RNG
$284.75
Ringcentral
$1.33
.47%
Earnings Details
2nd Quarter June 2020
Monday, August 03, 2020 4:02:00 PM
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Summary

Ringcentral Misses

Ringcentral (RNG) reported 2nd Quarter June 2020 earnings of $0.18 per share on revenue of $278.0 million. The consensus earnings estimate was $0.20 per share on revenue of $266.8 million. The Earnings Whisper number was $0.22 per share. Revenue grew 29.2% on a year-over-year basis.

The company said it expects third quarter non-GAAP earnings of approximately $0.24 per share on revenue of $283.5 million to $289.5 million. The current consensus estimate is earnings of $0.24 per share on revenue of $285.9 million for the quarter ending September 30, 2020. The company also said it expects 2020 earnings of $0.92 to $0.94 per share on revenue of $1.135 billion to $1.143 billion. The company's previous guidance was earnings of $0.91 to $0.94 per share on revenue of $1.024 billion to $1.030 billion and the current consensus estimate is earnings of $0.92 per share on revenue of $1.12 billion for the year ending December 31, 2020.

RingCentral Inc., provides software-as-a-service, or SaaS, solutions for business communications. Its solutions can be used in multiple devices including Smartphones, Tablets, PC’s and Desk Phones which allow communication across multiple channels.

Results
Reported Earnings
$0.18
Earnings Whisper
$0.22
Consensus Estimate
$0.20
Reported Revenue
$278.0 Mil
Revenue Estimate
$266.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

RingCentral Announces Second Quarter 2020 Results

RingCentral Office® ARR surpassed $1 billion, up 36%

Subscriptions Revenue up 32%

BELMONT, Calif.--(BUSINESS WIRE)--RingCentral, Inc. (NYSE: RNG), a leading provider of global enterprise cloud communications, collaboration, and contact center solutions, today announced financial results for the second quarter ended June 30, 2020.

Second Quarter Financial Highlights

  • Total revenue increased 29% year over year to $278 million.
  • Subscriptions revenue increased 32% year over year to $257 million.
  • Total Annualized Exit Monthly Recurring Subscriptions (ARR) increased 33% year over year to $1.1 billion.
  • RingCentral Office® ARR increased 36% year over year to $1.0 billion.
  • Mid-market and Enterprise ARR increased 50% year over year to $581 million.
  • Enterprise ARR increased 58% year over year to $363 million.
  • Channel ARR increased 60% year over year to $375 million.

“We delivered solid Q2 results driven again by strong contributions from mid-market and enterprise customers, as well as our channel partners,” said Vlad Shmunis, RingCentral's founder, chairman and CEO. “We are seeing a high level of adoption and engagement with our Message Video Phone (MVP) solution as businesses adapt to a work from anywhere environment. The ongoing global pandemic has elevated digital transformation of enterprise communications platforms to a top IT priority. Our strategic partnerships are broadening our global market reach, and we remain committed to delivering cloud solutions that enable our customers’ workforces to productively communicate and collaborate from anywhere, on any device, in any mode.”

Financial Results for the Second Quarter 2020

  • Revenue: Subscriptions revenue of $257 million increased 32% year over year and accounted for 92% of total revenue. Other revenue of $21 million increased 3% year over year, reflecting higher adoption of RingCentral apps in the current work from anywhere environment. Total revenue was $278 million for the second quarter of 2020, up from $215 million in the second quarter of 2019, representing 29% growth.
  • Operating Income (Loss): GAAP operating loss was ($29) million, compared to a GAAP operating loss of ($7) million in the same period last year, primarily driven by higher share-based compensation and amortization of intangibles. Non-GAAP operating income was $29 million, compared to a non-GAAP operating income of $20 million in the same period last year.
  • Net Income (Loss) Per Share: GAAP net profit per diluted share was $0.01, compared to ($0.11) in the same period last year, primarily driven by mark-to-market gains associated with investments and strategic partnerships, partially offset by higher share-based compensation, amortization of intangibles, and amortization of debt discount and issuance costs. Non-GAAP net income per diluted share was $0.24, compared to $0.21 per diluted share in the same period last year. The second quarter of 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 second quarter of 2020 was $774 million. This compares with $762 million at the end of the first quarter of 2020.

