RNG
$167.00
Ringcentral
($5.71)
(3.31%)
Earnings Details
3rd Quarter September 2019
Monday, November 04, 2019 4:03:00 PM
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Summary

Ringcentral Misses

Ringcentral (RNG) reported 3rd Quarter September 2019 earnings of $0.19 per share on revenue of $233.4 million. The consensus earnings estimate was $0.19 per share on revenue of $221.5 million. The Earnings Whisper number was $0.22 per share. Revenue grew 34.2% on a year-over-year basis.

The company said it expects fourth quarter non-GAAP earnings of approximately $0.21 per share on revenue of $238.0 million to $240.0 million. The current consensus earnings estimate is $0.21 per share on revenue of $237.3 million for the quarter ending December 31, 2019.

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
$0.19
Earnings Whisper
$0.22
Consensus Estimate
$0.19
Reported Revenue
$233.4 Mil
Revenue Estimate
$221.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

RingCentral Announces Third Quarter 2019 Results

Total Revenue up 34%

Enterprise ARR and Channel ARR each surpassed $250 million

Over 30 seven-digit TCV deals, setting new record

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 third quarter ended September 30, 2019.

Third Quarter Financial Highlights

  • Total revenue increased 34% year over year to $233 million.
  • Software subscriptions revenue increased 33% year over year to $211 million.
  • Annualized Exit Monthly Recurring Subscriptions (ARR) increased 31% year over year to $881 million.
  • RingCentral Office® ARR increased 35% year over year to $800 million.
  • Mid-market and Enterprise ARR increased 61% year over year to $426 million.
  • Enterprise ARR increased 77% year over year to $259 million.
  • Channel ARR increased 63% year over year to $263 million.

“We delivered another solid quarter. We are benefiting from continued momentum in mid-market and enterprise markets, with strong contributions from the channel,” said Vlad Shmunis, RingCentral’s founder, chairman and CEO. “We continue to drive success with our leading unified voice, video, and team messaging platform. With today’s announcement of our expanded relationship with AT&T, and the earlier announced strategic partnership with Avaya, we are excited to broaden our global sales reach to help accelerate the transition to the cloud for businesses worldwide.”

Financial Results for the Third Quarter 2019

  • Revenue: Total revenue was $233 million for the third quarter of 2019, up from $174 million in the third quarter of 2018, representing 34% growth.
  • Operating Income (Loss): GAAP operating loss was $10.7 million, compared to a GAAP operating loss of $7.0 million in the same period last year, primarily driven by higher share-based compensation, amortization of intangibles, and acquisition related matters. Non-GAAP operating profit was $21.7 million, compared to a non-GAAP operating profit of $14.3 million in the same period last year.
  • Net Income (Loss) Per Share: GAAP net loss per share was ($0.15), compared to ($0.12) in the same period last year, primarily driven by higher share-based compensation, amortization of intangibles, and acquisition related matters. Non-GAAP net income per diluted share was $0.22, compared to $0.19 per diluted share in the same period last year. The third quarter of 2019 reflected a 22.5% non-GAAP tax rate. There were no material cash taxes given our net operating loss carryforwards.
  • Balance Sheet: Total cash and cash equivalents at the end of the third quarter of 2019 was $583 million. This compares with $568 million at the end of the second quarter of 2019.

Additional Highlights

  • Announced a strategic agreement with Avaya making RingCentral the exclusive provider of UCaaS solutions to Avaya. RingCentral and Avaya will introduce a new solution, "Avaya Cloud Office by RingCentral." RingCentral and Avaya will jointly develop programs to leverage Avaya’s global sales and partner network, as well as build automated technologies for seamless customer transition to RingCentral’s leading global UCaaS solution.
  • Named a leader in the Gartner Magic Quadrant for Unified Communications as a Service, Worldwide Report.* In the Magic Quadrant report, published on July 30, 2019, RingCentral was positioned furthest for completeness of vision in the Leaders quadrant.
  • Announced partnership with SYNNEX Corporation, a leading business process services company, in which RingCentral will deliver a new wave of unified communications and collaboration, cloud communications, and contact center solutions to SYNNEX’ US channel partners. With a network of more than 25,000 reseller partners, SYNNEX will help broaden RingCentral’s channel reach while supporting partner enablement and onboarding.
  • Announced agreement with Fujitsu to provide enterprises across EMEA with cloud communications and contact centre solutions for enhanced mobility, workforce productivity, and customer engagement. Fujitsu will offer RingCentral Office® and RingCentral Contact CentreTM as part of Fujitsu Digital Workplace solutions.
  • Announced Westcon will act as a master agent for RingCentral initially in the UK and Ireland. It is anticipated that Westcon will draw on its established EMEA footprint to extend RingCentral’s reach across multiple markets in Europe.

