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8-K - 8-K - RingCentral, Inc.d264861d8k.htm

Exhibit 99.1

 

LOGO

RingCentral Announces Third Quarter 2016 Results

Software Subscriptions Revenue up 31%

RingCentral Office® ARR up 39%

GAAP Software Subscriptions Gross Margin of 79%; Non-GAAP: 80%

Belmont, Calif. – October 25, 2016 – RingCentral, Inc. (NYSE: RNG), a leading provider of cloud business communications and collaboration solutions, today announced financial results for the third quarter ended September 30, 2016.

Third Quarter Financial Highlights

 

    Software subscriptions revenue grew 31% year-over-year to $91.9 million; total revenue was $96.8 million.

 

    RingCentral Office® annualized exit recurring software subscriptions (ARR) grew 39% year-over-year to $316.8 million.

 

    Total annualized exit recurring software subscriptions (ARR) grew 31% year-over-year to $389.5 million.

 

    GAAP software subscriptions gross margin was 79.1%, up 3.4 points year-over-year, while Non-GAAP software subscriptions gross margin was 80.1%, up 3.6 points year-over-year.

 

    GAAP operating margin was (7.3%), up 0.3 points year-over-year, while Non-GAAP operating margin was 2.3%, up 1.6 points year-over-year.

 

    Net monthly subscriptions dollar retention: RingCentral Office® over 100% and overall subscriptions over 99%.

“In the third quarter, we executed well by balancing revenue growth, investments in enterprise, and expanding margins to drive results at the high-end or above our outlook,” said Vlad Shmunis, RingCentral’s Chairman and CEO. “Growth in our enterprise pipeline has accelerated meaningfully over the past three quarters, which we believe demonstrates the success of our focus on innovation and the investments we have made with our comprehensive go-to-market strategy. We were also honored to once again be placed in the leader’s quadrant and furthest to the right on vision in Gartner’s 2016 Magic Quadrant for UCaaS, further extending our leadership position.”

Financial Results for the Third Quarter 2016

 

    Revenue: Total revenue was $96.8 million for the third quarter of 2016, up from $76.8 million in the third quarter of 2015. Software subscriptions revenue was $91.9 million for the third quarter of 2016, up from $70.3 million in the third quarter of 2015.

 

    Pro Forma1 Revenue Comparison: Total revenue of $96.8 million in the third quarter of 2016, up from $74.5 million in the third quarter of 2015, representing 30% growth, adjusting for the agency model on a comparable basis.

 

1  In 1Q16 RingCentral transitioned direct phone sales to an agency model, in which RingCentral receives a commission for phone sales instead of separately recognizing the full sale price and cost of the product. RingCentral is providing supplemental information on a pro forma basis to provide a clear comparison of the Company’s results with prior periods as-if the Company had transitioned phone sales to the new agency model on January 1, 2015. Carrier phone sales will remain under the direct phone sales model.

 

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    Net Income (Loss) Per Share: GAAP net loss per share was ($0.11) for the third quarter of 2016 compared with ($0.09) for the third quarter of 2015. Non-GAAP net income per diluted share was $0.03 for the third quarter of 2016, compared with $0.00 per diluted share for the third quarter of 2015.

 

    Balance Sheet: Total cash and cash equivalents at the end of the third quarter of 2016 was $152.4 million, compared with $147.8 million at the end of the second quarter of 2016.

Third Quarter 2016 and Recent Business Highlights

 

    Placed by Gartner in the Leaders Quadrant for Unified Communications as a Service (UCaaS) Magic Quadrant. Gartner noted good customer satisfaction and named RingCentral the top UCaaS provider across multiple metrics.

 

    Recognized with the 2016 North American Frost & Sullivan Award for Company of the Year for hosted Internet protocol telephony and UCaaS market. Frost & Sullivan noted that RingCentral stands out among cloud communications providers for its ability to assess evolving customer needs and implement best practices.

 

    Won a 5,000 user deal at a multibillion-dollar restaurant chain with a total contract value over $3 million dollars.

 

    Launched new Android and iOS native apps for RingCentral’s team messaging platform that are faster and higher performing as well as seamlessly integrated with RingCentral Office.