Additional Highlights

  • Announced that RingCentral has been named to the Forbes “Global 2000: The World's Largest Public Companies” list, released in May, 2020.
  • Announced RingCentral Video™ (RCV), a reimagined video meetings experience. Leveraging RingCentral’s years of experience as a global UCaaS leader, RingCentral Video joins RingCentral messaging and RingCentral phone to complete our differentiated Message Video Phone™ (MVP) solution.
  • Announced expansion of strategic partnership with Atos SE with new Unify Office as the exclusive UCaaS solution for 40 million users of the Atos Unify family of products.
  • Announced global expansion and general availability of Avaya Cloud Office™ by RingCentral® in Australia, Canada, and the UK along with the availability of several key new features and capabilities including tools to help migrate customers more efficiently and effectively.
  • Launched IGNITE™ Partner Program, which enables partners to own the entire sales cycle with organizations of up to 400 employees. The program reinforces RingCentral's commitment to the channel, and gives partners greater flexibility to choose the sales process that best suits the needs of each individual prospect.
  • Announced RingCentral PBX for Microsoft Teams with Direct Routing integration, enabling Microsoft Teams users to have access to more robust cloud PBX capabilities without ever having to leave the Teams interface on mobile, web, and desktop.
  • Launched initial release of RingCentral Rooms, extending the power of RingCentral Video to conference rooms and meeting spaces that have dedicated video conferencing equipment, such as monitors, speakers, microphones, and cameras.

Financial Outlook

Full Year 2020 Guidance:

  • Raising subscriptions revenue range to $1.043 to $1.048 billion, representing annual growth of 28%. This is up from our prior range of $1.024 to $1.030 billion and annual growth of 25% to 26%.
  • Raising total revenue range to $1.135 to $1.143 billion, representing annual growth of 26% to 27%. This is up from our prior range of $1.116 to $1.125 billion and annual growth of 24% to 25%.
  • GAAP operating margin between (10.8%) and (10.1%).
  • Non-GAAP operating margin between 9.6% and 9.7%.
  • Non-GAAP tax rate for 2020 assumed to be 22.5%. No material cash taxes expected given net operating loss carryforwards.
  • Raising non-GAAP EPS range to $0.92 to $0.94 based on 93.5 million fully diluted shares. This is up from our prior range of $0.91 to $0.94, and reflects a $0.01 impact from lower other income assumptions.
  • Share-based compensation range of $190 to $195 million, amortization of debt discount of $44 million, amortization of acquired intangibles of $35 million, and acquisition related matters of approximately $2.2 million.

Third Quarter 2020 Guidance:

  • Subscriptions revenue range of $263 to $265 million, representing annual growth of 25% to 26%.
  • Total revenue range of $283.5 to $289.5 million, representing annual growth of 21% to 24%.
  • GAAP operating margin range of (12.0%) to (11.0%).
  • Non-GAAP operating margin of 10.0% to 10.2%.
  • Non-GAAP tax rate assumed to be 22.5%. No material cash taxes expected given net operating loss carryforwards.
  • Non-GAAP EPS of $0.24 based on 94 million fully diluted shares.
  • Share-based compensation range of $53 to $54 million, amortization of debt discount of $12 million, and amortization of acquired intangibles of $8.5 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, 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 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 2020, 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 second quarter of 2020 and outlook for the third quarter and full year of 2020.
  • When: Monday, August 3, 2020 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 August 10, 2020, a telephone replay will be available by dialing (844) 512-2921 from the United States or (412) 317-6671 internationally with recording access code 13706835.

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 cloud Message Video Phone (MVP), customer engagement and contact center solutions for businesses worldwide. 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’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.

