Q3 2023 revenue above high end of guidance
Q3 2023 GAAP and non-GAAP operating margin up
strongly
Raising midpoint of 2023 revenue outlook
RingCentral, Inc. (NYSE: RNG), a leading provider of AI-powered
global enterprise cloud communications, video meetings,
collaboration, and contact center solutions, today announced
financial results for the third quarter ended September 30,
2023.
Third Quarter Financial Highlights
- Total revenue increased 10% year over year to $558
million.
- Subscriptions revenue increased 10% year over year to $531
million.
- Annualized Exit Monthly Recurring Subscriptions (ARR) increased
11% year over year to $2.26 billion.
- Mid-market and Enterprise ARR increased 13% year over year to
$1.41 billion.
- GAAP operating margin of (9.7%), compared to (35.9%) in the
prior year.
- Non-GAAP operating margin of 19.1%, up 560 basis points
year-over-year.
“RingCentral is leveraging its leading position in Unified
Communications to transform into an AI-first, multi-product company
with proprietary offerings across UCaaS, CCaaS, Conversation and
Revenue Intelligence, and Events, Webinars and Meetings,” said
Tarek Robbiati, RingCentral’s CEO. “Our solid third quarter results
demonstrate our ability to drive long-term durable, profitable
growth.”
Financial Results for the Third Quarter 2023
- Revenue: Total revenue was $558 million for the third
quarter of 2023, up from $509 million in the third quarter of 2022,
representing 10% growth. Adjusted for constant currency, total
revenue rose 9%. Subscriptions revenue of $531 million increased
10% year over year and accounted for 95% of total revenue. Adjusted
for constant currency, subscriptions revenue rose 10%.
- Operating Income (Loss): GAAP operating loss was ($54)
million, compared to ($183) million in the same period last year.
Non-GAAP operating income was $107 million, or 19.1% of total
revenue, compared to $69 million, or 13.5% of total revenue, for
the third quarter of 2022.
- Adjusted EBITDA: Adjusted EBITDA for the third quarter
of 2023 was $128 million, or 22.9% of total revenue, compared to
$87 million, or 17.1% of total revenue, for the third quarter of
2022.
- Net Income (Loss) Per Share: GAAP net loss per share was
($0.45), compared to ($2.98) in the same period last year. Diluted
non-GAAP net income per share was $0.78, compared to $0.55 per
share in the same period last year. The third quarters of 2023 and
2022 reflected an approximately 22.5% non-GAAP tax rate. There were
no material cash taxes given our net operating loss
carryforwards.
- Cash and Cash Equivalents: Total cash and cash
equivalents at the end of the third quarter of 2023 was $432
million. This compares to $225 million at the end of the second
quarter of 2023. Our cash balance reflects the August 2023 issuance
of $400 million of senior notes due 2030, with $154 million of the
proceeds from this issuance subsequently used during the third
quarter of 2023 to repurchase a portion of our 2025 and 2026
convertible notes. The Company also repurchased $75 million in
shares during the third quarter of 2023 under the plans announced
in February and May of 2023. On November 1, 2023, the company's
Board of Directors authorized an incremental $100 million for the
repurchase of shares.
Financial Outlook
"We are seeing early traction with our new products such as
RingCX, RingSense and RingCentral Events," said Sonalee Parekh,
RingCentral's CFO. "Our efficiency initiatives also continue to
drive improved non-GAAP operating margins, which we are raising to
19.0%, at the high end of our prior range of 18.5% to 19.0%. We are
also raising our free cash flow outlook, and now expect to generate
$290 to $300 million of adjusted, unlevered free cash flow in 2023,
up from our prior outlook of $270 to $290 million.”
Full Year 2023 Guidance:
- Updating subscriptions revenue range to $2.095 to $2.101
billion, representing annual growth of 11%; raising midpoint to
$2.098 billion.
- Updating total revenue range to $2.198 to $2.205 billion,
representing annual growth of 11%; raising midpoint to $2.201
billion.