Financial Outlook

Fourth Quarter 2019 Guidance:

  • Total revenue range of $238 to $240 million, representing annual growth of 26% to 27%.
  • Software subscriptions revenue range of $217 to $219 million, representing annual growth of 26% to 27%.
  • GAAP operating margin range of (16.7%) to (16.1%).
  • Non-GAAP operating margin of 9.6%.
  • Non-GAAP tax rate assumed to be 22.5%, compared to 0% non-GAAP tax rate in 2018. No material cash taxes expected given net operating loss carryforwards.
  • Non-GAAP EPS of $0.21 based on 91.5 million fully diluted shares, which includes approximately 1.5 million weighted-average shares associated with the Avaya transaction.
  • Share-based compensation range of $30 to $31 million, amortization of debt discount of $5 million, amortization of acquired intangibles of $3.7 million, and acquisition related matters related to Avaya of approximately $28 million.

Full Year 2019 Guidance:

  • Raising total revenue range to $888 to $890 million, representing annual growth of 32%. This is up from our prior range of $874 to $877 million and annual growth of 30%.
  • Raising software subscriptions revenue range to $805 to $807 million, representing annual growth of 31% to 32%. This is up from our prior range of $795 to $797 million and annual growth of 30%.
  • GAAP operating margin between (7.3%) and (7.2%).
  • Non-GAAP operating margin between 9.1% and 9.2%.
  • Non-GAAP tax rate for 2019 assumed to be 22.5%, compared to 0% non-GAAP tax rate for 2018. No material cash taxes expected given net operating loss carryforwards.
  • Raising non-GAAP EPS to $0.81 based on 88.6 million fully diluted shares, which includes approximately 0.4 million weighted-average shares associated with the Avaya transaction. This is up from our prior range of $0.77 to $0.79.
  • Share-based compensation range of $102 to $103 million, amortization of debt discount of $20 million, amortization of acquired intangibles of $10 million, and acquisition related matters of approximately $34 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 GAAP EPS 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) 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 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 2019, 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 third quarter of 2019 and outlook for the fourth quarter and full year of 2019.
  • When: Monday, November 4, 2019 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 November 11, 2019, a telephone replay will be available by dialing (844) 512-2921 from the United States or (412) 317-6671 internationally with recording access code 13695702.

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 global enterprise cloud communications, collaboration, and contact center solutions. More flexible and cost-effective than legacy on-premises systems, the RingCentral platform empowers employees to work better together, from any location, on any device, and via any mode to serve customers, improving business efficiency and customer satisfaction. The company provides unified voice, video meetings, team messaging, digital customer engagement, and integrated contact center solutions for enterprises globally. RingCentral’s open platform integrates with leading business apps and enables customers to easily customize business workflows. RingCentral is headquartered in Belmont, California, and has offices around the world.

©2019 RingCentral, Inc. All rights reserved. RingCentral 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 contribution of the channel; the success of our relationships with AT&T and Avaya in broadening our global sales reach, and our market opportunity. 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: our ability to realize the anticipated benefits of our relationships with AT&T and Avaya; 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; our ability to compete successfully against existing and new competitors; our ability to enter into and maintain relationships with carriers and other resellers; 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 June 30, 2019, 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 software subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP operating income (loss), Non-GAAP net income (loss) and Non-GAAP net income (loss) per diluted share. Non-GAAP software 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 operating income (loss) is defined as operating income (loss) 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 operating income (loss) 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, 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.

We have included Non-GAAP software subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP net income (loss), and Non-GAAP net income (loss) per diluted share 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 in calculating Non-GAAP software subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP net income (loss), and Non-GAAP net income (loss) per diluted share provide useful measure for period-to-period comparisons of our business.

Although Non-GAAP software subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP net income (loss), and Non-GAAP net income (loss) per diluted share 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 Contact CenterTM 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.

Disclaimer

Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

*Source: Gartner, Inc., “Magic Quadrant for Unified Communications as a Service, Worldwide,” Daniel O’Connell, Megan Fernandez, Rafael Benitez, Christopher Trueman, Sebastian Hernandez, July 30, 2019.