©2020 RingCentral, Inc. All rights reserved. RingCentral, RingCentral Office, RingCentral Video, Message Video Phone, 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, the success of our RCV solution, the success of our strategic relationships, such as our relationships with Avaya and Atos, our market opportunity, 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 and Atos; 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 RCV; our ability to compete successfully against existing and new competitors; our ability to enter into and maintain relationships with resellers, carriers 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-Q for the quarter ended March 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, 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, 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, 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. 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® 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® 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® 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® 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® 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 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 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)

 

 

June 30, 2020

 

December 31, 2019

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

773,756

 

 

$

343,606

 

Accounts receivable, net

142,317

 

 

129,990

 

Deferred and prepaid sales commission costs

46,577

 

 

36,589

 

Prepaid expenses and other current assets

39,366

 

 

25,354

 

Total current assets

1,002,016

 

 

535,539

 

Property and equipment, net

114,423

 

 

89,230

 

Operating lease right-of-use-assets

38,107

 

 

39,269

 

Long-term investments

149,337

 

 

132,188

 

Deferred and prepaid sales commission costs, non-current

486,500

 

 

462,344

 

Goodwill

55,287

 

 

55,278

 

Acquired intangibles, net

110,090

 

 

127,338

 

Other assets

8,883

 

 

9,561

 

Total assets

$

1,964,643

 

 

$

1,450,747

 

Liabilities, Temporary Equity, and Stockholders’ Equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

36,476

 

 

$

34,612

 

Accrued liabilities

167,721

 

 

138,729

 

Current portion of convertible senior notes, net

44,417

 

 

 

Deferred revenue

122,514

 

 

107,372

 

Total current liabilities

371,128

 

 

280,713

 

Convertible senior notes, net

1,008,477

 

 

386,889

 

Operating lease liabilities

25,392

 

 

28,516

 

Other long-term liabilities

11,314

 

 

8,929

 

Total liabilities

1,416,311

 

 

705,047

 

 

 

 

 

Temporary equity

6,756

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

Common stock

9

 

 

9

 

Additional paid-in capital

889,987

 

 

1,033,053

 

Accumulated other comprehensive income

1,102

 

 

1,948

 

Accumulated deficit

(349,522

)

 

(289,310

)

Total stockholders’ equity

$

541,576

 

 

$

745,700

 

Total liabilities, temporary equity and stockholders’ equity

$

1,964,643

 

 

$

1,450,747

 

TABLE 2

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2020

 

2019

 

2020

 

2019

Revenues

 

 

 

 

 

 

 

Subscriptions

$

257,038

 

 

$

194,792

 

 

$

500,142

 

 

$

377,500

 

Other

20,947

 

 

20,360

 

 

45,355

 

 

39,141

 

Total revenues

277,985

 

 

215,152

 

 

545,497

 

 

416,641

 

Cost of revenues

 

 

 

 

 

 

 

Subscriptions

56,721

 

 

38,079

 

 

109,154

 

 

73,413

 

Other

19,916

 

 

15,551

 

 

40,927

 

 

31,052

 

Total cost of revenues

76,637

 

 

53,630

 

 

150,081

 

 

104,465

 

Gross profit

201,348

 

 

161,522

 

 

395,416

 

 

312,176

 

Operating expenses

 

 

 

 

 

 

 

Research and development

43,519

 

 

32,632

 

 

84,429

 

 

62,419

 

Sales and marketing

137,633

 

 

103,590

 

 

268,945

 

 

203,141

 

General and administrative

49,532

 

 

32,480

 

 

96,868

 

 

61,259

 

Total operating expenses

230,684

 

 

168,702

 

 

450,242

 

 

326,819

 

Loss from operations

(29,336

)

 

(7,180

)

 

(54,826

)

 

(14,643

)

Other income (expense), net

 

 

 

 

 

 

 

Interest expense

(12,598

)

 

(5,088

)

 

(20,100

)

 

(10,120

)

Other income, net

42,603

 

 

3,141

 

 

15,086

 

 

6,192

 

Other income (expense), net

30,005

 

 

(1,947

)

 

(5,014

)

 

(3,928

)

Income (loss) before income taxes

669

 

 

(9,127

)

 

(59,840

)

 

(18,571

)

Provision for (benefit from) income taxes

160

 

 

116

 

 

372

 

 

(2,970

)

Net income (loss)

$

509

 

 

$

(9,243

)

 

$

(60,212

)

 

$

(15,601

)

Net income (loss) per common share

 

 

