Exhibit 99.1
RingCentral Announces Fourth Quarter 2018 Results
Total Revenue up 34%
Mid-market and Enterprise ARR up 73%
Enterprise ARR up 99%
Belmont, Calif. – February 11, 2019 – RingCentral, Inc. (NYSE: RNG), a leading provider of global enterprise cloud communications, collaboration, and contact center solutions, today announced financial results for the fourth quarter ended December 31, 2018.
Fourth Quarter Financial Highlights
| • | Total revenue increased 34% year over year to $189 million. |
| • | Software subscriptions revenue increased 32% year over year to $172 million. |
| • | Annualized Exit Monthly Recurring Subscriptions (ARR) increased 33% year over year to $726 million. |
| • | RingCentral Office® ARR increased 38% year over year to $644 million. |
| • | Mid-market and Enterprise ARR increased 73% year over year to $309 million. |
| • | Enterprise ARR increased 99% year over year to $171 million. |
“Fourth quarter results were outstanding, and we finished 2018 with strong momentum, capped with our first eight-figure customer deal. Our growth was driven by ourmid-market and enterprise business, supported by strong contributions from channel and international,” said Vlad Shmunis, RingCentral’s founder, chairman and CEO. “We continue to rapidly innovate and expand our industry leading cloud communications platform that empowers enterprises to improve their business productivity and customer satisfaction.”
New Accounting Standard
The Company adopted the new standard related to revenue recognition (Topic 606) effective January 1, 2018. The financial information in this press release is prepared in accordance with Topic 606, and the comparison period amounts used to calculate growth rates are based on amounts that have been adjusted from previously reported amounts to conform to the requirements of Topic 606.
Financial Results for the Fourth Quarter 2018
| • | Revenue: Total revenue was $189 million for the fourth quarter of 2018, up from $141 million in the fourth quarter of 2017, representing 34% growth. |
| • | Operating Margin:GAAP operating margin was (1.8%), compared to (0.2%) in the fourth quarter of 2017, primarily driven by higher stock-based compensation and acquisition related expenses.Non-GAAP operating margin was 9.2%, compared to 8.1% in the year ago period. |
| • | Net Income (Loss) Per Share: GAAP net loss per share was ($0.07) for the fourth quarter of 2018 compared with breakeven for the fourth quarter of 2017, 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 $0.23 for the fourth quarter of 2018, compared with $0.14 per diluted share for the fourth quarter of 2017. |
| • | Balance Sheet: Total cash and cash equivalents at the end of the fourth quarter of 2018 was $566 million, which reflects approximately $26 million net cash payment for the acquisition of Dimelo. This compares with $577 million at the end of the third quarter of 2018. |
Recent Highlights
| • | Announced the acquisition of Connect First, a cloud-based outbound/blended customer engagement platform for midsize and enterprise companies. With the acquisition, the RingCentral Customer Engagement portfolio now includes RingCentral Contact Center for inbound communications and Workforce Optimization, RingCentral Engage for digital customer engagement, and Connect First for outbound/blended customer interactions. |
| • | Announced availability of the new RingCentral unified mobile app, an entirely reimagined collaboration-centric experience for enterprise communications. The RingCentral unified mobile app eliminates the need for multiple applications, and unites voice, team messaging, video meetings, and other key features into a single user experience. |
| • | Introduced RingCentral Engage, a leading digital customer engagement platform based on the recent acquisition of Dimelo, as well as the upcoming integration of RingCentral Engage with RingCentral’s team messaging and video solutions. |
| • | Announced agreements with three major government contracting vehicles including NASPO ValuePoint, TIPS USA, and New York State Office of General Services Technology Umbrella Contract. These vehicles are aimed at streamlining the purchasing process for state agencies, local municipalities, counties, cities, and districts, as well as school districts and higher education institutions across the country. |
| • | Announced artificial intelligence (AI) partnerships with Gong.io, ThetaLake, and Velvetech, bringing real-time and post-call voice analytics services to global customers. |
