RNG Ringcentral Inc

Q2 2024 key metrics above high end of guidance

Achieves record net cash provided by operating activities and record free cash flow

Raising 2024 revenue outlook

RingCentral, Inc. (NYSE: RNG), a leading provider of AI-driven cloud business communications, contact center, video, and hybrid event solutions, today announced financial results for the second quarter ended June 30, 2024.

Second Quarter Financial Highlights

• Total revenue increased 10% year-over-year to $593 million.
• Subscriptions revenue increased 10% year-over-year to $567 million.
• Annualized Exit Monthly Recurring Subscriptions (ARR) increased 9% year-over-year to $2.43 billion.
• Mid-market and Enterprise ARR increased 11% year-over-year to $1.52 billion.
• Enterprise ARR increased 12% year-over-year to $1.05 billion.
• GAAP operating margin of (0.9%), compared to (8.4%) in the prior year.
• Non-GAAP operating margin of 20.9%, up 160 basis points year-over-year.

“Q2 results were a continuation of the strong execution that we saw in the first quarter,” said Vlad Shmunis, RingCentral’s Founder and CEO. “Demand in our core UCaaS business remains solid, our new products are gaining traction, our pace of innovation is quickening, and we are expanding our partnerships as we welcome Cox Communications to our global service provider family. We are doing all this while continuing to improve profitability, reduce stock-based compensation, and grow free cash flow. We believe this will generate value for all our stakeholders over time.”

“Given our strong operating performance and focus on efficiency, we are again raising our full year revenue and free cash flow outlook,” said Sonalee Parekh, RingCentral's CFO. “With our strong free cash flow generation, we are planning to use a portion of it to reduce our gross debt from $1.5 billion today to no more than $1 billion before the end of 2026, as well as to at least fully offset dilution from stock-based compensation via buybacks.”

Financial Results for the Second Quarter 2024

• Revenue: Total revenue was $593 million for the second quarter of 2024, up from $539 million in the second quarter of 2023, representing 10% year-over-year growth. Adjusted for constant currency, total revenue rose 10%. Subscriptions revenue of $567 million increased 10% year-over-year and accounted for 96% of total revenue. Adjusted for constant currency, subscriptions revenue rose 10%.
• Operating Income (Loss): GAAP operating loss was ($5) million, compared to ($45) million in the same period last year. Non-GAAP operating income was $124 million, or 20.9% of total revenue, compared to $104 million, or 19.4% of total revenue, in the same period last year.
• Adjusted EBITDA: Adjusted EBITDA was $146 million, or 24.6% of total revenue, compared to $125 million, or 23.2% of total revenue, in the same period last year.
• Net Income (Loss) Per Share: GAAP net loss per share was ($0.16), compared to ($0.23) in the same period last year. Diluted non-GAAP net income per share was $0.91, compared to $0.83 per share in the same period last year. The second quarters of 2024 and 2023 reflected an approximately 22.5% non-GAAP tax rate.
• Cash Flow: Net cash provided by operating activities for the second quarter of 2024 was $127 million, or 21.4% of total revenue, compared to $91 million, or 16.8% of total revenue, for the second quarter of 2023. Free cash flow for the second quarter of 2024 was $109 million. This includes cash paid for interest of $8 million, restructuring and other payments of $3 million and cash received from certain strategic partners of $10 million. This compares to free cash flow for the second quarter of 2023 of $73 million. This includes cash paid for interest of $3 million, and restructuring and other payments of $4 million.
• Cash and Cash Equivalents: Total cash and cash equivalents at the end of the second quarter of 2024 was $199 million. Our cash balance reflects the repurchase of $82 million in shares during the second quarter of 2024 under the plans previously authorized by our Board. We currently have approximately $326 million remaining on our total authorization.