 

    Introduced RingCentral CloudConnect, a service that allows enterprises the ability to use their preferred network service provider to directly connect to RingCentral Cloud. The connection is provided through a private data exchange enabling lower latency, greater network reliability and availability, and added security.

 

    Announced a partnership with Intelisys, one of the nation’s key master agents in the US. Intelisys’ established international presence will enable RingCentral to further expand its global cloud communications footprint.

Conference Call Details:

 

    What: RingCentral financial results for the third quarter of 2016 and outlook for the fourth quarter and full year of 2016.

 

    When: Tuesday, October 25, 2016 at 1:30PM PT (4:30PM 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 may provide confirmation number 13647029 to access the call more quickly, and are encouraged to dial into the call 10 to 15 minutes prior to the start to prevent any delay in joining.

 

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

 

    Replay: A replay of the call will be available via telephone for seven days, beginning two hours after the call. To listen to the telephone replay in the U.S., please dial (877) 870-5176 from the United States or (858) 384-5517 internationally with recording access code 13647029.

About RingCentral

RingCentral, Inc. (NYSE: RNG) is a leading provider of cloud-based business communications and collaboration solutions. RingCentral’s cloud solution is easier to manage, and more flexible and cost-efficient than legacy on-premises communications systems. It meets the needs of modern distributed and mobile workforces spanning SMB to Enterprises globally. RingCentral, Business Communications Made Simple. RingCentral is headquartered in Belmont, California. RingCentral, RingCentral Office, and the RingCentral logo are registered trademarks of RingCentral, Inc.

Forward-Looking Statements

This press release contains “forward-looking statements,” including but not limited to, statements regarding our future, our GAAP and non-GAAP guidance, our markets and strategic opportunities, our expectations regarding the growth in our enterprise pipeline, and our planned investments and innovation. 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

 

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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 manage our expenses and growth; and general market, political, economic, and business conditions, as well as those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Form 10-Q for the quarter ended June 30, 2016, 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 include certain Non-GAAP financial measures, including Non-GAAP operating income (loss), Non-GAAP operating margin, Non-GAAP net income (loss), and Non-GAAP net income per diluted share. Non-GAAP operating income (loss) is defined as operating income (loss) excluding share-based compensation, amortization of acquisition intangibles, and acquisition related matters. 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 net income (loss) excluding stock-based compensation, intercompany remeasurement gains or losses, acquisition related matters, amortization of acquisition intangibles, and tax benefit for release of valuation allowance.

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

Although Non-GAAP operating income (loss), Non-GAAP operating margin, Non-GAAP net income (loss), and Non-GAAP net income 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 historical non-GAAP financial measures and key metrics 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 total annualized exit monthly recurring subscriptions, RingCentral Office® annualized exit monthly recurring subscriptions, and net monthly subscriptions dollar retention. We define our total annualized exit monthly recurring subscriptions as our total monthly recurring subscriptions multiplied by 12. Our total monthly recurring subscriptions equal the monthly value of all customer subscriptions in effect at the end of a given month. We believe this metric is a leading indicator of our anticipated subscriptions revenue. We calculate our RingCentral Office® annualized exit monthly recurring subscriptions in the same manner as we calculate our total annualized exit monthly recurring subscriptions, except that only customer subscriptions from RingCentral Office® customers are included when determining monthly recurring subscriptions for the purposes of calculating this key business metric. We define Dollar Net Change as the quotient of (i) the difference of our Monthly Recurring Subscriptions at the end of a period minus our Monthly Recurring Subscriptions at the beginning of a period minus our Monthly Recurring Subscriptions at the end of the period from new customers we added during the period, (ii) all divided by the number of months in the period. We define our Average Monthly Recurring Subscriptions as the average of the Monthly Recurring Subscriptions at the beginning and end of the measurement period.

