Attached files

file filename
8-K - 8-K - RingCentral, Inc.d236167d8k.htm

Exhibit 99.1

 

LOGO

RingCentral Announces Fourth Quarter 2016 Results

Software Subscriptions Revenue up 28%

RingCentral Office® ARR up 38%

GAAP Software Subscriptions Gross Margin of 80%; Non-GAAP: 81%

Belmont, Calif. – February 13, 2017 – RingCentral, Inc. (NYSE: RNG), a leading provider of cloud business communications and collaboration solutions, today announced financial results for the fourth quarter and full year ended December 31, 2016.

Fourth Quarter Financial Highlights

 

    Software subscriptions revenue grew 28% year-over-year to $98.0 million; total revenue was $104.5 million.

 

    RingCentral Office® annualized exit recurring software subscriptions (ARR) grew 38% year-over-year to $341.5 million.

 

    Total annualized exit recurring software subscriptions (ARR) grew 31% year-over-year to $414.4 million.

 

    GAAP software subscriptions gross margin was 80.2%, up 2.2 points year-over-year, while Non-GAAP software subscriptions gross margin was 81.2%, up 2.5 points year-over-year.

 

    GAAP operating margin was (6.3%), up 0.9 points year-over-year, while Non-GAAP operating margin was 2.1%, up 1.1 points year-over-year.

 

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

“The fourth quarter was a strong finish to a great year driven by our success with midmarket and enterprise customers. Our technology leadership and strategy of delivering integrated communications and collaboration solutions are paying off handsomely,” said Vlad Shmunis, RingCentral’s Chairman and CEO. “Additionally, the reseller channels are now increasingly switching their focus to cloud solutions and it has enabled us to scale our midmarket and enterprise go-to-market efforts rapidly. These larger customer segments are now an over $100 million business, growing at over 90% year over year. With this momentum and the very large underpenetrated market, I feel confident that we will be a $1 billion revenue company by the end of 2020.”

Financial Results for the Fourth Quarter 2016

 

    Revenue: Total revenue was $104.5 million for the fourth quarter of 2016, up from $83.4 million in the fourth quarter of 2015. Software subscriptions revenue was $98.0 million for the fourth quarter of 2016, up from $76.5 million in the fourth quarter of 2015.

 

    Pro Forma1 Revenue Comparison: Total revenue of $104.5 million in the fourth quarter of 2016, up from $80.8 million in the fourth quarter of 2015, representing 29% growth, adjusting for the agency model on a comparable basis.

 

1  In 1Q’16, 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 remained under the direct phone sales model.

 

1 | Page


    Net Income (Loss) Per Share: GAAP net loss per share was ($0.09) for the fourth quarter of 2016 compared with ($0.10) for the fourth quarter of 2015. Non-GAAP net income per diluted share was $0.03 for the fourth quarter of 2016, compared with $0.01 per diluted share for the fourth quarter of 2015.

 

    Balance Sheet: Total cash and cash equivalents at the end of the fourth quarter of 2016 was $160.4 million, compared with $152.4 million at the end of the third quarter of 2016.

Financial Results for the Full Year 2016

 

    Revenue: Total revenue was $379.7 million for the full year of 2016, up from $296.2 million in the full year of 2015. Software subscriptions revenue was $355.9 million for the full year of 2016, up from $271.2 million in the full year of 2015.

 

    Pro Forma1 Revenue Comparison: Total revenue of $378.3 million in the full year of 2016, up from $287.0 million in the full year of 2015, representing 32% growth, adjusting for the agency model on a comparable basis.

 

    Net Income (Loss) Per Share: GAAP net loss per share was ($0.40) for the full year of 2016 compared with ($0.46) for the full year of 2015. Non-GAAP net income (loss) per diluted share was $0.09 for the full year of 2016, compared with ($0.12) per diluted share for the full year of 2015.