Financial Outlook

Full Year 2024 Guidance:

• Raising subscriptions revenue range to $2.282 to $2.288 billion, representing annual growth of 9%.
• Raising total revenue range to $2.393 to $2.399 billion, representing annual growth of 9%.
• Updating GAAP operating margin range to (1.3%) to (0.8%) from (1.6%) to (0.9%).
• Maintaining non-GAAP operating margin of 21.0%.
• Maintaining non-GAAP tax rate assumption of 22.5%. No material cash taxes expected given net operating loss carryforwards.
• Raising non-GAAP EPS to $3.62 to $3.67 based on 96.0 to 95.0 million fully diluted shares. This compares to $3.59 to $3.67 based on 97.0 to 96.0 million fully diluted shares previously.
• Lowering share-based compensation range to $370 to $380 million from $380 to $390 million.
• Maintaining amortization of acquired intangibles of $140 million.
• Updating restructuring costs to $6 to $7 million from $5 to $7 million.
• Raising free cash flow to $395 to $400 million, up from $385 to $390 million. This guidance continues to include capitalized expenditures of $85 million, cash paid for interest of $60 million and restructuring and other payments of $20 million, as well as $25 million of cash received from certain strategic partners.

Third Quarter 2024 Guidance:

• Subscriptions revenue range of $572.0 to $575.0 million, representing year-over-year growth of 8%.
• Total revenue range of $600.5 to $603.5 million, representing year-over-year growth of 8%.
• GAAP operating margin range of (1.3%) to (0.7%).
• Non-GAAP operating margin of 21.0%.
• Non-GAAP tax rate assumption of 22.5%. No material cash taxes expected given net operating loss carryforwards.
• Non-GAAP EPS of $0.92 to $0.93 based on 94.5 to 94.0 million fully diluted shares.
• Share-based compensation range of $96 to $98 million.
• Amortization of acquired intangibles of $35 million.
• Restructuring costs of $0 to $1 million.

Additional Highlights

• With RingEX, our flagship UCaaS product, won a number of notable enterprise customers, including Whirlpool, a Fortune 500 company, and two 10,000 plus seat deals in the retail vertical, one of them being the largest APAC deal in company history.
• With RingCX, our AI-powered native contact center, won a number of notable customers, including one of the top 25 largest counties in the U.S. Additionally, we added over 300 new features to RingCX, including new integrations with ServiceNow, HubSpot and Microsoft Teams.
• With RingCentral Events, our hybrid events platform, won a number of notable enterprise customers, including a large, six figure deal with a leading, global management consulting firm, one of the world’s largest aerospace companies, and a large, global personal computing company.
• Introduced new enhancements to RingSense for Sales, our AI-driven conversation intelligence platform, including a powerful new AI coaching dashboard, integration into Microsoft Teams, and expansion of CRM capabilities.
• Today announced that Cox Communications, the largest private broadband provider in the U.S. and a comprehensive technology provider for businesses, has selected RingCentral to support their future UCaaS and CCaaS solutions, with plans to launch later this year.
• Announced an expansion of our strategic partnership with Vodafone Business to resell RingCX.
• Announced a new hybrid solution of RingCentral’s AI-powered cloud business communications solution with Avaya’s on-premise Aura telephony. The new hybrid offering allows users within the same organization to seamlessly collaborate with each other, whether individuals are using Avaya Aura or Avaya Cloud Office by RingCentral telephony solutions.
• Product recognition this quarter includes RingCX winning the 2024 Customer Magazine Contact Center Technology Award, and RingSense AI winning for technology of the year by TMCNet. Additionally, IDC recognized RingCentral as a Leader in the 2024 IDC Worldwide Unified Communications and Collaboration Platforms report.
• On July 23, 2024, Fitch Ratings upgraded its outlook on RingCentral's corporate debt rating from Stable to Positive. This upgraded outlook was based on our low and improving leverage, potential for future expansion in EBITDA margin and free cash flow growth.

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, 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 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 2024, 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 2024 and outlook for the third quarter and full year of 2024.
• When: Thursday, August 1, 2024 at 2:00PM PT (5:00PM ET).
• Dial-in: 1-888-349-0093 from the United States; 1-412-317-5201 internationally
• Webcast: RingCentral Q2 2024 Earnings Webcast (live and replay).
• Replay: Following the completion of the call through 11:59 PM ET on August 8, 2024, a telephone replay will be available by dialing 1-844-512-2921 from the United States or 1-412-317-6671 internationally with recording access code 10190686.

