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RingCentral Announces First Quarter 2021 Results

BELMONT, Calif., May 4, 2021 (BUSINESS WIRE) --

--Enterprise ARR up 62% to over $500 million

--Global 2000 and Fortune 1000 Enterprise Business now surpasses $100 million ARR

RingCentral, Inc. (NYSE: RNG), a leading provider of global enterprise cloud communications, video meetings, collaboration, and contact center solutions, today announced financial results for the first quarter ended March 31, 2021.

First Quarter Financial Highlights

Total revenue increased 32% year over year to $352 million. Subscriptions revenue increased 34% year over year to $325 million. Total Annualized Exit Monthly Recurring Subscriptions (ARR) increased 37% year over year to $1.4 billion. RingCentral Office(R) ARR (UCaaS + CCaaS) increased 40% year over year to $1.3 billion. Direct and Partners Office ARR(1) increased 33% year over year to $817 million, an acceleration of 8 points year over year. Channel Office ARR increased 53% year over year to $505 million.

"First quarter results were exceptional, with meaningful contributions from key partners including Avaya, Atos, AT&T, BT, and Telus," said Vlad Shmunis, RingCentral's founder, chairman and CEO. "We believe we are witnessing the intersection of two megatrends of digital transformation and hybrid workforce adoption, which is creating a structural shift in awareness and demand for cloud communications solutions. RingCentral has always been about work from anywhere. With our proven UCaaS platform and a comprehensive CCaaS portfolio, RingCentral continues to win as a trusted communications partner of choice for businesses of all sizes in their digital transformation journeys."

(1) Direct and Partners Office ARR is defined to include direct, Avaya, Atos, Alcatel-Lucent Enterprise, AT&T, BT, Telus, and other non-channel partners.

Financial Results for the First Quarter 2021

Revenue: Subscriptions revenue of $325 million increased 34% year over year and accounted for 92% of total revenue. Total revenue was $352 million for the first quarter of 2021, up from $268 million in the first quarter of 2020, representing 32% growth. Operating Income (Loss): GAAP operating loss was ($42) million, compared to a GAAP operating loss of ($25) million in the same period last year, primarily driven by higher share-based compensation and amortization of acquisition intangibles. Non-GAAP operating income was $33 million, compared to a non-GAAP operating income of $22 million in the same period last year. Net Income (Loss) Per Share: GAAP net loss per share was ($0.00), compared to ($0.70) in the same period last year. The lower loss was primarily driven by mark-to-market gains associated with investments and strategic partnerships. Non-GAAP net income per diluted share was $0.27, compared to $0.19 per diluted share in the same period last year. The first quarters of 2021 and 2020 reflected a 22.5% non-GAAP tax rate. There were no material cash taxes given our net operating loss carryforwards. Cash and Cash Equivalents: Total cash and cash equivalents at the end of the first quarter of 2021 was $463 million. This compares to $640 million at the end of the fourth quarter of 2020. Our cash balance reflects $183 million cash paid for partial repurchase of our 2023 convertible senior notes.

Additional Highlights

Partnerships

Together with Avaya, announced global expansion of Avaya Cloud Office(TM) by RingCentral(R), now available in 13 countries. In addition, the companies announced new capabilities including Team Connect, customizable key layouts, Salesforce integration, multi-account administration, and conversation folders. Together with Atos, launched Unify Video by RingCentral in Europe. A standalone video with team messaging product, Unify Video is designed to enhance online meetings and enable people to work smarter and communicate and collaborate from anywhere. Together with Alcatel-Lucent Enterprise, announced the launch of Rainbow Office, powered by RingCentral, in eight European countries including Austria, Belgium, France, Germany, Ireland, Italy, Spain, and the Netherlands. Together with AT&T Business, introduced AT&T Office@Hand Wireless, empowering users with a single phone number with native mobile dialing and voicemail options. AT&T Office@Hand Wireless allows businesses to maintain a high-performing voice presence across all devices - mobile, desk phones, tablets, and personal computers. Announced partnership with Eclipse Technology Solutions, a leading provider specializing in the delivery of transformative, end-to-end technology solutions and services, to offer RingCentral's market leading UCaaS solutions as a lead cloud communications offer to enterprise customers in Canada. Announced partnership with ecotel communication ag, a leading provider of IT and telecommunication solutions for business customers in Germany, whereby RingCentral will be the lead UCaaS offer for customers of all sizes transitioning to the cloud. As part of the partnership, ecotel will offer RingCentral Office(R) and provide customers with value-added services including migration, adoption, and integration to help customers rapidly move to the cloud.