TABLE 1

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

 

 

September 30, 2019

 

December 31, 2018

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

582,663

 

 

$

566,329

 

Accounts receivable, net

118,282

 

 

94,375

 

Deferred sales commission costs

32,196

 

 

23,038

 

Prepaid expenses and other current assets

31,904

 

 

23,772

 

Total current assets

765,045

 

 

707,514

 

Property and equipment, net

84,123

 

 

70,205

 

Operating lease right-of-use-assets

41,302

 

 

 

Deferred sales commission costs, non-current

78,629

 

 

55,735

 

Goodwill

54,743

 

 

31,238

 

Acquired intangibles, net

25,839

 

 

19,480

 

Other assets

9,798

 

 

10,154

 

Total assets

$

1,059,479

 

 

$

894,326

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

22,443

 

 

$

10,145

 

Accrued liabilities

140,535

 

 

100,687

 

Deferred revenue

105,159

 

 

88,527

 

Total current liabilities

268,137

 

 

199,359

 

Convertible senior notes, net

381,701

 

 

366,552

 

Operating lease liabilities

31,097

 

 

 

Other long-term liabilities

9,050

 

 

10,806

 

Total liabilities

689,985

 

 

576,717

 

 

 

 

 

Stockholders’ equity

 

 

 

Common stock

8

 

 

8

 

Additional paid-in capital

633,188

 

 

551,078

 

Accumulated other comprehensive income

351

 

 

2,226

 

Accumulated deficit

(264,053

)

 

(235,703

)

Total stockholders’ equity

$

369,494

 

 

$

317,609

 

Total liabilities and stockholders’ equity

$

1,059,479

 

 

$

894,326

 

The Company adopted the new accounting standard related to leases (Topic 842) effective January 1, 2019.

TABLE 2

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

Revenues

 

 

 

 

 

 

 

Software subscriptions

$

210,906

 

 

$

158,068

 

 

$

588,406

 

 

$

440,987

 

Other

22,446

 

 

15,757

 

 

61,587

 

 

44,013

 

Total revenues

233,352

 

 

173,825

 

 

649,993

 

 

485,000

 

Cost of revenues

 

 

 

 

 

 

 

Software subscriptions

40,930

 

 

27,958

 

 

114,343

 

 

79,200

 

Other

18,775

 

 

11,316

 

 

49,827

 

 

33,814

 

Total cost of revenues

59,705

 

 

39,274

 

 

164,170

 

 

113,014

 

Gross profit

173,647

 

 

134,551

 

 

485,823

 

 

371,986

 

Operating expenses

 

 

 

 

 

 

 

Research and development

35,286

 

 

26,347

 

 

97,705

 

 

73,812

 

Sales and marketing

109,882

 

 

86,279

 

 

313,023

 

 

237,222

 

General and administrative

39,142

 

 

28,952

 

 

100,401

 

 

73,984

 

Total operating expenses

184,310

 

 

141,578

 

 

511,129

 

 

385,018

 

Loss from operations

(10,663

)

 

(7,027

)

 

(25,306

)

 

(13,032

)

Other income (expense), net

 

 

 

 

 

 

 

Interest expense

(5,160

)

 

(4,916

)

 

(15,280

)

 

(11,163

)

Other income, net

2,926

 

 

2,533

 

 

9,118

 

 

3,944

 

Other income (expense), net

(2,234

)

 

(2,383

)

 

(6,162

)

 

(7,219

)

Loss before income taxes

(12,897

)

 

(9,410

)

 

(31,468

)

 

(20,251

)

Provision for (benefit from) income taxes

(148

)

 

108

 

 

(3,118

)

 

274

 

Net loss

$

(12,749

)

 

$

(9,518

)

 

$

(28,350

)

 

$

(20,525

)

Net loss per common share:

 

 

 

 

 

 

 

Basic and diluted

$

(0.15

)

 

$

(0.12

)

 

$

(0.34

)

 

$

(0.26

)

Weighted-average number of shares used in computing net loss per share:

 

 

 

 

 

 

 

Basic and diluted

83,283

 

 

79,903

 

 

82,348

 

 

79,116

 

TABLE 3

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

 

Nine Months Ended
September 30,

 

2019

 

2018

Cash flows from operating activities

 

 

 

Net loss

$

(28,350

)

 

$

(20,525

)

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

 

 

 

Depreciation and amortization

26,060

 

 

17,194

 

Share-based compensation

71,690

 

 

49,379

 

Amortization of deferred sales commission costs

21,189

 

 

13,956

 

Amortization of debt discount and issuance costs

15,149

 

 

11,003

 

Foreign currency remeasurement (gain) loss

61

 

 

657

 

Provision for bad debt

2,339

 

 

2,390

 

Deferred income taxes

(632

)

 

15

 

Tax benefit from release of valuation allowance

(3,210

)

 

 

Other

1,584

 

 

458

 

Changes in assets and liabilities:

 

 

 

Accounts receivable

(24,845

)