Investor Presentation Details

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

About RingCentral

RingCentral is a leading provider of AI-driven cloud business communications, contact center, video and hybrid event solutions. RingCentral empowers businesses with conversation intelligence, and unlocks rich customer and employee interactions to provide insights and improved business outcomes. With decades of expertise in reliable and secure cloud communications, RingCentral has earned the trust of millions of customers and thousands of partners worldwide. Visit ringcentral.com to learn more.

© 2024 RingCentral, Inc. All rights reserved. RingCentral, RingCentral Contact Center 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, the results of the pace of our innovation and our partner networks, our expectations regarding our profitability and our non-GAAP free cash flow, our expectations around the contribution of our new products, our estimates and expectations regarding third parties, and our ability to execute and lead in the UCaaS digital transformation market, our expectations around the demand for our products and the growth of the markets in which we compete. 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 strategic relationships; our expectations regarding our strategic acquisitions, including acquisition of select assets from Hopin; 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 RingEX (formerly RingCentral MVP™), 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 most recent Form 10-K and Form 10-Q 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 adjusted EBITDA, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP free cash flow, Non-GAAP free cash flow margin, and constant currency revenue. Non-GAAP subscriptions gross margin is defined as Non-GAAP subscriptions gross profit divided by GAAP subscriptions revenue. Non-GAAP other gross margin is defined as Non-GAAP other gross profit divided by GAAP other revenue. Non-GAAP income (loss) from operations is defined as GAAP income (loss) from operations excluding share-based compensation which includes related employer payroll taxes, amortization of acquisition intangibles, third-party relocation costs tied to the conflict between Russia and Ukraine and other costs including acquisition-related transaction costs and retention payments, certain litigation-related costs, net impact of amended agreements with strategic partners, and restructuring costs. Non-GAAP operating margin is defined as Non-GAAP income (loss) from operations divided by total GAAP revenue. Non-GAAP adjusted EBITDA is defined as Non-GAAP income (loss) from operations excluding depreciation and amortization. Non-GAAP net income (loss) is defined as GAAP net income (loss) excluding share-based compensation which includes related employer payroll taxes, amortization of acquisition intangibles, third-party relocation costs tied to the conflict between Russia and Ukraine and other costs including acquisition-related transaction costs and retention payments, certain litigation-related costs, net impact of amended agreements with strategic partners, restructuring costs, non-cash interest expense associated with amortization of debt discount and issuance costs related to our long-term debt, loss (gain) associated with investments, loss (gain) on early extinguishment of debt, intercompany remeasurement gains or losses, 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 free cash flow is defined as GAAP net cash provided by (used in) operating activities adjusted for capital expenditures including purchases of property and equipment and capitalized internal-use software. We believe information regarding Non-GAAP free cash flow provides useful information to investors in understanding and evaluating the strength of liquidity and available cash. Non-GAAP free cash flow margin is defined as Non-GAAP free cash flow divided by total GAAP revenues.

We have included Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP income (loss) from operations, Non-GAAP adjusted EBITDA, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP free cash flow, Non-GAAP free cash flow margin, and constant currency revenue 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 income (loss) from operations, Non-GAAP adjusted EBITDA, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP free cash flow, and Non-GAAP free cash flow margin provide useful measure for period-to-period comparisons of our business.

The Company has provided certain revenue-related information adjusted for constant currency to provide a framework for assessing how the Company's underlying business performed excluding the effect of foreign currency rate fluctuations. To present this information, current period results in currencies other than United States dollars are converted into United States dollars at the average exchange rate prevailing for the quarter being compared to for growth rate calculations presented, rather than the actual exchange rates in effect during that period.

