asset and lease liability on the condensed consolidated balance sheets for all leases with a term longer than 12 months, including renewals. ROU assets represent the Company’s right to use an underlying asset for the lease term. Lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are classified and recognized at the commencement date. Lease liabilities are measured based on the present value of fixed lease payments over the lease term. ROU assets consist of (i) initial measurement of the lease liability; (ii) lease payments made to the lessor at or before the commencement date less any lease incentives received; and (iii) initial direct costs incurred by the Company. Lease payments may vary because of changes in facts or circumstances occurring after the commencement, including changes in inflation indices. Variable lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest rate) are included in the measurement of ROU assets and lease liabilities using the index or rate at the commencement date. Variable lease payments that do not depend on an index or a rate are excluded from the measurement of ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. Since most of the Company’s leases do not provide an implicit rate, the Company uses its own incremental borrowing rate (“IBR”) on a collateralized basis in determining the present value of lease payments. The Company utilizes a market-based approach to estimate the IBR. The approach requires significant judgment. Therefore, the Company utilizes different data sets to estimate IBRs via an analysis of (i) yields on our outstanding traded bank loans (ii) yields on comparable credit rating composite curves and (iii) yields on comparable market curves. The majority of the Company’s lease arrangements include options to extend the lease. If the Company is reasonably certain to exercise such options, the periods covered by the options are included in the lease term. The Company recognizes rental expenses for operating leases that contain predetermined fixed escalation clauses on a straight-line basis over the expected term of the lease. The depreciable lives of certain fixed assets and leasehold improvements are limited by the expected lease term. The Company has certain leases that have an initial term of 12 months or less and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. For such leases, the Company elected not to recognize any ROU asset or lease liability on the condensed consolidated balance sheets. The Company has lease agreements with lease and non-lease components. The Company elected to account for the lease and non-lease components as a single lease component for all classes of underlying assets for which the Company has identified lease arrangements with non-lease components. Lease modifications In the normal course of business, the Company may modify leases, which could result in a change from the original lease classification (i.e. finance or operating leases). The Company remeasures the lease liability based on the lease term of the modified leases by discounting revised lease payments using a revised IBR at the effective date of the modification. The Company accounts for the remeasurement of lease liabilities and lease incentives from lessor by making corresponding adjustments to the relevant right-of-use asset. d)Recent accounting pronouncements The Company is as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (“JOBS Act”). The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards, such that an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to avail itself of the extended transition periods and, as a result, the Company will not be required to adopt new or revised accounting standards on the adoption dates required for other public companies so long as the Company remains an emerging growth company. In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform, which provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022 that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments are effective for all entities as of March 12, 2020, through December 31, 2022. The Company is evaluating the impact that the adoption of this standard will have on its unaudited condensed consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326)-Measurement of Credit Losses on Financial Instruments, which requires companies to measure and recognize lifetime expected credit losses for certain financial instruments, including trade accounts receivable. Expected credit losses are estimated using relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. This amendment is effective commencing in 2023 with early adoption permitted, and the Company expects to adopt the new standard on the effective date or the date it no longer qualifies as an emerging growth company, whichever is earlier. Entities are permitted to use a modified retrospective approach. The Company is evaluating the impact that the adoption of this standard will have on its unaudited condensed consolidated financial statements. In December 2019, the Financial Accounting Standards Board issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. We adopted the amendments in Topic 740 as of January 1, 2022, without a material impact on our unaudited condensed consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt: Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The guidance simplifies accounting for convertible instruments by removing major separation models required under current US GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for annual and interim periods beginning after December 15, 2021. The Company adopted this new guidance on January 1, 2022 without a material impact on its unaudited condensed consolidated financial statements. In February 2016, FASB issued Topic 842, which replaced the guidance in former ASC Topic 840, Leases. The new lease guidance increases transparency and comparability among organizations by requiring the recognition of the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s future obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) an operating lease ROU asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. The accounting for the Company’s finance leases remains substantially unchanged. Topic 842 allows entities to adopt using one of two methods: the modified retrospective transition method or the alternative transition method. During the nine months ended September 30, 2022, the Company adopted Topic 842, with an effective date of January 1, 2022, using the alternative transition method. Therefore, results for reporting periods beginning after January 1, 2022 are presented under Topic 842, while comparative information has not been restated and continues to be reported under accounting standards in effect for those periods. The Company recognized the cumulative effects of initially applying the standard as an adjustment to the opening balance of retained earnings in the period of adoption. In adopting the new guidance, the Company elected to apply the package of practical expedients permitted under the transition guidance, which allows the Company not to reassess (1) whether any expired or existing contracts contain leases under the new definition of a lease; (2) lease classification for any expired or existing leases; and (3) whether previously capitalized initial direct costs would qualify for capitalization under Topic 842. Adoption of the standard had a significant impact on the Company’s unaudited condensed consolidated balance sheets, including the (1) recognition of new ROU assets and liabilities on its balance sheet for all operating leases; and (2) reclassification of previously recognized lease abandonment liabilities, deferred rent, and favorable and unfavorable lease interests, as a reduction of or addition to the ROU assets recognized at adoption. The adoption of the standard did not have a significant impact on the unaudited condensed consolidated statements of operations and statements of cash flow. The cumulative effect of the changes made to our unaudited condensed consolidated balance sheet as of January 1, 2022 due to the adoption of Topic 842 was as follows (in millions):
See Note 10 - Leases for additional information.
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Business combination |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business combination | Business combination Acquisition of Legacy Cyxtera On July 29, 2021, Legacy Cyxtera consummated the Business Combination with SVAC, with Legacy Cyxtera deemed the accounting acquirer. The Business Combination was accounted for as a reverse recapitalization with no goodwill or other intangible assets recorded, in accordance with US GAAP. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Cyxtera issuing stock for the net assets of SVAC, accompanied by a recapitalization. As stated in Note 1, in connection with the closing of the Business Combination, SVAC was renamed Cyxtera Technologies, Inc. Of the 40,423,453 shares of SVAC’s Class A common stock (“Public Shares”) issued in its initial public offering (“IPO”) in September 2020, holders of 26,176,891 shares of SVAC’s Class A common stock properly exercised their right to have such shares redeemed for a full pro rata portion of the trust account holding the proceeds from the IPO, calculated as of two business days prior to the consummation of the Business Combination, which was approximately $10.00 per share or $261.8 million in the aggregate. As a result, 14,246,562 shares of Class A common stock remained outstanding leaving $142.5 million in the trust account. As a result of the Business Combination, 106,100,000 shares of Class A common stock were issued to SIS, the sole shareholder of Legacy Cyxtera prior to the Business Combination, and 25,000,000 shares of Class A common stock were issued to certain qualified institutional buyers and accredited investors, at a price of $10.00 per share, for aggregate consideration of $250.0 million, for the purpose of raising additional capital for use by the combined company following the closing of the Business Combination and satisfying one of the conditions to the closing (the “PIPE Investment”). Additionally, as a result of the Business Combination, 10,526,315 shares of Class A common stock were issued to certain clients of Starboard Value LP (the “Forward Purchasers”) for $100.0 million and 10,105,863 shares of SVAC Class B common stock held by SVAC Sponsor LLC, a Delaware limited liability company (the “Sponsor”), automatically converted to 10,105,863 shares of Class A common stock. In connection with the IPO, the Forward Purchasers and SVAC entered into an Optional Share Purchase Agreement, dated September 9, 2020 (the “Optional Share Purchase Agreement”), pursuant to which the Forward Purchasers were granted the option, exercisable anytime or from time to time for the six-month period following the day that is the first business day following the closing of the Company’s initial business combination, to purchase common equity of the surviving entity in the initial business combination (the “Optional Shares”) at a price per Optional Share of $10.00, subject to adjustments. In connection with the Merger Agreement, Legacy Cyxtera and the Forward Purchasers entered into a letter agreement pursuant to which the Forward Purchasers agreed not to purchase Optional Shares for an aggregate amount exceeding $75.0 million. On July 29, 2021, immediately prior to the consummation of the Transactions, Legacy Cyxtera entered into a second letter agreement (the “Optional Purchase Letter Agreement”) with the Forward Purchasers pursuant to which the parties agreed to amend the Optional Share Purchase Agreement to limit the number of Optional Shares available for purchase by the Forward Purchasers in the six-month period following the Transactions from $75.0 million to $37.5 million. Additionally, pursuant to an assignment agreement entered into concurrently with the Optional Purchase Letter Agreement (the “Assignment Agreement”), the Forward Purchasers agreed to assign an option to purchase $37.5 million of Optional Shares under the Optional Share Purchase Agreement to SIS. As a result of the Optional Purchase Letter Agreement and the Assignment Agreement, each of SIS and the Forward Purchasers had the ability to purchase, at a price of $10.00 per share, up to 3.75 million shares of Class A common stock (for a combined maximum amount of $75.0 million or 7.5 million shares) during the six-month period following the day that is the first business day following the closing date of the Transactions. The exercise price of $10.00 per share was subject to adjustment in proportion to any stock dividends, stock splits, reverse stock splits or similar transactions. On January 31, 2022, SIS and the Forward Purchasers exercised the option, and Cyxtera issued 7.5 million shares of Class A common stock to SIS and the Forward Purchasers at a price of $10.00 per share, for aggregate consideration of $75.0 million. Since SIS and the Forward Purchasers exercised the option, the Company was obligated to issue shares of Class A common stock in exchange for cash (and the option settled on a gross basis). The accounting guidance in ASC Subtopic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity (“ASC Subtopic 815-40”), states that contracts should be classified as equity instruments (and not as an asset or liability) if they are both (1) indexed to the issuer’s own stock and (2) classified in stockholders’ equity in the issuer’s statement of financial position. The optional share purchase options were indexed to the Company’s Class A common stock because the options were considered a fixed-for-fixed option on equity shares, pursuant to which the option holder would receive a fixed number of Class A common stock for a fixed conversion price of $10.00 per share. The Optional Share Purchase Agreement contained no contingent exercise or settlement provisions that would preclude equity classification. After giving effect to the Transactions, the redemption of the Public Shares as described above, the issuance of shares as part of the forward purchase and the consummation of the PIPE Investment, there were 165,978,740 shares of Class A common stock issued and outstanding. The Class A common stock and Public Warrants (as defined in Note 4) commenced trading on the Nasdaq Stock Market, LLC (“Nasdaq”) on July 30, 2021. As noted above, an aggregate of $261.8 million was paid from SVAC’s trust account to holders that properly exercised their right to have Public Shares redeemed, and the remaining balance immediately prior to the closing remained in the trust account. After taking into account the funds of $142.5 million in the trust account and $1.4 million from SVAC’s cash operating accounts after redemptions, the $250.0 million in gross proceeds from the PIPE Investment and the $100.0 million in gross proceeds from the forward purchase, the Company received approximately $493.9 million in total cash from the Business Combination, before direct and incremental transaction costs of approximately $59.4 million and debt repayment of $433.0 million plus accrued interest. The $433.0 million debt repayment includes the full repayment of Legacy Cyxtera’s 2017 Second Lien Term Facility (as defined in Note 11) of $310.0 million and pay down of Legacy Cyxtera’s Revolving Facility and 2021 Revolving Facility (each as defined in Note 11) of $123.0 million, plus accrued interest. In December 2021, the Company announced that it would redeem all of the Public Warrants and Private Placement Warrants (as defined in Note 4) that remained outstanding as of 5:00 p.m., New York City time, on January 19, 2022. On January 26, 2022, the Company announced that it had completed the redemption of all of its outstanding warrants that were issued under the warrant agreement and that remained outstanding at 5:00 p.m., New York City time, on January 19, 2022. Upon completion of the redemption, the Public Warrants ceased trading on the Nasdaq and were deregistered. Prior to the Business Combination, Legacy Cyxtera and SVAC filed separate standalone federal, state and local income tax returns. As a result of the Business Combination, which qualified as a reverse recapitalization, SVAC (now known as Cyxtera Technologies, Inc.) became the parent of the consolidated filing group, with Legacy Cyxtera (now known as Cyxtera Technologies, LLC) as a subsidiary. The following table reconciles the elements of the Business Combination to the consolidated statements of cash flows and the consolidated statements of changes in shareholders’ equity for the year ended December 31, 2021:
(1) Represents $41.8 million of non-cash Public Warrants and Private Placement Warrants liabilities assumed.
