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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Ringcentral Inc | NYSE:RNG | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.06 | -0.20% | 30.43 | 31.09 | 30.395 | 30.77 | 255,800 | 17:53:49 |
RingCentral Office® ARR up 40% to $1.3 billion
Enterprise ARR up 62% to over $500 million
Global 2000 and Fortune 1000 Enterprise Business now surpasses $100 million ARR
RingCentral, Inc. (NYSE: RNG), a leading provider of global enterprise cloud communications, video meetings, collaboration, and contact center solutions, today announced financial results for the first quarter ended March 31, 2021.
First Quarter Financial Highlights
“First quarter results were exceptional, with meaningful contributions from key partners including Avaya, Atos, AT&T, BT, and Telus,” said Vlad Shmunis, RingCentral’s founder, chairman and CEO. “We believe we are witnessing the intersection of two megatrends of digital transformation and hybrid workforce adoption, which is creating a structural shift in awareness and demand for cloud communications solutions. RingCentral has always been about work from anywhere. With our proven UCaaS platform and a comprehensive CCaaS portfolio, RingCentral continues to win as a trusted communications partner of choice for businesses of all sizes in their digital transformation journeys.”
(1) Direct and Partners Office ARR is defined to include direct, Avaya, Atos, Alcatel-Lucent Enterprise, AT&T, BT, Telus, and other non-channel partners.
Financial Results for the First Quarter 2021
Additional Highlights
Partnerships
Platform
Recognition
Financial Outlook
Full Year 2021 Guidance:
Second Quarter 2021 Guidance:
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:
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 strategic relationships, such as our relationships with Avaya, Atos, AT&T, Alcatel-Lucent Enterprise, BT, Eclipse Technology Solutions, ecotel communication, Telus, and Vodafone Business, our expectations regarding our strategic acquisitions, such as Kindite, our ability to expand and deepen our global distribution network, our market opportunity, our expectations around market trends, including digital transformation and hybrid workforce adoption, our expectations with respect to awareness and demand for cloud communications solutions, our ability to address business communication needs in the new work from anywhere environment, and the effects of the COVID-19 pandemic. Forward-looking statements are subject to known and unknown risks and uncertainties, and are based on assumptions that may prove to be incorrect, which could cause actual results to differ materially from those expected or implied by the forward-looking statements. Among the important factors that could cause actual results to differ materially from those in any forward-looking statements are: the future effects of the COVID-19 pandemic; our ability to realize the anticipated benefits of our strategic relationships, such as our relationships with Avaya, Atos, AT&T, Alcatel-Lucent Enterprise, BT, Eclipse Technology Solutions, ecotel communication, Telus, and Vodafone Business; our expectations regarding our strategic acquisitions, such as Kindite; our ability to grow at our expected rate of growth; our ability to add and retain larger and enterprise customers and enter new geographies and markets; our ability to continue to release, and gain customer acceptance of, new and improved versions of our services, including RingCentral Office® and Glip; our ability to compete successfully against existing and new competitors; our ability to enter into and maintain relationships with resellers, carriers, channel partners and strategic partners; our ability to successfully and timely integrate, and realize the benefits of any significant acquisition we may make; our ability to manage our expenses and growth; and general market, political, economic, and business conditions, as well as those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission, and in other filings we make with the Securities and Exchange Commission from time to time.
All forward-looking statements in this press release are based on information available to RingCentral as of the date hereof, and we undertake no obligation to update these forward-looking statements, to review or confirm analysts’ expectations, or to provide interim reports or updates on the progress of the current financial quarter.
Non-GAAP Financial Measures
Our reported financial results and financial outlook include certain Non-GAAP financial measures, including Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP income (loss) from operations, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP net cash provided by (used in) operating activities, and Non-GAAP free cash flow. Non-GAAP subscriptions gross margin is defined as Non-GAAP subscriptions gross profit divided by GAAP subscriptions revenue. Non-GAAP other gross margin is defined as Non-GAAP other gross profit divided by GAAP other revenue. Non-GAAP income (loss) from operations is defined as GAAP income (loss) from operations excluding share-based compensation which includes related employer payroll taxes, amortization of acquisition intangibles, and acquisition related matters including transaction costs, integration costs, restructuring costs, and acquisition-related retention payments, as well as changes in the fair value of contingent consideration obligations. Non-GAAP operating margin is defined as Non-GAAP income (loss) from operations divided by total GAAP revenue. Non-GAAP net income (loss) is defined as GAAP net income (loss) excluding share-based compensation which includes related employer payroll taxes, intercompany remeasurement gains or losses, acquisition related matters, amortization of acquisition intangibles, non-cash interest expense associated with amortization of debt discount and issuance costs related to our convertible senior notes, gain (loss) associated with investments and strategic partnerships, loss on early extinguishment of debt, tax benefit from release of valuation allowance, and the related income tax effect of these adjustments.