 

    Balance Sheet: Total cash and cash equivalents at the end of 2016 was $160.4 million, compared with $137.6 million at the end of 2015.

Fourth Quarter 2016 and Recent Business Highlights

 

    RingCentral Global Office™ has expanded to provide a local experience in over 30 countries and has been adopted by over 600 multinational enterprises.

 

    Announced that Structural Group has selected RingCentral as its new cloud communications and collaboration solution provider. With more than 1,800 employees across 22 locations in North America, Structural Group needed a new generation of flexible, mobile-first solutions to enhance customer engagement and productivity for its distributed and mobile workforce.

 

    Announced that Sungevity will replace its existing legacy on-premise PBX system and other applications for over 700 users with RingCentral. RingCentral’s architecture and open platform makes for a seamless integration with Sungevity’s existing business process and software platform. RingCentral will reduce Sungevity’s communication and collaboration solution costs by nearly 50 percent.

 

    Achieved milestone of issuing 100th U.S. patent, reinforcing RingCentral’s strong commitment to technology development and intellectual property protection

 

    RingCentral Connect Platform reached 1.6 million API requests per day and a 300% annual increase in API requests overall.

 

    Announced the addition of Extended Enterprise Support to the RingCentral Professional Services™ portfolio. This program provides enterprises requiring premium support services a dedicated team of technical account managers and customer success managers.

 

2 | Page


Conference Call Details:

 

    What: RingCentral financial results for the fourth quarter and full year of 2016 and outlook for the first quarter and full year of 2017.

 

    When: Monday, February 13, 2017 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 13653961 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 (844) 512-2921 from the United States or (412) 317-6671 internationally with recording access code 13653961.

About RingCentral

RingCentral, Inc. (NYSE: RNG) is a global provider of cloud unified communications and collaboration solutions. More flexible and cost-effective than legacy on-premise systems, RingCentral empowers today’s mobile and distributed workforce to be connected anywhere and on any device through voice, video, team messaging, collaboration, SMS, conferencing, online meetings, contact center, and fax. RingCentral provides an open platform that integrates with today’s leading business apps while giving customers the flexibility to customize their own workflows. RingCentral is a leader in the 2016 Gartner Magic Quadrant for Unified Communications as a Service Worldwide for the second consecutive year. RingCentral is headquartered in Belmont, Calif. RingCentral 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, our GAAP and non-GAAP guidance, our markets and strategic opportunities, and our expectations regarding our strategy of providing integrated global open communications and collaboration solutions, our reseller channels, our revenue growth and our momentum to reach $1 billion in revenues. 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 manage our expenses and growth; and general market, political, economic, and business conditions, as well as those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Form 10-Q for the quarter ended September 30, 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.

 

3 | Page


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

 

4 | Page


TABLE 1

RINGCENTRAL, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

 

     December 31, 2016     December 31, 2015  

Assets

    

Current assets

    

Cash and cash equivalents

   $ 160,355      $ 137,588   

Accounts receivable, net

     30,243        19,163   

Inventory

     63        2,317   

Prepaid expenses and other current assets

     15,250        11,978   
  

 

 

   

 

 

 

Total current assets

     205,911        171,046   

Property and equipment, net

     31,994        28,160   

Goodwill

     9,393        9,393   

Acquired intangibles, net

     2,244        3,266   

Other assets

     3,087        2,948   
  

 

 

   

 

 

 

Total assets

   $ 252,629      $ 214,813   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Accounts payable

   $ 7,810      $ 5,196   

Accrued liabilities

     48,322        34,702   

Current portion of capital lease obligation

     181        269   

Current portion of long-term debt

     14,528        3,750   

Deferred revenue

     45,159        36,657   
  

 

 

   

 

 

 

Total current liabilities

     116,000        80,574   

Long-term debt

     312        14,840   

Sales tax liability

     3,077        3,670   

Capital lease obligation

     —          181   

Other long-term liabilities

     3,199        5,416   
  

 

