RingCentral Office® ARR up 39% to $1.2
billion
Subscriptions Revenue up 34%
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
fourth quarter ended December 31, 2020.
Fourth Quarter Financial Highlights
- Total revenue increased 32% year over year to $335
million.
- Subscriptions revenue increased 34% year over year to over $306
million.
- Annualized Exit Monthly Recurring Subscriptions (ARR) increased
35% year over year to $1.3 billion.
- RingCentral Office® ARR increased 39% year over year to $1.2
billion.
- Mid-market and Enterprise ARR increased 49% year over year to
$713 million.
- Enterprise ARR increased 55% year over year to $454
million.
- Channel ARR increased 55% year over year to $465 million.
- TCV deals over $1 million were a new record, up over 50%
sequentially, including two over $10 million.
“Fourth quarter was outstanding, driven by robust growth across
the business with strong contributions from the channel and our key
partners led by Avaya, AT&T, and Atos,” said Vlad Shmunis,
RingCentral’s founder, chairman and CEO. “We are also excited to
add Vodafone Business as a key partner as we continue to expand our
global distribution network to meet the rising worldwide demand for
cloud-based communication solutions. We believe RingCentral is
uniquely positioned to address business communication needs in the
new work from anywhere environment with a well-differentiated
Message Video Phone™ (MVP™) cloud solution. With the recent
addition of our Smart Video Meetings solution, RingCentral Glip™,
we can now address our customers’ needs even better to communicate
via any mode, on any device, anywhere as they continue on their
digital transformation journey.”
Financial Results for the Fourth Quarter 2020
- Revenue: Subscriptions revenue of over $306 million
increased 34% year over year and accounted for 92% of total
revenue. Other revenue of $28 million increased 20% year over year,
reflecting higher adoption of RingCentral apps in the current work
from anywhere environment. Total revenue was $335 million for the
fourth quarter of 2020, up from $253 million in the fourth quarter
of 2019, representing 32% growth.
- Operating Income (Loss): GAAP operating loss was ($29)
million, compared to a GAAP operating loss of ($20) million in the
same period last year, primarily driven by higher share-based
compensation and amortization of acquisition intangibles, partially
offset by lower costs for acquisition related matters. Non-GAAP
operating income was $34 million, compared to a non-GAAP operating
income of $24 million in the same period last year.
- Net Income (Loss) Per Share: GAAP net loss per share was
($0.02), compared to ($0.30) in the same period last year. The
lower loss was primarily driven by higher mark-to-market gains
associated with investments and strategic partnerships and lower
costs for acquisition related matters, partially offset by higher
share-based compensation, amortization of acquisition intangibles,
and amortization of debt discount and issuance costs. Non-GAAP net
income per diluted share was $0.29, compared to $0.22 per diluted
share in the same period last year. The fourth quarters of 2020 and
2019 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 fourth quarter of 2020 was $640
million, which reflects a one-time payment related to a recent
strategic partnership, as well as $69 million cash paid for partial
repurchase of our 2023 convertible senior notes. This compares to
$746 million at the end of the third quarter of 2020.
Financial Results for the Full Year 2020
- Revenue: Subscriptions revenue of $1.1 billion increased
33% and accounted for 92% of total revenue. Other revenue of $97
million increased 15%, reflecting higher adoption of RingCentral
apps in the current work from anywhere environment. Total revenue
was $1.2 billion, up from $903 million in 2019, representing 31%
growth.
- Operating Income (Loss): GAAP operating loss was ($113)
million, compared to a GAAP operating loss of ($46) million in
2019, primarily driven by higher share-based compensation and
amortization of acquisition intangibles, partially offset by lower
costs for acquisition related matters. Non-GAAP operating income
was $115 million, compared to a non-GAAP operating income of $83
million in 2019.
- Net Income (Loss) Per Share: GAAP net loss per share was
($0.94), compared to ($0.64) in 2019, primarily driven by higher
share-based compensation, amortization of acquisition intangibles,
and amortization of debt discount and issuance costs, partially
offset by higher mark-to-market gains associated with investments
and strategic partnerships and lower costs for acquisition related
matters. Non-GAAP net income per diluted share was $0.98, compared
to $0.82 in 2019. 2020 and 2019 reflected a 22.5% non-GAAP tax
rate. There were no material cash taxes given our net operating
loss carryforwards.