 

 

 

 

 

Basic

$

0.01

 

 

$

(0.11

)

 

$

(0.69

)

 

$

(0.19

)

Diluted

0.01

 

 

(0.11

)

 

(0.69

)

 

(0.19

)

Weighted-average number of shares used in computing net income (loss) per share

 

 

 

 

 

 

 

Basic

88,254

 

 

82,339

 

 

87,797

 

 

81,872

 

Diluted

94,145

 

 

82,339

 

 

87,797

 

 

81,872

 

TABLE 3

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

 

Six Months Ended
June 30,

 

2020

 

2019

Cash flows from operating activities

 

 

 

Net loss

$

(60,212

)

 

$

(15,601

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation and amortization

34,500

 

 

16,486

 

Share-based compensation

85,844

 

 

44,314

 

Amortization of deferred and prepaid sales commission costs

20,659

 

 

13,196

 

Amortization of debt discount and issuance costs

20,018

 

 

10,031

 

Loss on early extinguishment of debt

7,207

 

 

 

Repayment of convertible senior notes attributable to debt discount

(14,230

)

 

 

Reduction of operating lease right-of-use assets

7,754

 

 

6,708

 

Unrealized gain and other related costs on investments

(17,149

)

 

 

Foreign currency remeasurement (gain) loss

305

 

 

(323

)

Provision for bad debt

3,071

 

 

995

 

Deferred income taxes

(162

)

 

(347

)

Tax benefit from release of valuation allowance

 

 

(3,210

)

Other

116

 

 

1,427

 

Changes in assets and liabilities:

 

 

 

Accounts receivable

(15,398

)

 

(10,804

)

Deferred and prepaid sales commission costs

(53,316

)

 

(33,032

)

Prepaid expenses and other current assets

(13,728

)

 

(9,253

)

Other assets

(106

)

 

181

 

Accounts payable

(973

)

 

11,146

 

Accrued liabilities

23,792

 

 

4,730

 

Deferred revenue

15,142

 

 

14,835

 

Operating lease liabilities

(7,322

)

 

(6,903

)

Other liabilities

4,297

 

 

(328

)

Net cash provided by operating activities

40,109

 

 

44,248

 

Cash flows from investing activities

 

 

 

Purchases of property and equipment

(15,581

)

 

(14,994

)

Capitalized internal-use software

(17,021

)

 

(7,602

)

Cash paid for business combination, net of cash acquired

 

 

(27,870

)

Net cash used in investing activities

(32,602

)

 

(50,466

)

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

(501,039

)

 

 

Payments for capped calls and transaction costs

(60,900

)

 

 

Proceeds from issuance of stock in connection with stock plans

21,604

 

 

13,509

 

Payments for taxes related to net share settlement of equity awards

(18,603

)

 

(5,047

)

Payment for contingent consideration for business acquisition

(3,548

)

 

 

Repayment of financing obligations

(943

)

 

(943

)

Net cash provided by financing activities

423,079

 

 

7,519

 

Effect of exchange rate changes

(436

)

 

38

 

Net increase (decrease) in cash, cash equivalents and restricted cash

430,150

 

 

1,339

 

Cash, cash equivalents and restricted cash

 

 

 

Beginning of period

343,606

 

 

566,329

 

End of period

$

773,756

 

 

$

567,668

 

TABLE 4

RINGCENTRAL, INC.

RECONCILIATION OF OPERATING INCOME (LOSS)

GAAP MEASURES TO NON-GAAP MEASURES

(Unaudited, in thousands)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2020

 

2019

 

2020

 

2019

Revenues

 

 

 

 

 

 

 

Subscriptions

$

257,038

 

 

$

194,792

 

 

$

500,142

 

 

$

377,500

 

Other

20,947

 

 

20,360

 

 

45,355

 

 

39,141

 

Total revenues

277,985

 

 

215,152

 

 

545,497

 

 

416,641

 

Cost of revenues reconciliation

 

 

 

 

 

 

 

GAAP Subscriptions cost of revenues

56,721

 

 

38,079

 

 

109,154

 

 

73,413

 

Share-based compensation

(2,676

)

 

(1,691

)

