Customer Contracts

The following table presents the balances related to customer contracts:


(In millions)	Consolidated Balance Sheets Account	December 31, 2022		December 31, 2023		December 31, 2024
Accounts receivable, net	Accounts receivable, net (1)	$	622.2	$	339.7	$	298.8
Current portion of contract assets	Other current assets	$	16.0	$	10.7	$	6.2
Non-current portion of contract assets	Other non-current assets	$	10.4	$	8.6	$	6.4
Current portion of deferred revenue	Deferred revenue	$	80.9	$	78.8	$	84.2
Non-current portion of deferred revenue	Other non-current liabilities	$	8.6	$	5.3	$	2.0

(1) Allowance for credit losses and accrued customer credits was $24.6 million, $20.1 million and $27.0 million as of December 31, 2022, 2023 and 2024, respectively.

The following table sets forth the changes in the allowance for credit losses during the years ended December 31, 2022, 2023 and 2024:


(In millions)	Beginning Balance		Additions (1)		Write-offs of Accounts Receivables, Net of Recoveries		Ending Balance
For the years ending December 31,
2022	$	13.7	$	11.0	$	(6.3)	$	18.4
2023	$	18.4	$	9.2	$	(13.4)	$	14.2
2024	$	14.2	$	18.3	$	(12.6)	$	19.9

(1) Additions to the allowance for credit losses are charged to bad debt within "Selling, general and administrative expenses."

Amounts recognized in revenue for the years ended December 31, 2022, 2023 and 2024, which were included in deferred revenue as of the beginning of the period totaled $98.6 million, $80.9 million and $78.8 million, respectively.

Cost Incurred to Obtain and Fulfill a Contract

As of December 31, 2023 and 2024, the balances of capitalized costs to obtain a contract were $42.0 million and $38.6 million, respectively, and the balances of capitalized costs to fulfill a contract were $13.4 million and $13.7 million, respectively. These capitalized costs are included in "Other non-current assets" on the Consolidated Balance Sheets.

Amortization of capitalized sales commissions and implementation costs were as follows:


	Year Ended December 31,
(In millions)	2022		2023		2024
Amortization of capitalized sales commissions	$	43.7	$	38.1	$	29.4
Amortization of capitalized implementation costs	$	16.4	$	13.0	$	9.6

Remaining Performance Obligations

As of December 31, 2024, the aggregate amount of transaction price allocated to remaining performance obligations was $601.9 million, of which approximately 51% is expected to be recognized as revenue during 2025 and the remainder thereafter. These remaining performance obligations primarily relate to our fixed-term arrangements. The aggregate amount of transaction price excludes variable consideration related to our usage-based arrangements for which we recognize revenue based on the right to invoice for the services performed.

Convertible Promissory Note

On September 27, 2022, we entered into a convertible note purchase agreement with a private company that is also a customer and a vendor. Pursuant to the purchase agreement, we purchased an unsecured convertible promissory note (the "Note") in an aggregate principal amount of $15.0 million. The Note accrues simple interest at a rate of 6% per annum and matures on September 27, 2027, unless earlier converted per the terms of the agreement. Principal and accrued interest are due and payable on the maturity date. We have elected to apply the fair value option under ASC No. 825, Financial Instruments, to account for the Note. As of December 31, 2023 and 2024, the fair value of the Note was $12.8 million and $15.0 million, respectively, and is included in "Other non-current assets" on our Consolidated Balance Sheets. The increase in the fair value of the Note is included in “Other expense, net” in the Consolidated Statements of Comprehensive Loss.

About Revenue Disclosures

Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.

Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.

Rackspace Technology, Inc. Revenue Disclosure

About Revenue Disclosures

Other Available Disclosures