Additional Highlights
Platform
- Launched RingCentral Glip™, a free, unlimited, easy-to-use
solution that offers high quality and high-availability video and
audio conferencing, seamlessly integrated with team messaging, file
sharing, contact, task, and calendar management - resulting in a
Smart Video Meetings™ experience. It includes innovative
pre-meeting, in-meeting, and post-meeting capabilities - all for
free. Glip® video meetings last up to 24-hours for up to 100
people, and provide a completely integrated team collaboration
capability.
- Announced acquisition of certain technology assets of
DeepAffects, a leading conversational intelligence pioneer that
uses artificial intelligence (AI) to analyze business conversations
and extract meaningful insights. DeepAffects brings powerful AI
capabilities that will enable RingCentral to deliver enhanced
pre-meeting, in-meeting and post-meeting experiences for
customers.
- Announced new innovations including RingCentral Embeddable™ for
RingCentral Video™, enabling developers to quickly integrate video
meeting capabilities such as scheduling, joining, and hosting
directly from their custom enterprise workflows. Also announced a
Call Supervision, Monitoring, and Streaming API, enabling
developers to add real-time transcription of a call or use Natural
Language Processing and Artificial Intelligence.
- RingCentral UK announced that the company has secured the
United Kingdom National Cyber Security Centre’s (NCSC) Cyber
Essentials Plus certification. The Cyber Essentials Plus
certification demonstrates robust practice across operational
processes and resilient cyber defenses.
- Announced that RingCentral Office® has achieved three
internationally recognized ISO certifications including ISO 27001,
ISO 27017, and ISO 27018 for information security best practices.
With these third-party certifications in place, RingCentral meets a
stringent set of requirements around security and privacy.
Partnerships
- Announced a strategic partnership with Vodafone Business to
deliver new cloud-based communications services. Together the
companies will create a new co-branded, cloud-based service that
will be the lead UCaaS solution for Vodafone Business, and also
offer Contact Center as a Service (CCaaS) to Vodafone Business
customers.
- In partnership with Avaya, announced that Avaya Cloud Office™
by RingCentral® is expanding availability to five of the largest
economies in Europe - Austria, Belgium, Germany, Italy, and
Spain.
- Announced that Atos SE is deploying Unify Office by RingCentral
to over 30,000 workers in over 20 countries. Unify Office by
RingCentral will be integrated by direct routing into Atos’
Microsoft Teams digital workplace environment providing a seamless
single pane of glass for communications both internally and
externally.
- In partnership with Atos SE, launched Unify Office by
RingCentral in the United States, United Kingdom, and
Australia.
- Announced an expansion of the partnership between RingCentral
and TELUS to serve broader sizes of businesses. The two companies
will work together to now enable Canadian small businesses to
easily transition their legacy phone systems to the cloud via TELUS
Business Connect, an all-in-one communications solution for
message, video, and phone.
- Announced that Horizon Telecom, a leading carrier-neutral
provider of communication and connectivity for global enterprises,
will offer RingCentral Office® to large-scale multinational
enterprises around the world.
- Announced a new partnership between RingCentral and Stack8. The
partnership will enable Stack8 to offer RingCentral’s Unified
Communications as a Service platform to their large enterprise
customers around the world. Additionally, Stack8 will provide
RingCentral Office® and an international cloud phone system to all
customers.
People
- Announced that Mignon Clyburn has been appointed to the
company’s board of directors. Clyburn served as a Commissioner of
the U.S. Federal Communications Commission from 2009 to 2018,
including as acting chair. Prior to her federal appointment,
Clyburn served 11 years on the Public Service Commission of South
Carolina and worked for nearly 15 years as publisher of the Coastal
Times, a Charleston weekly newspaper focused on the African
American community.
- Announced that Nat Natarajan has joined the company as its
Executive Vice President of Products and Engineering. Natarajan
brings more than 20 years of experience as a global operations,
product, technology, and organizational leader. Natarajan joins
from Ancestry where he was Chief Product Officer and Chief
Technology Officer. Prior to Ancestry, Natarajan was Senior Vice
President, Chief Product and Technology Officer for Intuit’s
TurboTax, and also Chief Information Security and Fraud
Officer.