 

(4,752

)

 

(3,037

)

Amortization of acquisition intangibles

(7,672

)

 

(1,340

)

 

(15,373

)

 

(2,350

)

Acquisition related matters

 

 

(14

)

 

 

 

(64

)

Non-GAAP Subscriptions cost of revenues

46,373

 

 

35,034

 

 

89,029

 

 

67,962

 

 

 

 

 

 

 

 

 

GAAP Other cost of revenues

19,916

 

 

15,551

 

 

40,927

 

 

31,052

 

Share-based compensation

(1,170

)

 

(429

)

 

(1,820

)

 

(724

)

Non-GAAP Other cost of revenues

18,746

 

 

15,122

 

 

39,107

 

 

30,328

 

Gross profit and gross margin reconciliation

 

 

 

 

 

 

 

Non-GAAP Subscriptions

82.0

%

 

82.0

%

 

82.2

%

 

82.0

%

Non-GAAP Other

10.5

%

 

25.7

%

 

13.8

%

 

22.5

%

Non-GAAP Gross profit

76.6

%

 

76.7

%

 

76.5

%

 

76.4

%

Operating expenses reconciliation

 

 

 

 

 

 

 

GAAP Research and development

43,519

 

 

32,632

 

 

84,429

 

 

62,419

 

Share-based compensation

(9,772

)

 

(5,508

)

 

(17,239

)

 

(9,770

)

Acquisition related matters

 

 

(5

)

 

 

 

(352

)

Non-GAAP Research and development

33,747

 

 

27,119

 

 

67,190

 

 

52,297

 

As a % of total revenues non-GAAP

12.1

%

 

12.6

%

 

12.3

%

 

12.6

%

 

 

 

 

 

 

 

 

GAAP Sales and marketing

137,633

 

 

103,590

 

 

268,945

 

 

203,141

 

Share-based compensation

(16,322

)

 

(9,799

)

 

(27,613

)

 

(17,407

)

Amortization of acquisition intangibles

(929

)

 

(938

)

 

(1,860

)

 

(1,860

)

Acquisition related matters

 

 

32

 

 

4

 

 

(1,610

)

Non-GAAP Sales and marketing

120,382

 

 

92,885

 

 

239,476

 

 

182,264

 

As a % of total revenues non-GAAP

43.3

%

 

43.2

%

 

43.9

%

 

43.7

%

 

 

 

 

 

 

 

 

GAAP General and administrative

49,532

 

 

32,480

 

 

96,868

 

 

61,259

 

Share-based compensation

(19,315

)

 

(7,489

)

 

(34,420

)

 

(13,376

)

Acquisition related matters

(293

)

 

(402

)

 

(2,156

)

 

(825

)

Non-GAAP General and administrative

29,924

 

 

24,589

 

 

60,292

 

 

47,058

 

As a % of total revenues non-GAAP

10.8

%

 

11.4

%

 

11.1

%

 

11.3

%

Income (loss) from operations reconciliation

 

 

 

 

 

 

 

GAAP loss from operations

(29,336

)

 

(7,180

)

 

(54,826

)

 

(14,643

)

Share-based compensation

49,255

 

 

24,916

 

 

85,844

 

 

44,314

 

Amortization of acquisition intangibles

8,601

 

 

2,278

 

 

17,233

 

 

4,210

 

Acquisition related matters

293

 

 

389

 

 

2,152

 

 

2,851

 

Non-GAAP Income from operations

28,813

 

 

20,403

 

 

50,403

 

 

36,732

 

Non-GAAP Operating margin

10.4

%

 

9.5

%

 

9.2

%

 

8.8

%

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
June 30,

 

Six Months Ended
June 30,

 

2020

 

2019

 

2020

 

2019

Net income (loss) reconciliation

 

 

 

 

 

 

 

GAAP net income (loss)

$

509

 

 

$

(9,243

)

 

$

(60,212

)

 

$

(15,601

)

Share-based compensation

49,255

 

 

24,916

 

 

85,844

 

 

44,314

 

Amortization of acquisition intangibles

8,601

 

 

2,278

 

 

17,233

 

 

4,210

 