 

   

 

 

 

Total liabilities

     122,588        104,681   

Stockholders’ equity

    

Common stock

     7        7   

Additional paid-in capital

     366,800        319,792   

Accumulated other comprehensive income

     2,737        527   

Accumulated deficit

     (239,503     (210,194
  

 

 

   

 

 

 

Total stockholders’ equity

     130,041        110,132   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 252,629      $ 214,813   
  

 

 

   

 

 

 

 

5 | Page


TABLE 2

RINGCENTRAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

 

     Three Months Ended     Year Ended  
     December 31,     December 31,  
     2016     2015     2016     2015  

Revenues

        

Software subscriptions

   $ 97,952      $ 76,532      $ 355,850      $ 271,245   

Other

     6,551        6,907        23,874        24,983   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     104,503        83,439        379,724        296,228   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues

        

Software subscriptions

     19,363        16,851        73,470        66,354   

Other

     5,289        6,011        18,741        20,917   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     24,652        22,862        92,211        87,271   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     79,851        60,577        287,513        208,957   

Operating expenses

        

Research and development

     17,417        15,312        65,514        52,924   

Sales and marketing

     54,701        38,378        192,497        139,851   

General and administrative

     14,339        12,883        55,454        47,114   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     86,457        66,573        313,465        239,889   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (6,606     (5,996     (25,952     (30,932

Other income (expense), net

        

Interest expense

     (162     (196     (746     (1,123

Other income (expense), net

     (94     (670     (2,375     (1,307
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense), net

     (256     (866     (3,121     (2,430
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before provision (benefit) for income taxes

     (6,862     (6,862     (29,073     (33,362

Provision (benefit) for income taxes

     84        79        236        (1,263
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (6,946   $ (6,941   $ (29,309   $ (32,099
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share

        

Basic and diluted

   $ (0.09   $ (0.10   $ (0.40   $ (0.46
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic and diluted

     73,961        71,420        72,994        70,069   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

6 | Page


TABLE 3

RINGCENTRAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

     Year Ended  
     December 31,  
     2016     2015  

Cash flows from operating activities

    

Net loss

   $ (29,309   $ (32,099

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

    

Depreciation and amortization

     14,663        13,467   

Share-based compensation

     30,840        22,088   

Foreign currency remeasurement loss

     2,615        843   

Tax benefit from release of valuation allowance

     —          (1,411

Impairment of fixed assets

     —          1,317   

Non-cash interest expense and other expenses related to debt

     —          156   

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

     —          616   

Provision for bad debt

     648        411   

Deferred income taxes

     (36     (8

Others

     583        416   

Changes in assets and liabilities:

    

Accounts receivable

     (11,728     (11,923

Inventory

     2,254        (606

Prepaid expenses and other current assets

     (3,272     (3,636

Other assets

     76        (422

Accounts payable

     1,516        1,591   

Accrued liabilities

     15,165        2,354   

Deferred revenue

     8,502        11,071   

Other liabilities

     (2,809     861   
  

 

 

   

 

 

 

Net cash provided by operating activities

     29,708        5,086   
  

 

 

   

 

 

 

Cash flows from investing activities

    

Purchases of property and equipment

     (14,236     (14,631

Capitalized internal-use software

     (2,162     (2,513

Cash paid in business combination, net of cash acquired

     —          (4,670

Proceeds from the maturity of available-for-sale securities

     —          28,080   

Proceeds from the maturity of restricted investments

     —          100   
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (16,398     6,366   
  

 

 

   

 

 

 

Cash flows from financing activities

    

Proceeds from issuance of stock in connection with stock plans

     15,104        19,524   

Taxes paid related to net share settlement of equity awards

     (255     (151

Payment of holdback from Glip acquisition

     (1,500     —     

Repayment of debt

     (3,750     (6,142

Repayment of capital lease obligations

     (269     (594
  

 

 

   

 

 

 

Net cash provided by financing activities

     9,330        12,637   
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     127        317   

Net increase in cash and cash equivalents

     22,767        24,406   

Cash and cash equivalents

    

Beginning of period

     137,588        113,182   
  

 

 

   

 

 

 

End of period

   $ 160,355      $ 137,588   
  

 

 

   

 

 

 

 

7 | Page


TABLE 4

RINGCENTRAL, INC.