Investor Relations Contact:

Darren Yip, RingCentral

(650) 641-2220

ir@RingCentral.com

Media Contact:

Jennifer Caukin, RingCentral

650-561-6348

Jennifer.caukin@ringcentral.com

 

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TABLE 1

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

 

     September 30, 2016     December 31, 2015  

Assets

    

Current assets

    

Cash and cash equivalents

   $ 152,390      $ 137,588   

Accounts receivable, net

     23,583        19,163   

Inventory

     84        2,317   

Prepaid expenses and other current assets

     16,644        11,978   
  

 

 

   

 

 

 

Total current assets

     192,701        171,046   

Property and equipment, net

     31,139        28,160   

Goodwill

     9,393        9,393   

Acquired intangibles, net

     2,500        3,266   

Other assets

     3,064        2,948   
  

 

 

   

 

 

 

Total assets

   $ 238,797      $ 214,813   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Accounts payable

   $ 4,701      $ 5,196   

Accrued liabilities

     46,368        34,702   

Current portion of capital lease obligation

     181        269   

Current portion of long-term debt

     14,528        3,750   

Deferred revenue

     42,738        36,657   
  

 

 

   

 

 

 

Total current liabilities

     108,516        80,574   

Long-term debt

     1,250        14,840   

Sales tax liability

     3,527        3,670   

Capital lease obligation

     —          181   

Other long-term liabilities

     3,402        5,416   
  

 

 

   

 

 

 

Total liabilities

     116,695        104,681   

Stockholders’ equity

    

Common stock

     7        7   

Additional paid-in capital

     351,784        319,792   

Accumulated other comprehensive income

     2,868        527   

Accumulated deficit

     (232,557     (210,194
  

 

 

   

 

 

 

Total stockholders’ equity

     122,102        110,132   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 238,797      $ 214,813   
  

 

 

   

 

 

 

 

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TABLE 2

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2016     2015     2016     2015  

Revenues

        

Software subscriptions

   $ 91,853      $ 70,321      $ 257,898      $ 194,713   

Other

     4,986        6,459        17,323        18,076   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     96,839        76,780        275,221        212,789   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues

        

Software subscriptions

     19,211        17,084        54,107        49,503   

Other

     4,244        5,249        13,452        14,906   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     23,455        22,333        67,559        64,409   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     73,384        54,447        207,662        148,380   

Operating expenses

        

Research and development

     16,490        13,475        48,097        37,612   

Sales and marketing

     50,306        34,878        137,796        101,473   

General and administrative

     13,649        11,922        41,114        34,231   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     80,445        60,275        227,007        173,316   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (7,061     (5,828     (19,345     (24,936

Other income (expense), net

        

Interest expense

     (176     (245     (585     (927

Other income (expense), net

     (696     (319     (2,280     (637
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense), net

     (872     (564     (2,865     (1,564
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before provision (benefit) for income taxes

     (7,933     (6,392     (22,210     (26,500

Provision (benefit) for income taxes

     46        (56     153        (1,342
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (7,979   $ (6,336   $ (22,363   $ (25,158
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share

        

Basic and diluted

   $ (0.11   $ (0.09   $ (0.31   $ (0.36
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic and diluted

     73,285        70,580        72,669        69,614   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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TABLE 3

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

     Nine Months Ended  
     September 30,  
     2016     2015  

Cash flows from operating activities

    

Net loss

   $ (22,363   $ (25,158

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

    

Depreciation and amortization

     10,749        9,935   

Share-based compensation

     22,603        15,790   

Foreign currency remeasurement loss

     2,450        315   

Tax benefit from release of valuation allowance

     —          (1,411

Non-cash interest expense and other expenses related to debt

     —          156   

Net accretion of discount and amortization of premium on available-for-sale securities

     —          602   

Provision for bad debt

     458        152   

Deferred income taxes

     (4     5   

Others

     464        220   

Changes in assets and liabilities:

    

Accounts receivable

     (4,878     (7,688

Inventory

     2,233        (577

Prepaid expenses and other current assets

     (4,667     (3,907

Other assets

     201        173   

Accounts payable

     (2,470     (61

Accrued liabilities

     13,737        4,758   

Deferred revenue

     6,080        8,700   

Other liabilities

     (2,157     204   
  

 

 

   

 

 

 

Net cash provided by operating activities

     22,436        2,208   
  

 

 

   

 

 

 

Cash flows from investing activities

    