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Loss per common share |
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Loss per common share | Loss per common share Basic loss per share is computed by dividing net loss (the numerator) by the weighted-average number of shares of Class A common stock outstanding (the denominator) for the period. Diluted loss per share assumes that any dilutive equity instruments were exercised with outstanding Class A common stock adjusted accordingly when the conversion of such instruments would be dilutive. The Company’s potential dilutive shares for the three and nine months ended September 30, 2022, including public warrants (“Public Warrants”) and private placement warrants (“Private Placement Warrants”), unvested employee stock options, unvested restricted stock units (“RSUs”), unvested performance stock units (“PSUs”), unissued employee stock purchase plan shares (“ESPP shares”) and options issued to the Forward Purchasers and SIS pursuant to the Optional Share Purchase Agreement, have been excluded from diluted net loss per share as the effect would be to reduce the net loss per share. The Company excluded the following potential shares of Class A common stock, from the computation of diluted net loss per share during the three and nine month periods ended September 30, 2022 and 2021 because including them would have an anti-dilutive effect:
(1) Optional shares were excluded from the computation of diluted loss per share for the periods these instruments represented potential dilutive common stock equivalents during the nine months ended September 30, 2022. (2) In addition, 19.4 million of Public Warrants and Private Placement Warrants were excluded from the computation of net loss per share for the period January 1, 2022 through January 24, 2022 because they would have had an anti-dilutive effect on the computation of diluted net loss.
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Restructuring, impairment, site closures and related costs |
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Restructuring, impairment, site closures and related costs | Restructuring, impairment, site closures and related costs Addison site In January 2021, the Company notified the landlord of the Addison office space in Texas of its intent to sublease the property for the remaining 10 years. The Company ceased use of and subleased the space during the three months ended March 31, 2021. In connection with this decision, the Company incurred $7.9 million of expenses, including $5.9 million of accrued lease termination costs and $2.0 million of asset disposals. Moses Lake site In February 2021, the Company notified the landlord of the Moses Lake data center facility in the State of Washington of its intent to cease the use of the space. Accordingly, the Company accelerated depreciation and amortization of all assets on the site, including favorable leasehold interest amortization, which resulted in no additional depreciation and amortization during the three months ended September 30, 2021 and $1.8 million during the nine months ended September 30, 2021, and no additional favorable leasehold interest amortization and $0.6 million of additional favorable leasehold interest amortization, recorded in cost of revenues, during the three and nine months ended September 30, 2021, respectively. The Company ceased use of the property in June 2021 at which time it met the conditions for recording a charge related to the remaining lease obligation of $58.5 million. There is no sublease in place on this property. Furthermore, management believes the ability to sublease the property is remote and as such has not made any assumption for the future cash flows from a potential sublease in making this estimate. On January 1, 2022, the Company adopted Topic 842, and reclassified $53.0 million of the restructuring liability reserve representing lease abandonment liabilities to the ROU asset. As of September 30, 2022, the restructuring liability reserve relates to the ASC 420, Exit or Disposal Cost Obligations, lease abandonment liability for Moses Lake, which was in excess of the ROU asset adjustment. The restructuring liability reserve is included in other liabilities in the unaudited condensed consolidated balance sheets. The activity in restructuring liability reserve for the nine months ended September 30, 2022 and 2021 was as follows (in millions):
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Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue Disaggregation of revenue The Company disaggregates revenue from contracts with customers into recurring revenues and non-recurring revenues. Cyxtera derives the majority of its revenues from recurring revenue streams, consisting primarily of colocation service fees. These fees are generally billed monthly and recognized ratably over the term of the contract. The Company’s non-recurring revenues are primarily comprised of installation services related to a customer’s initial deployment and professional services the Company performs. These services are considered to be non-recurring because they are billed typically once, upon completion of the installation or the professional services work performed. The majority of these non-recurring revenues are typically billed on the first invoice distributed to the customer in connection with their initial installation. However, revenues from installation services are deferred and recognized ratably over the period of the contract term in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”) as discussed in Note 2 to the Company’s consolidated financial statements as of and for the year ended December 31, 2021, included within the Annual Report on Form 10-K.
Contract balances The following table summarizes the opening and closing balances of the Company’s receivables; contract asset, current; contract asset, non-current; deferred revenue, current; and deferred revenue, non-current (in millions):
The difference between the opening and closing balances of the Company’s contract assets and deferred revenues primarily results from the timing difference between the Company’s performance obligation and the customer’s payment. The amounts of revenue recognized during the nine months ended September 30, 2022 and 2021 from the opening deferred revenue balance was $11.3 million and $12.1 million, respectively. During the three months ended September 30, 2022 and 2021, no impairment loss related to contract balances was recognized in the unaudited condensed consolidated statements of operations. In addition to the contract liability amounts shown above, deferred revenue on the unaudited condensed consolidated balance sheets includes $48.9 million and $46.1 million of advanced billings as of September 30, 2022 and December 31, 2021, respectively. Contract costs The ending balance of net capitalized contract costs as of September 30, 2022 and December 31, 2021 was $29.4 million and $29.3 million, respectively, $15.1 million and $17.2 million of which were included in prepaid and other current assets in the unaudited condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021, respectively, and $14.3 million and $12.1 million of which were included in other assets in the unaudited condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021, respectively. For the nine months ended September 30, 2022 and 2021, $14.7 million and $20.6 million, respectively, of contract costs were amortized, $5.4 million and $12.1 million of which were included in cost of revenues, excluding depreciation and amortization in the unaudited condensed consolidated statements of operations for the nine months ended September 30, 2022 and 2021, respectively, and $9.3 million and $8.5 million of which were included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations for the nine months ended September 30, 2022 and 2021. Remaining performance obligations Under colocation contracts, Cyxtera’s performance obligations are to provide customers with space and power through fixed duration agreements, which are typically three years. Under these arrangements, the Company bills customer on a monthly basis. Under interconnection agreements, Cyxtera’s performance obligations are to provide customers the ability to establish connections to their network service providers and business partners. Interconnection services are typically offered on month-to-month contract terms and generate recurring revenue. Cyxtera’s remaining performance obligations under its colocation agreements represent contracted revenue that has not been recognized, which includes deferred revenue and amounts that will be invoiced and recognized in future periods. The remaining performance obligations do not include estimates of variable consideration related to unsatisfied performance obligations, such as the usage of metered power, or any contracts that could be terminated without significant penalties such as the majority of interconnection revenues. The aggregate amount allocated to performance obligations that were unsatisfied or partially satisfied as of September 30, 2022 was $869.1 million, of which 44%, 27% and 29% is expected to be recognized over the next year, the next one to two years, and thereafter, respectively. The aggregate amount allocated to performance obligations that were unsatisfied as of December 31, 2021 was $818.0 million, of which 45%, 27% and 28% is expected to be recognized over the next year, the next one to two years, and thereafter, respectively. While initial contract terms vary in length, substantially all contracts automatically renew in one-year increments. Included in the performance obligations is either 1) remaining performance obligations under the initial contract terms or 2) remaining performance obligations related to contracts in the renewal period once the initial terms have lapsed.
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Balance sheet components |
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Balance sheet components | Balance sheet components Allowance for doubtful accounts The activity in the allowance for doubtful accounts during the nine months ended September 30, 2022 and the year ended December 31, 2021 was as follows (in millions):
Factored receivables On February 9, 2021, a subsidiary of Cyxtera entered into a Master Receivables Purchase Agreement ( the “Factoring Agreement”) with Nomura Corporate Funding America, LLC (the “Factor”) to factor up to $37.5 million in open trade receivables at any point during the term of the commitment, which extends for a period of 540 days provided that the Factor has the right to impose additional conditions to its obligations to complete any purchase after 360 days. The Factor has not imposed any such additional conditions. Pursuant to the terms of the arrangement, a subsidiary of the Company shall, from time to time, sell to the Factor certain of its accounts receivable balances on a non-recourse basis for credit approved accounts. The agreement allows for up to 85% of the face amount of an invoice to be factored. The unused balance fee under the arrangement is 2%. During the nine months ended September 30, 2022, the Company’s subsidiary factored $10.9 million of receivables and received $10.7 million, net of fees of $0.2 million. During the nine months ended September 30, 2021, the Company factored $91.5 million of receivables and collected $90.1 million, net of fees of $1.4 million. Cash collected under this arrangement is reflected within the change in accounts receivables in the unaudited condensed consolidated statements of cash flows. On August 31, 2022, the Company terminated the Factoring Agreement. Accounts Receivable Sales Program On August 31, 2022, the Company entered into an Accounts Receivable Sales Program with PNC Bank, National Association and the other parties thereto (the “A/R Program”) for an investment limit of $37.5 million, which terminates on August 31, 2025 unless extended. Under the A/R Program, certain of the Company's wholly owned subsidiaries continuously sell (or contribute) receivables to a wholly owned special purpose entity at fair market value. The Company then designates certain of the receivables to be sold by the special purpose entity to an unaffiliated financial institution (the “Purchaser”) and the special purpose entity grants a security interest in the remaining receivables to the Purchaser such that the Purchaser has recourse to all receivables transferred to the special purpose entity to recover its investment. Although the special purpose entity is a wholly owned subsidiary of the Company, it is a separate legal entity with its own separate creditors who will be entitled, upon its liquidation, to be satisfied out of its assets prior to any assets or value in such special purpose entity becoming available to its equity holders and its assets are not available to pay other creditors of the Company. As of September 30, 2022, the Company had $19.6 million drawn on the investment limit. The investments made by the Purchaser yield interest based on a variable rate which is based on the Secured Overnight Financing Rate (“SOFR”) plus a margin. All transactions under the A/R Program are accounted for as a true sale in accordance with ASC 860, Transfers and Servicing (“Topic 860”). Following the sale and transfer of the receivables to the Purchaser, the receivables are legally isolated from the Company and its subsidiaries, and the Company sells, conveys, transfers and assigns to the Purchaser all its rights, title and interest in the receivables. Receivables sold are derecognized from the statement of financial position. The Company continues to service, administer and collect the receivables on behalf of the Purchaser, and recognizes a servicing liability in accordance with Topic 860. As of September 30, 2022, the Company reported servicing liabilities of $17.9 million in other current liabilities and on the unaudited condensed consolidated balance sheets. Prepaid and other current assets Prepaid and other current assets consist of the following as of September 30, 2022 and December 31, 2021 (in millions):
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Goodwill and intangible assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and intangible assets | Goodwill and intangible assets Goodwill was $748.5 million and $761.7 million as of September 30, 2022 and December 31, 2021, respectively. The change in goodwill during the nine months ended September 30, 2022 was due to foreign currency translation. The Company has not recorded any goodwill impairment related to the colocation business since its inception. In addition, the Company had indefinite-lived intangible assets of $0.5 million as of September 30, 2022 and December 31, 2021. Summarized below are the carrying values for the major classes of amortizing intangible assets as of September 30, 2022 and December 31, 2021 (in millions):
The main changes in the carrying amount of each major class of amortizing intangible assets during the nine months ended September 30, 2022 and 2021 was amortization and, to a lesser extent, the impact of foreign currency translation. In addition, on January 1, 2022, the Company adopted Topic 842 and reclassified the favorable leasehold interests to ROU assets. Amortization expense on intangible assets, excluding the impact of unfavorable leasehold interest amortization, amounted to $45.2 million, for the nine months ended September 30, 2022 and 2021. Amortization expense for all intangible assets, except favorable leasehold interests, was recorded within depreciation and amortization expense in the unaudited condensed consolidated statements of operations. As of December 31, 2021, the Company had $16.2 million of unfavorable leasehold interests included within other liabilities in the accompanying unaudited condensed consolidated balance sheets. Favorable leasehold amortization of $4.6 million, and unfavorable leasehold amortization of $1.7 million was recorded within cost of revenues, excluding depreciation and amortization in the unaudited condensed consolidated statements of operations for the nine months ended September 30, 2021. The Company estimates annual amortization expense for existing intangible assets subject to amortization as of September 30, 2022 as follows (in millions):
Impairment tests The Company performs annual impairment tests of goodwill as of October 1st of each year or whenever an indicator of impairment exists. No impairment charges were recorded during the nine months ended September 30, 2022 and 2021.