Platform

Announced a range of new video and team messaging capabilities to enhance online meetings. Some of the new RingCentral Video features include video overlay, video virtual backgrounds, breakout rooms, and picture-in-picture. New team messaging capabilities include personal folders, export message data, and external guest controls. Announced the release of in-app calling for Salesforce. The new feature enables sales agents to make, transfer, and control phone calls directly from Salesforce, resulting in increased productivity and efficiency, and empowering sales agents to drive improved customer engagement. Acquired the technology and engineering team at Kindite, a developer of leading cryptographic technologies that mitigate and reduce security and privacy risks to information and applications in the cloud. The new technology will be incorporated into RingCentral's global communications platform later this year, providing customers with enhanced security capabilities including end-to-end encryption. Announced plans to open a new innovation center in India with sites in Bangalore and Gurgaon. Also announced that Anil Goel has been appointed as Vice President of Engineering and India General Manager. Goel was most recently Global Chief Technology and Product Officer at OYO Hotels and Homes, and previous to that, was at Amazon as Head of Engineering of Customer Returns and Reverse Logistics Business.

Recognition

Announced that RingCentral was named a Customers' Choice in the April 2021 Gartner Peer Insights 'Voice of the Customer': Unified Communications as a Service (UCaaS), Worldwide report for both the large and mid-size enterprise. RingCentral was the only vendor to receive the highest overall rating of 4.6 out of 5 stars, as of February 28, 2021 based on 126 reviews. Announced that RingCentral has been recognized as a Leader in two IDC MarketScape UCaaS reports for Enterprise and small and medium-sized business (SMB) market segments. The Enterprise report evaluates 19 different vendors that sell to organizations with 1,000 or more employees, while the SMB report evaluates 15 different vendors that sell to organizations with fewer than 1,000 employees. In both reports, RingCentral was named a Leader.

Financial Outlook

Full Year 2021 Guidance:

Raising subscriptions revenue range to $1.388 to $1.396 billion, representing annual growth of 28% to 29%. This is up from our prior range of $1.365 to $1.375 billion and annual growth of 26% to 27%. Raising total revenue range to $1.500 to $1.510 billion, representing annual growth of 27% to 28%. This is up from our prior range of $1.475 to $1.490 billion and annual growth of 25% to 26%. GAAP operating margin range of (21.3%) to (20.1%). Non-GAAP operating margin range of 10.0% to 10.1%. Non-GAAP tax rate assumed to be 22.5%. No material cash taxes expected given net operating loss carryforwards. Raising non-GAAP EPS range to $1.24 to $1.27 based on 93.5 to 94.0 million fully diluted shares. This is up from our prior range of $1.20 to $1.24 based on 94.0 to 94.5 million fully diluted shares. Share-based compensation range of $410 to $420 million, amortization of debt discount and issuance costs of $64 million, amortization of acquisition intangibles range of $46 to $49 million, and acquisition related matters of approximately $0.4 million.

Second Quarter 2021 Guidance:

Subscriptions revenue range of $332 to $334 million, representing annual growth of 29% to 30%. Total revenue range of $356.5 to $359.5 million, representing annual growth of 28% to 29%. GAAP operating margin range of (23.2%) to (21.6%). Non-GAAP operating margin of 9.3%. Non-GAAP tax rate assumed to be 22.5%. No material cash taxes expected given net operating loss carryforwards. Non-GAAP EPS range of $0.27 to $0.28 based on 93.0 million fully diluted shares. Share-based compensation range of $99 to $104 million, amortization of debt discount and issuance costs of $16 million, and amortization of acquisition intangibles of $12 million.

For a reconciliation of our forecasted non-GAAP operating margin, see "Reconciliation of Forecasted Operating Margin GAAP Measures to Non-GAAP Measures." We have not reconciled our forecasted non-GAAP EPS to its respective forecasted GAAP measure because we do not provide guidance on it. We do not provide guidance on forecasted GAAP EPS because of the inherent uncertainty and complexity involved in forecasting the intercompany remeasurement gain (loss), gain (loss) associated with investments and strategic partnerships, gain (loss) on early debt conversions, and provision (benefit) from income taxes, which could be significant reconciling items between the non-GAAP and respective GAAP measures. The intercompany remeasurement gain (loss) is affected by the movement in various exchange rates relative to the U.S. Dollar, which is difficult to predict and subject to constant change. We do not provide guidance on gain (loss) associated with investments and strategic partnerships as it is based on future share prices, which are difficult to predict and subject to inherent uncertainties. We do not provide guidance on gain (loss) on debt early conversions as it is based on future conversion requests, future share prices, and interest rates, which are difficult to predict and are subject to inherent uncertainties. We do not provide guidance on forecasted GAAP tax rates as we do not forecast discrete tax items as they are difficult to predict. The provision (benefit) from income taxes, excluding discrete items, is expected to have an immaterial impact to our GAAP EPS. We utilized a projected long-term tax rate in our computation of the non-GAAP income tax provision. For fiscal 2021, we have determined the projected non-GAAP tax rate to be 22.5%. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort.

