Form 8-K RingCentral Inc For: May 06

May 6, 2019 4:23 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): May 6, 2019

 

 

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.)

20 Davis Drive, Belmont, CA 94002

(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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on

which registered

Class A Common Stock, par value $0.0001   RNG   New York Stock Exchange

 

 

 


Item 2.02. Results of Operations and Financial Condition.

The information in Item 2.02 of 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 May 6, 2019, RingCentral, Inc. (the “Company”) issued a press release regarding its financial results for its fiscal quarter ended March 31, 2019. The full text of the Company’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 May 6, 2019.


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: May 6, 2019

 

RINGCENTRAL, INC.

By:

 

    /s/ Mitesh Dhruv

Name:

 

Mitesh Dhruv

Title:

 

Chief Financial Officer

Exhibit 99.1

 

LOGO

RingCentral Announces First Quarter 2019 Results

Total Revenue up 34%

Enterprise ARR up 95%

Channel ARR surpasses $200 million

Belmont, Calif. – May 6, 2019 – RingCentral, Inc. (NYSE: RNG), a leading provider of global enterprise cloud communications, collaboration, and contact center solutions, today announced financial results for the first quarter ended March 31, 2019.

First Quarter Financial Highlights

 

   

Total revenue increased 34% year over year to $201 million.

   

Software subscriptions revenue increased 33% year over year to $183 million.

   

Annualized Exit Monthly Recurring Subscriptions (ARR) increased 32% year over year to $777 million.

   

RingCentral Office® ARR increased 36% year over year to $694 million.

   

Mid-market and Enterprise ARR increased 70% year over year to $346 million.

   

Enterprise ARR increased 95% year over year to $200 million.

   

Channel ARR increased 75% year over year to $203 million.

“We are pleased with the first quarter. Enterprise delivered solid growth, with continued contributions from channel and international, including a 45,000 seat win with a major UK retailer,” said Vlad Shmunis, RingCentral’s founder, chairman and CEO. “We continue to expand our industry leading cloud communications suite, broaden our open platform developer network, and extend our global delivery footprint. We believe we are well-positioned to satisfy the demands of our enterprise customers to replace their aging on-premises PBX infrastructure with a fully-featured cloud-based unified communications solution.”

Financial Results for the First Quarter 2019

 

   

Revenue: Total revenue was $201 million for the first quarter of 2019, up from $150 million in the first quarter of 2018, representing 34% growth.

 

   

Operating Profit (Loss): GAAP operating loss was $7.5 million, compared to an operating loss of $1.4 million in the same period last year, primarily driven by higher stock-based compensation and acquisition related expenses. Non-GAAP operating profit was $16.3 million, compared to a non-GAAP operating profit $13.0 million in the same period last year.

 

   

Net Income (Loss) Per Share: GAAP net loss per share was ($0.08), compared to ($0.03) in the same period last year, primarily driven by higher stock-based compensation, amortization of debt discount and issuance costs, and acquisition related expenses. Non-GAAP net income per diluted share was $0.17, compared to $0.16 per diluted share in the same period last year. The first quarter of 2019 reflected a 22.5% non-GAAP tax rate. There were no material cash taxes given our net operating loss carryforwards.


   

Balance Sheet: Total cash and cash equivalents at the end of the first quarter of 2019 was $549 million, which reflects approximately $28 million net cash payment for the acquisition of Connect First. This compares with $566 million at the end of the fourth quarter of 2018.

Recent Highlights

 

   

Introduced RingCentral Persist, a new solution that enables enterprise customers to maintain communications services in case of an internet failure at a customer’s location. RingCentral Persist adds additional resiliency to RingCentral’s existing high availability delivery infrastructure for the most demanding customer environments, including the state-of-the-art Chase Center sports and entertainment complex, the new home of the Golden State Warriors, scheduled to open in September 2019.

   

Announced the expansion of RingCentral’s open platform with RingCentral Embeddable. Developers now have the ability to easily integrate RingCentral’s communications capabilities into any web application with just a few lines of code to enhance custom workflows.

   

Announced the integration of RingCentral Engage, our new digital customer engagement platform, with Google Dialogflow. With this integration, RingCentral Engage digital customers can now leverage the machine learning and AI capabilities of Google Dialogflow. This enables them to deploy chatbot virtual agents to manage automated digital customer interactions.

   

Announced that CRN has given RingCentral a 5-Star rating in its 2019 Partner Program Guide. This annual guide identifies the strongest and most successful partner programs in the channel today, offered by the top technology suppliers for IT products and services. The 5-Star rating recognizes an elite subset of companies that offer solution providers the best partnering elements in their channel programs.