 

(29,883

)

Deferred sales commission costs

(51,467

)

 

(31,793

)

Prepaid expenses and other current assets

(8,125

)

 

(6,256

)

Other assets

400

 

 

(406

)

Accounts payable

10,626

 

 

(1,128

)

Accrued liabilities

22,432

 

 

27,954

 

Deferred revenue

16,632

 

 

17,107

 

Other liabilities

(525

)

 

(1,020

)

Net cash provided by operating activities

71,008

 

 

49,102

 

Cash flows from investing activities

 

 

 

Purchases of property and equipment

(21,355

)

 

(17,852

)

Capitalized internal-use software

(11,472

)

 

(8,117

)

Cash paid for business combination, net of cash acquired

(27,870

)

 

 

Cash paid for acquisition of intangible assets

 

 

(18,470

)

Net cash used in investing activities

(60,697

)

 

(44,439

)

Cash flows from financing activities

 

 

 

Proceeds from issuance of convertible senior notes, net of issuance costs

 

 

449,457

 

Payments for capped call transactions and costs

 

 

(49,910

)

Repurchase of common stock

 

 

(15,000

)

Proceeds from issuance of stock in connection with stock plans

17,590

 

 

13,632

 

Taxes paid related to net share settlement of equity awards

(10,244

)

 

(5,457

)

Repayment of financing obligations

(943

)

 

(741

)

Net cash provided by financing activities

6,403

 

 

391,981

 

Effect of exchange rate changes

(380

)

 

(553

)

Net increase in cash, cash equivalents and restricted cash

16,334

 

 

396,091

 

Cash, cash equivalents and restricted cash

 

 

 

Beginning of period

566,329

 

 

181,192

 

End of period

$

582,663

 

 

$

577,283

 

TABLE 4

RINGCENTRAL, INC.

RECONCILIATION OF OPERATING INCOME (LOSS)

GAAP MEASURES TO NON-GAAP MEASURES

(Unaudited, in thousands)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

Revenues

 

 

 

 

 

 

 

Software subscriptions

$

210,906

 

 

$

158,068

 

 

$

588,406

 

 

$

440,987

 

Other

22,446

 

 

15,757

 

 

61,587

 

 

44,013

 

Total revenues

233,352

 

 

173,825

 

 

649,993

 

 

485,000

 

Cost of revenues reconciliation

 

 

 

 

 

 

 

GAAP Software subscriptions cost of revenues

40,930

 

 

27,958

 

 

114,343

 

 

79,200

 

Share-based compensation

(1,759

)

 

(1,169

)

 

(4,796

)

 

(3,181

)

Amortization of acquisition intangibles

(1,338

)

 

(151

)

 

(3,688

)

 

(452

)

Acquisition related matters

 

 

 

 

(64

)

 

 

Non-GAAP Software subscriptions cost of revenues

37,833

 

 

26,638

 

 

105,795

 

 

75,567

 

 

 

 

 

 

 

 

 

GAAP Other cost of revenues

18,775

 

 

11,316

 

 

49,827

 

 

33,814

 

Share-based compensation

(592

)

 

(146

)

 

(1,316

)

 

(445

)

Non-GAAP Other cost of revenues

18,183

 

 

11,170

 

 

48,511

 

 

33,369

 

Gross profit and gross margin reconciliation

 

 

 

 

 

 

 

Non-GAAP Subscriptions

82.1

%

 

83.1

%

 

82.0

%

 

82.9

%

Non-GAAP Other

19.0

%

 

29.1

%

 

21.2

%

 

24.2

%

Non-GAAP Gross profit

76.0

%

 

78.2

%

 

76.3

%

 

77.5

%

Operating expenses reconciliation

 

 

 

 

 

 

 

GAAP Research and development

35,286

 

 

26,347

 

 

97,705

 

 

73,812

 

Share-based compensation

(6,230

)

 

(4,069

)

 

(16,000

)

 

(11,069

)

Acquisition related matters

 

 

 

 

(352

)

 

 

Non-GAAP Research and development

29,056

 

 

22,278

 

 

81,353

 

 

62,743

 

As a % of total revenues non-GAAP

12.5

%

 

12.8

%

 

12.5

%

 

12.9

%

 

 

 

 

 

 

 

 

GAAP Sales and marketing

109,882

 

 

86,279

 

 

313,023

 

 

237,222

 

Share-based compensation

(10,182

)

 

(7,449

)

 

(27,589

)

 

(19,679

)

Amortization of acquisition intangibles

(931

)

 

(876

)

 

(2,791

)

 

(2,891

)

Acquisition related matters

(499

)