- Announced that Jaya Kumar has joined the company as its Chief
Marketing Officer (CMO). Kumar brings more than 25 years of
experience with multiple Fortune 100 companies including PepsiCo
and Kraft Foods/Mondelez where he held both president and CMO
positions. Most recently he was Global CMO at Capital Group, the
world’s largest fund manager with over $2.2 trillion in assets
under management.
- Announced that Matthew Bishop has been appointed as Chief
Digital Officer. Bishop spent over 18 years at Microsoft, most
recently as Corporate Vice President of Commercial Strategy and
Operations of Microsoft’s Worldwide Commercial Business. He joined
RingCentral from Core Scientific, where he served as Chief
Administrative Officer after leaving Microsoft.
- Announced that Heather Hinton has joined RingCentral as the
company’s Chief Information Security Officer (CISO). Hinton joins
RingCentral from IBM, where she spent 13 years in various
leadership positions, most recently as vice president and IBM
distinguished engineer, and CISO for the company’s Cloud and
Cognitive Software business unit.
Recognition
- Announced that Gartner has recognized RingCentral as a Leader
in the 2020 Magic Quadrant for Unified Communications as a Service,
Worldwide report.* In the Magic Quadrant report, published on
November 11, 2020, RingCentral was positioned furthest for
completeness of vision in the Leaders quadrant. This is
RingCentral’s sixth year in a row being named to the Leaders
quadrant.
- Announced that RingCentral has received the highest scores in
every use case among 14 total vendors in the 2020 Gartner Critical
Capabilities for Unified Communications as a Service (UCaaS),
Worldwide report.* In the report, Gartner evaluated UCaaS vendors
across the following five identified use cases: Mobility and Remote
Working, Integrated Contact Center, Midsize Enterprise,
Multinational Organization, and Large Enterprise.
- Announced that RingCentral ranked first and highest for growth
in the 2020 Frost Radar™ UCaaS Market Report from Frost &
Sullivan for the second year in a row. RingCentral was also ranked
as the number one market share leader in a separate report issued
by Frost & Sullivan focused on growth opportunities in the
UCaaS market.
- Announced that RingCentral’s executive and investor relations
leadership were named to Institutional Investor’s prestigious 2021
All-America Executive Team. For the second consecutive year, the
team achieved the ‘Most Honored’ company distinction and ranked in
the top three positions across all categories in the software
sector of CEO, CFO, and Investor Relations.
Financial Outlook
Full Year 2021 Guidance:
- Total revenue range of $1.475 to $1.490 billion, representing
annual growth of 25% to 26%.
- Subscriptions revenue range of $1.365 to $1.375 billion,
representing annual growth of 26% to 27%.
- GAAP operating margin range of (21.7%) to (20.4%).
- 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.
- Non-GAAP EPS 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 $65 million,
and amortization of acquisition intangibles range of $45 to $48
million.
First Quarter 2021 Guidance:
- Total revenue range of $337 to $340 million, representing
annual growth of 26% to 27%.
- Subscriptions revenue range of $311.5 to $313.5 million,
representing annual growth of 28% to 29%.
- GAAP operating margin range of (15.1%) to (13.8%).
- Non-GAAP operating margin range of 8.6% to 8.8%.
- Non-GAAP tax rate assumed to be 22.5%. No material cash taxes
expected given net operating loss carryforwards.
- Non-GAAP EPS range of $0.24 to $0.25 based on 93.5 million
fully diluted shares.
- Share-based compensation range of $66 to $68 million,
amortization of debt discount and issuance costs of $16 million,
and amortization of acquisition intangibles range of $11 to $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 fourth
quarter of 2020 and outlook for the first quarter and full year of
2021.
- When: February 16, 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 February 23, 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 13715059.
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™ (MVP™) 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® , a
Unified Communications as a Service (UCaaS) platform including team
messaging, video meetings, and a cloud phone system, Glip® the
company’s free video meetings solution with team messaging that
enables Smart Video Meetings™, 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.
© 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 Glip solution, the success of our strategic
relationships, such as our relationships with Vodafone Business,
Avaya, Atos SE, TELUS, Horizon Telecom, and Stack8, our ability to
expand and deepen our global distribution network, our market
opportunity, 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 Vodafone
Business, Avaya, Atos SE, TELUS, Horizon Telecom, and Stack8; 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 Glip and RingCentral Video; 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-Q for the quarter ended September 30,
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, 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® 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.
*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.