- GAAP operating margin range of (9.3%) to (8.7%) versus (8.0%)
to (6.3%) previously, as we continue to streamline the organization
and incur restructuring costs.
- Raising non-GAAP operating margin range to 19.0%, up from 18.5%
to 19.0% previously.
- Non-GAAP tax rate assumed to be 22.5%. No material cash taxes
expected given net operating loss carryforwards.
- Non-GAAP EPS of $3.19 to $3.20 based on 97.0 million fully
diluted shares. This compares to $3.11 to $3.25 based on 99.0
million to 98.0 fully diluted shares.
- Share-based compensation range of $426 to $431 million.
- Amortization of acquired intangibles of $151 million.
- Third-party relocation and other costs, net, of $10
million.
- Restructuring costs of $23 to $28 million.
- Raising adjusted, unlevered free cash flow to $290 to $300
million, up from $270 to $290 million.
Fourth Quarter 2023 Guidance:
- Subscriptions revenue range of $542.0 to $548.0 million,
representing year-over-year growth of 8% to 9%.
- Total revenue range of $566.5 to $573.5 million, representing
year-over-year growth of 8% to 9%.
- GAAP operating margin range of (8.8%) to (6.7%).
- Non-GAAP operating margin of 20.0%.
- Non-GAAP tax rate assumed to be 22.5%. No material cash taxes
expected given net operating loss carryforwards.
- Non-GAAP EPS of $0.82 to $0.83 based on 97.0 to 96.5 million
fully diluted shares.
- Share-based compensation range of $105 to $110 million.
- Amortization of acquired intangibles of $38 million.
- Restructuring costs of $10 million to $15 million.
Additional Highlights
- Announced in August 2023 the issuance of $400 million aggregate
principal amount of senior notes due 2030 (the “2030 Senior Notes”)
in a private offering. The 2030 Senior Notes are senior unsecured
and bear interest at a rate of 8.5% per annum. We intend to use the
net proceeds from the 2030 Senior Notes to repurchase a portion of
our outstanding convertible senior notes and the remainder of the
net proceeds, if any, for general corporate purposes.
- Announced in August 2023 we had entered into individual,
privately negotiated repurchase transactions with certain holders
of our 0% Convertible Senior Notes due 2025 (the “2025 Convertible
Notes”) and 0% Convertible Senior Notes due 2026 (the “2026
Convertible Notes”). We paid $154 million in cash to repurchase
approximately $166 million in aggregate principal of the 2025 and
2026 Convertible Notes. The transaction was funded with proceeds
from the August 2023 issuance of the 2030 Senior Notes.
For a reconciliation of our forecasted non-GAAP operating
margin, see “Reconciliation of Forecasted Operating Margin GAAP
Measures to Non-GAAP Measures.” We have not reconciled our
forecasted non-GAAP EPS to its respective forecasted GAAP measure
because we do not provide guidance on it. We do not provide
guidance on forecasted GAAP EPS because of the inherent uncertainty
and complexity involved in forecasting the intercompany
remeasurement gain (loss), gain (loss) associated with investments,
gain (loss) on early debt conversions, and provision (benefit) from
income taxes, which could be significant reconciling items between
the non-GAAP and respective GAAP measures. The intercompany
remeasurement gain (loss) is affected by the movement in various
exchange rates relative to the U.S. Dollar, which is difficult to
predict and subject to constant change. We do not provide guidance
on gain (loss) associated with investments as it is based on future
share prices, which are difficult to predict and subject to
inherent uncertainties. We do not provide guidance on gain (loss)
on debt early conversions as it is based on future conversion
requests, future share prices, and interest rates, which are
difficult to predict and are subject to inherent uncertainties. We
do not provide guidance on forecasted GAAP tax rates as we do not
forecast discrete tax items as they are difficult to predict. The
provision (benefit) from income taxes, excluding discrete items, is
expected to have an immaterial impact to our GAAP EPS. We utilized
a projected long-term tax rate in our computation of the non-GAAP
income tax provision. For fiscal 2023, 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.