Conference Call Details:

What: RingCentral financial results for the first quarter of 2021 and outlook for the second quarter and full year of 2021. When: Tuesday, May 4, 2021 at 2:00PM PT (5:00PM ET). Dial-in: To access the call in the United States, please dial (877) 705-6003, and for international callers, dial (201) 493-6725. Callers are encouraged to dial into the call 10 to 15 minutes prior to the start to prevent any delay in joining. Webcast: http://ir.ringcentral.com (live and replay). Replay: Following the completion of the call through 11:59 PM ET on May 11, 2021, a telephone replay will be available by dialing (844) 512-2921 from the United States or (412) 317-6671 internationally with recording access code 13718511.

Investor Presentation Details

An investor presentation providing additional information and analysis can be found at http://ir.ringcentral.com.

About RingCentral

RingCentral, Inc. (NYSE: RNG) is a leading provider of business cloud communications and contact center solutions based on its powerful Message Video Phone(TM)(MVP(TM)) platform. More flexible and cost effective than legacy on-premise PBX and video conferencing systems that it replaces, RingCentral empowers modern mobile and distributed workforces to communicate, collaborate, and connect via any mode, any device, and any location. RingCentral offers three key products in its portfolio including RingCentral Office(R), a Unified Communications as a Service (UCaaS) platform including team messaging, video meetings, and a cloud phone system, Glip(R)the company's free video meetings solution with team messaging that enables Smart Video Meetings(TM), and RingCentral cloud Contact Center solutions. RingCentral's open platform integrates with leading third party business applications and enables customers to easily customize business workflows. RingCentral is headquartered in Belmont, California, and has offices around the world.

(C) 2021 RingCentral, Inc. All rights reserved. RingCentral, Message Video Phone, MVP, RingCentral Office, Glip, Smart Video Meetings, and the RingCentral logo are trademarks of RingCentral, Inc.

Forward-Looking Statements

This press release contains "forward-looking statements," including but not limited to, statements regarding our future financial results, our GAAP and non-GAAP guidance, our momentum in mid-market and enterprise, contributions from channel partners, the success of our strategic relationships, such as our relationships with Avaya, Atos, AT&T, Alcatel-Lucent Enterprise, BT, Eclipse Technology Solutions, ecotel communication, Telus, and Vodafone Business, our expectations regarding our strategic acquisitions, such as Kindite, our ability to expand and deepen our global distribution network, our market opportunity, our expectations around market trends, including digital transformation and hybrid workforce adoption, our expectations with respect to awareness and demand for cloud communications solutions, our ability to address business communication needs in the new work from anywhere environment, and the effects of the COVID-19 pandemic. Forward-looking statements are subject to known and unknown risks and uncertainties, and are based on assumptions that may prove to be incorrect, which could cause actual results to differ materially from those expected or implied by the forward-looking statements. Among the important factors that could cause actual results to differ materially from those in any forward-looking statements are: the future effects of the COVID-19 pandemic; our ability to realize the anticipated benefits of our strategic relationships, such as our relationships with Avaya, Atos, AT&T, Alcatel-Lucent Enterprise, BT, Eclipse Technology Solutions, ecotel communication, Telus, and Vodafone Business; our expectations regarding our strategic acquisitions, such as Kindite; our ability to grow at our expected rate of growth; our ability to add and retain larger and enterprise customers and enter new geographies and markets; our ability to continue to release, and gain customer acceptance of, new and improved versions of our services, including RingCentral Office(R) and Glip; our ability to compete successfully against existing and new competitors; our ability to enter into and maintain relationships with resellers, carriers, channel partners and strategic partners; our ability to successfully and timely integrate, and realize the benefits of any significant acquisition we may make; our ability to manage our expenses and growth; and general market, political, economic, and business conditions, as well as those risks and uncertainties included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in our Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission, and in other filings we make with the Securities and Exchange Commission from time to time.

