Form 8-K RingCentral Inc For: Feb 03

February 3, 2015 4:16 PM

�

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

�

FORM 8-K

�

CURRENT REPORT

Pursuant to Section�13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February�3, 2015

�

RINGCENTRAL, INC.

(Exact name of registrant as specified in its charter)

�

Delaware

�

001-36089

�

94-3322844

(State or other jurisdiction

of incorporation)

�

(Commission

File Number)

�

(IRS Employer

Identification No.)

1400 Fashion Island Boulevard, Suite 700, San Mateo, CA 94404

(Address of principal executive offices) (Zip Code)

Registrant�s telephone number, including area code: (650)�472-4100

(Former name or former address, if changed since last report)

�

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

�

�	Written communications pursuant to Rule�425 under the Securities Act (17 CFR 230.425)

�

�	Soliciting material pursuant to Rule�14a-12 under the Exchange Act (17 CFR 240.14a-12)

�

�	Pre-commencement communications pursuant to Rule�14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

�

�	Pre-commencement communications pursuant to Rule�13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

�

Item�2.02. Results of Operations and Financial Condition.

The information in this Current Report is being furnished and shall not be deemed �filed� for purposes of Section�18 of the Securities Exchange Act of 1934 (the �Exchange Act�), or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On February�3, 2015, the Registrant issued a press release regarding its financial results for its fiscal quarter ended December�31, 2014. The full text of the Registrant�s press release is furnished herewith as Exhibit 99.1.

Item�9.01. Financial Statements and Exhibits.

(d) Exhibits

�


Exhibit	��	Description

99.1	��	Press Release dated February 3, 2015.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: February�3, 2015

�


RINGCENTRAL, INC.

By:		/s/ Clyde Hosein
Name:��		Clyde Hosein
Title:		Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

�


Exhibit No.	��	Description

99.1	��	Press Release dated February 3, 2015.

Exhibit 99.1

�

LOGO

RingCentral Announces Revenue Increase of 37% for Fourth Quarter 2014

RingCentral Office^� Annualized Exit Monthly Recurring Subscriptions up 52%

Total Year 2014 Revenue up 37%

San Mateo, Calif. � February�3, 2015 � RingCentral, Inc. (NYSE: RNG), a leading provider of�cloud business communications solutions, today announced financial results for the fourth quarter and full year ended December�31, 2014.

Fourth Quarter Highlights:

�

Revenue increased 37% year-over-year to $61.9 million.

�

Total annualized exit monthly recurring subscriptions were up 37% year-over-year to $237.5 million.

�

RingCentral Office^� annualized exit monthly recurring subscriptions were up 52% year-over-year to $170.5 million.

�

Net monthly subscription dollar retention was over 99%.

�We had a very successful year in 2014, capped by a fourth quarter of industry leading revenue growth and meaningful margin improvements,� said Vlad Shmunis, RingCentral�s Chairman and CEO. �Our strategy to expand up market and acquire larger customers continues to build momentum, and is contributing meaningfully to our financial results. We believe that our differentiated, cloud-based business communications platform is clearly resonating with customers and positions us well for success in 2015 and beyond.�

Financial Results of the Fourth Quarter 2014:

�

Revenue: Total revenue was $61.9 million for the fourth quarter of 2014, up 37% from the fourth quarter of 2013. Service revenue was $56.4 million for the fourth quarter of 2014, up 37% from the fourth quarter of 2013.

�

Net Income (Loss): GAAP net income (loss) per diluted share was ($0.15) for the fourth quarter of 2014 compared with ($0.22) for the fourth quarter of 2013. Non-GAAP net income (loss) per diluted share was ($0.09) for the fourth quarter of 2014, compared with ($0.14) per diluted share for the fourth quarter of 2013.

�

Balance Sheet: Total cash and short-term investments at the end of the fourth quarter of 2014 was $141.7 million, compared with $149.4 million at the end of the third quarter of 2014.

Financial Results of the Full Year 2014:

�

Revenue: Total revenue was $219.9 million for the full year of 2014, up 37% from the full year of 2013. Service revenue was $200.1 million for the full year of 2014, up 37% from the full year of 2013.