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Fair value measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements | Fair value measurementsThe fair value of cash, accounts receivable, accounts payable, accrued expenses, deferred revenue and other current liabilities approximate their carrying value because of the short-term nature of these instruments. Refer to Note 12 for the fair value measurement disclosures related to the warrant liabilities. The carrying values and fair values of other financial instruments are as follows as of September 30, 2022 and December 31, 2021 (in millions):
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company determines if an arrangement is or contains a lease at inception. The Company enters into lease arrangements primarily for data center spaces, office spaces and equipment. The Company recognizes an ROU asset and lease liability on the unaudited condensed consolidated balance sheets for all leases with a term longer than 12 months. The leases have remaining lease terms of 1 year to 32 years. As of September 30, 2022, the Company recorded finance lease assets of $1,131.3 million, net of accumulated amortization of $221.0 million, within property and equipment, net. Lease Expenses The components of lease expenses and income are as follows (in millions):
(1) Amortization of assets under leases is included in depreciation and amortization expense in the Company’s unaudited condensed consolidated statements of operations. (2) Interest on lease liabilities is included in interest expense, net in the Company’s unaudited condensed consolidated statements of operations. (3) Operating lease costs for data centers is included in cost of revenue, excluding depreciation and amortization in the Company’s unaudited condensed consolidated statements of operations. Operating lease costs for office leases is included in selling, general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations. (4) Variable lease costs for operating leases is included in costs of revenue, excluding depreciation and amortization in the Company’s unaudited condensed consolidated statements of operations. (5) The Company has subleases for certain data centers with Lumen Technologies, Inc. formerly known as CenturyLink Inc. (“Lumen”), and the Company also leases a portion of an owned location to Lumen. The Company also has a sublease of the Addison office space described in Note 5. Sublease and lease income of $7.7 million in connection with Lumen is included in revenues in the Company’s unaudited condensed consolidated statements of operations. Sublease income of $1.4 million in connection with the Addison office lease is included in restructuring, impairment, site closures, and related costs in the Company’s unaudited condensed consolidated statements of operations. (6) During the nine months ended September 30, 2022, the Company recognized $3.9 million of restructuring expenses recorded in restructuring, impairment, site closures and related costs in the unaudited condensed consolidated statements of operations. The restructuring costs were composed of $4.8 million of operating lease cost and $0.5 million of accretion expense, net of $1.4 million of income recognized from the Addison sublease. Lease costs for short-term leases were inconsequential for the nine months ended September 30, 2022. Other Information Other information related to leases is as follows (in millions):
(1) Includes renewal options that are reasonably certain to be exercised. Maturities of Lease Liabilities Maturities of lease liabilities under Topic 842 as of September 30, 2022 are as follows (in millions):
(1) Minimum lease payments have not been reduced by minimum sublease rentals of $47.7 million due in the future under non-cancelable subleases. Future minimum lease receipts under operating lease obligations under Topic 842 as of September 30, 2022 are as follows (in millions):
The future minimum lease receipts and payments under operating lease obligations under ASC Topic 840 as of December 31, 2021 are as follows (in millions):
(1) Minimum lease payments have not been reduced by minimum sublease rentals of $45.1 million due in the future under non-cancelable subleases. Total rent expense, including the net impact from the amortization of ROU asset, was approximately $88.1 million for the nine months ended September 30, 2022 and is included within cost of revenues, excluding depreciation and amortization in the unaudited condensed consolidated statements of operations. The future minimum lease payments under capital lease arrangements and sale-leaseback financing obligations under ASC Topic 840 as of December 31, 2021 are as follows (in millions):
Interest expense recorded in connection with capital leases and sale-leaseback financings totaled $28.5 million, $85.6 million, $25.1 million and $76.1 million, respectively, for the three and nine months ended September 30, 2022 and 2021 and is included within interest expense, net in the accompanying unaudited condensed consolidated statements of operations. Sale-leaseback financings The Company enters sale-leaseback financings, primarily relating to equipment. Amortization of assets under finance leases is included in depreciation and amortization expense in the Company’s unaudited condensed consolidated statements of operations. Payments on sale-leaseback financings are included in repayments of sale-leaseback financings in the Company’s unaudited condensed consolidated statements of cash flows. During the nine months ended September 30, 2022 and 2021, the Company had additions to assets and liabilities recorded as sale-leaseback financings of $26.7 million and $2.9 million, respectively. During the three and nine months ended September 30, 2022 and 2021, there was no gain or loss recognized from the sale-leaseback financings.
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Leases | Leases The Company determines if an arrangement is or contains a lease at inception. The Company enters into lease arrangements primarily for data center spaces, office spaces and equipment. The Company recognizes an ROU asset and lease liability on the unaudited condensed consolidated balance sheets for all leases with a term longer than 12 months. The leases have remaining lease terms of 1 year to 32 years. As of September 30, 2022, the Company recorded finance lease assets of $1,131.3 million, net of accumulated amortization of $221.0 million, within property and equipment, net. Lease Expenses The components of lease expenses and income are as follows (in millions):
(1) Amortization of assets under leases is included in depreciation and amortization expense in the Company’s unaudited condensed consolidated statements of operations. (2) Interest on lease liabilities is included in interest expense, net in the Company’s unaudited condensed consolidated statements of operations. (3) Operating lease costs for data centers is included in cost of revenue, excluding depreciation and amortization in the Company’s unaudited condensed consolidated statements of operations. Operating lease costs for office leases is included in selling, general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations. (4) Variable lease costs for operating leases is included in costs of revenue, excluding depreciation and amortization in the Company’s unaudited condensed consolidated statements of operations. (5) The Company has subleases for certain data centers with Lumen Technologies, Inc. formerly known as CenturyLink Inc. (“Lumen”), and the Company also leases a portion of an owned location to Lumen. The Company also has a sublease of the Addison office space described in Note 5. Sublease and lease income of $7.7 million in connection with Lumen is included in revenues in the Company’s unaudited condensed consolidated statements of operations. Sublease income of $1.4 million in connection with the Addison office lease is included in restructuring, impairment, site closures, and related costs in the Company’s unaudited condensed consolidated statements of operations. (6) During the nine months ended September 30, 2022, the Company recognized $3.9 million of restructuring expenses recorded in restructuring, impairment, site closures and related costs in the unaudited condensed consolidated statements of operations. The restructuring costs were composed of $4.8 million of operating lease cost and $0.5 million of accretion expense, net of $1.4 million of income recognized from the Addison sublease. Lease costs for short-term leases were inconsequential for the nine months ended September 30, 2022. Other Information Other information related to leases is as follows (in millions):
(1) Includes renewal options that are reasonably certain to be exercised. Maturities of Lease Liabilities Maturities of lease liabilities under Topic 842 as of September 30, 2022 are as follows (in millions):
(1) Minimum lease payments have not been reduced by minimum sublease rentals of $47.7 million due in the future under non-cancelable subleases. Future minimum lease receipts under operating lease obligations under Topic 842 as of September 30, 2022 are as follows (in millions):
The future minimum lease receipts and payments under operating lease obligations under ASC Topic 840 as of December 31, 2021 are as follows (in millions):
(1) Minimum lease payments have not been reduced by minimum sublease rentals of $45.1 million due in the future under non-cancelable subleases. Total rent expense, including the net impact from the amortization of ROU asset, was approximately $88.1 million for the nine months ended September 30, 2022 and is included within cost of revenues, excluding depreciation and amortization in the unaudited condensed consolidated statements of operations. The future minimum lease payments under capital lease arrangements and sale-leaseback financing obligations under ASC Topic 840 as of December 31, 2021 are as follows (in millions):
Interest expense recorded in connection with capital leases and sale-leaseback financings totaled $28.5 million, $85.6 million, $25.1 million and $76.1 million, respectively, for the three and nine months ended September 30, 2022 and 2021 and is included within interest expense, net in the accompanying unaudited condensed consolidated statements of operations. Sale-leaseback financings The Company enters sale-leaseback financings, primarily relating to equipment. Amortization of assets under finance leases is included in depreciation and amortization expense in the Company’s unaudited condensed consolidated statements of operations. Payments on sale-leaseback financings are included in repayments of sale-leaseback financings in the Company’s unaudited condensed consolidated statements of cash flows. During the nine months ended September 30, 2022 and 2021, the Company had additions to assets and liabilities recorded as sale-leaseback financings of $26.7 million and $2.9 million, respectively. During the three and nine months ended September 30, 2022 and 2021, there was no gain or loss recognized from the sale-leaseback financings.
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Long-term debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt | Long-term debt Long-term debt consists of the following as of September 30, 2022 and December 31, 2021 (in millions):
Senior secured credit facilities On May 1, 2017, a subsidiary of the Company (the “Borrower”) entered into credit agreements for up to $1,275.0 million of borrowings under first and second lien credit agreements (collectively, the “Senior Secured Credit Facilities”). The Senior Secured Credit Facilities consist of (a) a first lien credit agreement providing for (i) a $150.0 million first lien multi-currency revolving credit facility (the “Revolving Facility”) and (ii) (a) an $815.0 million first lien term loan borrowing (the “2017 First Lien Term Facility”), and (b) a second lien credit agreement providing for a $310.0 million second lien term loan credit borrowing (the “2017 Second Lien Term Facility”). On May 13, 2019, the Borrower borrowed an additional $100.0 million under the incremental first lien loan under the first lien credit agreement (the “2019 First Lien Term Facility”). On May 7, 2021, certain of the lenders under the Revolving Facility entered into an amendment with the Borrower pursuant to which they agreed to extend the maturity date for certain revolving commitments from May 1, 2022 to November 1, 2023. Under these terms of the amendment, $141.3 million of commitments under the existing Revolving Facility were exchanged for $120.1 million of commitments under a new revolving facility (the “2021 Revolving Facility”). The 2021 Revolving Facility has substantially the same terms as the Revolving Facility, except that the maturity date of the 2021 Revolving Facility is November 1, 2023. In connection with the amendment, the Company repaid $19.6 million of the outstanding balance under the Revolving Facility on May 10, 2021. The amounts owed under the 2017 Second Lien Term Facility, the Revolving Facility and the 2021 Revolving Facility were repaid in July and August 2021 following the consummation of the Business Combination (see Note 3, Business Combination). Subsequent to the consummation of the Business Combination and the pay-down of the Revolving Facility and the 2021 Revolving Facility, the Company drew down an additional $40.0 million from such revolving facilities during the year ended December 31, 2021. During the nine months ended September 30, 2022, the Company repaid $40.0 million of the outstanding balance under the revolving facilities. Subsequent to paying down the revolving facilities, the Company drew down $42.0 million from the 2021 Revolving Facility during the nine months ended September 30, 2022. As of September 30, 2022, a total of $42.0 million was outstanding and approximately $73.1 million was available under the revolving facilities. As of December 31, 2021, a total of $40.0 million was outstanding and approximately $88.8 million was available under the revolving facilities. The Senior Secured Credit Facilities, including the 2019 First Lien Term Facility, are secured by substantially all assets of the Borrower and contain customary covenants, including reporting and financial covenants, some of which require the Borrower to maintain certain financial coverage and leverage ratios, as well as customary events of default, and are guaranteed by certain of the Borrower’s domestic subsidiaries. As of September 30, 2022, the Company believes the Borrower was in compliance with these covenants. The Revolving Facility matured in May 2022 and was not renewed. The 2021 Revolving Facility, the 2017 First Lien Term Facility and the 2019 First Lien Term Facility have an 18 month, and five year term, respectively, and are set to expire on November 1, 2023, May 1, 2024, and May 1, 2024, respectively. The Borrower is required to make amortization payments on each of the 2017 First Lien Term Facility and the 2019 First Lien Term Facility at a rate of 1.0% of the original principal amount per annum, payable on a quarterly basis, with the remaining balance to be repaid in full at maturity. The 2017 First Lien Term Facility bears interest at a rate based on LIBOR plus a margin that can vary from 2.0% to 3.0%. The 2019 First Lien Term Facility bears interest at a rate based on LIBOR plus a margin that can vary from 3.0% to 4.0%. As of September 30, 2022, the rate for the 2017 First Lien Term Facility was 5.8% and the rate for the 2019 First Lien Term Facility was 6.8%. The 2021 Revolving Facility allows the Borrower to borrow, repay and reborrow over its stated term. The 2021 Revolving Facility provides a sublimit for the issuance of letters of credit of up to $30.0 million at any one time. Borrowings under the 2021 Revolving Facility bear interest at a rate based on LIBOR plus a margin that can vary from 2.5% to 3.0% or, at the Borrower’s option, the alternative base rate, which is defined as the higher of (a) the Federal Funds Rate plus, 0.5%, (b) the JP Morgan prime rate or (c) one-month LIBOR plus 1.0%, in each case, plus a margin that can vary from 1.5% to 3.0%. The Borrower is required to pay a letter of credit fee on the face amount of each letter of credit, at a 0.125% rate per annum. The Revolving Facility matured in May 2022 and was not renewed. As of September 30, 2022, the rate for the 2021 Revolving facility was 5.8%. The balance of the 2021 Revolving Facility was $42.0 million as of September 30, 2022. The aggregate maturities of our long-term debt are as follows as of September 30, 2022 (in millions):