All forward-looking statements in this press release are based on information available to RingCentral as of the date hereof, and we undertake no obligation to update these forward-looking statements, to review or confirm analysts' expectations, or to provide interim reports or updates on the progress of the current financial quarter.

Non-GAAP Financial Measures

Our reported financial results and financial outlook include certain Non-GAAP financial measures, including Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP income (loss) from operations, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP net cash provided by (used in) operating activities, and Non-GAAP free cash flow. Non-GAAP subscriptions gross margin is defined as Non-GAAP subscriptions gross profit divided by GAAP subscriptions revenue. Non-GAAP other gross margin is defined as Non-GAAP other gross profit divided by GAAP other revenue. Non-GAAP income (loss) from operations is defined as GAAP income (loss) from operations excluding share-based compensation which includes related employer payroll taxes, amortization of acquisition intangibles, and acquisition related matters including transaction costs, integration costs, restructuring costs, and acquisition-related retention payments, as well as changes in the fair value of contingent consideration obligations. Non-GAAP operating margin is defined as Non-GAAP income (loss) from operations divided by total GAAP revenue. Non-GAAP net income (loss) is defined as GAAP net income (loss) excluding share-based compensation which includes related employer payroll taxes, intercompany remeasurement gains or losses, acquisition related matters, amortization of acquisition intangibles, non-cash interest expense associated with amortization of debt discount and issuance costs related to our convertible senior notes, gain (loss) associated with investments and strategic partnerships, loss on early extinguishment of debt, tax benefit from release of valuation allowance, and the related income tax effect of these adjustments.

Non-GAAP diluted shares outstanding include the impact on shares used in per share calculations of our outstanding capped call transactions. Our outstanding capped call transactions are anti-dilutive in GAAP earnings per share but are expected to mitigate the dilutive effect of our convertible notes and therefore are included in the calculations of non-GAAP diluted shares outstanding.

Non-GAAP net cash provided by (used in) operating activities is defined as net cash provided by (used in) operating activities plus cash paid for repayments of convertible senior notes attributable to debt discount and cash paid for strategic partnerships. Non-GAAP free cash flow is defined as Non-GAAP net cash provided by (used in) operating activities reduced by purchases of property and equipment and capitalized internal-use software. We believe information regarding free cash flow provides useful information to investors in understanding and evaluating the strength of liquidity and available cash.

We have included Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP net cash provided by (used in) operating activities, and Non-GAAP free cash flow in this press release because they are key measures used by us to understand and evaluate our operating performance and trends, to prepare and approve our annual budget, and to develop short and long-term operational plans. In particular, the exclusion of certain expenses and cash flow items in calculating Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP net cash provided by (used in) operating activities, and Non-GAAP free cash flow provide useful measure for period-to-period comparisons of our business.

Although Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP net cash provided by (used in) operating activities, and Non-GAAP free cash flow are frequently used by investors in their evaluations of companies, these non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Because of these limitations, these non-GAAP financial measures should be considered alongside other financial performance measures.

Reconciliations of the Company's non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included in this press release.

Other Measures

Our reported results also include our annualized exit monthly recurring subscriptions, RingCentral Office(R) annualized exit monthly recurring subscriptions, mid-market and enterprise annualized exit monthly recurring subscriptions, enterprise annualized exit monthly recurring subscriptions, channel partner annualized exit monthly recurring subscriptions, and net monthly subscriptions dollar retention. We define our annualized exit monthly recurring subscriptions as our monthly recurring subscriptions multiplied by 12. Our monthly recurring subscriptions equal the monthly value of all customer recurring charges contracted at the end of a given month. We believe this metric is a leading indicator of our anticipated subscriptions revenue. We calculate our RingCentral Office(R) annualized exit monthly recurring subscriptions in the same manner as we calculate our annualized exit monthly recurring subscriptions, except that only customer subscriptions from RingCentral Office(R) and RingCentral customer engagement solutions customers are included when determining monthly recurring subscriptions for the purposes of calculating this key business metric. We calculate mid-market and enterprise annualized exit monthly recurring subscriptions in the same manner as we calculate our RingCentral Office(R) annualized exit monthly recurring subscriptions, except that only customer subscriptions from customers generating $25,000 or more in annual recurring revenue are included. We calculate enterprise annualized exit monthly recurring subscriptions in the same manner as we calculate our RingCentral Office(R) annualized exit monthly recurring subscriptions, except that only customer subscriptions from customers generating $100,000 or more in annual recurring revenue are included. We calculate channel partner Office annualized exit monthly recurring subscriptions in the same manner as we calculate our annualized exit monthly revenue subscriptions, except that only customer subscriptions generated from channel partners are included. We calculate direct and partners Office annualized exit monthly recurring subscriptions in the same manner as we calculate our annualized exit monthly revenue subscriptions, except that only customer subscriptions not generated from channel partners are included. We define dollar net change as the quotient of (i) the difference of our monthly recurring subscriptions at the end of a period minus our monthly recurring subscriptions at the beginning of a period minus our monthly recurring subscriptions at the end of the period from new customers we added during the period, (ii) all divided by the number of months in the period. We define our average monthly recurring subscriptions as the average of the monthly recurring subscriptions at the beginning and end of the measurement period.