�

Net Income (Loss): GAAP net income (loss) per diluted share was ($0.72) for the full year of 2014 compared with ($1.39) for the full year of 2013. Non-GAAP net income (loss) per diluted share was ($0.49) for the full year of 2014, compared with ($1.01) per diluted share for the full year of 2013.

�

Balance Sheet: Total cash and short-term investments at the end of 2014 was $141.7 million, up from $116.4 million at the end of 2013.

Fourth Quarter 2014 and Recent Business Highlights:

�

Announced that RingCentral Office^� is now integrated with Google for Work. Users can click-to-call, send and receive SMS text messages, host web meetings, and video and audio conferences with up to 1,000 people � all within the Google for Work environment.

�

Released a fully HIPAA-compliant RingCentral Office^� solution to better serve the large and growing healthcare industry.

�

Integrated RingCentral Office^� with Zendesk, a leading cloud-based customer service software provider.

Conference Call Details:

�

What: RingCentral financial results for the fourth quarter and full year of 2014 and outlook for the first quarter and full year of 2015.

�

When: Tuesday, February�3, 2015 at 2PM PT (5PM ET).

�

Dial in: To access the call in the United States, please (877)�705-6003, and for international callers dial (201)�493-6725. Callers may provide confirmation number 13598805 to access the call more quickly, and 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: A replay of the call will be available via telephone for seven days, beginning two hours after the call. To listen to the telephone replay in the U.S., please dial (877)�870-5176 from the United States or (858)�384-5517 internationally with recording access code 13598805.

About RingCentral

RingCentral, Inc. (NYSE: RNG) is a leading provider of cloud-based business communications solutions. Easier to manage and more flexible than on-premise communications phone systems, RingCentral�s cloud solution meets the needs of modern distributed and mobile workforces, while eliminating the expense and complications of on-premise traditional hardware-based systems and software. RingCentral is headquartered in San Mateo, California.

Forward-Looking Statements

This press release contains �forward-looking statements�, including statements regarding our strategy to expand up market and acquire larger customers and our anticipated future financial results. 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 grow at our expected rate of growth; our ability to add and retain larger customers and enter new geographies and markets; our ability to continue to release, and gain customer acceptance of, new and improved versions of our services; our ability to compete successfully against existing and new competitors; our ability to enter into and maintain relationships with carriers and other resellers; our ability to 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, 2014, 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 results include certain Non-GAAP financial measures, including Non-GAAP operating income (loss) and Non-GAAP net income (loss) per share. We define Non-GAAP operating income (loss) as operating income (loss) excluding share-based compensation, legal settlements and other one-time items. We define Non-GAAP net income (loss) per share as net income (loss) per share assuming all preferred stock converted into common stock at the later of the start of the period or the date of issuance.

We have included Non-GAAP operating income (loss) and Non-GAAP net income (loss) per share in this press release because they are key measures used by us to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short and long-term operational plans. In particular, the exclusion of certain expenses in calculating Non-GAAP operating income (loss) and Non-GAAP net income (loss) per share can provide a useful measure for period-to-period comparisons of our core business.

Although Non-GAAP operating income (loss) and Non-GAAP net income (loss) per share are frequently used by investors in their evaluations of companies, these non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Because of these limitations, these non-GAAP financial measures should be considered alongside other financial performance measures.

We have not reconciled Non-GAAP operating income (loss) to operating income (loss) guidance or Non-GAAP net income (loss) per share to net income (loss) per share guidance because we do not provide guidance for share-based compensation expense, provision for income taxes, interest income, interest expense, and other income and expenses, which are reconciling items between Non-GAAP operating income (loss) to operating income (loss) guidance or Non-GAAP net income (loss) per share to net income (loss) per share. As items that impact net income (loss) are out of our control and/or cannot be reasonably predicted, we are unable to provide such guidance. Accordingly, reconciliation to net income (loss) is not available without unreasonable effort. For a reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see the reconciliation tables included in this press release.