We have not reconciled adjusted, unlevered free cash flow
guidance to net cash provided by (used in) operating activities
because we do not provide guidance on the reconciling items between
net cash provided by (used in) operating activities and adjusted,
unlevered free cash flow due to the uncertainty regarding, and the
potential variability of, these items. Accordingly, a
reconciliation of net cash provided by (used in) operating
activities to adjusted, unlevered free cash flow guidance is not
available without unreasonable effort.
Conference Call Details:
- What: RingCentral financial results for the third
quarter of 2023 and outlook for the fourth quarter and full year of
2023.
- When: Monday, November 6, 2023 at 2:00PM PT (5:00PM
ET).
- Dial-in: 1-888-349-0093 from the United States;
1-412-317-5201 internationally
- Webcast: RingCentral Q3 2023 Earnings Webcast (live and
replay).
- Replay: Following the completion of the call through
11:59 PM ET on November 13, 2023, a telephone replay will be
available by dialing 1-844-512-2921 from the United States or
1-412-317-6671 internationally with recording access code
10183256.
Investor Presentation Details
An investor presentation providing additional information and
analysis can be found at https://ir.ringcentral.com.
About RingCentral
RingCentral is a leading global provider of cloud-based business
communications and collaboration solutions that seamlessly combine
phone, messaging, video meetings, and contact center. RingCentral
empowers customers with AI-powered conversation intelligence that
unlocks insights from their interaction data to accelerate business
outcomes. With decades of expertise in reliable and secure cloud
communications, RingCentral has earned the trust of millions of
customers and thousands of partners worldwide. Visit
ringcentral.com to learn more.
© 2023 RingCentral, Inc. All rights reserved. RingCentral,
RingCentral Contact Center and the RingCentral logo are trademarks
of RingCentral, Inc.
Forward-Looking Statements
This press release contains “forward-looking statements,”
including but not limited to, statements regarding our future
financial results, our GAAP and non-GAAP guidance, the results of
the pace of our innovation and our partner networks, our
expectations regarding our profitability and our non-GAAP adjusted,
unlevered free cash flow, our estimates and expectations regarding
third parties, and our ability to execute and lead in the UCaaS
digital transformation market, our expectations around the demand
for our products and the growth of the markets in which we compete.
Forward-looking statements are subject to known and unknown risks
and uncertainties, and are based on assumptions that may prove to
be incorrect, which could cause actual results to differ materially
from those expected or implied by the forward-looking statements.
Among the important factors that could cause actual results to
differ materially from those in any forward-looking statements are:
our ability to realize the anticipated benefits of our strategic
relationships; our expectations regarding our strategic
acquisitions, including our recently announced acquisition of
select assets from Hopin; our ability to grow at our expected rate
of growth; our ability to add and retain larger and enterprise
customers and enter new geographies and markets; our ability to
continue to release, and gain customer acceptance of, new and
improved versions of our services, including RingCentral MVP™, and
RingCentral Video®; our ability to compete successfully against
existing and new competitors; our ability to enter into and
maintain relationships with resellers, carriers, channel partners
and strategic partners; our ability to successfully and timely
integrate, and realize the benefits of any significant acquisition
we may make; our ability to manage our expenses and growth; and
general market, political, economic, and business conditions, as
well as those risks and uncertainties included under the captions
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations,” in our most recent
Form 10-Q filed with the Securities and Exchange Commission, and in
other filings we make with the Securities and Exchange Commission
from time to time.
All forward-looking statements in this press release are based
on information available to RingCentral as of the date hereof, and
we undertake no obligation to update these forward-looking
statements, to review or confirm analysts’ expectations, or to
provide interim reports or updates on the progress of the current
financial quarter.