                                                                                       TABLE 1
                                                                                  RINGCENTRAL, INC.
                                                                        CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                              (Unaudited, in thousands)
                                                                                      
                                                                               March 31,                             December 31,
                                                                                                    2021                                                       2020
                                                                                   -----------------------------------                        -----------------------------------
Assets                                                                                                   
Current assets                                                                                           
                                                                                   $        463,067     $        639,853  
   Cash and cash equivalents
                                                                                            166,852              176,034  
   Accounts receivable, net
                                                                                             73,578               63,726  
   Deferred and prepaid sales commission costs
                                                                                             40,206               46,516  
   Prepaid expenses and other current assets
                                                                                   ---------------  --------------------                      ---------------  --------------------
Total current assets                                                                        743,703              926,129  
Property and equipment, net                                                                 145,598              142,208  
Operating lease right-of-use assets                                                          48,938               51,115  
Long-term investments                                                                       270,697              213,176  
Deferred and prepaid sales commission costs, non-current                                    680,988              667,779  
Goodwill                                                                                     56,295               57,313  
Acquired intangibles, net                                                                   115,040              118,313  
Other assets                                                                                  8,453                8,564  
                                                                                   ---------------  --------------------                      ---------------  --------------------
Total assets                                                                       $      2,069,712     $      2,184,597  
                                                                                   ====== ========= ====================                      ====== ========= ====================
Liabilities, Temporary Equity, and Stockholders' Equity                       
Current liabilities                                                                                      
                                                                                   $         44,719     $         54,043  
   Accounts payable
                                                                                            216,343              210,654  
   Accrued liabilities
                                                                                             37,051               31,148  
   Current portion of convertible senior notes, net
                                                                                            146,245              142,223  
   Deferred revenue
                                                                                   ---------------  --------------------                      ---------------  --------------------
Total current liabilities                                                                   444,358              438,068  
Convertible senior notes, net                                                             1,350,792            1,375,320  
Operating lease liabilities                                                                  36,070               38,722  
Other long-term liabilities                                                                  21,299               20,241  
                                                                                   ---------------  --------------------                      ---------------  --------------------
Total liabilities                                                                         1,852,519            1,872,351  
                                                                                      
Temporary equity                                                                              4,125                3,787  
                                                                                   ---------------  --------------------                      ---------------  --------------------
                                                                                      
Stockholders' equity                                                          
                                                                                                  9                    9  
   Common stock
                                                                                            582,157              673,950  
   Additional paid-in capital
                                                                                              3,394                6,806  
   Accumulated other comprehensive income
                                                                                           (372,492 )                              (372,306 )
   Accumulated deficit
                                                                                   ---------------  --------------------                      ---------------  --------------------
Total stockholders' equity                              $        213,068     $        308,459  
                                                                                   ------ --------- --------------------                      ------ --------- --------------------
                                                                                  TABLE 2
                                                                             RINGCENTRAL, INC.
                                                              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                             (Unaudited, in thousands, except per share data)
                                                     