Purchases of property and equipment

     (9,634     (11,106

Capitalized internal-use software

     (1,515     (1,836

Cash paid in business combination, net of cash acquired

     —          (4,670

Proceeds from the maturity of available-for-sale securities

     —          25,760   

Proceeds from the maturity of restricted investments

     —          100   
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (11,149     8,248   
  

 

 

   

 

 

 

Cash flows from financing activities

    

Proceeds from issuance of stock in connection with stock plans

     8,268        12,040   

Taxes paid related to net share settlement of equity awards

     (131     (105

Payment of holdback from Glip acquisition

     (1,500     —     

Repayment of debt

     (2,813     (5,205

Repayment of capital lease obligations

     (269     (509
  

 

 

   

 

 

 

Net cash provided by financing activities

     3,555        6,221   
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (40     145   

Net increase in cash and cash equivalents

     14,802        16,822   

Cash and cash equivalents

    

Beginning of period

     137,588        113,182   
  

 

 

   

 

 

 

End of period

   $ 152,390      $ 130,004   
  

 

 

   

 

 

 

 

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TABLE 4

RINGCENTRAL, INC.

RECONCILIATION OF OPERATING INCOME (LOSS)

GAAP MEASURES TO NON-GAAP MEASURES

(Unaudited, in thousands)

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2016     2015     2016     2015  

Revenues

        

Software subscriptions

   $ 91,853      $ 70,321      $ 257,898      $ 194,713   

Other

     4,986        6,459        17,323        18,076   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     96,839        76,780        275,221        212,789   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues reconciliation

        

GAAP Software subscriptions cost of revenues

     19,211        17,084        54,107        49,503   

Stock-based compensation

     (824     (535     (2,239     (1,468

Amortization of acquisition intangibles

     (151     —          (453     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Software subscriptions cost of revenues

     18,236        16,549        51,415        48,035   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Other cost of revenues

     4,244        5,249        13,452        14,906   

Stock-based compensation

     (35     —          (86     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Other cost of revenues

     4,209        5,249        13,366        14,906   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit and gross margin reconciliation

        

Non-GAAP Subscriptions

     80.1     76.5     80.1     75.3

Non-GAAP Other

     15.6     18.7     22.8     17.5

Non-GAAP Gross profit

     76.8     71.6     76.5     70.4

Operating expenses reconciliation

        

GAAP Research and development

     16,490        13,475        48,097        37,612   

Stock-based compensation

     (1,996     (1,351     (5,491     (3,745

Amortization of acquisition intangibles

     —          (256     —          (328

Acquisition related matters

     (619     (331     (1,102     (331
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Research and development

     13,875        11,537        41,504        33,208   
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     14.3     15.0     15.1     15.6

GAAP Sales and marketing

     50,306        34,878        137,796        101,473   

Stock-based compensation

     (3,023     (1,797     (7,790     (5,333

Amortization of acquisition intangibles

     (105     —          (315     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Sales and marketing

     47,178        33,081        129,691        96,140   
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     48.7     43.1     47.1     45.2

GAAP General and administrative

     13,649        11,922        41,114        34,231   

Stock-based compensation

     (2,511     (2,069     (6,997     (5,244

Acquisition related matters

     —          (2     (59     (749
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP General and administrative

     11,138        9,851        34,058        28,238   
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     11.5     12.8     12.4     13.3
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations reconciliation

        

GAAP loss from operations

     (7,061     (5,828     (19,345     (24,936

Stock-based compensation

     8,389        5,752        22,603        15,790   

Amortization of acquisition intangibles

     256        256        768        328   

Acquisition related matters

     619        333        1,161        1,080   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Income (loss) from operations

   $ 2,203      $ 513      $ 5,187      $ (7,738
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Operating margin

     2.3     0.7     1.9     -3.6

 

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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     Nine Months Ended  
     September 30,     September 30,  
     2016     2015     2016     2015  

Net Income (loss) reconciliation

        