Although Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP income (loss) from operations, Non-GAAP adjusted EBITDA, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP free cash flow, Non-GAAP free cash flow margin, and constant currency revenue 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, mid-market and enterprise annualized exit monthly recurring subscriptions, enterprise annualized exit monthly recurring subscriptions and net monthly subscriptions dollar retention rate. 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 mid-market and enterprise annualized exit monthly recurring subscriptions in the same manner as we calculate our 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 annualized exit monthly recurring subscriptions, except that only customer subscriptions from customers generating $100,000 or more in annual recurring revenue are included. We define our Net Monthly Subscription Dollar Retention Rate as (i) one plus (ii) the quotient of Dollar Net Change divided by Average Monthly Recurring Subscriptions. We calculate 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, 2024

 

December 31, 2023

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

199,328

 

 

$

222,195

 

Accounts receivable, net

 

369,995

 

 

 

364,438

 

Deferred and prepaid sales commission costs

 

186,429

 

 

 

184,620

 

Prepaid expenses and other current assets

 

72,158

 

 

 

77,396

 

Total current assets

 

827,910

 

 

 

848,649

 

Property and equipment, net

 

182,315

 

 

 

184,390

 

Operating lease right-of-use assets

 

45,172

 

 

 

42,989

 

Deferred and prepaid sales commission costs, non-current

 

366,911

 

 

 

395,724

 

Goodwill

 

74,414

 

 

 

67,370

 

Acquired intangibles, net

 

322,940

 

 

 

393,767

 

Other assets

 

12,152

 

 

 

12,024

 

Total assets

$

1,831,814

 

 

$

1,944,913

 

Liabilities, Temporary Equity, and Stockholders’ Deficit

 

 

 

Current liabilities

 

 

 

Accounts payable

$

38,947

 

 

$

53,295

 

Accrued liabilities

 

279,357

 

 

 

325,632

 

Current portion of long-term debt, net

 

181,033

 

 

 

20,000

 

Deferred revenue

 

262,105

 

 

 

233,619

 

Total current liabilities

 

761,442

 

 

 

632,546

 

Long-term debt, net

 

1,356,254

 

 

 

1,525,482

 

Operating lease liabilities

 

30,508

 

 

 

28,178

 

Other long-term liabilities

 

12,416

 

 

 

61,827

 

Total liabilities

 

2,160,620

 

 

 

2,248,033

 

 

 

 

 

Temporary equity

 

 

 

Series A convertible preferred stock

 

199,449

 

 

 

199,449

 

 

 

 

 

Stockholders’ deficit

 

 

 

Common stock

 

9

 

 

 

9

 

Additional paid-in capital

 

1,219,172

 

 

 

1,204,781

 

Accumulated other comprehensive loss

 

(5,053

)

 

 

(8,223

)

Accumulated deficit

 

(1,742,383

)

 

 

(1,699,136

)

Total stockholders’ deficit

$

(528,255

)

 

$

(502,569

)

Total liabilities, temporary equity and stockholders’ deficit

$

1,831,814

 

 

$

1,944,913

 

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,

 

2024

 

2023

 

2024

 

2023

Revenues

 

 

 

 

 

 

 

Subscriptions

$

567,058

 

 

$

513,632

 

 

$

1,124,545

 

 

$

1,021,926

 

Other

 

25,849

 

 

 

25,673

 

 

 

52,573

 

 

 

51,068

 

Total revenues

 

592,907

 

 

 

539,305

 

 

 

1,177,118

 

 

 

1,072,994

 

Cost of revenues

 

 

 

 

 

 

 

Subscriptions

 

148,107

 

 

 

136,067

 

 

 

291,757

 

 

 

272,492

 

Other

 

28,563

 

 

 

28,350

 

 

 

55,392

 

 

 

52,601

 

Total cost of revenues

 

176,670

 

 

 

164,417

 

 

 

347,149

 

 

 

325,093

 

Gross profit

 

416,237

 

 

 

374,888

 

 

 

829,969

 

 

 

747,901

 

Operating expenses

 

 

 

 

 

 

 

Research and development

 

79,750

 

 

 

80,280

 

 

 

160,278

 