Non-GAAP diluted shares outstanding include the impact on shares used in per share calculations of our outstanding capped call transactions. Our outstanding capped call transactions are anti-dilutive in GAAP earnings per share but are expected to mitigate the dilutive effect of our convertible notes and therefore are included in the calculations of non-GAAP diluted shares outstanding.
Non-GAAP net cash provided by (used in) operating activities is defined as net cash provided by (used in) operating activities plus cash paid for repayments of convertible senior notes attributable to debt discount and cash paid for strategic partnerships. Non-GAAP free cash flow is defined as Non-GAAP net cash provided by (used in) operating activities reduced by purchases of property and equipment and capitalized internal-use software. We believe information regarding free cash flow provides useful information to investors in understanding and evaluating the strength of liquidity and available cash.
We have included Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP net cash provided by (used in) operating activities, and Non-GAAP free cash flow in this press release because they are key measures used by us to understand and evaluate our operating performance and trends, to prepare and approve our annual budget, and to develop short and long-term operational plans. In particular, the exclusion of certain expenses and cash flow items in calculating Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP net cash provided by (used in) operating activities, and Non-GAAP free cash flow provide useful measure for period-to-period comparisons of our business.
Although Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP net cash provided by (used in) operating activities, and Non-GAAP free cash flow are frequently used by investors in their evaluations of companies, these non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Because of these limitations, these non-GAAP financial measures should be considered alongside other financial performance measures.
Reconciliations of the Company’s non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included in this press release.
Other Measures
Our reported results also include our annualized exit monthly recurring subscriptions, RingCentral Office® 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 Office annualized exit monthly recurring subscriptions in the same manner as we calculate our annualized exit monthly revenue subscriptions, except that only customer subscriptions generated from channel partners are included. We calculate direct and partners Office annualized exit monthly recurring subscriptions in the same manner as we calculate our annualized exit monthly revenue subscriptions, except that only customer subscriptions not generated from channel partners are included. We define dollar net change as the quotient of (i) the difference of our monthly recurring subscriptions at the end of a period minus our monthly recurring subscriptions at the beginning of a period minus our monthly recurring subscriptions at the end of the period from new customers we added during the period, (ii) all divided by the number of months in the period. We define our average monthly recurring subscriptions as the average of the monthly recurring subscriptions at the beginning and end of the measurement period.
TABLE 1
RINGCENTRAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
March 31, 2021
December 31, 2020
Assets
Current assets
Cash and cash equivalents
$
463,067
$
639,853
Accounts receivable, net
166,852
176,034
Deferred and prepaid sales commission costs
73,578
63,726
Prepaid expenses and other current assets
40,206
46,516
Total current assets
743,703
926,129
Property and equipment, net
145,598
142,208
Operating lease right-of-use assets
48,938
51,115
Long-term investments
270,697
213,176
Deferred and prepaid sales commission costs, non-current
680,988
667,779
Goodwill
56,295
57,313
Acquired intangibles, net
115,040
118,313
Other assets
8,453
8,564
Total assets
$
2,069,712
$
2,184,597
Liabilities, Temporary Equity, and Stockholders’ Equity