   

Announced that the Oakland A’s have named RingCentral as the team’s official business communications partner. The business-to-business partnership will integrate RingCentral’s technology into the A’s front office in combination with a marketing collaboration. Additionally, announced a multi-year strategic partnership with Detroit Pistons to deploy RingCentral Office and Contact Center in the Henry Ford Detroit Pistons Performance Center.

Financial Outlook

Full Year 2019 Guidance:

 

   

Raising total revenue range to $862 to $866 million, representing annual growth of 28% to 29%. This is up from our prior range of $847 to $859 million and annual growth of 26% to 28%.

   

Raising software subscriptions revenue range to $786 to $790 million, representing annual growth of 28% to 29%. This is up from our prior range of $775 to $785 million and annual growth of 26% to 28%.

   

GAAP operating margin between (4.4%) and (3.7%).

   

Non-GAAP operating margin between 9.0% and 9.3%.

   

Non-GAAP tax rate for 2019 assumed to be 22.5%, compared to 0% non-GAAP tax rate for 2018. No material cash taxes expected given net operating loss carryforwards.

   

Raising non-GAAP EPS range to $0.71 to $0.75 based on 88.5 million fully diluted shares. This is up from our prior range of $0.69 to $0.73.


   

Stock-based compensation range of $101 to $104 million, amortization of debt discount of $20 million, amortization of acquired intangibles of $9 million, and acquisition related matters of $2.5 million.

Second Quarter 2019 Guidance:

 

   

Total revenue range of $203.5 to $205.5 million, representing annual growth of 27% to 28%.

   

Software subscriptions revenue range of $185.5 to $187.5 million, representing annual growth of 27% to 28%.

   

GAAP operating margin range of (6.6%) to (5.8%).

   

Non-GAAP operating margin range of 8.3% to 8.5%.

   

Non-GAAP tax rate assumed to be 22.5%, compared to 0% non-GAAP tax rate in 2018. No material cash taxes expected given net operating loss carryforwards.

   

Non-GAAP EPS range of $0.15 to $0.17 based on 88 million fully diluted shares.

   

Stock-based compensation range of $27 to $28 million, amortization of debt discount of $5 million, and amortization of acquired intangibles of $2.3 million.

For a reconciliation of our forecasted non-GAAP operating margin, see “Reconciliation of Forecasted Operating Margin GAAP Measures to Non-GAAP Measures.” We have not reconciled our forecasted non-GAAP EPS to GAAP EPS because we do not provide guidance on it. We do not provide guidance on forecasted GAAP EPS because of the inherent uncertainty and complexity involved in forecasting the intercompany remeasurement gain (loss) and provision (benefit) from income taxes, which could be significant reconciling items between the non-GAAP and respective GAAP measures. The intercompany remeasurement gain (loss) is affected by the movement in various exchange rates relative to the U.S. Dollar, which is difficult to predict and subject to constant change. We do not provide guidance on forecasted GAAP tax rates as we do not forecast discrete tax items as they are difficult to predict. The provision (benefit) from income taxes, excluding discrete items, is expected to have an immaterial impact to our GAAP EPS. We utilized a projected long-term tax rate in our computation of the non-GAAP income tax provision. For fiscal 2019, we have determined the projected non-GAAP tax rate to be 22.5%. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort.

Conference Call Details:

 

   

What: RingCentral financial results for the first quarter of 2019 and outlook for the second quarter and full year of 2019.

   

When: Monday, May 6, 2019 at 2:00PM PT (5:00PM ET).

   

Dial-in: To access the call in the United States, please dial (877) 705-6003, and for international callers, dial (201) 493-6725. Callers are encouraged to dial into the call 10 to 15 minutes prior to the start to prevent any delay in joining.

   

Webcast: http://ir.ringcentral.com/ (live and replay).

   

Replay: Following the completion of the call through 11:59 PM ET on May 13, 2019, a telephone replay will be available by dialing (844) 512-2921 from the United States or (412) 317-6671 internationally with recording access code 13689769.