Gartner, Inc., “Critical Capabilities for Unified Communications
as a Service, Worldwide” Christopher Trueman, Megan Fernandez,
Daniel O’Connell, Rafael Benitez, Pankil Sheth, November 17,
2020.
Gartner, Inc., “Magic Quadrant for Unified Communications as a
Service, Worldwide,” Rafael Benitez, Megan Fernandez, Daniel
O’Connell, Christopher Trueman, Pankil Sheth, November 11,
2020.
TABLE 1
RINGCENTRAL, INC.
CONSOLIDATED BALANCE
SHEETS
(Unaudited, in
thousands)
December 31, 2020
December 31, 2019
Assets
Current assets
Cash and cash equivalents
$
639,853
$
343,606
Accounts receivable, net
176,034
129,990
Deferred and prepaid sales commission
costs
63,726
36,589
Prepaid expenses and other current
assets
46,516
25,354
Total current assets
926,129
535,539
Property and equipment, net
142,208
89,230
Operating lease right-of-use assets
51,115
39,269
Long-term investments
213,176
132,188
Deferred and prepaid sales commission
costs, non-current
667,779
462,344
Goodwill
57,313
55,278
Acquired intangibles, net
118,313
127,338
Other assets
8,564
9,561
Total assets
$
2,184,597
$
1,450,747
Liabilities, Temporary Equity, and
Stockholders’ Equity
Current liabilities
Accounts payable
$
54,043
$
34,612
Accrued liabilities
210,654
138,729
Current portion of convertible senior
notes, net
31,148
—
Deferred revenue
142,223
107,372
Total current liabilities
438,068
280,713
Convertible senior notes, net
1,375,320
386,889
Operating lease liabilities
38,722
28,516
Other long-term liabilities
20,241
8,929
Total liabilities
1,872,351
705,047
Temporary equity
3,787
—
Stockholders’ equity
Common stock
9
9
Additional paid-in capital
673,950
1,033,053
Accumulated other comprehensive income
6,806
1,948
Accumulated deficit
(372,306
)
(289,310
)
Total stockholders’ equity
$
308,459
$
745,700
Total liabilities, temporary equity and
stockholders’ equity
$
2,184,597
$
1,450,747
TABLE 2
RINGCENTRAL, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited, in thousands,
except per share data)
Three Months Ended
December 31,
Year Ended December
31,
2020
2019
2020
2019
Revenues
Subscriptions
$
306,495
$
229,405
$
1,086,276
$
817,811
Other
28,041
23,460
97,381
85,047
Total revenues
334,536
252,865
1,183,657
902,858
Cost of revenues
Subscriptions
67,305
45,977
236,990
160,320
Other
23,907
20,896
86,617
70,723
Total cost of revenues
91,212
66,873
323,607
231,043
Gross profit
243,324
185,992
860,050
671,815
Operating expenses
Research and development
56,574
38,658
189,484
136,363
Sales and marketing
161,842
126,077
583,773
439,100
General and administrative
53,651
41,626
200,032
142,027
Total operating expenses
272,067
206,361
973,289
717,490
Loss from operations
(28,743
)
(20,369
)
(113,239
)
(45,675
)
Other income (expense), net
Interest expense
(16,501
)
(5,232
)
(49,281
)
(20,512
)
Other income, net
43,548
129
80,458
9,247
Other income (expense), net
27,047
(5,103
)
31,177
(11,265
)
Loss before income taxes
(1,696
)
(25,472
)
(82,062
)
(56,940
)
Provision for (benefit from) income
taxes
131
(215
)
934
(3,333
)
Net loss
$
(1,827
)
$
(25,257
)
$
(82,996
)
$
(53,607
)
Net loss per common share
Basic and diluted
$
(0.02
)
$
(0.30
)
$
(0.94
)
$
(0.64
)
Weighted-average number of shares used in
computing net loss per share
Basic and diluted
89,951
85,449
88,684
83,130
TABLE 3
RINGCENTRAL, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited, in
thousands)
Year Ended December
31,
2020
2019
Cash flows from operating
activities
Net loss
$
(82,996
)
$
(53,607
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation and amortization
75,612
37,870
Share-based compensation
189,600
101,354
Amortization of deferred and prepaid sales