 

 

165,521

 

Sales and marketing

 

269,487

 

 

 

264,443

 

 

 

542,217

 

 

 

524,655

 

General and administrative

 

72,359

 

 

 

75,227

 

 

 

143,732

 

 

 

157,318

 

Total operating expenses

 

421,596

 

 

 

419,950

 

 

 

846,227

 

 

 

847,494

 

Loss from operations

 

(5,359

)

 

 

(45,062

)

 

 

(16,258

)

 

 

(99,593

)

Other income (expense), net

 

 

 

 

 

 

 

Interest expense

 

(16,021

)

 

 

(5,118

)

 

 

(32,275

)

 

 

(7,330

)

Other income

 

9,803

 

 

 

35,651

 

 

 

11,747

 

 

 

41,080

 

Other income (expense), net

 

(6,218

)

 

 

30,533

 

 

 

(20,528

)

 

 

33,750

 

Loss before income taxes

 

(11,577

)

 

 

(14,529

)

 

 

(36,786

)

 

 

(65,843

)

Provision for income taxes

 

3,176

 

 

 

6,953

 

 

 

6,461

 

 

 

10,038

 

Net loss

$

(14,753

)

 

$

(21,482

)

 

$

(43,247

)

 

$

(75,881

)

Net loss per common share

 

 

 

 

 

 

 

Basic and diluted

$

(0.16

)

 

$

(0.23

)

 

$

(0.47

)

 

$

(0.79

)

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

 

 

 

 

 

 

 

Basic and diluted

 

92,745

 

 

 

95,339

 

 

 

92,944

 

 

 

95,528

 

TABLE 3

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

 

Six Months Ended

June 30,

 

2024

 

2023

Cash flows from operating activities

 

 

 

Net loss

$

(43,247

)

 

$

(75,881

)

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

 

 

 

Depreciation and amortization

 

112,974

 

 

 

115,556

 

Share-based compensation

 

174,948

 

 

 

202,851

 

Unrealized loss on investments

 

—

 

 

 

1,646

 

Amortization of deferred and prepaid sales commission costs

 

79,098

 

 

 

65,160

 

Amortization of debt discount and issuance costs

 

2,014

 

 

 

2,398

 

Gain on early extinguishment of debt

 

—

 

 

 

(31,107

)

Reduction of operating lease right-of-use assets

 

10,153

 

 

 

10,175

 

Provision for bad debt

 

2,928

 

 

 

4,940

 

Other

 

(7,008

)

 

 

(1,632

)

Changes in assets and liabilities:

 

 

 

Accounts receivable

 

(8,485

)

 

 

(15,813

)

Deferred and prepaid sales commission costs

 

(72,683

)

 

 

(62,153

)

Prepaid expenses and other assets

 

6,708

 

 

 

(2,773

)

Accounts payable

 

(13,861

)

 

 

(38,890

)

Accrued and other liabilities

 

(31,131

)

 

 

17,459

 

Deferred revenue

 

19,815

 

 

 

17,486

 

Operating lease liabilities

 

(9,048

)

 

 

(10,198

)

Net cash provided by operating activities

 

223,175

 

 

 

199,224

 

Cash flows from investing activities

 

 

 

Purchases of property and equipment

 

(11,186

)

 

 

(13,160

)

Capitalized internal-use software

 

(26,515

)

 

 

(25,964

)

Cash paid for business combination, net of cash acquired

 

(26,291

)

 

 

—

 

Net cash used in investing activities

 

(63,992

)

 

 

(39,124

)

Cash flows from financing activities

 

 

 

Proceeds from issuance of stock in connection with stock plans

 

10,000

 

 

 

10,887

 

Payments for taxes related to net share settlement of equity awards

 

(4,124

)

 

 

(3,986

)

Payments for repurchases of common stock

 

(162,006

)

 

 

(174,570

)

Proceeds from issuance of long-term debt, net of issuance costs

 

—

 

 

 

394,394

 

Payments for the repurchase of convertible notes

 

—

 

 

 