Our reported results also include our total annualized exit monthly recurring subscriptions, RingCentral Office annualized exit monthly recurring subscriptions, and net monthly subscription dollar retention. We define our total annualized exit monthly recurring subscriptions as our total monthly recurring subscriptions multiplied by 12. Our total monthly recurring subscriptions equals the monthly value of all customer subscriptions in effect at the end of a given month. We believe this metric is a leading indicator of our anticipated services revenues. We calculate our RingCentral Office annualized exit monthly recurring subscriptions in the same manner as we calculate our total annualized exit monthly recurring subscriptions, except that only customer subscriptions from RingCentral Office customers are included when determining monthly recurring subscriptions for the purposes of calculating this key business metric. 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.

Investor Relations Contact:

Mitesh Dhruv, RingCentral

Greg Kleiner, ICR for RingCentral

(650) 581-9443

[email protected]

Media Contact:

Jennifer Caukin, RingCentral

650-561-6348

[email protected]

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

�


�	��	December�31, 2014		�	�	December�31, 2013		�
Assets	��				�
Current assets:	��				�
Cash and cash equivalents	��	$	113,182	�	�	$	116,378	�
Short-term investments	��	�	28,479	�	�	�	��	�
Accounts receivable, net	��	�	7,651	�	�	�	3,045	�
Inventory	��	�	1,710	�	�	�	2,111	�
Prepaid expenses and other current assets	��	�	8,767	�	�	�	5,214	�
	��	�	�	�	�	�	�	�
Total current assets		�	159,789	�		�	126,748	�
Property and equipment, net		�	25,527	�		�	16,660	�
Other assets		�	3,021	�		�	1,777	�
	��	�	�	�	�	�	�	�
Total assets		$	188,337	�		$	145,185	�
	��	�	�	�	�	�	�	�
Liabilities and Stockholders� Equity
Current liabilities:
Accounts payable		$	4,181	�		$	4,414	�
Accrued liabilities		�	29,236	�		�	20,559	�
Current portion of capital lease obligation		�	509	�		�	347	�
Current portion of long-term debt		�	16,764	�		�	9,871	�
Deferred revenue		�	25,586	�		�	16,552	�
	��	�	�	�	�	�	�	�
Total current liabilities		�	76,276	�		�	51,743	�
Long-term debt		�	7,813	�		�	24,356	�
Sales tax liability		�	3,953	�		�	3,988	�
Capital lease obligation		�	535	�		�	247	�
Other long-term liabilities		�	3,255	�		�	1,336	�
	��	�	�	�	�	�	�	�
Total liabilities		�	91,832	�		�	81,670	�

Stockholders� equity:
Common stock		�	7	�		�	6	�
Additional paid-in capital		�	274,844	�		�	193,574	�
Accumulated other comprehensive loss		�	(251	)		�	(310	)
Accumulated deficit		�	(178,095	)		�	(129,755	)
	��	�	�	�	�	�	�	�
Total stockholders� equity		�	96,505	�		�	63,515	�
	��	�	�	�	�	�	�	�
Total liabilities and stockholders� equity		$	188,337	�		$	145,185	�
	��	�	�	�	�	�	�	�

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

�

��

Three�Months�Ended
December�31,

�

Year�Ended
December�31,

�

��

2014

�

2013

�

2014

�

2013

�

Revenues:

��

�

Services

��

56,430

�

41,327

�

200,098

�

145,995

�

Product

��

�

5,464

�

4,016

�

19,789

�

14,510

�

��

�

Total revenues

�

61,894

�

45,343

�

219,887

�

160,505

�

��

�

Cost of revenues:

Services

�

15,368

�

13,051

�

58,673

�

47,230

�

Product

�

4,554

�

4,100

�

18,100

�

14,289

�

��

�

Total cost of revenues

�

19,922

�

17,151

�

76,773

�

61,519

�

��

�

Gross profit

�

41,972

�

28,192

�

143,114

�

98,986

�

Operating expenses:

Research and development

�

12,104

�

9,139

�

44,582

�

33,399

�

Sales and marketing

�

28,485

�

19,983

�

104,827

�

72,336

�

General and administrative

�

10,726

�

9,425

�

38,910

�

34,284

�

��

�

Total operating expenses

�

51,315

�

38,547

�

188,319

�

140,019

�

��

�

Loss from operations

�

(9,343

)