Financial Outlook
Full Year 2019 Guidance:
| • | Total revenue guidance between $847 and $859 million, or an annual growth rate of 26% to 28%. |
| • | Software subscriptions revenue between $775 and $785 million, or an annual growth rate of 26% to 28%. |
| • | GAAP operating margin between (4.3%) and (3.2%). |
| • | Non-GAAP operating margin between 9.0% and 9.3%. |
| • | Non-GAAP tax rate for 2019 assumed to be 22% to 24%, compared to 0%non-GAAP tax rate in our 2018 reporting. No cash taxes expected given net operating loss carryforwards. |
| • | Non-GAAP EPS between $0.69 and $0.73 based on 88.5 million fully diluted shares. |
| • | Stock-based compensation between $99 and $103 million, amortization of debt discount of $20 million, and amortization of acquired intangibles between $8 and $10 million. |
First Quarter 2019 Guidance:
| • | Total revenue range of $191.5 to $194.5 million, representing annual growth of 27% to 29%. |
| • | Software subscriptions revenue range of $175.5 to $177.5 million, representing annual growth of 28% to 30%. |
| • | GAAP operating margin range of (4.0%) to (3.0%). |
| • | Non-GAAP operating margin range of 8.0% to 8.1%. |
| • | Non-GAAP tax rate assumed to be 22% to 24%, compared to 0%non-GAAP tax rate in our 2018 reporting. No cash taxes expected given net operating loss carryforwards. |
| • | Non-GAAP EPS range of $0.14 to $0.16 based on 87.0 million fully diluted shares. |
| • | Stock-based compensation between $19.5 and $20.5 million, amortization of debt discount of $5.0 million, and amortization of acquired intangibles between $2.0 and $2.5 million. |
For a reconciliation of our forecastednon-GAAP operating margin, see “Reconciliation of Forecasted Operating Margin GAAP Measures toNon-GAAP Measures.” We have not reconciled our forecastednon-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 thenon-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 no 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 thenon-GAAP income tax provision. For fiscal 2019, we have determined the projectednon-GAAP tax rate to be in the range of22-24%. Accordingly, a reconciliation of thenon-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort.
Conference Call Details:
| • | What: RingCentral financial results for the fourth quarter of 2018 and outlook for the first quarter and full year of 2019. |
| • | When: Monday, February 11, 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 February 18, 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 13686761. |
Investor Presentation Details
An investor presentation providing additional information and analysis can be found athttp://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 legacyon-premises systems, RingCentral empowers modern mobile and distributed workforces to communicate, collaborate, and connect from any location, on any device, and via any mode. RingCentral 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 Engage, Dimelo, Connect First, 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 andnon-GAAP guidance, our momentum and growth, our strength in themid-market and enterprise segments and our channel partner and international business, our continued innovation and expansion of our cloud communications platform, 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 Form10-Q for the quarter ended September 30, 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 certainNon-GAAP financial measures, includingNon-GAAP software subscriptions gross margin,Non-GAAP other gross margin,Non-GAAP operating margin,Non-GAAP operating income (loss),Non-GAAP net income (loss) andNon-GAAP net income (loss) per diluted share.Non-GAAP software subscriptions gross margin is defined asNon-GAAP subscriptions gross profit divided by GAAP subscriptions revenue.Non-GAAP other gross margin is defined asNon-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 asNon-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, 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 ofnon-GAAP diluted shares outstanding.
We have includedNon-GAAP software subscriptions gross margin,Non-GAAP other gross margin,Non-GAAP operating margin,Non-GAAP net income (loss), andNon-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 calculatingNon-GAAP software subscriptions gross margin,Non-GAAP other gross margin,Non-GAAP operating margin,Non-GAAP net income (loss), andNon-GAAP net income (loss) per diluted share provide useful measure forperiod-to-period comparisons of our business.