GAAP Net loss

   $ (7,979   $ (6,336   $ (22,363   $ (25,158

Stock-based compensation

     8,389        5,752        22,603        15,790   

Amortization of acquisition intangibles

     256        256        768        328   

Acquisition related matters

     619        333        1,161        1,080   

Intercompany remeasurement loss

     745        257        2,341        332   

Tax benefit from release of valuation allowance

     —          —          —          (1,411
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net income (loss)

   $ 2,030      $ 262      $ 4,510      $ (9,039
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net income (loss) per share

        

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 net loss per share

     73,285        70,580        72,669        69,614   

Effect of dilutive securities (stock options and restricted stock awards)

     3,838        3,353        3,355        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     77,123        73,933        76,024        69,614   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Net loss per share

   $ (0.11   $ (0.09   $ (0.31   $ (0.36
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net income (loss) per share

   $ 0.03      $ 0.00      $ 0.06      $ (0.13
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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TABLE 6

RINGCENTRAL, INC.

PRO FORMA2 STATEMENT OF GROSS MARGIN UNDER AGENCY MODEL

(Unaudited, in thousands)

 

     2015     2016     3Q16  
     1Q     2Q     3Q     4Q     1Q     2Q     3Q     Q/Q     Y/Y  

GAAP Software subscription revenue

   $ 59,951      $ 64,441      $ 70,321      $ 76,532      $ 79,978      $ 86,067      $ 91,853        7     31

GAAP Other revenue

   $ 5,367      $ 6,250      $ 6,459      $ 6,907      $ 6,560      $ 5,777      $ 4,986       

Revised Agency Model adjustment

     (2,222     (2,101     (2,278     (2,597     (1,436     —          —         
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

Pro forma other revenue

   $ 3,145      $ 4,149      $ 4,181      $ 4,310      $ 5,124      $ 5,777      $ 4,986        (14 %)      19
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total pro forma revenue

   $ 63,096      $ 68,590      $ 74,502      $ 80,842      $ 85,102      $ 91,844      $ 96,839        5     30
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Software subscription cost of revenue

   $ 15,914      $ 16,505      $ 17,084      $ 16,851      $ 16,723      $ 18,173      $ 19,211       

Stock-based compensation

     (457     (476     (535     (586     (634     (781     (824    

Amortization of acquisition intangibles

     —          —          —          —          (151     (151     (151    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

Non-GAAP Software subscriptions cost of revenue

   $ 15,457      $ 16,029      $ 16,549      $ 16,265      $ 15,938      $ 17,241      $ 18,236       

GAAP Other cost of revenue

   $ 4,633      $ 5,024      $ 5,249      $ 6,011      $ 5,017      $ 4,191      $ 4,244       

Stock-based compensation

     —          —          —          —          (19     (32     (35    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

Non-GAAP Other cost of revenue

   $ 4,633      $ 5,024      $ 5,249      $ 6,011      $ 4,998      $ 4,159      $ 4,209       

Revised Agency Model adjustment

     (2,222     (2,101     (2,278     (2,597     (1,436     —          —         
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

Pro forma other cost of revenue

   $ 2,411      $ 2,923      $ 2,971      $ 3,414      $ 3,562      $ 4,159      $ 4,209       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total pro forma cost of revenue

   $ 17,868      $ 18,952      $ 19,520      $ 19,679      $ 19,500      $ 21,400      $ 22,445        5     15
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pro forma software subscriptions revenue gross profit

   $ 44,494      $ 48,412      $ 53,772      $ 60,267      $ 64,040      $ 68,826      $ 73,617        7     37

Pro forma other revenue gross profit

     734        1,226        1,210        896        1,562        1,618        777        (52 %)      (36 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total pro forma gross profit

   $ 45,228      $ 49,638      $ 54,982      $ 61,163      $ 65,602      $ 70,444      $ 74,394        6     35
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pro forma software subscriptions revenue gross margin

     74     75     76     79     80     80     80    

Pro forma other revenue gross margin

     23     30     29     21     30     28     16    

Total pro forma gross margin

     72     72     74     76     77     77     77    

 

2  In 2Q16, RingCentral provided supplemental information on a pro forma basis to provide a clear comparison of the Company’s results with prior periods. The pro forma information reflects results as-if the Company had transitioned to the new agency model for the first quarter of 2016 and for all periods in 2015.

 

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