 

 

 

(2,109

)

 

 

Non-GAAP Sales and marketing

98,270

 

 

77,954

 

 

280,534

 

 

214,652

 

As a % of total revenues non-GAAP

42.1

%

 

44.8

%

 

43.2

%

 

44.3

%

 

 

 

 

 

 

 

 

GAAP General and administrative

39,142

 

 

28,952

 

 

100,401

 

 

73,984

 

Share-based compensation

(8,613

)

 

(5,682

)

 

(21,989

)

 

(15,005

)

Acquisition related matters

(2,183

)

 

(1,742

)

 

(3,008

)

 

(1,742

)

Non-GAAP General and administrative

28,346

 

 

21,528

 

 

75,404

 

 

57,237

 

As a % of total revenues non-GAAP

12.1

%

 

12.4

%

 

11.6

%

 

11.8

%

Income (loss) from operations reconciliation

 

 

 

 

 

 

 

GAAP loss from operations

(10,663

)

 

(7,027

)

 

(25,306

)

 

(13,032

)

Share-based compensation

27,376

 

 

18,515

 

 

71,690

 

 

49,379

 

Amortization of acquisition intangibles

2,269

 

 

1,027

 

 

6,479

 

 

3,343

 

Acquisition related matters

2,682

 

 

1,742

 

 

5,533

 

 

1,742

 

Non-GAAP Income from operations

21,664

 

 

14,257

 

 

58,396

 

 

41,432

 

Non-GAAP Operating margin

9.3

%

 

8.2

%

 

9.0

%

 

8.5

%

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
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

Net (loss) income reconciliation

 

 

 

 

 

 

 

GAAP net loss

$

(12,749

)

 

$

(9,518

)

 

$

(28,350

)

 

$

(20,525

)

Share-based compensation

27,376

 

 

18,515

 

 

71,690

 

 

49,379

 

Amortization of acquisition intangibles

2,269

 

 

1,027

 

 

6,479

 

 

3,343

 

Acquisition related matters

2,682

 

 

1,742

 

 

5,533

 

 

1,742

 

Amortization of debt discount and issuance costs

5,118

 

 

4,849

 

 

15,149

 

 

11,003

 

Intercompany remeasurement loss (gain)

340

 

 

(149

)

 

264

 

 

874

 

Tax benefit from release of valuation allowance

 

 

 

 

(3,210

)

 

 

Income tax expense effects

(5,751

)

 

 

 

(15,131

)

 

 

Non-GAAP net income

$

19,285

 

 

$

16,466

 

 

$

52,424

 

 

$

45,816

 

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

 

 

 

 

 

 

 

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

83,283

 

 

79,903

 

 

82,348

 

 

79,116

 

Effect of dilutive securities

5,127

 

 

6,463

 

 

5,263

 

 

6,557

 

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

88,410

 

 

86,366

 

 

87,611

 

 

85,673

 

 

 

 

 

 

 

 

 

Diluted net (loss) income per share

 

 

 

 

 

 

 

GAAP net loss per share

$

(0.15

)

 

$

(0.12

)

 

$

(0.34

)

 

$

(0.26

)

Non-GAAP net income per share

$

0.22

 

 

$

0.19

 

 

$

0.60

 

 

$

0.53

 

TABLE 6

RINGCENTRAL, INC.

RECONCILIATION OF FORECASTED OPERATING MARGIN

GAAP MEASURES TO NON-GAAP MEASURES

(Unaudited, in millions)

 

 

Q4 2019

 

FY 2019

 

Low Range

 

High Range

 

Low Range

 

High Range

GAAP revenues

238.0

 

 

240.0

 

 

888.0

 

 

890.0

 

 

 

 

 

 

 

 

 

GAAP loss from operations

(39.9

)

 

(38.7

)

 

(65.2

)

 

(64.0

)

GAAP operating margin

(16.7

%)

 

(16.1

%)

 

(7.3

%)

 

(7.2

%)

Share-based compensation

31.0

 

 

30.0

 

 

102.7

 

 

101.7

 

Amortization of acquisition intangibles

3.7

 

 

3.7

 

 

10.2

 

 

10.2

 

Acquisition related matters

28.0

 

 

28.0

 

 

33.5

 

 

33.5

 

Non-GAAP income from operations

22.8

 

 

23.0

 

 

81.2

 

 

81.4

 

Non-GAAP operating margin

9.6

%

 

9.6

%

 

9.1

%

 

9.2

%

 

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

Media Contact:
Mariana Kosturos, RingCentral
(650) 562-6545
Mariana.Kosturos@ringcentral.com

Source: RingCentral, Inc.