Interest expense, net Interest expense, net for the three and nine months ended September 30, 2022 and 2021 consist of the following (in millions):
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Warrant liabilities |
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Warrant liabilities | Warrant liabilities In September 2020, in connection with the IPO, SVAC issued Public Warrants to purchase shares of the SVAC Class A common stock at $11.50 per share. Simultaneously with the consummation of the IPO, SVAC issued Private Placement Warrants to purchase shares of its Class A common stock at $11.50 per share to the Sponsor and to SVAC’s underwriters. In July 2021, in connection with the Business Combination transaction described in Note 3, additional Public Warrants and Private Placement Warrants were issued to SVAC common shareholders, including the Forward Purchasers. In December 2021, the Company announced that it would redeem all of the Public Warrants and Private Placement Warrants that remained outstanding as of 5:00 p.m., New York time, on January 19, 2022 (the “Redemption Time”). Pursuant to the terms of the Warrant Agreement, prior to the Redemption Time, the warrant holders were permitted to exercise their warrants either (a) on a cash basis by paying the exercise price of $11.50 per warrant in cash or (b) on a “cashless basis,” in which case the holder would receive 0.265 shares of Class A common stock per warrant. As a result of the redemption notice for the Public Warrants and Private Placement Warrants, the valuation method for the Private Placement Warrants was changed from the Monte Carlo Simulation to utilizing a fair value based on the publicly traded closing price of the Public Warrants given that, in connection with the terms of the redemption notice, the exercise and settlement provision of the Public Warrants and Private Placement Warrants were substantially the same. Such fair value determination represents a Level 2 fair value input. On January 26, 2022, the Company completed the redemption of all of its outstanding warrants that were issued under the Warrant Agreement and that remained outstanding at the Redemption Time, at a redemption price of $0.10 per warrant. Between January 1, 2022, and the Redemption Time, warrant holders elected to exercise 126,641 warrants on a cash basis for $1.5 million, and 17,859,466 warrants on a “cashless basis,” resulting in the issuance by the Company of 4,859,162 shares of Class A common stock. On January 26, 2022, the Company redeemed 1,370,760 warrants for $0.1 million, which was recorded as an expense in the change of fair value of warrant liabilities in other income (expenses), net in the unaudited condensed consolidated statements of operations. The warrant shares were issued in transactions not requiring registration under the Securities Act in reliance on the exemption contained in Section 3(a)(9) of the Securities Act. Upon completion of the redemption, the Public Warrants ceased trading on the Nasdaq and were deregistered, to the extent unsold. For the Public Warrants and Private Placement Warrants exercised through the Redemption Time, the warrants were marked to market through the settlement date utilizing the publicly traded closing stock price of the Public Warrants on the settlement date, with changes in the fair value through the settlement date recorded as change of fair value of warrant liabilities in other income (expenses), net in the unaudited condensed consolidated statements of operations. Upon settlement, the remaining warrant liabilities were derecognized and the liabilities and cash received from warrant holders was recorded as consideration for the common shares issued (an increase of $54.2 million was recorded to additional paid in capital). There were no Level 3 warrant liabilities outstanding during the three and nine months ended September 30, 2022. The following table presents information about the Company’s movement in its Level 1 and Level 2 warrant liabilities measured at fair value during the nine months ended September 30, 2022 (in millions):
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Shareholder's equity |
9 Months Ended |
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Sep. 30, 2022 | |
Equity [Abstract] | |
Shareholder's equity | Shareholders’ equity As mentioned in Note 1, the equity structure has been restated in all the comparative periods up to the Closing Date to reflect the number of shares of the Company’s Class A common stock issued to Legacy Cyxtera’s shareholder in connection with the Business Combination. Accordingly, the shares and corresponding capital amounts and earnings per share prior to the Business Combination have been retroactively restated as of January 1, 2021 to 115,745,455 shares, as shown in the unaudited condensed consolidated statements of changes in shareholders’ equity. The Company’s authorized share capital consists of 510,000,000 shares of capital stock, of which 500,000,000 are designated as Class A common stock, and 10,000,000 are designated as preferred stock. As of December 31, 2020, Legacy Cyxtera had 115,745,455 shares of Class A common stock issued and outstanding, which shares were owned by SIS. On February 19, 2021, Cyxtera redeemed, cancelled and retired 9,645,455 shares of its Class A common stock, held by SIS, in exchange for the payment of $97.9 million by the Company to SIS. From January 1, 2022 through the Redemption Time, with the redemption of the warrants, 7,970,730 Public Warrants and 8,576,940 Private Placement Warrants, respectively, were exercised in accordance with the terms of the Warrant Agreement, resulting in the issuance of 4,859,162 shares of Class A common stock. In addition, on January 31, 2022, the Company issued a total of 7,500,000 Optional Shares for an aggregate purchase price of $75.0 million. As of September 30, 2022, the Company had 179,587,616 shares of Class A common stock issued and outstanding. Effective July 29, 2022, the SIS interest in the Company's Class A common stock was distributed to BC Partners, Medina Capital, and other owners of SIS, resulting in BC Partners owning 38.0% of the Company's Class A common stock and Medina Capital owning 12.8% of the Company's Class A common stock. Prior to the SIS distribution, SIS owned 61.5% of the Company’s Class A common stock. As of September 30, 2022 and December 31, 2021, there were no shares of preferred stock issued or outstanding.
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Stock-based compensation |
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Stock-based compensation | Stock-based compensation Stock-based compensation includes stock options, RSUs, PSUs and class B units in SIS Holdings LP, which are awarded to employees, and directors of the Company. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the award based on its grant date fair value. Stock-based compensation expense is included within cost of revenues, excluding depreciation and amortization, and selling, general and administrative expense in the unaudited condensed consolidated statements of operations. SIS Holdings LP Class B Profit Units All awards under the SIS Holdings LP Class B Unit Plan (the “SIS Plan”) were issued in 2018, 2019 and 2020 (none were issued in 2021 or 2022). Awards under the SIS Plan represent equity interests in SIS Holdings LP, and not the Company. The stock-based compensation cost was as follows (in millions) and included in the following captions in the accompanying unaudited condensed consolidated statements of operations:
No related income tax benefit was recognized for the three and nine months ended September 30, 2022 and 2021. As of September 30, 2022, total equity-based compensation expense related to 17,626 unvested Class B Units not yet recognized totaled $1.6 million, which is expected to be recognized over a weighted-average period of 1.7 years. 2021 Omnibus Incentive Plan Effective as of July 29, 2021, the Company adopted the 2021 Omnibus Incentive Plan (the “2021 Plan”). The total number of shares of Class A common stock authorized for issuance under the 2021 Plan is 13,278,299. Stock options, RSUs and PSUs are granted under and governed by the 2021 Plan. Stock Options Stock option transactions for the nine months ended September 30, 2022, were as follows:
As of September 30, 2022, the total unrecognized stock-based compensation expense, net of actual forfeitures, related to unvested stock options was approximately $1.4 million (before income taxes) and is expected to be recognized over a weighted average period of approximately 2.9 years. Total stock options compensation expense for the three and nine months ended September 30, 2022 was approximately $0.1 million and $0.4 million, respectively, net of actual forfeitures, and is recorded in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations. The related income tax benefit for the three and nine months ended September 30, 2022 was inconsequential. Restricted Stock Units RSU transactions for the nine months ended September 30, 2022 were as follows:
As of September 30, 2022, the total unrecognized stock-based compensation expense, net of actual forfeitures, related to unvested RSUs was approximately $35.5 million, before income taxes, and is expected to be recognized over a weighted average period of approximately 2.0 years. The total fair value of RSUs vested was $12.5 million during the nine months ended September 30, 2022. Total RSU compensation expense totaled $5.0 million and $13.3 million, net of actual forfeitures, for the three and nine months ended September 30, 2022, of which approximately $4.7 million and $12.4 million, respectively, is recorded in selling, general and administrative expenses and $0.3 million and $0.9 million, respectively, is recorded in cost of revenues, excluding depreciation and amortization, in the unaudited condensed consolidated statements of operations. The related income tax benefit for the three and nine months ended September 30, 2022 was inconsequential. Performance Stock Units The Company has granted PSUs under the Company’s 2021 Plan. The Company has the intent and ability to settle the PSU awards with shares. The PSU will vest based on both the passage of time and achievement of certain market and performance conditions that are measured during a three-year period beginning on January 1, 2022, subject to continued employment on the applicable vesting dates. The actual number of PSUs earned with respect to an award is based upon the target number of PSUs, multiplied by a “payout percentage” ranging from 0% to 200% of target level and determined by the level of performance against pre-established performance or market components for the applicable performance period. The PSUs are subject to two types of performance conditions: relative total shareholder return (“TSR”) based on achievement of certain market conditions, and adjusted earnings before interest, taxes, depreciation and amortization (“Adj. EBITDA”), each of which is weighted one-half of the PSU, as shown in more detail below.
The award of PSUs will vest in three equal installments on the 1st, 2nd and 3rd anniversary of the grant date. The PSUs will be earned based on the Company’s achievement of the applicable performance goals as follows: •Year One of the performance period: Award will vest based on performance during the first year of the performance period; •Year Two: Award will vest based on cumulative performance during the first two years of the performance period; •Year Three: Award will vest based on cumulative performance during the three years of the performance period. The payout percentage will be linearly interpolated if achievement falls between the threshold and target or target and maximum levels of performance. With respect to the TSR measured component, the PSUs were valued using a Monte-Carlo simulation. The key assumptions used to determine the fair value of the TSR measured component of the PSUs at March 23, 2022 (grant date) using the Monte Carlo simulation model were as follows:
With respect to the Adj. EBITDA measured component, the PSUs for the first year were valued using the fair value of the Company’s Class A common stock on the date of the grant, which was $11.66 multiplied by the number of shares of Class A common stock expected to be earned based on the Company’s estimate of future Adj. EBITDA, to be realized in Year One. The Adj. EBITDA measured PSUs for Year Two and Year Three, are not deemed granted for accounting purposes because the adjusted EBITDA targets for 2023 and 2024 are not yet determinable as they have not been approved by the board of directors. The following table summarizes PSU activity for the nine months ended September 30, 2022:
(1) Year Two and Year Three Adj. EBITDA measured PSUs are excluded from the total amount of granted PSUs, since such units are not deemed granted for accounting purposes as of September 30, 2022. We excluded 174,883 of Year Two and Year Three Adj. EBITDA measured PSUs. As of September 30, 2022, the total unrecognized stock-based compensation expense, related to unvested PSUs was approximately $5.5 million, before income taxes, and is expected to be recognized over a weighted period of approximately 1.2 years. No PSUs vested during the three and nine months ended September 30, 2022. The Company estimates that all PSU awards outstanding at September 30, 2022 will vest. Total PSU compensation expense was $0.8 million and $1.7 million, respectively, for the three and nine months ended September 30, 2022 and was recorded in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations. The related income tax benefit for the three and nine months ended September 30, 2022 was inconsequential. Employee Stock Purchase Plan Effective as of June 8, 2022, the Company adopted the 2022 Employee Stock Purchase Plan (the “ESPP”) under which shares of the Company’s common stock are available for purchase by eligible participants. The total number of shares of Class A common stock authorized for issuance under the ESPP is 1,785,664. The ESPP allows participants to purchase shares of Class A common stock at 85% of its fair market value at the lower of (i) the date of commencement of the offering period or (ii) the last day of the exercise period, as defined in the plan documents. The fair value of purchases under the Company’s ESPP is estimated using the Black-Scholes option-pricing valuation model. The determination of fair value of stock-based awards using an option-pricing model is affected by the Company’s stock price as well as assumptions pertaining to several variables, including expected stock price volatility, the expected term of the award and the risk-free rate of interest. In the option-pricing model for the Company’s employee stock purchase plans, expected stock price volatility is based on historical volatility of the Company’s common stock. The expected term of the award is based on the six-month requisite period. The Company has not paid dividends in the past, and has not announced any intention to pay dividends in the foreseeable future, and therefore uses an expected dividend yield of zero. The following table provides details pertaining to the ESPP for the periods indicated:
As of September 30, 2022, the total unrecognized stock-based compensation expense related to the ESPP was approximately $0.2 million, before income taxes, and is expected to be recognized over a weighted period of approximately 0.5 years. Non-cash stock-based compensation expense under the ESPP was de minimis for the three and nine months ended September 30, 2022. The related income tax benefit for the three and nine months ended September 30, 2022 was inconsequential.