commission costs
47,207
30,134
Amortization of debt discount and issuance
costs
49,031
20,337
Loss on early extinguishment of debt
13,284
—
Repayment of convertible senior notes
attributable to debt discount
(35,020
)
—
Reduction of operating lease right-of-use
assets
15,712
13,256
Unrealized gain and other related costs on
investments
(80,988
)
3,369
Foreign currency remeasurement (gain)
loss
(2,954
)
(105
)
Provision for bad debt
5,936
2,949
Deferred income taxes
(499
)
(737
)
Tax benefit from release of valuation
allowance
—
(3,210
)
Other
512
240
Changes in assets and liabilities:
Accounts receivable
(51,980
)
(37,163
)
Deferred and prepaid sales commission
costs
(274,908
)
(102,303
)
Prepaid expenses and other current
assets
(20,878
)
(1,575
)
Other assets
266
764
Accounts payable
21,916
21,753
Accrued liabilities
62,451
27,095
Deferred revenue
34,851
18,845
Operating lease liabilities
(15,362
)
(13,830
)
Other liabilities
14,016
(590
)
Net cash (used in) provided by operating
activities
(35,191
)
64,846
Cash flows from investing
activities
Purchases of property and equipment
(43,618
)
(27,767
)
Capitalized internal-use software
(38,113
)
(16,526
)
Cash paid for business combination, net of
cash acquired
—
(27,870
)
Purchases of long-term investments
—
(135,557
)
Cash paid for acquisition of intangible
assets
(25,955
)
(89,060
)
Net cash used in investing activities
(107,686
)
(296,780
)
Cash flows from financing
activities
Proceeds from issuance of convertible
senior notes, net of issuance costs
1,627,177
—
Payments for 2023 convertible senior notes
partial repurchase
(1,086,268
)
—
Payments for capped calls and transaction
costs
(102,695
)
—
Proceeds from issuance of stock in
connection with stock plans
41,230
29,827
Payments for taxes related to net share
settlement of equity awards
(36,717
)
(14,666
)
Payment for contingent consideration for
business acquisition
(3,648
)
(5,176
)
Repayment of financing obligations
(1,489
)
(943
)
Net cash provided by financing
activities
437,590
9,042
Effect of exchange rate changes
1,534
169
Net increase (decrease) in cash, cash
equivalents, and restricted cash
296,247
(222,723
)
Cash, cash equivalents, and restricted
cash
Beginning of year
343,606
566,329
End of year
$
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
December 31,
Year Ended December
31,
2020
2019
2020
2019
Revenues
Subscriptions
$
306,495
$
229,405
$
1,086,276
$
817,811
Other
28,041
23,460
97,381
85,047
Total revenues
334,536
252,865
1,183,657
902,858
Cost of revenues reconciliation
GAAP Subscriptions cost of revenues
67,305
45,977
236,990
160,320
Share-based compensation
(2,831
)
(2,095
)
(10,454
)
(6,891
)
Amortization of acquisition
intangibles
(9,105
)
(3,310
)
(32,055
)
(6,998
)
Acquisition related matters
—
(81
)
—
(145
)
Non-GAAP Subscriptions cost of
revenues
55,369
40,491
194,481
146,286
GAAP Other cost of revenues
23,907
20,896
86,617
70,723
Share-based compensation
(1,025
)
(534
)
(3,821
)
(1,850
)
Non-GAAP Other cost of revenues
22,882
20,362
82,796
68,873
Gross profit and gross margin
reconciliation
Non-GAAP Subscriptions
81.9
%
82.3
%
82.1
%
82.1
%
Non-GAAP Other
18.4
%
13.2
%
15.0
%
19.0
%
Non-GAAP Gross profit
76.6
%
75.9
%
76.6
%
76.2
%
Operating expenses
reconciliation
GAAP Research and development
56,574
38,658
189,484
136,363
Share-based compensation
(11,365
)
(7,132
)
(39,283
)
(23,132
)
Acquisition related matters
—
(341
)
—
(693
)
Non-GAAP Research and development
45,209
31,185
150,201
112,538
As a % of total revenues non-GAAP
13.5
%
12.3
%
12.7
%
12.5
%
GAAP Sales and marketing
161,842
126,077
583,773
439,100
Share-based compensation
(19,075
)
(10,736
)
(64,240