�

(10,355

)

�

(45,205

)

�

(41,033

)

Other income (expense), net

�

(864

)

�

(2,990

)

�

(3,038

)

�

(5,110

)

��

�

Loss before provision (benefit) for income taxes

�

(10,207

)

�

(13,345

)

�

(48,243

)

�

(46,143

)

Provision (benefit) for income taxes

�

(87

)

�

(45

)

��

�

Net loss

(10,120

)

(13,365

)

(48,340

)

(46,098

)

��

�

Net loss per common share:

Basic and diluted

0.15

)

0.22

)

0.72

)

1.39

)�

��

�

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

Basic and diluted

�

68,318

�

62,098

�

66,818

�

33,155

�

��

�

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

�


�	��	Year Ended December�31,						�
�	��	2014		�	�	2013		�
Cash flows from operating activities:	��				�
Net loss	��	$	(48,340	)	�	$	(46,098	)
Adjustments to reconcile net loss to net cash used in operating activities:	��				�
Depreciation and amortization	��	�	10,378	�	�	�	8,980	�
Share-based compensation	��	�	15,516	�	�	�	7,540	�
Non-cash interest and other expense related to debt	��	�	259	�	�	�	2,014	�
Loss on disposal of assets	��	�	100	�	�	�	338	�
Deferred income tax	��	�	(32	)	�	�	(16	)
Changes in assets and liabilities:	��				�
Accounts receivable	��	�	(4,606	)	�	�	(355	)
Inventory	��	�	401	�	�	�	(1,279	)�
Prepaid expenses and other current assets	��	�	(3,553	)	�	�	(1,873	)
Other assets	��	�	(1,015	)	�	�	(328	)
Accounts payable	��	�	(510	)	�	�	(453	)
Accrued liabilities	��	�	9,054	�	�	�	1,370	�
Deferred revenue	��	�	9,034	�	�	�	5,262	�
Other liabilities	��	�	1,884	�	�	�	1,127	�
	��	�	�	�	�	�	�	�
Net cash used in operating activities		�	(11,430	)		�	(23,771	)
	��	�	�	�	�	�	�	�
Cash flows from investing activities:
Purchases of property and equipment		�	(17,965	)		�	(10,789	)
Purchases of available-for-sale securities		�	(28,696	)		�	��	�
Restricted investments		�	��	�		�	(130	)
	��	�	�	�	�	�	�	�
Net cash used in investing activities		�	(46,661	)		�	(10,919	)
	��	�	�	�	�	�	�	�
Cash flows from financing activities:
Net proceeds from public offerings of common stock		�	57,167	�		�	103,309	�
Net proceeds from debt agreements		�	��	�		�	37,857	�
Repayment of debt		�	(9,909	)		�	(26,309	)
Repayment of capital lease obligations		�	(698	)		�	(422	)
Proceeds from issuance of preferred stock warrants		�	��	�		�	1,625	�
Payment of offering costs		�	(1,219	)		�	(3,720	)
Proceeds from issuance of stock in connection with stock plans		�	9,446	�		�	893	�
	��	�	�	�	�	�	�	�
Net cash provided by financing activities		�	54,787	�		�	113,233	�
	��	�	�	�	�	�	�	�
Effect of exchange rate changes on cash and cash equivalents		�	108	�		�	(29	)
Net increase (decrease) in cash and cash equivalents		�	(3,196	)		�	78,514	�
Cash and cash equivalents:
Beginning of period		�	116,378	�		�	37,864	�
	��	�	�	�	�	�	�	�
End of period		$	113,182	�		$	116,378	�
	��	�	�	�	�	�	�	�

RINGCENTRAL, INC.