AlthoughNon-GAAP software subscriptions gross margin,Non-GAAP other gross margin,Non-GAAP operating margin,Non-GAAP net income (loss), andNon-GAAP net income (loss) per diluted share, are frequently used by investors in their evaluations of companies, thesenon-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, thesenon-GAAP financial measures should be considered alongside other financial performance measures.
Reconciliations of the Company’snon-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, 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 customer subscriptions from RingCentral Office, RingCentral Contact Center and RingCentral Engage customers are included when determining monthly recurring subscriptions for the purposes of calculating this key business metric. We calculatemid-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 with 50 seats or more 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 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.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
| December 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| *As Adjusted | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 566,329 | $ | 181,192 | ||||
Accounts receivable, net | 94,375 | 46,690 | ||||||
Deferred sales commission costs | 23,038 | 15,424 | ||||||
Prepaid expenses and other current assets | 23,772 | 21,512 | ||||||
|
|
|
| |||||
Total current assets | 707,514 | 264,818 | ||||||
Property and equipment, net | 70,205 | 43,298 | ||||||
Deferred sales commission costs, noncurrent | 55,735 | 37,871 | ||||||
Goodwill | 31,238 | 9,393 | ||||||
Acquired intangibles, net | 19,480 | 1,462 | ||||||
Other assets | 10,154 | 2,972 | ||||||
|
|
|
| |||||
Total assets | $ | 894,326 | $ | 359,814 | ||||
|
|
|
| |||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 10,145 | $ | 7,322 | ||||
Accrued liabilities | 100,687 | 54,977 | ||||||
Deferred revenue | 88,527 | 62,917 | ||||||
|
|
|
| |||||
Total current liabilities | 199,359 | 125,216 | ||||||
Convertible senior notes, net | 366,552 | — | ||||||
Other long-term liabilities | 10,806 | 6,252 | ||||||
|
|
|
| |||||
Total liabilities | 576,717 | 131,468 | ||||||
Stockholders’ equity: | ||||||||
Common stock | 8 | 8 | ||||||
Additionalpaid-in capital | 551,078 | 434,840 | ||||||
Accumulated other comprehensive income | 2,226 | 2,998 | ||||||
Accumulated deficit | (235,703 | ) | (209,500 | ) | ||||
|
|
|
| |||||
Total stockholders’ equity | $ | 317,609 | $ | 228,346 | ||||
|
|
|
| |||||
Total liabilities and stockholders’ equity | $ | 894,326 | $ | 359,814 | ||||
|
|
|
| |||||
* Prior-period information has been adjusted for the adoption of ASU2014-09,Revenue from Contracts with Customers (Topic 606), which we adopted on January 1, 2018.
TABLE 2
RINGCENTRAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| *As Adjusted |
| *As Adjusted | |||||||||||||
Revenues | ||||||||||||||||
Software subscriptions | $ | 171,901 | $ | 130,312 | $ | 612,888 | $ | 465,254 | ||||||||
Other | 16,723 | 10,873 | 60,736 | 38,363 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total revenues | 188,624 | 141,185 | 673,624 | 503,617 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Cost of revenues | ||||||||||||||||
Software subscriptions | 30,254 | 24,223 | 109,454 | 89,193 | ||||||||||||
Other | 13,861 | 9,397 | 47,675 | 32,078 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total cost of revenues | 44,115 | 33,620 | 157,129 | 121,271 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Gross profit | 144,509 | 107,565 | 516,495 | 382,346 | ||||||||||||
Operating expenses | ||||||||||||||||
Research and development | 27,230 | 20,362 | 101,042 | 75,148 | ||||||||||||
Sales and marketing | 91,894 | 67,992 | 329,116 | 240,223 | ||||||||||||
General and administrative | 28,789 | 19,428 | 102,773 | 72,313 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total operating expenses | 147,913 | 107,782 | 532,931 | 387,684 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Loss from operations | (3,404 | ) | (217 | ) | (16,436 | ) | (5,338 | ) | ||||||||
Other income (expense), net | ||||||||||||||||
Interest expense | (4,939 | ) | (5 | ) | (16,102 | ) | (99 | ) | ||||||||
Other income, net | 2,531 | 178 | 6,475 | 1,491 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Other income (expense), net | (2,408 | ) | 173 | (9,627 | ) | 1,392 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Loss before provision for income taxes | (5,812 | ) | (44 | ) | (26,063 | ) | (3,946 | ) | ||||||||
Provision (benefit) for income taxes | (134 | ) | 77 | 140 | 258 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Net loss | $ | (5,678 | ) | $ | (121 | ) | $ | (26,203 | ) | $ | (4,204 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Net loss per common share | ||||||||||||||||
Basic and diluted | $ | (0.07 | ) | $ | (0.00 | ) | $ | (0.33 | ) | $ | (0.06 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Weighted-average number of shares used in computing net loss per share | ||||||||||||||||
Basic and diluted | 80,638 | 77,665 | 79,500 | 76,281 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
* Prior-period information has been adjusted for the adoption of ASU2014-09,Revenue from Contracts with Customers (Topic 606), which we adopted on January 1, 2018.