Investor Presentation Details

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

About RingCentral

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

©2019 RingCentral, Inc. All rights reserved. RingCentral, RingCentral Office, RingCentral Contact Center, RingCentral Persist, RingCentral Embeddable, RingCentral Engage, Connect First, Work as One, 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 expansion of our communications suite, the broadening of our open platform developer network, the extension of our global delivery footprint, our ability to satisfy the requirements of enterprises, and our market opportunity. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on assumptions that may prove to be incorrect, which could cause actual results to differ materially from those expected or implied by the forward-looking statements. Among the important factors that could cause actual results to differ materially from those in any forward-looking statements are: our ability to grow at our expected rate of growth; our ability to add and retain larger and enterprise customers and enter new geographies and markets; our ability to continue to release, and gain customer acceptance of, new and improved versions of our services; our ability to compete successfully against existing and new competitors; our ability to enter into and maintain relationships with carriers and other resellers; our ability to successfully and timely integrate, and realize the benefits of any significant acquisition we may make; our ability to manage our expenses and growth; and general market, political, economic, and business conditions, as well as those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission; and in other filings we make with the Securities and Exchange Commission from time to time.

All forward-looking statements in this press release are based on information available to RingCentral as of the date hereof, and we undertake no obligation to update these forward-looking statements, to review or confirm analysts’ expectations, or to provide interim reports or updates on the progress of the current financial quarter.

Non-GAAP Financial Measures

Our reported financial results and financial outlook include certain Non-GAAP financial measures, including Non-GAAP software subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP operating income (loss), Non-GAAP net income (loss) and Non-GAAP net income (loss) per diluted share. Non-GAAP software subscriptions gross margin is defined as Non-GAAP


subscriptions gross profit divided by GAAP subscriptions revenue. Non-GAAP other gross margin is defined as Non-GAAP other gross profit divided by GAAP other revenue. Non-GAAP operating income (loss) is defined as operating income (loss) excluding share-based compensation, amortization of acquisition intangibles, and acquisition related matters including transaction costs, integration costs, restructuring costs, and acquisition-related retention payments, as well as changes in the fair value of contingent consideration obligations. Non-GAAP operating margin is defined as Non-GAAP operating income (loss) divided by total GAAP revenue. Non-GAAP net income (loss) is defined as GAAP net income (loss) excluding share-based compensation, intercompany remeasurement gains or losses, acquisition related matters, amortization of acquisition intangibles, non-cash interest expense associated with amortization of debt discount and issuance costs related to our convertible senior notes, tax benefit from release of valuation allowance, and the related income tax effect of these adjustments.

Non-GAAP diluted shares outstanding include the impact on shares used in per share calculations of our outstanding capped call transactions. Our outstanding capped call transactions are anti-dilutive in GAAP earnings per share but are expected to mitigate the dilutive effect of our convertible notes and therefore are included in the calculations of non-GAAP diluted shares outstanding.

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

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

Reconciliations of the Company’s non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included in this press release.

Other Measures

Our reported results also include our annualized exit monthly recurring subscriptions, RingCentral Office® annualized exit monthly recurring subscriptions, mid-market and enterprise and enterprise annualized exit monthly recurring subscriptions, channel partner annualized exit monthly recurring subscriptions, and net monthly subscriptions dollar retention. We define our annualized exit monthly recurring subscriptions as our monthly recurring subscriptions multiplied by 12. Our monthly recurring subscriptions equal the monthly value of all customer recurring charges contracted at the end of a given month. We believe this metric is a leading indicator of our anticipated subscriptions revenue. We calculate our RingCentral Office® annualized exit monthly recurring subscriptions in the same manner as we calculate our annualized exit monthly recurring subscriptions, except that only customer subscriptions from RingCentral Office and RingCentral Contact Center 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 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 calculate channel 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.

Investor Relations Contact:

Ryan Goodman, RingCentral

(650) 918-5356

Ryan.Goodman@RingCentral.com

Media Contact:

Mariana Kosturos, RingCentral

(650) 562-6545

Mariana.Kosturos@ringcentral.com


TABLE 1

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

 

     March 31,
2019
    December 31,
2018
 

Assets

    

Current assets

    

Cash and cash equivalents

   $ 549,030     $ 566,329  

Accounts receivable, net

     100,706       94,375  

Deferred sales commission costs

     24,924       23,038  

Prepaid expenses and other current assets

     29,708       23,772  
  

 

 

   

 

 

 

Total current assets

     704,368       707,514  

Property and equipment, net

     74,203       70,205  

Operating lease right-of-use assets

     31,719       —    

Deferred sales commission costs, non-current

     59,098       55,735  

Goodwill

     55,373       31,238  

Acquired intangibles, net

     30,634       19,480  

Other assets

     10,307       10,154  
  

 

 

   

 

 

 

Total assets

   $ 965,702     $ 894,326  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Accounts payable

   $ 19,366     $ 10,145  

Accrued liabilities

     115,363       100,687  

Deferred revenue

     93,828       88,527  
  

 

 

   

 

 

 

Total current liabilities

     228,557       199,359  

Convertible senior notes, net

     371,534       366,552  

Operating lease liabilities

     23,693       —    

Other long-term liabilities

     10,694       10,806  
  

 