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

(In thousands, except per share data)

(Unaudited)

�

��

Three�Months
Ended�December
31, 2014

�

Three�Months
Ended�December
31, 2013

�

Year Ended
December�31,�2014

�

Year Ended
December�31,
2013

�

Revenues:

��

�

Services

��

56,430

��

�

41,327

��

�

200,098

��

�

145,995

��

Product

��

�

5,464

��

�

4,016

��

�

19,789

��

�

14,510

��

�

Total Revenues

�

61,894

��

�

45,343

��

�

219,887

��

�

160,505

��

�

Cost of Revenues reconciliation:

GAAP Services cost of revenues

�

15,368

��

�

13,051

��

�

58,673

��

�

47,230

��

Share-based compensation

�

(320

)�

�

(242

)�

�

(1,294

)�

�

(539

)�

��

�

Non-GAAP services cost of revenues

�

15,048

��

�

12,809

��

�

57,379

��

�

46,691

��

�

GAAP Product cost of revenues

�

4,554

��

�

4,100

��

�

18,100

��

�

14,289

��

�

Gross margin reconciliation:

Non-GAAP Services

�

73.3

%�

�

69.0

%�

�

71.3

%�

�

68.0

%�

Non-GAAP Product

�

16.7

%�

�

(2.1

%)�

�

8.5

%�

�

1.5

%�

Non-GAAP Gross margin

�

68.3

%�

�

62.7

%�

�

65.7

%�

�

62.0

%�

Operating expenses reconciliation:

GAAP Research and development

�

12,104

��

�

9,139

��

�

44,582

��

�

33,399

��

Share-based compensation

�

(917

)�

�

(611

)�

�

(3,343

)�

�

(1,495

)�

��

�

Non-GAAP research and development

�

11,187

��

�

8,528

��

�

41,239

��

�

31,904

��

�

As a % of total revenues non-GAAP

�

18.1

%�

�

18.8

%�

�

18.8

%�

�

19.9

%�

GAAP Sales and marketing

�

28,485

��

�

19,983

��

�

104,827

��

�

72,336

��

Share-based compensation

�

(1,599

)�

�

(579

)�

�

(5,260

)�

�

(1,313

)�

��

�

Non-GAAP sales and marketing

�

26,886

��

�

19,404

��

�

99,567

��

�

71,023

��

�

As a % of total revenues non-GAAP

�

43.4

%�

�

42.8

%�

�

45.3

%�

�

44.2

%�

GAAP General and administrative

�

10,726

��

�

9,425

��

�

38,910

��

�

34,284

��

Share-based compensation

�

(1,374

)�

�

(1,561

)�

�

(5,619

)�

�

(4,193

)�

Legal related matters

�

��

�

��

�

��

�

(3,097

)�

��

�

Non-GAAP general and administrative

�

9,352

��

�

7,864

��

�

33,291

��

�

26,994

��

As a % of total revenues non-GAAP

�

15.1

%�

�

17.3

%�

�

15.1

%�

�

16.8

%�

Loss from operations reconciliation:

GAAP loss from operations

�

(9,343

)�

�

(10,355

)�

�

(45,205

)�

�

(41,033

)�

Share-based compensation

�

4,210

��

�

2,993

��

�

15,516

��

�

7,540

��

Legal related matters

�

��

�

��

�

��

�

3,097

��

�

Non-GAAP loss from Operations

�

(5,133

)�

�

(7,362

)�

�

(29,689

)�

�

(30,396

)�

��

�

Net loss reconciliation:

GAAP Net loss

�

(10,120

)�

�

(13,365

)�

�

(48,340

)�

�

(46,098

)�

Share-based compensation

�

4,210

��

�

2,993

��

�

15,516

��

�

7,540

��

Legal related matters

�

��

�

��

�

��

�

3,097

��

Debt refinance

�

1,833

��

�

1,833

��

�

Non-GAAP Net loss

(5,910

)�

(8,539

)�

(32,824

)�

(33,628

)�

��

�

Basic and diluted net loss per share

GAAP

(0.15

)�

(0.22

)�

(0.72

)�

(1.39

)�

Non-GAAP

(0.09

)�

(0.14

)�

(0.49

)�

(1.01

)�

Shares used to compute basic and diluted GAAP and Non-GAAP net loss per share

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62,098

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66,818

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33,155

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Form 8-K RingCentral Inc For: Feb 03

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