Non-GAAP Financial Measures
Our reported financial results and financial outlook include
certain Non-GAAP financial measures, including Non-GAAP
subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP
operating margin, Non-GAAP income (loss) from operations, Non-GAAP
adjusted EBITDA, Non-GAAP net income (loss), Non-GAAP net income
(loss) per diluted share, Non-GAAP adjusted, unlevered free cash
flow, and constant currency revenue. Non-GAAP subscriptions gross
margin is defined as Non-GAAP subscriptions gross profit divided by
GAAP subscriptions revenue. Non-GAAP other gross margin is defined
as Non-GAAP other gross profit divided by GAAP other revenue.
Non-GAAP income (loss) from operations is defined as GAAP income
(loss) from operations excluding share-based compensation which
includes related employer payroll taxes, amortization of
acquisition intangibles, asset write-down charges, third-party
relocation costs tied to the conflict between Russia and Ukraine
and other costs including acquisition-related transaction costs and
retention payments, certain litigation-related costs, net impact of
amended agreements with strategic partners, and restructuring
costs. Non-GAAP operating margin is defined as Non-GAAP income
(loss) from operations divided by total GAAP revenue. Non-GAAP
adjusted EBITDA is defined as Non-GAAP income (loss) from
operations excluding depreciation and amortization. Non-GAAP net
income (loss) is defined as GAAP net income (loss) excluding
share-based compensation which includes related employer payroll
taxes, amortization of acquisition intangibles, asset write-down
charges, third-party relocation costs tied to the conflict between
Russia and Ukraine and other costs including acquisition-related
transaction costs and retention payments, certain
litigation-related costs, net impact of amended agreements with
strategic partners, restructuring costs, non-cash interest expense
associated with amortization of debt discount and issuance costs
related to our long term debt, loss (gain) associated with
investments, loss (gain) on early extinguishment of debt,
intercompany remeasurement gains or losses, and the related income
tax effect of these adjustments.
Non-GAAP diluted shares outstanding include the impact on shares
used in per share calculations of our outstanding capped call
transactions. Our outstanding capped call transactions are
anti-dilutive in GAAP earnings per share but are expected to
mitigate the dilutive effect of our convertible notes and therefore
are included in the calculations of non-GAAP diluted shares
outstanding.
Non-GAAP adjusted, unlevered free cash flow is defined as GAAP
net cash provided by (used in) operating activities adjusted for
capital expenditures including purchases of property and equipment
and capitalized internal-use software, strategic partnerships,
restructuring and other non-recurring payments, and cash paid for
interest. We believe information regarding adjusted, unlevered 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 income
(loss) from operations, Non-GAAP adjusted EBITDA, Non-GAAP net
income (loss), Non-GAAP net income (loss) per diluted share,
Non-GAAP adjusted, unlevered free cash flow, and constant currency
revenue in this press release because they are key measures used by
us to understand and evaluate our operating performance and trends,
to prepare and approve our annual budget, and to develop short and
long-term operational plans. In particular, the exclusion of
certain expenses and cash flow items in calculating Non-GAAP
subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP
operating margin, Non-GAAP income (loss) from operations, Non-GAAP
adjusted EBITDA, Non-GAAP net income (loss), Non-GAAP net income
(loss) per diluted share, and Non-GAAP adjusted, unlevered free
cash flow provide useful measure for period-to-period comparisons
of our business.
The Company has provided certain revenue-related information
adjusted for constant currency to provide a framework for assessing
how the Company's underlying business performed excluding the
effect of foreign currency rate fluctuations. To present this
information, current period results in currencies other than United
States dollars are converted into United States dollars at the
average exchange rate prevailing for the quarter being compared to
for growth rate calculations presented, rather than the actual
exchange rates in effect during that period.
Although Non-GAAP subscriptions gross margin, Non-GAAP other
gross margin, Non-GAAP operating margin, Non-GAAP income (loss)
from operations, Non-GAAP adjusted EBITDA, Non-GAAP net income
(loss), Non-GAAP net income (loss) per diluted share, Non-GAAP
adjusted, unlevered free cash flow, and constant currency revenue
are frequently used by investors in their evaluations of companies,
these non-GAAP financial measures have limitations as analytical
tools and should not be considered in isolation or as a substitute
for financial information presented in accordance with GAAP.