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Income taxes |
9 Months Ended |
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Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxesThe income tax (benefit) and expense for the three and nine months ended September 30, 2022 was $(0.5) million and $1.6 million, respectively. The income tax expense on the pre-tax loss for the nine months ended September 30, 2022 was primarily attributable to an incremental valuation allowance recorded due to continued losses in the U.S. and other loss jurisdictions, tax expense recorded in foreign jurisdictions where income is generated, certain permanent book to tax differences, as well as an effective settlement with the tax authorities. The effective tax rate was different than the amount expected at the statutory federal income tax rate for the three and nine months ended September 30, 2022 as a result of additional state income tax benefits, an increase in the valuation allowance recorded on certain deferred tax assets that management believes are not more likely than not to be fully realized in future periods, certain nondeductible remuneration to covered employees under Internal Revenue Code section 162(m), nondeductible equity-based compensation, the change in fair value of the warrant liabilities, and miscellaneous transfer pricing true-ups for final statutory filings and/or tax returns in certain foreign jurisdictions. The income tax expense for the nine months ended September 30, 2022 includes the second quarter recognition of tax expense related to an effective settlement of the Company’s tax examination by the Internal Revenue Service (“IRS”) for the 2017 tax year.The income tax (benefit) for the three and nine months ended September 30, 2021 was $(11.1) million and $(36.9) million, respectively. The income tax benefit on the pre-tax loss for the three and nine months ended September 30, 2021 was different than the amount expected at the statutory federal income tax rate primarily as a result of additional state income tax benefits, which were partially offset by an increase in the valuation allowance recorded on certain deferred tax assets in the U.S. and foreign jurisdictions that management believes are not more likely than-not to be fully realized in future periods, nondeductible equity compensation, and the change in fair value of the warrant liabilities. |
Commitments and contingencies |
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Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies Letters of credit As of September 30, 2022 and December 31, 2021, the Company had $4.9 million and $5.7 million, respectively, in irrevocable stand-by letters of credit outstanding, which were issued primarily to guarantee data center lease obligations and another subsidiary’s performance under a line of credit. As of September 30, 2022 and December 31, 2021, no amounts had been drawn on any of these irrevocable stand-by letters of credit. Lease commitments The Company entered into an agreement for power redundancy supply at a facility in Massachusetts. The service contract will contain a lease of power redundancy equipment, however, the lease has not yet commenced as of September 30, 2022. This lease is expected to commence in 2023, with a total lease commitment of $22.4 million. Purchase obligations As of September 30, 2022 and December 31, 2021, the Company had approximately $1.7 million and $4.4 million, respectively, of purchase commitments related to IT licenses, utilities and colocation operations. These amounts do not represent the Company’s entire anticipated purchases in the future but represent only those items for which the Company was contractually committed as of September 30, 2022 and December 31, 2021, respectively. Litigation From time to time, the Company is involved in certain legal proceedings and claims that arise in the ordinary course of business. It is the Company’s policy to accrue for amounts related to these legal matters if it is probable that a liability has been incurred and the amount is reasonably estimable. In the opinion of management, based on consultations with counsel, the results of any of these matters individually and in the aggregate, are not expected to have a material effect on the Company’s results of operations, financial condition or cash flows.
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Segment reporting |
9 Months Ended |
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Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Segment reporting | Segment reportingCyxtera’s chief operating decision maker is its Chief Executive Officer. The Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions – the colocation segment. The Company derives the significant majority of its colocation revenue from sales to customers in the United States, based upon the service address of the customer. Revenue derived from customers outside the United States, based upon the service address of the customer, was not significant in any individual foreign country. |
Certain relationships and related party transactions |
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Certain relationships and related party transactions | Certain relationships and related party transactions Relationships The Company is party to the following agreements and key relationships: •Promissory Notes On March 31, 2019, Appgate Inc., formerly known as Cyxtera Cybersecurity, Inc. (“Appgate”) issued promissory notes to each of the Company and Cyxtera Management, Inc. (the “Management Company”) (together, the “Promissory Notes”) evidencing certain funds borrowed by Appgate from each of the Company and the Management Company as well as potential future borrowings. The Promissory Notes had a combined initial aggregate principal amount of $95.2 million and provided for additional borrowings during the term of the Promissory Notes for additional amounts not to exceed approximately $52.5 million in the aggregate (approximately $147.7 million including the initial aggregate principal amount). Interest accrued on the unpaid principal balance of the Promissory Notes at a rate per annum equal to 3%; provided that, with respect to any day during the period from the date of the Promissory Notes through December 31, 2019, interest was calculated assuming that the unpaid principal balance of the Promissory Notes on such day is the unpaid principal amount of the notes on the last calendar day of the quarter in which such day occurs. Interest was payable upon the maturity date of the notes. Each of the Promissory Notes had an initial maturity date of March 30, 2020, and was extended through March 30, 2021 by amendments entered into effective as of March 30, 2020. On February 8, 2021, the Company received $120.6 million from Appgate. Approximately $117.1 million and $1.1 million were designated as repayment of the full balance of the $154.3 million outstanding principal and accrued interest, respectively, on the Promissory Notes at that time. On the same date, the Company issued a payoff letter to Appgate extinguishing the remaining unpaid balance of the Promissory Notes. The remainder of the payment was designated as settlement of trade balances with Appgate and its subsidiaries and other amounts due to / from under a Transition Services Agreement by and between Appgate and the Management Company pursuant to which the Management Company provided certain transition services to Appgate and Appgate provided certain transition services to Cyxtera. As a result, during the three months ended March 31, 2021, the Company wrote-off the ending balance in the allowance for loan losses on the Promissory Notes. No transactions related to the Promissory Notes were recorded during the three months ended September 30, 2022. There was no activity in allowance for loan losses on the Promissory Notes during the three and nine months ended September 30, 2022. The activity in the allowance for loan losses on the Promissory Notes during the year ended December 31, 2021 was as follows (in millions):
•Sponsor’s investment in the First Lien Term Facility At September 30, 2021, until the date of the Business Combination, some of the controlled affiliates of BC Partners, the largest equity owner of SIS, held investments in the Company’s 2017 First Lien Term Facility and 2019 First Lien Term Facility. The total investment represented less than 5% of the Company’s total outstanding debt. As of September 30, 2022 and December 31, 2021, the controlled affiliates of BC Partners no longer held investments in the Company’s 2017 First Lien Term Facility and 2019 First Lien Term Facility. •Optional Share Purchase On July 21, 2021, immediately prior to the consummation of the Business Combination, Legacy Cyxtera entered into the Optional Purchase Letter Agreement with the Forward Purchasers, pursuant to which the Forward Purchasers agreed to amend the Optional Share Purchase Agreement to limit the number of Optional Shares available for purchase by the Forward Purchasers in the six-month period following the Business Combination from 7.5 million shares to 3.75 million shares. In addition, on such date, the Forward Purchasers agreed to assign the rights to purchase up to 3.75 million shares under the Optional Share Purchase Agreement to SIS. In January 2022, SIS and the Forward Purchasers exercised their option to purchase 7.5 million Optional Shares at a price of $10.00 per share, for an aggregate purchase price of $75.0 million. •Relationships with certain members of the Company’s board of directors The chairman of the board of directors is one of the founders and the chairman of Emerge Americas, LLC, which operates a technology conference in Miami, Florida. As of September 30, 2022 and December 31, 2021, the Company did not owe any significant amounts to Emerge Americas, LLC. Since 2019 until the date of the Business Combination, one of the directors of the Company was also a member of the board of directors of Pico Quantitative Trading, LLC (“Pico”). Pico offers a comprehensive range of network products to meet the full spectrum of electronic trading requirements. As of September 30, 2022 and December 31, 2021, Pico is no longer a related party of the Company. Two directors of the Company are also members of the board of directors of Presidio Holdings (“Presidio”), a provider of digital transformation solutions built on agile secure infrastructure deployed in a multi-cloud world with business analytics. During the three and nine months ended September 30, 2022 the Company paid $0.1 million and $0.2 million, respectively, to Presidio for services (no amounts were paid in 2021). As of September 30, 2022 and December 31, 2021, the Company did not owe any amounts to Presidio. Presidio is also a customer and referral partner of the Company. During each of the three months ended September 30, 2022 and 2021, the Company billed and collected from Presidio a total of $0.1 million. During each of the nine months ended September 30, 2022 and 2021, the Company billed from Presidio a total of $0.3 million and $0.1 million, respectively. During each of the nine months ended September 30, 2022 and 2021, the Company collected a total of $0.3 million and $0.2 million, respectively. One of the directors of the Company is also a member of the board of directors of Altice USA, Inc. (“Altice”), a vendor and a customer of the Company. The amount paid and due to Altice for the three and nine months ended September 30, 2022 and 2021, was inconsequential. The amounts billed and collected from Altice for the three and nine months ended September 30, 2022 were $0.1 million and $0.3 million, respectively. The amounts billed and collected from Altice for the three and nine months ended September 30, 2021 were $0.1 million and $0.2 million, respectively. One of the directors of the Company is also a member of the board of directors of Navex Global, Inc. (“Navex”), a vendor and customer of the Company. The amount paid and due to Navex for the three and nine months ended September 30, 2022 and 2021, was inconsequential. The amounts billed and collected from Navex for the three months ended September 30, 2022 and 2021, was inconsequential. The amounts billed and collected from Navex for the nine months ended September 30, 2022 were $0.1 million (amount billed and collected during the nine months September 30, 2021 was inconsequential). Related party transactions and balances The following table summarizes the Company’s transactions with related parties for each of the three and nine months ended September 30, 2022, and 2021 (in millions):
(1) Revenues for the three and nine months ended September 30, 2022 and 2021 include amounts recognized from contracts with Appgate, Altice, Navex, and Presidio. Appgate is an affiliate of the Company and a direct subsidiary of SIS. (2) Selling, general and administrative expenses include amounts incurred from contracts with Appgate an Presidio. (3) Includes net income recognized under the Transition Services Agreement for the three and nine months ended September 30, 2021. As of September 30, 2022 and December 31, 2021, the Company had the following balances arising from transactions with related parties (in millions):
(1)Accounts receivable at September 30, 2022 and December 31, 2021, include trade receivables due from Appgate. (2)Accounts payable at September 30, 2022 and December 31, 2021, include amounts due to trade payables due to Appgate.