 

   

 

 

 

Total liabilities

     634,478       576,717  

Stockholders’ equity:

    

Common stock

     8       8  

Additional paid-in capital

     571,426       551,078  

Accumulated other comprehensive income

     1,851       2,226  

Accumulated deficit

     (242,061     (235,703
  

 

 

   

 

 

 

Total stockholders’ equity

   $ 331,224     $ 317,609  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 965,702     $ 894,326  
  

 

 

   

 

 

 

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


TABLE 2

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

 

     Three Months Ended
March 31,
 
     2019     2018  

Revenues

    

Software subscriptions

   $ 182,708     $ 136,960  

Other

     18,781       13,383  
  

 

 

   

 

 

 

Total revenues

     201,489       150,343  
  

 

 

   

 

 

 

Cost of revenues

    

Software subscriptions

     35,334       24,526  

Other

     15,501       11,148  
  

 

 

   

 

 

 

Total cost of revenues

     50,835       35,674  
  

 

 

   

 

 

 

Gross profit

     150,654       114,669  

Operating expenses

    

Research and development

     29,787       22,651  

Sales and marketing

     99,551       71,920  

General and administrative

     28,779       21,449  
  

 

 

   

 

 

 

Total operating expenses

     158,117       116,020  
  

 

 

   

 

 

 

Loss from operations

     (7,463     (1,351

Other income (expense), net

    

Interest expense

     (5,032     (1,411

Other income, net

     3,051       73  
  

 

 

   

 

 

 

Other income (expense), net

     (1,981     (1,338
  

 

 

   

 

 

 

Loss before income taxes

     (9,444     (2,689

Provision for (benefit from) income taxes

     (3,086     27  
  

 

 

   

 

 

 

Net loss

   $ (6,358   $ (2,716
  

 

 

   

 

 

 

Net loss per common share

    

Basic and diluted

   $ (0.08   $ (0.03
  

 

 

   

 

 

 

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

    

Basic and diluted

     81,400       78,341  
  

 

 

   

 

 

 


TABLE 3

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

     Three months ended
March 31,
 
     2019     2018  

Cash flows from operating activities

    

Net loss

   $ (6,358   $ (2,716

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

    

Depreciation and amortization

     7,696       5,542  

Share-based compensation

     19,398       13,267  

Amortization of deferred sales commission costs

     6,228       3,984  

Amortization of debt discount and issuance costs

     4,982       1,370  

Foreign currency remeasurement (gain) loss

     (11     267  

Provision for bad debt

     337       554  

Deferred income taxes

     (235     (6

Tax benefit from release of valuation allowance

     (3,245     —    

Other

     1,347       206  

Changes in assets and liabilities:

    

Accounts receivable

     (5,267     (9,243

Deferred sales commission costs

     (11,477     (7,478

Prepaid expenses and other current assets

     (5,834     (2,270

Other assets

     (83     337  

Accounts payable

     7,757       (2,816

Accrued liabilities

     (103     6,079  

Deferred revenue

     5,301       5,120  

Other liabilities

     (236     (12
  

 

 

   

 

 

 

Net cash provided by operating activities

     20,197       12,185  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Purchases of property and equipment

     (6,862     (4,587

Capitalized internal-use software

     (3,543     (2,759

Cash paid for business combination, net of cash acquired

     (27,870     —    

Cash paid for acquisition of intangible assets

     —         (18,470
  

 

 

   

 

 

 

Net cash used in investing activities

     (38,275     (25,816
  

 

 

   

 

 

 

Cash flows from financing activities

    

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

     —         449,457  

Payments for capped call transactions and costs

     —         (49,910

Repurchase of common stock

     —         (15,000

Proceeds from issuance of stock in connection with stock plans

     2,666       3,688  

Taxes paid related to net share settlement of equity awards

     (1,934     (1,014
  

 

 

   

 

 

 

Net cash provided by financing activities

     732       387,221  
  

 

 

   

 

 

 

Effect of exchange rate changes

     47       181  

Net increase (decrease) in cash, cash equivalents and restricted cash

     (17,299     373,771  

Cash, cash equivalents and restricted cash

    

Beginning of period

     566,329       181,192  
  

 

 

   

 

 

 

End of period

   $ 549,030     $ 554,963  
  

 

 

   

 

 

 


TABLE 4

RINGCENTRAL, INC.