                                                                                             Three Months Ended
                                                                                                                     March 31,
                                                                       ---------------------------------------------------------------------------------------------
                                                                       2021                                      2020
                                                                       ----------------------------------------                        ---------------------------------
Revenues                                                                                          
                                                                       $             325,223     $      243,104  
   Subscriptions
                                                                                      27,133             24,408  
   Other
                                                                       --------------------  --------------------                      -------------  --------------------
Total revenues                                                                       352,356            267,512  
                                                                       --------------------  --------------------                      -------------  --------------------
Cost of revenues                                                                                  
                                                                                      73,247             52,433  
   Subscriptions
                                                                                      23,734             21,011  
   Other
                                                                       --------------------  --------------------                      -------------  --------------------
Total cost of revenues                                                                96,981             73,444  
                                                                       --------------------  --------------------                      -------------  --------------------
Gross profit                                                                         255,375            194,068  
Operating expenses                                                                                
                                                                                      62,676             40,910  
   Research and development
                                                                                     179,249            131,312  
   Sales and marketing
                                                                                      55,461             47,336  
   General and administrative
                                                                       --------------------  --------------------                      -------------  --------------------
Total operating expenses                                                             297,386            219,558  
                                                                       --------------------  --------------------                      -------------  --------------------
Loss from operations                                                                 (42,011 )                             (25,490 )
Other income (expense), net                                                                       
                                                                                     (16,278 )                              (7,502 )
   Interest expense
                                                                                      58,543            (27,517 )
   Other income (expense)
                                                                       --------------------  --------------------                      -------------  --------------------
Other income (expense), net                                                           42,265            (35,019 )
                                                                       --------------------  --------------------                      -------------  --------------------
Gain (loss) before income taxes                                                          254            (60,509 )
Provision for income taxes                                                               440                212  
                                                                       --------------------  --------------------                      -------------  --------------------
Net loss                                                               $                (186 )                      $      (60,721 )
                                                                       ====== ============== ====================                      ====== ======= ====================
Net loss per common share                                                                         
                                                                       $      --     $        (0.70 )
   Basic and diluted
                                                                       ====== ============== ====================                      ====== ======= ====================
Weighted-average number of shares used in computing net loss per share                            
                                                                                    TABLE 3
                                                                               RINGCENTRAL, INC.
                                                                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                           (Unaudited, in thousands)
                                                              
                                                                                                   Three Months Ended
                                                                                                                           March 31,
                                                                                ----------------------------------------------------------------------------------------
                                                                             2021                                   2020
                                                                                ----------------------------------                        ----------------------------------
Cash flows from operating activities                                                                 
Net loss                                                                        $          (186 )                      $       (60,721 )
Adjustments to reconcile net loss to net cash provided by operating activities:                      
                                                                                         24,577              16,548  
   Depreciation and amortization
                                                                                         54,962              36,589  
   Share-based compensation
                                                                                         15,644               9,809  
   Amortization of deferred and prepaid sales commission costs
                                                                                         16,200               7,452  
   Amortization of debt discount and issuance costs
                                                                                            658               7,250  
   Loss on early extinguishment of debt
                                                                                         (4,712 )                              (13,894 )
   Repayment of convertible senior notes attributable to debt discount
                                                                                          4,322               3,843  
   Reduction of operating lease right-of-use assets
                                                                                        (57,521 )                               22,246  
   Unrealized (gain) loss on investments
                                                                                            194                 964  
   Foreign currency remeasurement loss
                                                                                          1,485               1,492  
   Provision for bad debt
                                                                                           (274 )                                  (33 )
   Deferred income taxes
                                                                                            153                  45  
   Other
Changes in assets and liabilities:                                                                   
                                                                                          7,697              (6,935 )
   Accounts receivable
                                                                                        (36,502 )                              (22,544 )
   Deferred and prepaid sales commission costs
                                                                                          6,310              (8,958 )
   Prepaid expenses and other current assets
                                                                                            818                 131  
   Other assets
                                                                                         (8,109 )                                  888  
   Accounts payable
                                                                                          9,063              19,948  
   Accrued liabilities
                                                                                          4,022               2,806  
   Deferred revenue
                                                                                         (4,382 )                               (3,783 )
   Operating lease liabilities
                                                                                          2,536                 (74 )
   Other liabilities
                                                                                --------------  --------------------                      --------------  --------------------
                                                                                         36,955              13,069  
      Net cash provided by operating activities
                                                                                --------------  --------------------                      --------------  --------------------
Cash flows from investing activities                                                                 
Purchases of property and equipment                                                      (8,721 )                               (6,861 )
Capitalized internal-use software                                                        (9,757 )                               (7,389 )
Cash paid for acquisition of intangible assets                                           (8,358 )                       --  
                                                                                --------------  --------------------                      --------------  --------------------
                                                                                        (26,836 )                              (14,250 )
      Net cash used in investing activities
                                                                                --------------  --------------------                      --------------  --------------------
Cash flows from financing activities                                                                 
Proceeds from issuance of convertible senior notes, net of issuance costs        --             986,508  
Payments for 2023 convertible senior notes partial repurchase                          (178,911 )                             (495,704 )
Payments for capped calls and transaction costs                                  --             (60,900 )
Proceeds from issuance of stock in connection with stock plans                            1,192               4,802  
Payments for taxes related to net share settlement of equity awards                      (4,900 )                              (10,351 )
Payment for contingent consideration for business acquisition                            (3,600 )                               (3,548 )
Repayment of financing obligations                                                         (277 )                                 (511 )
                                                                                --------------  --------------------                      --------------  --------------------
                                                                                       (186,496 )                              420,296  
      Net cash (used in) provided by financing activities
                                                                                --------------  --------------------                      --------------  --------------------
Effect of exchange rate changes                                                            (409 )                                 (657 )
                                                                                       (176,786 )                              418,458  
      Net (decrease) increase in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash                                                          
Beginning of period                                                                     639,853             343,606  
                                                                                --------------  --------------------                      --------------  --------------------
                                                                   TABLE 4
                                                              RINGCENTRAL, INC.
                                                  RECONCILIATION OF OPERATING INCOME (LOSS)
                                                     GAAP MEASURES TO NON-GAAP MEASURES
                                                          (Unaudited, in thousands)
                            