TABLE 3
RINGCENTRAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
| Year Ended December 31, | ||||||||
| 2018 | 2017 | |||||||
| *As Adjusted | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (26,203 | ) | $ | (4,204 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities | ||||||||
Depreciation and amortization | 23,273 | 16,214 | ||||||
Share-based compensation | 68,088 | 42,060 | ||||||
Amortization of deferred sales commission costs | 19,754 | 12,623 | ||||||
Amortization of debt discount and issuance costs | 15,918 | — | ||||||
Foreign currency remeasurement (gain) loss | 951 | (666 | ) | |||||
Provision for bad debt | 3,091 | 1,674 | ||||||
Deferred income taxes | (303 | ) | (47 | ) | ||||
Other | 614 | 181 | ||||||
Changes in assets and liabilities | ||||||||
Accounts receivable | (47,877 | ) | (17,903 | ) | ||||
Deferred sales commission costs | (45,232 | ) | (32,469 | ) | ||||
Prepaid expenses and other current assets | (342 | ) | (6,199 | ) | ||||
Other assets | 279 | 1,533 | ||||||
Accounts payable | 2,783 | 176 | ||||||
Accrued liabilities | 33,695 | 9,918 | ||||||
Deferred revenue | 24,780 | 18,298 | ||||||
Other liabilities | (1,139 | ) | (24 | ) | ||||
|
|
|
| |||||
Net cash provided by operating activities | 72,130 | 41,165 | ||||||
|
|
|
| |||||
Cash flows from investing activities | ||||||||
Purchases of property and equipment | (27,123 | ) | (19,497 | ) | ||||
Capitalizedinternal-use software | (11,421 | ) | (7,420 | ) | ||||
Cash paid for business combination, net of cash acquired | (26,434 | ) | — | |||||
Cash paid for acquisition of intangible assets | (18,470 | ) | — | |||||
Restricted investment | — | 530 | ||||||
|
|
|
| |||||
Net cash used in investing activities | (83,448 | ) | (26,387 | ) | ||||
|
|
|
| |||||
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 | 20,621 | 25,495 | ||||||
Taxes paid related to net share settlement of equity awards | (7,172 | ) | (3,691 | ) | ||||
Repayment of debt | — | (14,840 | ) | |||||
Repayment of capital lease and financing obligations | (741 | ) | (181 | ) | ||||
|
|
|
| |||||
Net cash provided by financing activities | 397,255 | 6,783 | ||||||
|
|
|
| |||||
Effect of exchange rate changes | (800 | ) | (724 | ) | ||||
Net increase in cash, cash equivalents and restricted cash | 385,137 | 20,837 | ||||||
Cash, cash equivalents and restricted cash | ||||||||
Beginning of period | 181,192 | 160,355 | ||||||
|
|
|
| |||||
End of period | $ | 566,329 | $ | 181,192 | ||||
|
|
|
| |||||
* Prior-period information has been adjusted for the adoption of ASU2014-09,Revenue from Contracts with Customers (Topic 606), which we adopted on January 1, 2018.