Because of these limitations, these non-GAAP financial measures
should be considered alongside other financial performance
measures.
Reconciliations of the Company’s non-GAAP financial measures to
their most directly comparable GAAP measures has been provided in
the financial statement tables included in this press release.
Other Measures
Our reported results also include our annualized exit monthly
recurring subscriptions, mid-market and enterprise annualized exit
monthly recurring subscriptions, enterprise annualized exit monthly
recurring subscriptions, and net monthly subscription dollar
retention rate. We define our annualized exit monthly recurring
subscriptions as our monthly recurring subscriptions multiplied by
12. Our monthly recurring subscriptions equal the monthly value of
all customer recurring charges contracted at the end of a given
month. We believe this metric is a leading indicator of our
anticipated subscriptions revenue. We calculate mid-market and
enterprise annualized exit monthly recurring subscriptions in the
same manner as we calculate our annualized exit monthly recurring
subscriptions, except that only customer subscriptions from
customers generating $25,000 or more in annual recurring revenue
are included. We calculate enterprise annualized exit monthly
recurring subscriptions in the same manner as we calculate our
annualized exit monthly recurring subscriptions, except that only
customer subscriptions from customers generating $100,000 or more
in annual recurring revenue are included. We define our net monthly
subscription dollar retention rate as (i) one plus (ii) the
quotient of dollar net change divided by average monthly recurring
subscriptions. We calculate dollar net change as the quotient of
(i) the difference of our monthly recurring subscriptions at the
end of a period minus our monthly recurring subscriptions at the
beginning of a period minus our monthly recurring subscriptions at
the end of the period from new customers we added during the
period, (ii) all divided by the number of months in the period. We
define our average monthly recurring subscriptions as the average
of the monthly recurring subscriptions at the beginning and end of
the measurement period.
TABLE 1
RINGCENTRAL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited, in
thousands)
September 30, 2023
December 31, 2022
Assets
Current assets
Cash and cash equivalents
$
432,352
$
269,984
Accounts receivable, net
347,912
311,318
Deferred and prepaid sales commission
costs
176,197
158,865
Prepaid expenses and other current
assets
95,858
55,849
Total current assets
1,052,319
796,016
Property and equipment, net
183,593
185,400
Operating lease right-of-use assets
32,477
35,433
Deferred and prepaid sales commission
costs, non-current
394,020
438,579
Goodwill
66,482
54,335
Acquired intangibles, net
431,920
528,051
Other assets
21,683
35,848
Total assets
$
2,182,494
$
2,073,662
Liabilities, Temporary Equity, and
Stockholders' Deficit
Current liabilities
Accounts payable
$
43,311
$
62,721
Accrued liabilities
310,752
380,113
Current portion of long-term debt, net
20,000
—
Deferred revenue
231,247
209,725
Total current liabilities
605,310
652,559
Long-term debt, net
1,781,252
1,638,411
Operating lease liabilities
18,577
20,182
Other long-term liabilities
62,362
45,848
Total liabilities
2,467,501
2,357,000
Temporary equity
Series A convertible preferred stock
199,449
199,449
Stockholders' deficit
Common stock
9
10
Additional paid-in capital
1,170,672
1,059,880
Accumulated other comprehensive loss
(3,244
)
(8,781
)
Accumulated deficit
(1,651,893
)
(1,533,896
)
Total stockholders' deficit
$
(484,456
)
$
(482,787
)
Total liabilities, temporary equity and
stockholders’ deficit
$
2,182,494
$
2,073,662
TABLE 2
RINGCENTRAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited, in thousands,