Acquisition related matters

293

 

 

389

 

 

2,152

 

 

2,851

 

Amortization of debt discount and issuance costs

12,566

 

 

5,049

 

 

20,018

 

 

10,031

 

Gain associated with investments and strategic partnerships

(41,506

)

 

 

 

(21,358

)

 

 

Loss (gain) on early extinguishment of debt

(43

)

 

 

 

7,207

 

 

 

Intercompany remeasurement loss (gain)

(360

)

 

(202

)

 

538

 

 

(76

)

Income tax expense effects (1)

(6,473

)

 

(5,127

)

 

(11,282

)

 

(12,590

)

Non-GAAP net income

$

22,842

 

 

$

18,060

 

 

$

40,140

 

 

$

33,139

 

Reconciliation between GAAP and non-GAAP weighted average shares used in computing basic and diluted net income (loss) per common share:

 

 

 

 

 

 

 

Weighted average number of shares used in computing basic net income (loss) per share

88,254

 

 

82,339

 

 

87,797

 

 

81,872

 

Effect of dilutive securities

5,891

 

 

 

 

 

 

 

GAAP weighted average shares used in computing GAAP diluted net income (loss) per share

94,145

 

 

82,339

 

 

87,797

 

 

81,872

 

Effect of dilutive securities

(839

)

 

5,137

 

 

4,990

 

 

5,331

 

Non-GAAP weighted average shares used in computing non-GAAP diluted net income per share

93,306

 

 

87,476

 

 

92,787

 

 

87,203

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per share

 

 

 

 

 

 

 

GAAP net income (loss) per share

$

0.01

 

 

$

(0.11

)

 

$

(0.69

)

 

$

(0.19

)

Non-GAAP net income per share

$

0.24

 

 

$

0.21

 

 

$

0.43

 

 

$

0.38

 

(1) Income tax expense effects for the three and six months ended June 30, 2019 include the tax benefit from release of valuation allowance.

TABLE 6

RINGCENTRAL, INC.

RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES

GAAP MEASURES TO NON-GAAP FREE CASH FLOW MEASURES

(Unaudited, in thousands)

 

 

Six Months Ended
June 30,

 

2020

 

2019

Net cash provided by operating activities

$

40,109

 

 

$

44,248

 

Repayment of convertible senior notes attributable to debt discount

14,230

 

 

 

Non-GAAP net cash provided by operating activities

54,339

 

 

44,248

 

Purchases of property and equipment

(15,581

)

 

(14,994

)

Capitalized internal-use software

(17,021

)

 

(7,602

)

Non-GAAP free cash flow

$

21,737

 

 

$

21,652

 

TABLE 7

RINGCENTRAL, INC.

RECONCILIATION OF FORECASTED OPERATING MARGIN

GAAP MEASURES TO NON-GAAP MEASURES

(Unaudited, in millions)

 

 

Q3 2020

 

FY 2020

 

Low Range

 

High Range

 

Low Range

 

High Range

GAAP revenues

283.5

 

 

289.5

 

 

1,135.0

 

 

1,143.0

 

 

 

 

 

 

 

 

 

GAAP loss from operations

(34.2)

 

 

(32.0)

 

 

(122.7)

 

 

(115.8)

 

GAAP operating margin

(12.0

%)

 

(11.0

%)

 

(10.8

%)

 

(10.1

%)

Share-based compensation

54.0

 

 

53.0

 

 

195.0

 

 

190.0

 

Amortization of acquisition intangibles

8.5

 

 

8.5

 

 

34.5

 

 

34.5

 

Acquisition related matters

 

 

 

 

2.2

 

 

2.2

 

Non-GAAP income from operations

28.4

 

 

29.5

 

 

109.0

 

 

110.9

 

Non-GAAP operating margin

10.0

%

 

10.2

%

 

9.6

%

 

9.7

%

 

Investor Relations Contact:
Ryan Goodman, RingCentral
(650) 918-5356
Ryan.Goodman@ringcentral.com

Media Contact:
Jyotsna Grover, RingCentral
(650) 513-8712
Jyotsna.Grover@ringcentral.com

Source: RingCentral, Inc.