                                                                 Three Months Ended
                                                                                         March 31,
                                              ----------------------------------------------------------------------------------------
                                           2021                                   2020
                                              ----------------------------------                        ----------------------------------
Revenues                                                           
                                              $       325,223     $       243,104  
      Subscriptions
                                                       27,133              24,408  
      Other
                                              --------------  --------------------                      --------------  --------------------
                                                      352,356             267,512  
   Total revenues
                                              ==============  ====================                      ==============  ====================
Cost of revenues reconciliation                                    
                                                       73,247              52,433  
      GAAP Subscriptions cost of revenues
                                                       (3,978 )                               (2,076 )
      Share-based compensation
                                                      (10,618 )                               (7,701 )
      Amortization of acquisition intangibles
                                               --      --  
      Acquisition related matters
                                              --------------  --------------------                      --------------  --------------------
                                                       58,651              42,656  
   Non-GAAP Subscriptions cost of revenues
                                              ==============  ====================                      ==============  ====================
                                                                   
       
                                                       23,734              21,011  
      GAAP Other cost of revenues
                                                       (1,656 )                                 (650 )
      Share-based compensation
                                              --------------  --------------------                      --------------  --------------------
                                                       22,078              20,361  
   Non-GAAP Other cost of revenues
                                              ==============  ====================                      ==============  ====================
Gross profit and gross margin reconciliation                       
                                                         82.0 %                                 82.5 %
      Non-GAAP Subscriptions
                                                         18.6 %                                 16.6 %
      Non-GAAP Other
                                                         77.1 %                                 76.4 %
      Non-GAAP Gross profit
Operating expenses reconciliation                                  
                                                       62,676              40,910  
      GAAP Research and development
                                                      (14,649 )                               (7,467 )
      Share-based compensation
                                               --      --  
      Acquisition related matters
                                              --------------  --------------------                      --------------  --------------------
                                                       48,027              33,443  
   Non-GAAP Research and development
                                              ==============  ====================                      ==============  ====================
                                                         13.6 %                                 12.5 %
   As a % of total revenues non-GAAP
                                                                   
       
                                                      179,249             131,312  
      GAAP Sales and marketing
                                                      (24,767 )                              (11,291 )
      Share-based compensation
                                                         (970 )                                 (931 )
      Amortization of acquisition intangibles
                                               --                   4  
      Acquisition related matters
                                              --------------  --------------------                      --------------  --------------------
                                                      153,512             119,094  
   Non-GAAP Sales and marketing
                                              ==============  ====================                      ==============  ====================
                                                         43.6 %                                 44.5 %
   As a % of total revenues non-GAAP
                                                                   
       
                                                       55,461              47,336  
      GAAP General and administrative
                                                      (17,443 )                              (15,105 )
      Share-based compensation
                                                         (438 )                               (1,863 )
      Acquisition related matters
                                              --------------  --------------------                      --------------  --------------------
                                                       37,580              30,368  
   Non-GAAP General and administrative
                                              ==============  ====================                      ==============  ====================
                                                         10.7 %                                 11.4 %
   As a % of total revenues non-GAAP
Income (loss) from operations reconciliation                       
                                                      (42,011 )                              (25,490 )
      GAAP loss from operations
                                                       62,493              36,589  
      Share-based compensation
                                                       11,588               8,632  
      Amortization of acquisition intangibles
                                                          438               1,859  
      Acquisition related matters
                                              --------------  --------------------                      --------------  --------------------
                                                       32,508              21,590  
   Non-GAAP Income from operations
                                              ==============  ====================                      ==============  ====================
                                                                                                                   TABLE 5
                                                                                                              RINGCENTRAL, INC.
                                                                                                     RECONCILIATION OF NET INCOME (LOSS)
                                                                                                     GAAP MEASURES TO NON-GAAP MEASURES
                                                                                              (In thousands, except per share data) (Unaudited)
                                                                                                                       