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Basis of presentation and significant accounting policies (Policies) |
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Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation and use of estimatesThe accompanying unaudited condensed consolidated financial statements have been prepared by Cyxtera and reflect all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary to fairly state the financial position and the results of operations for the interim periods presented. The unaudited condensed consolidated balance sheet data as of December 31, 2021 has been derived from audited consolidated financial statements as of that date. The unaudited condensed consolidated financial statements have been prepared in accordance with the regulations of the Securities and Exchange Commission (“SEC”) but omit certain information and footnote disclosure necessary to present the statements in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). For further information, refer to the Company’s consolidated financial statements as of and for the year ended December 31, 2021, included in the Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report on Form 10-K”). Results for the interim periods are not necessarily indicative of the results for the entire fiscal year. |
Use of estimates | Basis of presentation and use of estimatesThe accompanying unaudited condensed consolidated financial statements have been prepared by Cyxtera and reflect all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary to fairly state the financial position and the results of operations for the interim periods presented. The unaudited condensed consolidated balance sheet data as of December 31, 2021 has been derived from audited consolidated financial statements as of that date. The unaudited condensed consolidated financial statements have been prepared in accordance with the regulations of the Securities and Exchange Commission (“SEC”) but omit certain information and footnote disclosure necessary to present the statements in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). For further information, refer to the Company’s consolidated financial statements as of and for the year ended December 31, 2021, included in the Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report on Form 10-K”). Results for the interim periods are not necessarily indicative of the results for the entire fiscal year. |
Risks and uncertainties | Risks and uncertainties Preparing financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Examples include, but are not limited to, asset and goodwill impairments, allowance for doubtful accounts, future asset retirement obligations and the potential outcome of future tax consequences of events that have been recognized in the unaudited condensed consolidated financial statements. Actual results and outcomes may differ from these estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment. Coronavirus (COVID-19) Update During the three and nine months ended September 30, 2022, the COVID-19 pandemic did not have a material impact on our unaudited condensed consolidated financial statements. The full impact that the ongoing COVID-19 pandemic will have on our future unaudited condensed consolidated financial statements remains uncertain and ultimately will depend on many factors, including the duration and potential cyclicity of the health crisis, further public policy actions to be taken in response, as well as the continued impact of the pandemic on the global economy and our customers and vendors. We will continue to evaluate the nature and extent of these potential impacts to our business and unaudited condensed consolidated financial statements.
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Update to significant accounting policies and Recent accounting pronouncements | Update to significant accounting policiesThe Company’s significant accounting policies are detailed in Note 2 - Summary of Significant Accounting Policies of the Company’s consolidated financial statements as of and for the year ended December 31, 2021 included within the Company’s Annual Report on Form 10-K. Significant updates to our accounting policies as a result of the adoption of Accounting Standard Update (“ASU”) 2016-12, Leases, as well as the initial implementation guidance and subsequent amendments to ASU 2017-13, ASU 2018-01, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2020-05 (collectively referred to as “Topic 842”) for the three and nine months ended September 30, 2022 are discussed below. Recent accounting pronouncements The Company is as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (“JOBS Act”). The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards, such that an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to avail itself of the extended transition periods and, as a result, the Company will not be required to adopt new or revised accounting standards on the adoption dates required for other public companies so long as the Company remains an emerging growth company. In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform, which provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022 that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments are effective for all entities as of March 12, 2020, through December 31, 2022. The Company is evaluating the impact that the adoption of this standard will have on its unaudited condensed consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326)-Measurement of Credit Losses on Financial Instruments, which requires companies to measure and recognize lifetime expected credit losses for certain financial instruments, including trade accounts receivable. Expected credit losses are estimated using relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. This amendment is effective commencing in 2023 with early adoption permitted, and the Company expects to adopt the new standard on the effective date or the date it no longer qualifies as an emerging growth company, whichever is earlier. Entities are permitted to use a modified retrospective approach. The Company is evaluating the impact that the adoption of this standard will have on its unaudited condensed consolidated financial statements. In December 2019, the Financial Accounting Standards Board issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. We adopted the amendments in Topic 740 as of January 1, 2022, without a material impact on our unaudited condensed consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt: Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. The guidance simplifies accounting for convertible instruments by removing major separation models required under current US GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for annual and interim periods beginning after December 15, 2021. The Company adopted this new guidance on January 1, 2022 without a material impact on its unaudited condensed consolidated financial statements. In February 2016, FASB issued Topic 842, which replaced the guidance in former ASC Topic 840, Leases. The new lease guidance increases transparency and comparability among organizations by requiring the recognition of the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s future obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) an operating lease ROU asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. The accounting for the Company’s finance leases remains substantially unchanged. Topic 842 allows entities to adopt using one of two methods: the modified retrospective transition method or the alternative transition method. During the nine months ended September 30, 2022, the Company adopted Topic 842, with an effective date of January 1, 2022, using the alternative transition method. Therefore, results for reporting periods beginning after January 1, 2022 are presented under Topic 842, while comparative information has not been restated and continues to be reported under accounting standards in effect for those periods. The Company recognized the cumulative effects of initially applying the standard as an adjustment to the opening balance of retained earnings in the period of adoption.In adopting the new guidance, the Company elected to apply the package of practical expedients permitted under the transition guidance, which allows the Company not to reassess (1) whether any expired or existing contracts contain leases under the new definition of a lease; (2) lease classification for any expired or existing leases; and (3) whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.
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Leases | Leases The Company determines if an arrangement is or contains a lease at its inception. The Company enters into lease arrangements primarily for data center spaces, office spaces and equipment. The Company recognizes a right-of-use (“ROU”) asset and lease liability on the condensed consolidated balance sheets for all leases with a term longer than 12 months, including renewals. ROU assets represent the Company’s right to use an underlying asset for the lease term. Lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are classified and recognized at the commencement date. Lease liabilities are measured based on the present value of fixed lease payments over the lease term. ROU assets consist of (i) initial measurement of the lease liability; (ii) lease payments made to the lessor at or before the commencement date less any lease incentives received; and (iii) initial direct costs incurred by the Company. Lease payments may vary because of changes in facts or circumstances occurring after the commencement, including changes in inflation indices. Variable lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest rate) are included in the measurement of ROU assets and lease liabilities using the index or rate at the commencement date. Variable lease payments that do not depend on an index or a rate are excluded from the measurement of ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. Since most of the Company’s leases do not provide an implicit rate, the Company uses its own incremental borrowing rate (“IBR”) on a collateralized basis in determining the present value of lease payments. The Company utilizes a market-based approach to estimate the IBR. The approach requires significant judgment. Therefore, the Company utilizes different data sets to estimate IBRs via an analysis of (i) yields on our outstanding traded bank loans (ii) yields on comparable credit rating composite curves and (iii) yields on comparable market curves. The majority of the Company’s lease arrangements include options to extend the lease. If the Company is reasonably certain to exercise such options, the periods covered by the options are included in the lease term. The Company recognizes rental expenses for operating leases that contain predetermined fixed escalation clauses on a straight-line basis over the expected term of the lease. The depreciable lives of certain fixed assets and leasehold improvements are limited by the expected lease term. The Company has certain leases that have an initial term of 12 months or less and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. For such leases, the Company elected not to recognize any ROU asset or lease liability on the condensed consolidated balance sheets. The Company has lease agreements with lease and non-lease components. The Company elected to account for the lease and non-lease components as a single lease component for all classes of underlying assets for which the Company has identified lease arrangements with non-lease components. Lease modifications In the normal course of business, the Company may modify leases, which could result in a change from the original lease classification (i.e. finance or operating leases). The Company remeasures the lease liability based on the lease term of the modified leases by discounting revised lease payments using a revised IBR at the effective date of the modification. The Company accounts for the remeasurement of lease liabilities and lease incentives from lessor by making corresponding adjustments to the relevant right-of-use asset.
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Revenue | The Company disaggregates revenue from contracts with customers into recurring revenues and non-recurring revenues. Cyxtera derives the majority of its revenues from recurring revenue streams, consisting primarily of colocation service fees. These fees are generally billed monthly and recognized ratably over the term of the contract. The Company’s non-recurring revenues are primarily comprised of installation services related to a customer’s initial deployment and professional services the Company performs. These services are considered to be non-recurring because they are billed typically once, upon completion of the installation or the professional services work performed. The majority of these non-recurring revenues are typically billed on the first invoice distributed to the customer in connection with their initial installation. However, revenues from installation services are deferred and recognized ratably over the period of the contract term in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”) as discussed in Note 2 to the Company’s consolidated financial statements as of and for the year ended December 31, 2021, included within the Annual Report on Form 10-K. |
Basis of presentation and significant accounting policies (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Cumulative Effect of the Changes Made to Consolidated Balance Sheet From the Adoption of Topic 842 | The cumulative effect of the changes made to our unaudited condensed consolidated balance sheet as of January 1, 2022 due to the adoption of Topic 842 was as follows (in millions):
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Business combination (Tables) |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Reverse Recapitalization | The following table reconciles the elements of the Business Combination to the consolidated statements of cash flows and the consolidated statements of changes in shareholders’ equity for the year ended December 31, 2021:
(1) Represents $41.8 million of non-cash Public Warrants and Private Placement Warrants liabilities assumed.
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Loss per common share (Tables) |
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Schedule of Antidilutive Securities Excluded from Computation of Net Loss Per Share | The Company excluded the following potential shares of Class A common stock, from the computation of diluted net loss per share during the three and nine month periods ended September 30, 2022 and 2021 because including them would have an anti-dilutive effect:
(1) Optional shares were excluded from the computation of diluted loss per share for the periods these instruments represented potential dilutive common stock equivalents during the nine months ended September 30, 2022. (2) In addition, 19.4 million of Public Warrants and Private Placement Warrants were excluded from the computation of net loss per share for the period January 1, 2022 through January 24, 2022 because they would have had an anti-dilutive effect on the computation of diluted net loss.
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Restructuring, impairment, site closures and related costs (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Impairment Site Closures and Related Costs | The activity in restructuring liability reserve for the nine months ended September 30, 2022 and 2021 was as follows (in millions):
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Revenue (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Revenue |
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Schedule of Contract Balances | The following table summarizes the opening and closing balances of the Company’s receivables; contract asset, current; contract asset, non-current; deferred revenue, current; and deferred revenue, non-current (in millions):
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Balance sheet components (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Allowance For Doubtful Accounts | The activity in the allowance for doubtful accounts during the nine months ended September 30, 2022 and the year ended December 31, 2021 was as follows (in millions):
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Schedule of Prepaid and Other Current assets | Prepaid and other current assets consist of the following as of September 30, 2022 and December 31, 2021 (in millions):
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Goodwill and intangible assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | Summarized below are the carrying values for the major classes of amortizing intangible assets as of September 30, 2022 and December 31, 2021 (in millions):
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The Company estimates annual amortization expense for existing intangible assets subject to amortization as of September 30, 2022 as follows (in millions):
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Fair value measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Value and Fair Value of Other Financial Instruments | The carrying values and fair values of other financial instruments are as follows as of September 30, 2022 and December 31, 2021 (in millions):
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Leases (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Lease Expenses | The components of lease expenses and income are as follows (in millions):
(1) Amortization of assets under leases is included in depreciation and amortization expense in the Company’s unaudited condensed consolidated statements of operations. (2) Interest on lease liabilities is included in interest expense, net in the Company’s unaudited condensed consolidated statements of operations. (3) Operating lease costs for data centers is included in cost of revenue, excluding depreciation and amortization in the Company’s unaudited condensed consolidated statements of operations. Operating lease costs for office leases is included in selling, general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations. (4) Variable lease costs for operating leases is included in costs of revenue, excluding depreciation and amortization in the Company’s unaudited condensed consolidated statements of operations. (5) The Company has subleases for certain data centers with Lumen Technologies, Inc. formerly known as CenturyLink Inc. (“Lumen”), and the Company also leases a portion of an owned location to Lumen. The Company also has a sublease of the Addison office space described in Note 5. Sublease and lease income of $7.7 million in connection with Lumen is included in revenues in the Company’s unaudited condensed consolidated statements of operations. Sublease income of $1.4 million in connection with the Addison office lease is included in restructuring, impairment, site closures, and related costs in the Company’s unaudited condensed consolidated statements of operations. (6) During the nine months ended September 30, 2022, the Company recognized $3.9 million of restructuring expenses recorded in restructuring, impairment, site closures and related costs in the unaudited condensed consolidated statements of operations. The restructuring costs were composed of $4.8 million of operating lease cost and $0.5 million of accretion expense, net of $1.4 million of income recognized from the Addison sublease. Lease costs for short-term leases were inconsequential for the nine months ended September 30, 2022. Other Information Other information related to leases is as follows (in millions):
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Maturities of Operating Lease Liabilities | Maturities of lease liabilities under Topic 842 as of September 30, 2022 are as follows (in millions):
(1) Minimum lease payments have not been reduced by minimum sublease rentals of $47.7 million due in the future under non-cancelable subleases.
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Finance of Operating Lease Liabilities | Maturities of lease liabilities under Topic 842 as of September 30, 2022 are as follows (in millions):
(1) Minimum lease payments have not been reduced by minimum sublease rentals of $47.7 million due in the future under non-cancelable subleases.