TABLE 4
RINGCENTRAL, INC.
RECONCILIATION OF OPERATING INCOME (LOSS)
GAAP MEASURES TONON-GAAP MEASURES
(Unaudited, in thousands)
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| *As Adjusted |
| *As Adjusted | |||||||||||||
Revenues | ||||||||||||||||
Software subscriptions | $ | 171,901 | $ | 130,312 | $ | 612,888 | $ | 465,254 | ||||||||
Other | 16,723 | 10,873 | 60,736 | 38,363 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total revenues | 188,624 | 141,185 | 673,624 | 503,617 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Cost of revenues reconciliation | ||||||||||||||||
GAAP Software subscriptions cost of revenues | 30,254 | 24,223 | 109,454 | 89,193 | ||||||||||||
Stock-based compensation | (1,162 | ) | (849 | ) | (4,343 | ) | (3,552 | ) | ||||||||
Amortization of acquisition intangibles | (277 | ) | (150 | ) | (729 | ) | (602 | ) | ||||||||
Acquisition related matters | (29 | ) | — | (29 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-GAAP Software subscriptions cost of revenues | 28,786 | 23,224 | 104,353 | 85,039 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
GAAP Other cost of revenues | 13,861 | 9,397 | 47,675 | 32,078 | ||||||||||||
Stock-based compensation | (194 | ) | (65 | ) | (639 | ) | (183 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Non-GAAP Other cost of revenues | 13,667 | 9,332 | 47,036 | 31,895 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Gross profit and gross margin reconciliation | ||||||||||||||||
Non-GAAP Subscriptions | 83.3 | % | 82.2 | % | 83.0 | % | 81.7 | % | ||||||||
Non-GAAP Other | 18.3 | % | 14.2 | % | 22.6 | % | 16.9 | % | ||||||||
Non-GAAP Gross profit | 77.5 | % | 76.9 | % | 77.5 | % | 76.8 | % | ||||||||
Operating expenses reconciliation | ||||||||||||||||
GAAP Research and development | 27,230 | 20,362 | 101,042 | 75,148 | ||||||||||||
Stock-based compensation | (3,906 | ) | (2,751 | ) | (14,975 | ) | (9,550 | ) | ||||||||
Acquisition related matters | (9 | ) | — | (9 | ) | (443 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Non-GAAP Research and development | 23,315 | 17,611 | 86,058 | 65,155 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
As a % of total revenuesnon-GAAP | 12.4 | % | 12.5 | % | 12.8 | % | 12.9 | % | ||||||||
GAAP Sales and marketing | 91,894 | 67,992 | 329,116 | 240,223 | ||||||||||||
Stock-based compensation | (7,645 | ) | (4,459 | ) | (27,324 | ) | (16,015 | ) | ||||||||
Amortization of acquisition intangibles | (726 | ) | — | (3,617 | ) | (180 | ) | |||||||||
Acquisition related matters | (146 | ) | — | (146 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-GAAP Sales and marketing | 83,377 | 63,533 | 298,029 | 224,028 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
As a % of total revenuesnon-GAAP | 44.2 | % | 45.0 | % | 44.2 | % | 44.5 | % | ||||||||
GAAP General and administrative | 28,789 | 19,428 | 102,773 | 72,313 | ||||||||||||
Stock-based compensation | (5,802 | ) | (3,432 | ) | (20,807 | ) | (12,760 | ) | ||||||||
Acquisition related matters | (794 | ) | — | (2,536 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-GAAP General and administrative | 22,193 | 15,996 | 79,430 | 59,553 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
As a % of total revenuesnon-GAAP | 11.8 | % | 11.3 | % | 11.8 | % | 11.8 | % | ||||||||
Income (loss) from operations reconciliation | ||||||||||||||||
GAAP loss from operations | (3,404 | ) | (217 | ) | (16,436 | ) | (5,338 | ) | ||||||||
Stock-based compensation | 18,709 | 11,556 | 68,088 | 42,060 | ||||||||||||
Amortization of acquisition intangibles | 1,003 | 150 | 4,346 | 782 | ||||||||||||
Acquisition related matters | 978 | — | 2,720 | 443 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-GAAP Income from operations | 17,286 | 11,489 | 58,718 | 37,947 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-GAAP Operating margin | 9.2 | % | 8.1 | % | 8.7 | % | 7.5 | % | ||||||||
* Prior-period information has been adjusted for the adoption of ASU 2014-09,Revenue from Contracts with Customers (Topic 606), which we adopted on January 1, 2018.