except per share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Revenues
Subscriptions
$
531,030
$
483,229
$
1,552,956
$
1,386,140
Other
27,134
25,803
78,202
77,444
Total revenues
558,164
509,032
1,631,158
1,463,584
Cost of revenues
Subscriptions
141,172
134,372
413,664
395,083
Other
27,802
33,102
80,403
86,055
Total cost of revenues
168,974
167,474
494,067
481,138
Gross profit
389,190
341,558
1,137,091
982,446
Operating expenses
Research and development
85,444
86,700
250,965
273,492
Sales and marketing
270,767
261,914
795,422
781,767
General and administrative
87,154
72,261
244,472
217,810
Asset write-down charge
—
103,242
—
103,242
Total operating expenses
443,365
524,117
1,290,859
1,376,311
Loss from operations
(54,175
)
(182,559
)
(153,768
)
(393,865
)
Other income (expense), net
Interest expense
(12,162
)
(1,178
)
(19,492
)
(3,613
)
Other income (expense)
20,441
(100,006
)
61,521
(194,725
)
Other income (expense), net
8,279
(101,184
)
42,029
(198,338
)
Loss before income taxes
(45,896
)
(283,743
)
(111,739
)
(592,203
)
(Benefit from) provision for income
taxes
(3,780
)
873
6,258
2,900
Net loss
$
(42,116
)
$
(284,616
)
$
(117,997
)
$
(595,103
)
Net loss per common share
Basic and diluted
$
(0.45
)
$
(2.98
)
$
(1.24
)
$
(6.26
)
Weighted-average number of shares used in
computing net loss per share
Basic and diluted
94,593
95,575
95,213
95,097
TABLE 3
RINGCENTRAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited, in
thousands)
Nine Months Ended
September 30,
2023
2022
Cash flows from operating
activities
Net loss
$
(117,997
)
$
(595,103
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
174,723
184,166
Share-based compensation
314,533
293,777
Unrealized loss on investments
1,646
176,218
Asset write-down charge
—
124,904
Amortization of deferred and prepaid sales
commission costs
100,618
81,536
Amortization of debt discount and issuance
costs
3,465
3,350
Non-cash interest expense
4,156
—
Gain on early extinguishment of debt
(42,891
)
—
Reduction of operating lease right-of-use
assets
15,272
14,887
Provision for bad debt
5,200
7,103
Other
723
3,688
Changes in assets and liabilities:
Accounts receivable
(39,641
)
(40,247
)
Deferred and prepaid sales commission
costs
(103,773
)
(185,049
)
Prepaid expenses and other assets
(7,251
)
(689
)
Accounts payable
(31,664
)
19,384
Accrued and other liabilities
9,383
47,001
Deferred revenue
15,309
32,970
Operating lease liabilities
(15,993
)
(15,963
)
Net cash provided by operating
activities
285,818
151,933
Cash flows from investing
activities
Purchases of property and equipment
(17,515
)
(23,828
)
Capitalized internal-use software
(38,241
)
(39,638
)
Cash paid for business combination, net of
cash acquired
(14,709
)
—
Proceeds from sale of marketable equity
investments
—
3,223
Purchases of intangible assets and
long-term investments
—
(3,990
)
Net cash used in investing activities
(70,465
)
(64,233
)
Cash flows from financing
activities
Proceeds from issuance of stock in
connection with stock plans
10,954
10,892
Payments for taxes related to net share
settlement of equity awards
(7,124
)
(5,180
)
Payments for repurchase of common
stock
(249,568
)
(45,004
)
Proceeds from issuance of long-term debt,
net of issuance costs
786,311
—
Payments for the repurchase of convertible
senior notes
(580,960
)
—
Repayments of principal on term loan
(5,000
)
—
Repayments for financing obligations
(4,738
)
(3,950
)
Payments for contingent consideration
(1,673
)
(1,538
)
Net cash used in financing activities
(51,798
)
(44,780
)
Effect of exchange rate changes
(1,187
)
(4,699
)
Net increase in cash, cash equivalents,
and restricted cash
162,368
38,221
Cash, cash equivalents, and restricted
cash
Beginning of period
269,984
267,162
End of period
$
432,352
$
305,383
TABLE 4
RINGCENTRAL, INC.