(427,304

)

Payments for fees on long-term debt

 

(2,152

)

 

 

—

 

Repayments of principal on long-term debt

 

(10,000

)

 

 

—

 

Repayments for financing obligations

 

(2,244

)

 

 

(3,291

)

Payments for contingent consideration

 

(10,345

)

 

 

(973

)

Net cash used in financing activities

 

(180,871

)

 

 

(204,843

)

Effect of exchange rate changes

 

(1,179

)

 

 

110

 

Net decrease in cash, cash equivalents, and restricted cash

 

(22,867

)

 

 

(44,633

)

Cash, cash equivalents, and restricted cash

 

 

 

Beginning of period

 

222,195

 

 

 

269,984

 

End of period

$

199,328

 

 

$

225,351

 

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,

 

2024

 

2023

 

2024

 

2023

Revenues

 

 

 

 

 

 

 

Subscriptions

$

567,058

 

 

$

513,632

 

 

$

1,124,545

 

 

$

1,021,926

 

Other

 

25,849

 

 

 

25,673

 

 

 

52,573

 

 

 

51,068

 

Total revenues

$

592,907

 

 

$

539,305

 

 

$

1,177,118

 

 

$

1,072,994

 

Cost of revenues reconciliation

 

 

 

 

 

 

 

GAAP Subscriptions cost of revenues

$

148,107

 

 

$

136,067

 

 

$

291,757

 

 

$

272,492

 

Share-based compensation

 

(6,168

)

 

 

(6,753

)

 

 

(12,492

)

 

 

(13,704

)

Amortization of acquired intangibles

 

(33,769

)

 

 

(36,639

)

 

 

(67,852

)

 

 

(73,279

)

Third-party relocation and other costs

 

(10

)

 

 

(12

)

 

 

(49

)

 

 

(12

)

Restructuring costs

 

(24

)

 

 

(232

)

 

 

(259

)

 

 

(637

)

Non-GAAP Subscriptions cost of revenues

$

108,136

 

 

$

92,431

 

 

$

211,105

 

 

$

184,860

 

 

 

 

 

 

 

 

 

GAAP Other cost of revenues

$

28,563

 

 

$

28,350

 

 

$

55,392

 

 

$

52,601

 

Share-based compensation

 

(2,017

)

 

 

(2,393

)

 

 

(4,076

)

 

 

(4,512

)

Amortization of acquired intangibles

 

(22

)

 

 

(22

)

 

 

(44

)

 

 

(44

)

Restructuring costs

 

(22

)

 

 

(39

)

 

 

(348

)

 

 

(52

)

Non-GAAP Other cost of revenues

$

26,502

 

 

$

25,896

 

 

$

50,924

 

 

$

47,993

 

Gross profit and gross margin reconciliation

 

 

 

 

 

 

 

Non-GAAP Subscriptions

 

80.9

%

 

 

82.0

%

 

 

81.2

%

 

 

81.9

%

Non-GAAP Other

 

(2.5

)%

 

 

(0.9

)%

 

 

3.1

%

 

 

6.0

%

Non-GAAP Gross profit

 

77.3

%

 

 

78.1

%

 

 

77.7

%

 

 

78.3

%

Operating expenses reconciliation

 

 

 

 

 

 

 

GAAP Research and development

$

79,750

 

 

$

80,280

 

 

$

160,278

 

 

$

165,521

 

Share-based compensation

 

(19,618

)

 

 

(23,298

)

 

 

(39,611

)

 

 

(47,228

)

Third-party relocation and other costs

 

(477

)

 

 

(1,504

)

 

 

(1,545

)

 

 

(1,563

)

Restructuring costs

 

(323

)

 

 

(1,053

)

 

 

(1,773

)

 

 

(2,487

)

Non-GAAP Research and development

$

59,332

 

 

$

54,425

 

 

$

117,349

 

 

$

114,243

 

As a % of total revenues non-GAAP

 

10.0

%

 

 

10.1

%

 

 

10.0

%

 

 

10.6

%

 

 