RECONCILIATION OF OPERATING INCOME (LOSS)

GAAP MEASURES TO NON-GAAP MEASURES

(Unaudited, in thousands)

 

     Three Months Ended
March 31,
 
     2019     2018  

Revenues

    

Software subscriptions

   $ 182,708     $ 136,960  

Other

     18,781       13,383  
  

 

 

   

 

 

 

Total revenues

     201,489       150,343  
  

 

 

   

 

 

 

Cost of revenues reconciliation

    

GAAP Software subscriptions cost of revenues

     35,334       24,526  

Stock-based compensation

     (1,346     (876

Amortization of acquisition intangibles

     (1,010     (151

Acquisition related matters

     (50     —    
  

 

 

   

 

 

 

Non-GAAP Software subscriptions cost of revenues

     32,928       23,499  
  

 

 

   

 

 

 

GAAP Other cost of revenues

     15,501       11,148  

Stock-based compensation

     (295     (134
  

 

 

   

 

 

 

Non-GAAP Other cost of revenues

     15,206       11,014  
  

 

 

   

 

 

 

Gross profit and gross margin reconciliation

    

Non-GAAP Subscriptions

     82.0     82.8

Non-GAAP Other

     19.0     17.7

Non-GAAP Gross profit

     76.1     77.0

Operating expenses reconciliation

    

GAAP Research and development

     29,787       22,651  

Stock-based compensation

     (4,262     (3,094

Acquisition related matters

     (347     —    
  

 

 

   

 

 

 

Non-GAAP Research and development

     25,178       19,557  
  

 

 

   

 

 

 

As a % of total revenues non-GAAP

     12.5     13.0

GAAP Sales and marketing

     99,551       71,920  

Stock-based compensation

     (7,608     (5,041

Amortization of acquisition intangibles

     (922     (916

Acquisition related matters

     (1,642     —    
  

 

 

   

 

 

 

Non-GAAP Sales and marketing

     89,379       65,963  
  

 

 

   

 

 

 

As a % of total revenues non-GAAP

     44.4     43.9

GAAP General and administrative

     28,779       21,449  

Stock-based compensation

     (5,887     (4,122

Acquisition related matters

     (423     —    
  

 

 

   

 

 

 

Non-GAAP General and administrative

     22,469       17,327  
  

 

 

   

 

 

 

As a % of total revenues non-GAAP

     11.2     11.5

Income (loss) from operations reconciliation

    

GAAP loss from operations

     (7,463     (1,351

Stock-based compensation

     19,398       13,267  

Amortization of acquisition intangibles

     1,932       1,067  

Acquisition related matters

     2,462       —    
  

 

 

   

 

 

 

Non-GAAP Income from operations

     16,329       12,983  
  

 

 

   

 

 

 

Non-GAAP Operating margin

     8.1     8.6


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,
 
     2019     2018  

Net (loss) income reconciliation

    

GAAP net loss

   $ (6,358   $ (2,716

Stock-based compensation

     19,398       13,267  

Amortization of acquisition intangibles

     1,932       1,067  

Acquisition related matters

     2,462       —    

Amortization of debt discount and issuance costs

     4,982       1,370  

Intercompany remeasurement loss (gain)

     126       274  

Tax benefit from release of valuation allowance

     (3,245     —    

Income tax expense effects

     (4,218     —    
  

 

 

   

 

 

 

Non-GAAP net income

   $ 15,079     $ 13,262  
  

 

 

   

 

 

 

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

     81,400       78,341  

Effect of dilutive securities

     5,525       6,629  
  

 

 

   

 

 

 

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

     86,925       84,970  
  

 

 

   

 

 

 

Diluted net (loss) income per share

    

GAAP net loss per share

   $ (0.08   $ (0.03
  

 

 

   

 

 

 

Non-GAAP net income per share

   $ 0.17     $ 0.16  
  

 

 

   

 

 

 


TABLE 6

RINGCENTRAL, INC.

RECONCILIATION OF FORECASTED OPERATING MARGIN

GAAP MEASURES TO NON-GAAP MEASURES

(Unaudited, in millions)

 

     Q2 2019     FY 2019  
     Low Range     High Range     Low Range     High Range  

GAAP revenues

     203.5       205.5       862.0       866.0  

GAAP loss from operations

     (13.4     (11.8     (37.9     (32.0

GAAP operating margin

     (6.6 %)      (5.8 %)      (4.4 %)      (3.7 %) 

Stock-based compensation

     28.0       27.0       104.0       101.0  

Amortization of acquisition intangibles

     2.3       2.3       9.0       9.0  

Acquisition related matters

     —         —         2.5       2.5  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP income from operations

     16.9       17.5       77.6       80.5  

Non-GAAP operating margin

     8.3     8.5     9.0     9.3

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