RECONCILIATION OF OPERATING
INCOME (LOSS)
GAAP MEASURES TO NON-GAAP
MEASURES
(Unaudited, in
thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Revenues
Subscriptions
$
531,030
$
483,229
$
1,552,956
$
1,386,140
Other
27,134
25,803
78,202
77,444
Total revenues
558,164
509,032
1,631,158
1,463,584
Cost of revenues reconciliation
GAAP Subscriptions cost of revenues
141,172
134,372
413,664
395,083
Share-based compensation
(7,392
)
(6,577
)
(21,096
)
(20,421
)
Amortization of acquired intangibles
(37,045
)
(42,750
)
(110,324
)
(128,609
)
Third-party relocation and other costs
(93
)
(74
)
(105
)
(1,229
)
Restructuring costs
—
(96
)
(637
)
(252
)
Non-GAAP Subscriptions cost of
revenues
96,642
84,875
281,502
244,572
GAAP Other cost of revenues
27,802
33,102
80,403
86,055
Share-based compensation
(2,380
)
(2,066
)
(6,892
)
(6,705
)
Amortization of acquired intangibles
(22
)
(23
)
(66
)
(54
)
Restructuring costs
(6
)
—
(58
)
—
Non-GAAP Other cost of revenues
25,394
31,013
73,387
79,296
Gross profit and gross margin
reconciliation
Non-GAAP Subscriptions
81.8
%
82.4
%
81.9
%
82.4
%
Non-GAAP Other
6.4
%
(20.2
)%
6.2
%
(2.4
)%
Non-GAAP Gross profit
78.1
%
77.2
%
78.2
%
77.9
%
Operating expenses
reconciliation
GAAP Research and development
85,444
86,700
250,965
273,492
Share-based compensation
(24,576
)
(22,105
)
(71,804
)
(70,264
)
Third-party relocation and other costs
(3,401
)
(1,468
)
(4,964
)
(17,560
)
Restructuring costs
(1,794
)
(2,383
)
(4,281
)
(2,722
)
Non-GAAP Research and development
55,673
60,744
169,916
182,946
As a % of total revenues non-GAAP
10.0
%
11.9
%
10.4
%
12.5
%
GAAP Sales and marketing
270,767
261,914
795,422
781,767
Share-based compensation
(38,287
)
(38,139
)
(117,063
)
(119,749
)
Amortization of acquired intangibles
(1,134
)
(894
)
(2,529
)
(2,746
)
Third-party relocation and other costs
(86
)
(41
)
(101
)
(55
)
Restructuring costs
(1,124
)
(2,096
)
(5,093
)
(3,033
)
Non-GAAP Sales and marketing
230,136
220,744
670,636
656,184
As a % of total revenues non-GAAP
41.2
%
43.4
%
41.1
%
44.8
%
GAAP General and administrative
87,154
72,261
244,472
217,810
Share-based compensation
(40,456
)
(28,096
)
(103,858
)
(84,509
)
Third-party relocation and other costs
(1,689
)
(430
)
(5,317
)
(3,374
)
Restructuring costs
(1,520
)
(740
)
(2,856
)
(1,823
)
Non-GAAP General and administrative
43,489
42,995
132,441
128,104
As a % of total revenues non-GAAP
7.8
%
8.4
%
8.1
%
8.8
%
Income (loss) from operations
reconciliation
GAAP loss from operations
(54,175
)
(182,559
)
(153,768
)
(393,865
)
Share-based compensation
113,091
96,983
320,713
301,648
Amortization of acquired intangibles
38,201
43,667
112,919
131,409
Asset write-down charge
—
103,242
—
103,242
Third-party relocation and other costs
5,269
2,013
10,487
22,218
Restructuring costs
4,444
5,315
12,925
7,830
Non-GAAP Income from operations
106,830
68,661
303,276
172,482
Non-GAAP Operating margin
19.1
%
13.5
%
18.6
%
11.8
%
Depreciation and amortization
20,966
18,298
61,804
52,757
Non-GAAP Adjusted EBITDA
127,796
86,959
365,080
225,239
As a % of total revenues non-GAAP