 

 

 

 

 

 

GAAP Sales and marketing

$

269,487

 

 

$

264,443

 

 

$

542,217

 

 

$

524,655

 

Share-based compensation

 

(33,653

)

 

 

(40,734

)

 

 

(68,500

)

 

 

(78,776

)

Amortization of acquired intangibles

 

(931

)

 

 

(834

)

 

 

(1,743

)

 

 

(1,395

)

Third-party relocation and other costs

 

(38

)

 

 

(15

)

 

 

(332

)

 

 

(15

)

Restructuring costs

 

(449

)

 

 

(1,370

)

 

 

(2,611

)

 

 

(3,969

)

Non-GAAP Sales and marketing

$

234,416

 

 

$

221,490

 

 

$

469,031

 

 

$

440,500

 

As a % of total revenues non-GAAP

 

39.5

%

 

 

41.1

%

 

 

39.8

%

 

 

41.1

%

 

 

 

 

 

 

 

 

GAAP General and administrative

$

72,359

 

 

$

75,227

 

 

$

143,732

 

 

$

157,318

 

Share-based compensation

 

(27,489

)

 

 

(33,149

)

 

 

(55,282

)

 

 

(63,402

)

Third-party relocation and other costs

 

(4,156

)

 

 

(541

)

 

 

(4,228

)

 

 

(3,628

)

Restructuring costs

 

(380

)

 

 

(912

)

 

 

(789

)

 

 

(1,336

)

Non-GAAP General and administrative

$

40,334

 

 

$

40,625

 

 

$

83,433

 

 

$

88,952

 

As a % of total revenues non-GAAP

 

6.8

%

 

 

7.5

%

 

 

7.1

%

 

 

8.3

%

Income (loss) from operations reconciliation

 

 

 

 

 

 

 

GAAP loss from operations

$

(5,359

)

 

$

(45,062

)

 

$

(16,258

)

 

$

(99,593

)

Share-based compensation

 

88,945

 

 

 

106,327

 

 

 

179,961

 

 

 

207,622

 

Amortization of acquired intangibles

 

34,722

 

 

 

37,495

 

 

 

69,639

 

 

 

74,718

 

Third-party relocation and other costs, net

 

4,681

 

 

 

2,072

 

 

 

6,154

 

 

 

5,218

 

Restructuring costs

 

1,198

 

 

 

3,606

 

 

 

5,780

 

 

 

8,481

 

Non-GAAP Income from operations

$

124,187

 

 

$

104,438

 

 

$

245,276

 

 

$

196,446

 

Non-GAAP Operating margin

 

20.9

%

 

 

19.4

%

 

 

20.8

%

 

 

18.3

%

 

 

 

 

 

 

 

 

Depreciation and amortization

$

21,601

 

 

$

20,544

 

 

$

43,335

 

 

$

40,838

 

Non-GAAP Adjusted EBITDA

$

145,788

 

 

$

124,982

 

 

$

288,611

 

 

$

237,284

 

As a % of total revenues non-GAAP

 

24.6

%

 

 

23.2

%

 

 

24.5

%

 

 

22.1

%

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,

 

2024

 

2023

 

2024

 

2023

Net income (loss) reconciliation

 

 

 

 

 

 

 

GAAP net loss

$

(14,753

)

 

$

(21,482

)

 

$

(43,247

)

 

$

(75,881

)

Share-based compensation

 

88,945

 

 

 

106,327

 

 

 

179,961

 

 

 

207,622

 

Amortization of acquired intangibles

 

34,722

 

 

 

37,495

 

 

 

69,639

 

 

 

74,718

 

Third-party relocation and other costs, net

 

(2,980

)

 

 

2,072

 

 

 

(1,507

)

 

 

1,709

 

Restructuring costs

 

1,198

 

 

 

3,606

 

 

 

5,780

 

 

 

8,481

 

Amortization of debt discount and issuance costs

 

1,011

 

 

 

1,279

 

 

 

2,014

 

 

 

2,398

 

Loss associated with investments

 