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Minimum Future Rentals to be Received | Future minimum lease receipts under operating lease obligations under Topic 842 as of September 30, 2022 are as follows (in millions):
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Schedule of Future Minimum Rental Payments for Operating Leases | The future minimum lease receipts and payments under operating lease obligations under ASC Topic 840 as of December 31, 2021 are as follows (in millions):
(1) Minimum lease payments have not been reduced by minimum sublease rentals of $45.1 million due in the future under non-cancelable subleases.
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Schedule of Future Minimum Lease Payments for Capital Leases | The future minimum lease payments under capital lease arrangements and sale-leaseback financing obligations under ASC Topic 840 as of December 31, 2021 are as follows (in millions):
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Long-term debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt | Long-term debt consists of the following as of September 30, 2022 and December 31, 2021 (in millions):
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Schedule of Maturities of Long-term Debt | The aggregate maturities of our long-term debt are as follows as of September 30, 2022 (in millions):
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Schedule of Interest Expense Net | Interest expense, net for the three and nine months ended September 30, 2022 and 2021 consist of the following (in millions):
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Warrant liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Warrant Liability | The following table presents information about the Company’s movement in its Level 1 and Level 2 warrant liabilities measured at fair value during the nine months ended September 30, 2022 (in millions):
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Stock-based compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity-based Compensation Cost | The stock-based compensation cost was as follows (in millions) and included in the following captions in the accompanying unaudited condensed consolidated statements of operations:
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Schedule of Stock Options Transactions | Stock option transactions for the nine months ended September 30, 2022, were as follows:
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Schedule of Restricted Stock Unit, Activity | RSU transactions for the nine months ended September 30, 2022 were as follows:
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Share-based Payment Arrangement, Performance Shares, Activity | The PSUs are subject to two types of performance conditions: relative total shareholder return (“TSR”) based on achievement of certain market conditions, and adjusted earnings before interest, taxes, depreciation and amortization (“Adj. EBITDA”), each of which is weighted one-half of the PSU, as shown in more detail below.
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Schedule of Assumptions Used for Estimating Fair Value | The key assumptions used to determine the fair value of the TSR measured component of the PSUs at March 23, 2022 (grant date) using the Monte Carlo simulation model were as follows:
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Schedule of Performance Shares, Outstanding Activity | The following table summarizes PSU activity for the nine months ended September 30, 2022:
(1) Year Two and Year Three Adj. EBITDA measured PSUs are excluded from the total amount of granted PSUs, since such units are not deemed granted for accounting purposes as of September 30, 2022. We excluded 174,883 of Year Two and Year Three Adj. EBITDA measured PSUs.
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Schedule of pertaining to the Company’s ESPP | The following table provides details pertaining to the ESPP for the periods indicated:
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Certain relationships and related party transactions (Tables) |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Allowance For Doubtful Accounts | The activity in the allowance for doubtful accounts during the nine months ended September 30, 2022 and the year ended December 31, 2021 was as follows (in millions):
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Schedule of Related Party Transactions | The following table summarizes the Company’s transactions with related parties for each of the three and nine months ended September 30, 2022, and 2021 (in millions):
(1) Revenues for the three and nine months ended September 30, 2022 and 2021 include amounts recognized from contracts with Appgate, Altice, Navex, and Presidio. Appgate is an affiliate of the Company and a direct subsidiary of SIS. (2) Selling, general and administrative expenses include amounts incurred from contracts with Appgate an Presidio. (3) Includes net income recognized under the Transition Services Agreement for the three and nine months ended September 30, 2021. As of September 30, 2022 and December 31, 2021, the Company had the following balances arising from transactions with related parties (in millions):
(1)Accounts receivable at September 30, 2022 and December 31, 2021, include trade receivables due from Appgate. (2)Accounts payable at September 30, 2022 and December 31, 2021, include amounts due to trade payables due to Appgate.
|
Organization and description of the business (Details) |
Jul. 29, 2021
shares
|
Sep. 30, 2022
dataCenter
market
$ / shares
|
Dec. 31, 2021
$ / shares
|
---|---|---|---|
Business Acquisition [Line Items] | |||
Number of highly interconnected data centers | 66 | ||
Number of global markets | market | 33 | ||
Number of continents with data centers | 3 | ||
Common stock par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |
SVAC | Legacy Cyxtera | |||
Business Acquisition [Line Items] | |||
Number of shares issued (in shares) | shares | 120,568,182 |
Basis of presentation and significant accounting policies (Details) - USD ($) $ in Millions |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Assets: | ||
Operating lease right-of-use assets | $ 248.3 | $ 0.0 |
Intangible assets, net | 441.8 | 519.8 |
Liabilities | ||
Current portion of operating lease liabilities | 33.8 | 0.0 |
Operating leases liabilities, net of current portion | 273.5 | 0.0 |
Other liabilities | $ 72.0 | 158.2 |
Adjustments due to adoption of Topic 842 | ||
Assets: | ||
Operating lease right-of-use assets | 290.6 | |
Intangible assets, net | (32.7) | |
Liabilities | ||
Current portion of operating lease liabilities | 32.2 | |
Operating leases liabilities, net of current portion | 319.0 | |
Other liabilities | (93.3) | |
Cumulative Effect, Period of Adoption, Adjusted Balance | ||
Assets: | ||
Operating lease right-of-use assets | 290.6 | |
Intangible assets, net | 487.1 | |
Liabilities | ||
Current portion of operating lease liabilities | 32.2 | |
Operating leases liabilities, net of current portion | 319.0 | |
Other liabilities | $ 64.9 |
Business combination - Consideration Paid (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2021
USD ($)
| |
Business Combination and Asset Acquisition [Abstract] | |
SVAC’s trust and cash, net of redemptions | $ 143.9 |
Cash - PIPE Investment | 250.0 |
Cash - Forward Purchase | 100.0 |
Less: transaction costs and advisory fees, net of tax benefit | (59.4) |
Net proceeds from reverse recapitalization | 434.5 |
Plus: non cash net liabilities assumed | (41.8) |
Less: accrued transaction costs and advisory fees | (0.4) |
Net contributions from reverse recapitalization | 392.3 |
Non-cash warrant liability assumed | $ 41.8 |
Restructuring, impairment, site closures and related costs - Restructuring Liability Reserve (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Restructuring Reserve [Roll Forward] | ||
Balance at beginning of the period | $ 62.3 | $ 0.0 |
Lease termination costs | 0.0 | 64.4 |
Reclassification of deferred rent credits | 0.0 | 3.4 |
Reclassification of the restructuring liability reserve to ROU Asset | (53.0) | 0.0 |
Accretion | 0.5 | 2.0 |
Payments | (0.9) | (6.1) |
Balance at end of the period | $ 8.9 | $ 63.7 |
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 186.6 | $ 177.1 | $ 553.0 | $ 525.3 |
Recurring revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 178.1 | 169.3 | 526.0 | 501.2 |
Non-recurring revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 8.5 | $ 7.8 | $ 27.0 | $ 24.1 |
Revenue - Summary of Opening and Closing Contract Balances (Details) - USD ($) $ in Millions |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2021 |
Jun. 30, 2021 |
Mar. 31, 2021 |
|
Receivables | ||||||
Opening balance | $ 38.5 | $ 27.7 | $ 18.3 | $ 16.3 | $ 12.6 | $ 33.5 |
Net increase (decrease) during the period | (18.3) | 10.8 | 9.4 | 9.9 | 3.7 | (20.9) |
Ending balance | 20.2 | 38.5 | 27.7 | 26.2 | 16.3 | 12.6 |
Contract asset, current | ||||||
Opening balance | 14.3 | 16.1 | 17.2 | 19.6 | 22.0 | 23.8 |
Net increase (decrease) during the period | 0.8 | (1.8) | (1.1) | (1.3) | (2.4) | (1.8) |
Ending balance | 15.1 | 14.3 | 16.1 | 18.3 | 19.6 | 22.0 |
Contract asset, non-current | ||||||
Beginning balance | 14.0 | 12.6 | 12.1 | 12.6 | 14.1 | 16.8 |
Net increase (decrease) during the period | 0.3 | 1.4 | 0.5 | (1.7) | (1.5) | (2.7) |
Ending balance | 14.3 | 14.0 | 12.6 | 10.9 | 12.6 | 14.1 |
Deferred revenue, current | ||||||
Beginning balance | 14.9 | 14.5 | 14.5 | 14.7 | 15.1 | 15.6 |
Net increase (decrease) during the period | 0.3 | 0.4 | 0.0 | 0.4 | (0.4) | (0.5) |
Ending balance | 15.2 | 14.9 | 14.5 | 15.1 | 14.7 | 15.1 |
Deferred revenue, non-current | ||||||
Beginning balance | 14.1 | 14.1 | 14.7 | 15.3 | 16.1 | 18.1 |
Net increase (decrease) during the period | 0.1 | 0.0 | (0.6) | 1.4 | (0.8) | (2.0) |
Ending balance | $ 14.2 | $ 14.1 | $ 14.1 | $ 16.7 | $ 15.3 | $ 16.1 |
Revenue - Contract Balances (Details) - USD ($) $ in Millions |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
|
Capitalized Contract Cost [Line Items] | |||
Deferred revenue recognized | $ 11.3 | $ 12.1 | |
Advance billing, deferred revenue | 48.9 | $ 46.1 | |
Capitalized contract costs | 29.4 | 29.3 | |
Contract costs amortization | 14.7 | 20.6 | |
Costs of revenues, excluding depreciation and amortization | |||
Capitalized Contract Cost [Line Items] | |||
Contract costs amortization | 5.4 | 12.1 | |
Selling, General and Administrative Expenses | |||
Capitalized Contract Cost [Line Items] | |||
Contract costs amortization | 9.3 | $ 8.5 | |
Prepaid Expenses and Other Current Assets | |||
Capitalized Contract Cost [Line Items] | |||
Capitalized contract costs | 15.1 | 17.2 | |
Other Assets | |||
Capitalized Contract Cost [Line Items] | |||
Capitalized contract costs | $ 14.3 | $ 12.1 |
Balance sheet components - Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2022 |
Dec. 31, 2021 |
|
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 0.3 | $ 1.4 |
(Write-offs) Recoveries | 0.3 | 0.1 |
Reversal of allowance | (0.4) | (1.2) |
Ending balance | $ 0.2 | $ 0.3 |
Balance sheet components - Narrative (Details) - USD ($) $ in Millions |
9 Months Ended | |||
---|---|---|---|---|
Feb. 09, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Aug. 31, 2022 |
|
Maximum uncollected receivables available | $ 37.5 | |||
Master receivables purchase agreement, extension period | 540 days | |||
Master receivable purchase agreement, term, period with obligation to complete purchase | 360 days | |||
Invoice face amount factored percentage | 85.00% | |||
Trade receivables, unused percentage | 2.00% | |||
Proceeds from factored receivables, gross | $ 10.9 | $ 91.5 | ||
Proceeds from factored receivables, net | 10.7 | 90.1 | ||
Factored receivables fees | 0.2 | $ 1.4 | ||
Accounts receivable from securitization | $ 37.5 | |||
Accounts receivable securitization drawing | 19.6 | |||
Other Current Liabilities | ||||
Accounts servicing liabilities | $ 17.9 |
Balance sheet components - Prepaid and Other Current Assets (Details) - USD ($) $ in Millions |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
Sep. 30, 2021 |
Jun. 30, 2021 |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|---|---|---|---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||