                                                                                                                                                               Three Months Ended
                                                                                                                                                                                       March 31,
                                                                                                                                         ---------------------------------------------------------------------------------------------
                                                                                                                                         2021                                      2020
                                                                                                                                         ----------------------------------------                        ---------------------------------
Net income (loss) reconciliation                                                                                                                                    
                                                                                                                                         $                (186 )                      $      (60,721 )
   GAAP net loss
                                                                                                                                                        62,493             36,589  
      Share-based compensation
                                                                                                                                                        11,588              8,632  
      Amortization of acquisition intangibles
                                                                                                                                                           438              1,859  
      Acquisition related matters
                                                                                                                                                        16,200              7,452  
      Amortization of debt discount and issuance costs
                                                                                                                                                       (59,597 )                              20,148  
      Loss (gain) associated with investments and strategic partnerships
                                                                                                                                                           658              7,250  
      Loss on early extinguishment of debt
                                                                                                                                                           735                898  
      Intercompany remeasurement loss
                                                                                                                                                        (6,933 )                              (4,809 )
      Income tax expense effects
                                                                                                                                         --------------------  --------------------                      -------------  --------------------
                                                                                                                                         $              25,396     $       17,298  
      Non-GAAP net income
                                                                                                                                         ====== ============== ====================                      ====== ======= ====================
Reconciliation between GAAP and non-GAAP weighted average shares used in computing basic and diluted net income (loss) per common share:                            
                                                                                                                                                        90,634             87,339  
      Weighted average number of shares used in computing basic net (loss) income per share
                                                                                                                                                         2,349              4,927  
      Effect of dilutive securities
                                                                                                                                         --------------------  --------------------                      -------------  --------------------
                                                                                                                                                        92,983             92,266  
      Non-GAAP weighted average shares used in computing non-GAAP diluted net income per share
                                                                                                                                         ====================  ====================                      =============  ====================
                                                                                                                                                                    
       
Diluted net income (loss) per share                                                                                                                                 
                                                                                                                                         $      --     $        (0.70 )
      GAAP net loss per share
                                                                                                                                         ====== ============== ====================                      ====== ======= ====================
                                                                            TABLE 6
                                                                       RINGCENTRAL, INC.
                                                    RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
                                                       GAAP MEASURES TO NON-GAAP FREE CASH FLOW MEASURES
                                                                   (Unaudited, in thousands)
                                                  
                                                                                     Three Months Ended
                                                                                                             March 31,
                                                                    ------------------------------------------------------------------------------------
                                                                2021                                 2020
                                                                    --------------------------------                        --------------------------------
Net cash provided by operating activities                           $      36,955     $      13,069  
Repayment of convertible senior notes attributable to debt discount         4,712            13,894  
                                                                    ------------  --------------------                      ------------  --------------------
                                                                           41,667            26,963  
   Non-GAAP net cash provided by operating activities
                                                                    ------------  --------------------                      ------------  --------------------
Purchases of property and equipment                                        (8,721 )                             (6,861 )
Capitalized internal-use software                                          (9,757 )                             (7,389 )
                                                                    ------------  --------------------                      ------------  --------------------
                                                                                                                      TABLE 7
                                                                                                                 RINGCENTRAL, INC.
                                                                                                   RECONCILIATION OF FORECASTED OPERATING MARGIN
                                                                                                        GAAP MEASURES TO NON-GAAP MEASURES
                                                                                                             (Unaudited, in millions)
                                                                                                     
                                                                   Q2 2021                                                                                    FY 2021
                                           ----------------------------------------------------------------------------------------                          --------------------------------------------------------------------------------
                                      Low Range                            High Range                           Low Range                        High Range
                                           ----------------------------------                       ----------------------------------                       ------------------------------                       ------------------------------
GAAP revenues                                       356.5              359.5        1,500.0        1,510.0  
                                                                              
GAAP loss from operations                           (82.8 )                               (77.6 )                          (319.4 )                          (303.9 )
GAAP operating margin                               (23.2 %)                              (21.6 %)                          (21.3 %)                          (20.1 %)
                                                    104.0               99.0          420.0          410.0  
   Share-based compensation
                                                     12.0               12.0           49.0           46.0  
   Amortization of acquisition intangibles
                                           --     --            0.4            0.4  
   Acquisition related matters
                                           -------------- --------------------            

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