458

 

 

 

—

 

 

 

458

 

 

 

1,646

 

Loss (gain) on early extinguishment of debt

 

—

 

 

 

(31,107

)

 

 

—

 

 

 

(31,107

)

Intercompany remeasurement gain

 

(558

)

 

 

(1,901

)

 

 

(296

)

 

 

(1,886

)

Income tax expense effects

 

(21,848

)

 

 

(16,276

)

 

 

(42,873

)

 

 

(34,453

)

Non-GAAP net income

$

86,195

 

 

$

80,013

 

 

$

169,929

 

 

$

153,247

 

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 loss per share

 

92,745

 

 

 

95,339

 

 

 

92,944

 

 

 

95,528

 

Effect of dilutive securities

 

2,165

 

 

 

1,340

 

 

 

2,486

 

 

 

1,252

 

Non-GAAP weighted average shares used in

computing non-GAAP diluted net income per share

 

94,910

 

 

 

96,679

 

 

 

95,430

 

 

 

96,780

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per share

 

 

 

 

 

 

 

GAAP net loss per share

$

(0.16

)

 

$

(0.23

)

 

$

(0.47

)

 

$

(0.79

)

Non-GAAP net income per share

$

0.91

 

 

$

0.83

 

 

$

1.78

 

 

$

1.58

 

TABLE 6

RINGCENTRAL, INC.

RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES

GAAP MEASURES TO NON-GAAP FREE CASH FLOW MEASURES

(Unaudited, in thousands)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2024

 

2023

 

2024

 

2023

Net cash provided by operating activities

$

127,081

 

 

$

90,691

 

 

$

223,175

 

 

$

199,224

 

Capitalized expenditures

 

(18,292

)

 

 

(17,805

)

 

 

(37,701

)

 

 

(39,124

)

Non-GAAP free cash flow

$

108,789

 

 

$

72,886

 

 

$

185,474

 

 

$

160,100

 

Non-GAAP free cash flow margin

 

18.3

%

 

 

13.5

%

 

 

15.8

%

 

 

14.9

%

TABLE 7

RINGCENTRAL, INC.

RECONCILIATION OF FORECASTED OPERATING MARGIN AND FREE CASH FLOW

GAAP MEASURES TO NON-GAAP MEASURES

(Unaudited, in millions)

 

 

Q3 2024

 

FY 2024

 

Low Range

 

High Range

 

Low Range

 

High Range

GAAP revenues

600.5

 

 

603.5

 

 

 

2,393.0

 

 

 

2,399.0

 

 

 

 

 

 

 

 

 

GAAP loss from operations

(7.9

)

 

(4.3

)

 

 

(30.5

)

 

 

(18.2

)

GAAP operating margin

(1.3

%)

 

(0.7

%)

 

 

(1.3

%)

 

 

(0.8

%)

Share-based compensation

98.0

 

 

96.0

 

 

 

380.0

 

 

 

370.0

 

Amortization of acquired intangibles

35.0

 

 

35.0

 

 

 

140.0

 

 

 

140.0

 

Third-party relocation and other costs, net

—

 

 

—

 

 

 

6.0

 

 

 

6.0

 

Restructuring costs

1.0

 

 

—

 

 

 

7.0

 

 

 

6.0

 

Non-GAAP income from operations

126.1

 

 

126.7

 

 

 

502.5

 

 

 

503.8

 

Non-GAAP operating margin

21.0

%

 

21.0

%

 

 

21.0

%

 

 

21.0

%

 

 

FY 2024

 

Low Range

 

High Range

GAAP net cash provided by operating activities

$

480.0

 

 

$

485.0

 

Capitalized expenditures

 

(85.0

)

 

 

(85.0

)

Non-GAAP free cash flow

$

395.0

 

 

$

400.0

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240801174573/en/

Investor Relations Contact: Will Wong, RingCentral 650-450-4826 ir@ringcentral.com

Media Contact: Mariana Leventis, RingCentral 650-562-6545 Mariana.Leventis@ringcentral.com