Current liabilities
Accounts payable
$
44,719
$
54,043
Accrued liabilities
216,343
210,654
Current portion of convertible senior notes, net
37,051
31,148
Deferred revenue
146,245
142,223
Total current liabilities
444,358
438,068
Convertible senior notes, net
1,350,792
1,375,320
Operating lease liabilities
36,070
38,722
Other long-term liabilities
21,299
20,241
Total liabilities
1,852,519
1,872,351
Temporary equity
4,125
3,787
Stockholders’ equity
Common stock
9
9
Additional paid-in capital
582,157
673,950
Accumulated other comprehensive income
3,394
6,806
Accumulated deficit
(372,492
)
(372,306
)
Total stockholders’ equity
$
213,068
$
308,459
Total liabilities, temporary equity and stockholders’ equity
$
2,069,712
$
2,184,597
TABLE 2
RINGCENTRAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
Three Months Ended March 31,
2021
2020
Revenues
Subscriptions
$
325,223
$
243,104
Other
27,133
24,408
Total revenues
352,356
267,512
Cost of revenues
Subscriptions
73,247
52,433
Other
23,734
21,011
Total cost of revenues
96,981
73,444
Gross profit
255,375
194,068
Operating expenses
Research and development
62,676
40,910
Sales and marketing
179,249
131,312
General and administrative
55,461
47,336
Total operating expenses
297,386
219,558
Loss from operations
(42,011
)
(25,490
)
Other income (expense), net
Interest expense
(16,278
)
(7,502
)
Other income (expense)
58,543
(27,517
)
Other income (expense), net
42,265
(35,019
)
Gain (loss) before income taxes
254
(60,509
)
Provision for income taxes
440
212
Net loss
$
(186
)
$
(60,721
)
Net loss per common share
Basic and diluted
$
—
$
(0.70
)
Weighted-average number of shares used in computing net loss per share
Basic and diluted
90,634
87,339
TABLE 3
RINGCENTRAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Three Months Ended March 31,
2021
2020
Cash flows from operating activities
Net loss
$
(186
)
$
(60,721
)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
24,577
16,548
Share-based compensation
54,962
36,589
Amortization of deferred and prepaid sales commission costs
15,644
9,809
Amortization of debt discount and issuance costs
16,200
7,452
Loss on early extinguishment of debt
658
7,250
Repayment of convertible senior notes attributable to debt discount
(4,712
)
(13,894
)
Reduction of operating lease right-of-use assets
4,322
3,843
Unrealized (gain) loss on investments
(57,521
)
22,246
Foreign currency remeasurement loss
194
964
Provision for bad debt
1,485
1,492
Deferred income taxes
(274
)
(33
)
Other
153
45
Changes in assets and liabilities:
Accounts receivable
7,697
(6,935
)
Deferred and prepaid sales commission costs
(36,502
)
(22,544
)
Prepaid expenses and other current assets
6,310
(8,958
)
Other assets
818
131
Accounts payable
(8,109
)
888
Accrued liabilities
9,063
19,948
Deferred revenue
4,022
2,806
Operating lease liabilities
(4,382
)
(3,783
)
Other liabilities
2,536
(74
)
Net cash provided by operating activities
36,955
13,069
Cash flows from investing activities
Purchases of property and equipment
(8,721
)
(6,861
)
Capitalized internal-use software
(9,757
)
(7,389
)
Cash paid for acquisition of intangible assets
(8,358
)
—
Net cash used in investing activities
(26,836
)
(14,250
)
Cash flows from financing activities
Proceeds from issuance of convertible senior notes, net of issuance costs
—
986,508
Payments for 2023 convertible senior notes partial repurchase
(178,911
)
(495,704
)
Payments for capped calls and transaction costs
—
(60,900
)
Proceeds from issuance of stock in connection with stock plans
1,192
4,802
Payments for taxes related to net share settlement of equity awards
(4,900
)
(10,351
)
Payment for contingent consideration for business acquisition
(3,600
)
(3,548
)
Repayment of financing obligations
(277
)
(511
)
Net cash (used in) provided by financing activities
(186,496
)
420,296
Effect of exchange rate changes
(409
)
(657
)
Net (decrease) increase in cash, cash equivalents, and restricted cash
(176,786
)
418,458
Cash, cash equivalents, and restricted cash
Beginning of period
639,853
343,606
End of period
$
463,067
$
762,064
TABLE 4
RINGCENTRAL, INC.