TABLE 5
RINGCENTRAL, INC.
RECONCILIATION OF NET INCOME (LOSS)
GAAP MEASURES TONON-GAAP MEASURES
(In thousands, except per share data) (Unaudited)
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| *As Adjusted |
| *As Adjusted | |||||||||||||
Net Income (loss) reconciliation | ||||||||||||||||
GAAP net loss | $ | (5,678 | ) | $ | (121 | ) | $ | (26,203 | ) | $ | (4,204 | ) | ||||
Stock-based compensation | 18,709 | 11,556 | 68,088 | 42,060 | ||||||||||||
Amortization of acquisition intangibles | 1,003 | 150 | 4,346 | 782 | ||||||||||||
Acquisition related matters | 978 | — | 2,720 | 443 | ||||||||||||
Amortization of debt discount and issuance costs | 4,915 | — | 15,918 | — | ||||||||||||
Intercompany remeasurement loss (gain) | 309 | 50 | 1,183 | (820 | ) | |||||||||||
Income tax expense effects ** | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-GAAP net income | $ | 20,236 | $ | 11,635 | $ | 66,052 | $ | 38,261 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Reconciliation between GAAP andnon-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 | 80,638 | 77,665 | 79,500 | 76,281 | ||||||||||||
Effect of dilutive securities | 5,694 | 6,356 | 6,341 | 5,925 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-GAAP weighted average shares used in computingnon-GAAP diluted net income per share | 86,332 | 84,021 | 85,841 | 82,206 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted net income (loss) per share | ||||||||||||||||
GAAP Net loss per share | $ | (0.07 | ) | $ | (0.00 | ) | $ | (0.33 | ) | $ | (0.06 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Non-GAAP Net income per share | $ | 0.23 | $ | 0.14 | $ | 0.77 | $ | 0.47 | ||||||||
|
|
|
|
|
|
|
| |||||||||
* Prior-period information has been adjusted for the adoption of ASU2014-09,Revenue from Contracts with Customers (Topic 606), which we adopted on January 1, 2018. ** Thenon-GAAP adjustments do not have an impact on our income tax provision due to our continued history ofnon-GAAP losses and full valuation allowance. |
TABLE 6
RINGCENTRAL, INC.
RECONCILIATION OF FORECASTED OPERATING MARGIN
GAAP MEASURES TONON-GAAP MEASURES
(Unaudited, in millions)
| Q1 2019 | FY 2019 | |||||||||||||||
| Low Range | High Range | Low Range | High Range | |||||||||||||
GAAP revenues | 191.5 | 194.5 | 847.0 | 859.0 | ||||||||||||
GAAP loss from operations | (7.7 | ) | (5.7 | ) | (36.8 | ) | (27.1 | ) | ||||||||
GAAP operating margin | (4.0 | %) | (3.0 | %) | (4.3 | %) | (3.2 | %) | ||||||||
Stock-based compensation | 20.5 | 19.5 | 103.0 | 99.0 | ||||||||||||
Amortization of acquisition intangibles | 2.5 | 2.0 | 10.0 | 8.0 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-GAAP income from operations | 15.3 | 15.8 | 76.2 | 79.9 | ||||||||||||
Non-GAAP operating margin | 8.0 | % | 8.1 | % | 9.0 | % | 9.3 | % | ||||||||