22.9
%
17.1
%
22.4
%
15.4
%
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
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Net income (loss)
reconciliation
GAAP net loss
$
(42,116
)
$
(284,616
)
$
(117,997
)
$
(595,103
)
Share-based compensation
113,091
96,983
320,713
301,648
Amortization of acquired intangibles
38,201
43,667
112,919
131,409
Asset write-down charge
—
103,242
—
103,242
Third-party relocation and other costs,
net
(1,731
)
2,013
(22
)
22,204
Restructuring costs
4,444
5,315
12,925
7,830
Amortization of debt discount and issuance
costs
1,067
1,118
3,465
3,350
Loss associated with investments
99
99,835
1,745
194,080
Gain on early extinguishment of debt
(11,784
)
—
(42,891
)
—
Intercompany remeasurement loss (gain)
669
35
(1,217
)
519
Income tax expense effects
(25,866
)
(14,532
)
(60,319
)
(35,818
)
Non-GAAP net income
$
76,074
$
53,060
$
229,321
$
133,361
Reconciliation between GAAP and
non-GAAP weighted average shares used in computing basic and
diluted net income (loss) per common share:
Weighted average number of shares used in
computing basic net loss per share
94,593
95,575
95,213
95,097
Effect of dilutive securities
2,362
927
1,622
977
Non-GAAP weighted average shares used in
computing non-GAAP diluted net income per share
96,955
96,502
96,835
96,074
Diluted net income (loss) per
share
GAAP net loss per share
$
(0.45
)
$
(2.98
)
$
(1.24
)
$
(6.26
)
Non-GAAP net income per share
$
0.78
$
0.55
$
2.37
$
1.39
TABLE 6
RINGCENTRAL, INC.
RECONCILIATION OF CASH FLOWS
FROM OPERATING ACTIVITIES
GAAP MEASURES TO NON-GAAP
ADJUSTED, UNLEVERED FREE CASH FLOW MEASURES
(Unaudited, in
thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Net cash provided by operating
activities
$
86,594
$
42,260
$
285,818
$
151,933
Less:
Capitalized expenditures
(16,632
)
(21,745
)
(55,756
)
(63,466
)
Strategic partnerships
—
—
(33,250
)
—
Add:
Restructuring and other payments
10,038
12,724
21,460
14,118
Cash paid for interest, net of interest
rate swap
6,737
52
10,166
272
Non-GAAP adjusted, unlevered free cash
flow
$
86,737
$
33,291
$
228,438
$
102,857
TABLE 7
RINGCENTRAL, INC.
RECONCILIATION OF FORECASTED
OPERATING MARGIN
GAAP MEASURES TO NON-GAAP
MEASURES
(Unaudited, in
millions)
Q4 2023
FY 2023
Low Range
High Range
Low Range
High Range
GAAP revenues
566.5
573.5
2,197.7
2,204.7
GAAP loss from operations
(49.7
)
(38.3
)
(203.4
)
(192.1
)
GAAP operating margin
(8.8
%)
(6.7
%)
(9.3
%)
(8.7
%)
Share-based compensation
110.0
105.0
430.7
425.7
Amortization of acquired intangibles
38.0
38.0
150.9
150.9
Third-party relocation and other costs,
net
—
—
10.5
10.5
Restructuring costs
15.0
10.0
28.0
23.0
Non-GAAP income from operations
113.3
114.7
416.7
418.0
Non-GAAP operating margin
20.0
%
20.0
%
19.0
%
19.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231106929479/en/
Investor Relations Contact: Will Wong, RingCentral
650-450-4826 ir@ringcentral.com
Media Contact: Mariana Leventis, RingCentral 650-562-6545
Mariana.Leventis@ringcentral.com
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