RECONCILIATION OF OPERATING INCOME (LOSS)
GAAP MEASURES TO NON-GAAP MEASURES
(Unaudited, in thousands)
Three Months Ended March 31,
2021
2020
Revenues
Subscriptions
$
325,223
$
243,104
Other
27,133
24,408
Total revenues
352,356
267,512
Cost of revenues reconciliation
GAAP Subscriptions cost of revenues
73,247
52,433
Share-based compensation
(3,978
)
(2,076
)
Amortization of acquisition intangibles
(10,618
)
(7,701
)
Acquisition related matters
—
—
Non-GAAP Subscriptions cost of revenues
58,651
42,656
GAAP Other cost of revenues
23,734
21,011
Share-based compensation
(1,656
)
(650
)
Non-GAAP Other cost of revenues
22,078
20,361
Gross profit and gross margin reconciliation
Non-GAAP Subscriptions
82.0
%
82.5
%
Non-GAAP Other
18.6
%
16.6
%
Non-GAAP Gross profit
77.1
%
76.4
%
Operating expenses reconciliation
GAAP Research and development
62,676
40,910
Share-based compensation
(14,649
)
(7,467
)
Acquisition related matters
—
—
Non-GAAP Research and development
48,027
33,443
As a % of total revenues non-GAAP
13.6
%
12.5
%
GAAP Sales and marketing
179,249
131,312
Share-based compensation
(24,767
)
(11,291
)
Amortization of acquisition intangibles
(970
)
(931
)
Acquisition related matters
—
4
Non-GAAP Sales and marketing
153,512
119,094
As a % of total revenues non-GAAP
43.6
%
44.5
%
GAAP General and administrative
55,461
47,336
Share-based compensation
(17,443
)
(15,105
)
Acquisition related matters
(438
)
(1,863
)
Non-GAAP General and administrative
37,580
30,368
As a % of total revenues non-GAAP
10.7
%
11.4
%
Income (loss) from operations reconciliation
GAAP loss from operations
(42,011
)
(25,490
)
Share-based compensation
62,493
36,589
Amortization of acquisition intangibles
11,588
8,632
Acquisition related matters
438
1,859
Non-GAAP Income from operations
32,508
21,590
Non-GAAP Operating margin
9.2
%
8.1
%
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 March 31,
2021
2020
Net income (loss) reconciliation
GAAP net loss
$
(186
)
$
(60,721
)
Share-based compensation
62,493
36,589
Amortization of acquisition intangibles
11,588
8,632
Acquisition related matters
438
1,859
Amortization of debt discount and issuance costs
16,200
7,452
Loss (gain) associated with investments and strategic partnerships
(59,597
)
20,148
Loss on early extinguishment of debt
658
7,250
Intercompany remeasurement loss
735
898
Income tax expense effects
(6,933
)
(4,809
)
Non-GAAP net income
$
25,396
$
17,298
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) income per share
90,634
87,339
Effect of dilutive securities
2,349
4,927
Non-GAAP weighted average shares used in computing non-GAAP diluted net income per share
92,983
92,266
Diluted net income (loss) per share
GAAP net loss per share
$
—
$
(0.70
)
Non-GAAP net income per share
$
0.27
$
0.19
TABLE 6
RINGCENTRAL, INC.
RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
GAAP MEASURES TO NON-GAAP FREE CASH FLOW MEASURES
(Unaudited, in thousands)
Three Months Ended March 31,
2021
2020
Net cash provided by operating activities
$
36,955
$
13,069
Repayment of convertible senior notes attributable to debt discount
4,712
13,894
Non-GAAP net cash provided by operating activities
41,667
26,963
Purchases of property and equipment
(8,721
)
(6,861
)
Capitalized internal-use software
(9,757
)
(7,389
)
Non-GAAP free cash flow
$
23,189
$
12,713
TABLE 7
RINGCENTRAL, INC.
RECONCILIATION OF FORECASTED OPERATING MARGIN
GAAP MEASURES TO NON-GAAP MEASURES
(Unaudited, in millions)
Q2 2021
FY 2021
Low Range
High Range
Low Range
High Range
GAAP revenues
356.5
359.5
1,500.0
1,510.0
GAAP loss from operations
(82.8
)
(77.6
)
(319.4
)
(303.9
)
GAAP operating margin
(23.2
%)
(21.6
%)
(21.3
%)
(20.1
%)
Share-based compensation
104.0
99.0
420.0
410.0
Amortization of acquisition intangibles
12.0
12.0
49.0
46.0
Acquisition related matters
—
—
0.4
0.4
Non-GAAP income from operations
33.2
33.4
150.0
152.5
Non-GAAP operating margin
9.3
%
9.3
%
10.0
%
10.1
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20210504006255/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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