Contract asset, current | $ 15.1 | $ 14.3 | $ 16.1 | $ 17.2 | $ 18.3 | $ 19.6 | $ 22.0 | $ 23.8 |
Prepaid expenses | 23.0 | 19.3 | ||||||
Other current assets | (1.1) | 1.0 | ||||||
Total prepaid and other current assets | $ 37.0 | $ 37.5 |
Goodwill and intangible assets - Narrative (Details) - USD ($) |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 748,500,000 | $ 761,700,000 | |
Goodwill impairment | 0 | ||
Indefinite-lived intangible assets | 500,000 | 500,000 | |
Accumulated amortization | 327,000,000.0 | 306,600,000 | |
Goodwill impairment loss | 0 | $ 0 | |
Intangible Assets Excluding Unfavorable Leasehold Interest | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of favorable/unfavorable leasehold interests, net | 45,200,000 | 45,200,000 | |
Unfavorable Leasehold Interest | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of favorable/unfavorable leasehold interests, net | 1,700,000 | ||
Accumulated amortization | 16,200,000 | ||
Favorable leasehold interests | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of favorable/unfavorable leasehold interests, net | $ 4,600,000 | ||
Accumulated amortization | $ 0 | $ 24,900,000 |
Goodwill and intangible assets - Major Classes of Amortizing Intangible Assets (Details) - USD ($) $ in Millions |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 768.3 | $ 825.9 |
Accumulated Amortization | (327.0) | (306.6) |
Net | 441.3 | 519.3 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 768.0 | 768.0 |
Accumulated Amortization | (326.7) | (281.4) |
Net | 441.3 | 486.6 |
Favorable leasehold interests | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 0.0 | 57.6 |
Accumulated Amortization | 0.0 | (24.9) |
Net | 0.0 | 32.7 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 0.3 | 0.3 |
Accumulated Amortization | (0.3) | (0.3) |
Net | $ 0.0 | $ 0.0 |
Goodwill and intangible assets - Annual Amortization Expense (Details) - USD ($) $ in Millions |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 (3 months remaining) | $ 15.1 | |
2023 | 60.3 | |
2024 | 60.3 | |
2025 | 60.3 | |
2026 | 60.3 | |
Thereafter | 185.0 | |
Net | $ 441.3 | $ 519.3 |
Fair value measurements - Narrative (Details) - USD ($) $ in Millions |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Debt issuance costs | $ 4.8 | $ 7.5 |
Leases - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Lessee, Lease, Description [Line Items] | ||||
Finance lease assets | $ 1,131,300,000 | $ 1,131,300,000 | ||
Accumulated amortization of finance lease assets | 221,000,000 | 221,000,000 | ||
Operating lease, expense | 88,100,000 | |||
Interest expense on finance leases | $ 25,100,000 | $ 76,100,000 | ||
Additions to assets and liabilities, sale lease financings | 26,700,000 | 2,900,000 | ||
Sale and leaseback transaction, gain (loss) | $ 0 | $ 0 | $ 0 | $ 0 |
Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Term of contract | 1 year | 1 year | ||
Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Term of contract | 32 years | 32 years |
Leases - Schedule of ASC 842 Lease Maturity (Details) $ in Millions |
Sep. 30, 2022
USD ($)
|
---|---|
Operating Leases | |
2022 (3 months remaining) | $ 14.6 |
2023 | 58.6 |
2024 | 58.2 |
2025 | 49.9 |
2026 | 45.4 |
Thereafter | 254.4 |
Total lease payments | 481.1 |
Less: imputed interest | (173.8) |
Total | 307.3 |
Finance Leases | |
2022 (3 months remaining) | 38.9 |
2023 | 151.5 |
2024 | 141.8 |
2025 | 144.1 |
2026 | 138.7 |
Thereafter | 2,582.5 |
Total lease payments | 3,197.5 |
Less: imputed interest | (2,070.2) |
Total | 1,127.3 |
Total | |
2022 (3 months remaining) | 53.5 |
2023 | 210.1 |
2024 | 200.0 |
2025 | 194.0 |
2026 | 184.1 |
Thereafter | 2,836.9 |
Total lease payments | 3,678.6 |
Less: imputed interest | (2,244.0) |
Total | 1,434.6 |
Future minimum sublease rentals | $ 47.7 |
Leases - ASC 842 Minimum Future Rentals to be Received (Details) $ in Millions |
Sep. 30, 2022
USD ($)
|
---|---|
Leases [Abstract] | |
2022 (3 months remaining) | $ 3.1 |
2023 | 12.2 |
2024 | 12.2 |
2025 | 12.3 |
2026 | 12.4 |
Thereafter | 4.1 |
Total minimum lease receipts | $ 56.3 |
Leases - ASC 840 Operating Leases Maturity (Details) - USD ($) $ in Millions |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Lease receipts | ||
2022 | $ 12.2 | |
2023 | 12.2 | |
2024 | 12.2 | |
2025 | 12.2 | |
2026 | 12.2 | |
Thereafter | 4.1 | |
Total minimum lease receipts/payments | 65.1 | |
Lease commitments | ||
2022 | 60.3 | |
2023 | 59.7 | |
2024 | 59.2 | |
2025 | 50.6 | |
2026 | 46.3 | |
Thereafter | 273.8 | |
Total minimum lease receipts/payments | $ 549.9 | |
Operating leases, future minimum payments due, future minimum sublease rentals | $ 45.1 |
Leases - Capital Lease Arrangements (Details) $ in Millions |
Dec. 31, 2021
USD ($)
|
---|---|
Capital Leases and Sale Leaseback Obligations Arrangements | |
2022 | $ 135.1 |
2023 | 128.3 |
2024 | 118.5 |
2025 | 120.6 |
2026 | 119.3 |
Thereafter | 2,285.0 |
Total minimum lease payments | 2,906.8 |
Less: amount representing interest | (1,930.5) |
Present value of net minimum lease payments | 976.3 |
Less: current portion | (38.5) |
Capital leases, net of current portion | $ 937.8 |
Long-term debt - Summary of Long-term Debt (Details) - USD ($) $ in Millions |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt Instrument [Line Items] | ||
Less: unamortized debt issuance costs | $ (4.8) | $ (7.5) |
Total carrying value of debt | 906.2 | 908.3 |
Less: current maturities of long-term debt | (9.2) | (11.8) |
Long-term debt, net current portion | 897.0 | 896.5 |
2017 First Lien Term Facility due May 2024 | Line of Credit | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 772.2 | 778.3 |
2019 First Lien Term Facility due May 2024 | Line of Credit | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 96.8 | 97.5 |
Revolving Facility due May 2022 | Line of Credit | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 0.0 | 2.7 |
2021 Revolving Facility due November 2023 | Line of Credit | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 42.0 | $ 37.3 |
Long-term debt - Maturities of Long-term Debt (Details) - USD ($) $ in Millions |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt Disclosure [Abstract] | ||
2022 (3 months remaining) | $ 2.3 | |
2023 | 51.2 | |
2024 | 852.7 | |
2025 | 0.0 | |
2026 | 0.0 | |
Total carrying value of debt | $ 906.2 | $ 908.3 |
Long-term debt - Interest Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Debt Disclosure [Abstract] | ||||
Interest expense on debt, net of capitalized interest | $ 11.6 | $ 11.6 | $ 29.9 | $ 44.1 |
Interest expense on finance leases | 28.5 | 25.1 | 85.6 | 76.1 |
Amortization of deferred financing costs and fees | 1.0 | 6.4 | 3.1 | 9.1 |
Interest Expense | $ 41.1 | $ 43.1 | $ 118.6 | $ 129.3 |
Warrant liabilities - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Jan. 26, 2022 |
Jan. 26, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
Sep. 30, 2020 |
|
Derivative [Line Items] | |||||
Exercise price per warrant (in dollars per share) (less than) | $ 11.50 | ||||
Number of securities (in shares) | 0.265 | ||||
Warrants exercised on cash basis (in shares) | 126,641 | ||||
Issuance of shares related to exercise of warrants | $ 1.5 | $ 54.2 | |||
Warrant exercised on cashless basis (in shares) | 17,859,466 | ||||
Issuance of shares related to exercise of warrants (in shares) | 4,859,162 | 4,859,162 | |||
Number of warrants redeemed (in shares) | 1,370,760 | ||||
Payments for warrants redemption | $ 0.1 | ||||
Public Warrants | |||||
Derivative [Line Items] | |||||
Warrants redemption price per warrant (in dollars per share) | $ 0.10 | $ 0.10 | |||
Public and Private Placement Warrants | |||||
Derivative [Line Items] | |||||
Issuance of shares related to exercise of warrants | $ 54.2 |
Warrant liabilities - Change in Warrant Liability (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2022
USD ($)
| |
Warrants and Rights Outstanding [Roll Forward] | |
Beginning balance | $ 64.7 |
Warrants exercised for Class A common stock | (52.9) |
Change in fair value of the warrant liabilities | (11.8) |
Ending balance | 0.0 |
Fair Value, Inputs, Level 1 | Public Warrants | |
Warrants and Rights Outstanding [Roll Forward] | |
Beginning balance | 36.1 |
Warrants exercised for Class A common stock | (28.9) |
Change in fair value of the warrant liabilities | (7.2) |
Ending balance | 0.0 |
Fair Value, Inputs, Level 2 | Private Placement Warrants | |
Warrants and Rights Outstanding [Roll Forward] | |
Beginning balance | 28.6 |
Warrants exercised for Class A common stock | (24.0) |
Change in fair value of the warrant liabilities | (4.6) |
Ending balance | $ 0.0 |
Stock-based compensation - Equity-based Compensation Cost (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Equity-based compensation cost | $ 6.2 | $ 1.8 | $ 16.0 | $ 5.4 |
Costs of revenues, excluding depreciation and amortization | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Equity-based compensation cost | 0.4 | 0.0 | 0.9 | 0.2 |
Selling, general and administrative expenses | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Equity-based compensation cost | $ 5.8 | $ 1.8 | $ 15.1 | $ 5.2 |
Stock-based compensation - Fair Value of Stock Options Awards (Details) - PSUs |
Mar. 23, 2022
$ / shares
|
---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 2.30% |
Volatility for Least-Square Monte Carlo Model | 39.00% |
Expected Term in Years | 2 years 9 months 18 days |
Dividend Yield | 0.00% |
Fair Value of Class A Common Stock (in dollars per share) | $ 11.66 |
Stock-based compensation - Performance Stock Units Activity (Details) - PSUs |
9 Months Ended |
---|---|
Sep. 30, 2022
$ / shares
shares
| |
Number of Units | |
Beginning balance (in shares) | 0 |
Award granted (in shares) | 349,766 |
Vested (in share) | 0 |
Forfeited (in shares) | 0 |
Ending balance (in shares) | 349,766 |
Weighted-average grant date fair value | |
Beginning balance (in dollars per share) | $ / shares | $ 0 |
Grants (in dollars per share) | $ / shares | 15.78 |
Vested (in dollars per share) | $ / shares | 0 |
Forfeitures (in dollars per share) | $ / shares | 0 |
Ending balance (in dollars per share) | $ / shares | $ 15.78 |
Yet to grant (in shares) | 174,883 |
Stock-based compensation - Schedule of Company’s ESPP (Details) - Employee Stock Purchase Plan $ / shares in Units, $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2022
USD ($)
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Cash proceeds | $ | $ 0.9 |
Common shares issued (in shares) | shares | 173,665 |
Fair value of ESPP at grant date (in dollars per share) | $ 5.73 |
Stock price at grant date (in dollars per share) | $ 5.83 |
Income taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax benefit (expense) | $ (0.5) | $ (11.1) | $ 1.6 | $ (36.9) |
Commitments and contingencies (Details) - USD ($) |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Loss Contingencies [Line Items] | ||
Total lease commitment | $ 22,400,000 | |
Purchase commitment | 1,700,000 | $ 4,400,000 |
Standby Letters of Credit | ||
Loss Contingencies [Line Items] | ||
Line of credit facility, maximum borrowing capacity | 4,900,000 | 5,700,000 |
Letters of credit outstanding | $ 0 | $ 0 |
Certain relationships and related party transactions - Schedule of Allowance For Loan Losses Activity (Details) - Affiliated Entity $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2021
USD ($)
| |
Financing Receivable, Related Parties [Roll Forward] | |
Beginning balance | $ 30.0 |
Provision for loan losses | 0.0 |
Reversal of allowance | 0.0 |
Net reversal of allowance for loan losses | 0.0 |
Write offs | (30.0) |
Ending balance | $ 0.0 |
Certain relationships and related party transactions - Summary of related party transactions (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Related Party Transactions [Abstract] | ||||
Revenues | $ 0.3 | $ 0.2 | $ 0.9 | $ 0.8 |
Selling general and administrative expenses | 0.1 | 0.0 | 0.3 | (0.1) |
Other expenses, net | $ 0.0 | $ 0.0 | $ 0.0 | $ 0.1 |
Certain relationships and related party transactions - Schedule of Related Party Transactions Balances (Details) - USD ($) $ in Millions |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Related Party Transactions [Abstract] | ||
Accounts receivable | $ 0.1 | $ 0.1 |
Accounts payable | $ 0.0 | $ 0.6 |
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