)
(38,325
)
Amortization of acquisition
intangibles
(962
)
(929
)
(3,781
)
(3,720
)
Acquisition related matters
—
(8,374
)
4
(10,483
)
Non-GAAP Sales and marketing
141,805
106,038
515,756
386,572
As a % of total revenues non-GAAP
42.4
%
41.9
%
43.6
%
42.8
%
GAAP General and administrative
53,651
41,626
200,032
142,027
Share-based compensation
(17,894
)
(9,167
)
(71,802
)
(31,156
)
Acquisition related matters
(244
)
(1,947
)
(2,820
)
(4,955
)
Non-GAAP General and administrative
35,513
30,512
125,410
105,916
As a % of total revenues non-GAAP
10.6
%
12.1
%
10.6
%
11.7
%
Income (loss) from operations
reconciliation
GAAP loss from operations
(28,743
)
(20,369
)
(113,239
)
(45,675
)
Share-based compensation
52,190
29,664
189,600
101,354
Amortization of acquisition
intangibles
10,067
4,239
35,836
10,718
Acquisition related matters
244
10,743
2,816
16,276
Non-GAAP Income from operations
33,758
24,277
115,013
82,673
Non-GAAP Operating margin
10.1
%
9.6
%
9.7
%
9.2
%
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
December 31,
Year Ended December
31,
2020
2019
2020
2019
Net income (loss) income
reconciliation
GAAP net loss
$
(1,827
)
$
(25,257
)
$
(82,996
)
$
(53,607
)
Share-based compensation
52,190
29,664
189,600
101,354
Amortization of acquisition
intangibles
10,067
4,239
35,836
10,718
Acquisition related matters
244
21,300
2,816
26,833
Amortization of debt discount and issuance
costs
16,418
5,188
49,031
20,337
Gain associated with investments and
strategic partnerships
(41,683
)
(8,343
)
(89,488
)
(8,343
)
Loss on early extinguishment of debt
961
—
13,284
—
Intercompany remeasurement gain
(2,050
)
(383
)
(1,634
)
(119
)
Income tax expense effects (1)
(7,621
)
(6,105
)
(25,478
)
(24,446
)
Non-GAAP net income
$
26,699
$
20,303
$
90,971
$
72,727
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
89,951
85,449
88,684
83,130
Effect of dilutive securities
2,845
5,783
4,144
5,393
Non-GAAP weighted average shares used in
computing non-GAAP diluted net income per share
92,796
91,232
92,828
88,523
Diluted net (loss) income per
share
GAAP net loss per share
$
(0.02
)
$
(0.30
)
$
(0.94
)
$
(0.64
)
Non-GAAP net income per share
$
0.29
$
0.22
$
0.98
$
0.82
(1) Income tax expense effects for the year ended December 31,
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)
Year Ended December
31,
2020
2019
Net cash (used in) provided by operating
activities
$
(35,191
)
$
64,846
Strategic partnerships
141,584
34,500
Repayment of convertible senior notes
attributable to debt discount
35,020
—
Non-GAAP net cash provided by operating
activities
141,413
99,346
Purchases of property and equipment
(43,618
)
(27,767
)
Capitalized internal-use software
(38,113
)
(16,526
)
Non-GAAP free cash flow
$
59,682
$
55,053
TABLE 7
RINGCENTRAL, INC.
RECONCILIATION OF FORECASTED
OPERATING MARGIN
GAAP MEASURES TO NON-GAAP
MEASURES
(Unaudited, in
millions)
Q1 2021
FY 2021
Low Range
High Range
Low Range
High Range
GAAP revenues
337.0
340.0
1,475.0
1,490.0
GAAP loss from operations
(51.0
)
(47.1
)
(320.5
)
(304.5
)
GAAP operating margin
(15.1
%)
(13.8
%)
(21.7
%)
(20.4
%)
Share-based compensation
68.0
66.0
420.0
410.0
Amortization of acquisition
intangibles
12.0
11.0
48.0
45.0
Acquisition related matters
—
—
—
—
Non-GAAP income from operations
29.0
29.9
147.5
150.5
Non-GAAP operating margin
8.6
%
8.8
%
10.0
%
10.1
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210216006139/en/
Investor Relations Contact: Ryan Goodman, RingCentral
(650) 918-5356 Ryan.Goodman@ringcentral.com
Media Contact: Mariana Leventis, RingCentral (650)
562-6545 Mariana.Leventis@ringcentral.com
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