RECONCILIATION OF OPERATING INCOME (LOSS)

GAAP MEASURES TO NON-GAAP MEASURES

(Unaudited, in thousands)

 

     Three Months Ended     Year Ended  
     December 31,     December 31,  
     2016     2015     2016     2015  

Revenues

        

Software subscriptions

   $ 97,952      $ 76,532      $ 355,850      $ 271,245   

Other

     6,551        6,907        23,874        24,983   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     104,503        83,439        379,724        296,228   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues reconciliation

        

GAAP Software subscriptions cost of revenues

     19,363        16,851        73,470        66,354   

Stock-based compensation

     (810     (586     (3,048     (2,054

Amortization of acquisition intangibles

     (151     —          (603     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Software subscriptions cost of revenues

     18,402        16,265        69,819        64,300   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Other cost of revenues

     5,289        6,011        18,741        20,917   

Stock-based compensation

     (31     —          (117     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Other cost of revenues

     5,258        6,011        18,624        20,917   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit and gross margin reconciliation

        

Non-GAAP Subscriptions

     81.2     78.7     80.4     76.3

Non-GAAP Other

     19.7     13.0     22.0     16.3

Non-GAAP Gross profit

     77.4     73.3     76.7     71.2

Operating expenses reconciliation

        

GAAP Research and development

     17,417        15,312        65,514        52,924   

Stock-based compensation

     (1,805     (1,642     (7,296     (5,387

Amortization of acquisition intangibles

     —          (151     —          (480

Acquisition related matters

     (309     (244     (1,411     (575
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Research and development

     15,303        13,275        56,807        46,482   
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     14.6     15.9     15.0     15.7

GAAP Sales and marketing

     54,701        38,378        192,497        139,851   

Stock-based compensation

     (3,111     (1,867     (10,902     (7,200

Amortization of acquisition intangibles

     (105     (105     (420     (105
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Sales and marketing

     51,485        36,406        181,175        132,546   
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     49.3     43.6     47.7     44.7

GAAP General and administrative

     14,339        12,883        55,454        47,114   

Stock-based compensation

     (2,480     (2,203     (9,477     (7,447

Acquisition related matters

     —          (39     (59     (787
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP General and administrative

     11,859        10,641        45,918        38,880   
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     11.3     12.8     12.1     13.1
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations reconciliation

        

GAAP loss from operations

     (6,606     (5,996     (25,952     (30,932

Stock-based compensation

     8,237        6,298        30,840        22,088   

Amortization of acquisition intangibles

     256        256        1,023        585   

Acquisition related matters

     309        283        1,470        1,362   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Income (loss) from operations

   $ 2,196      $ 841      $ 7,381      $ (6,897
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Operating margin

     2.1     1.0     1.9     (2.3 %) 

 

8 | Page


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     Year Ended  
     December 31,     December 31,  
     2016     2015     2016     2015  

Net Income (loss) reconciliation

        

GAAP Net loss

   $ (6,946   $ (6,941   $ (29,309   $ (32,099

Stock-based compensation

     8,237        6,298        30,840        22,088   

Amortization of acquisition intangibles

     256        256        1,023        585   

Acquisition related matters

     309        283        1,470        1,362   

Intercompany remeasurement loss

     167        594        2,508        928   

Tax benefit from release of valuation allowance

     —          —          —          (1,411
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net income (loss)

   $ 2,023      $ 490      $ 6,532      $ (8,547
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     73,961        71,420        72,994        70,069   

Effect of dilutive securities

     3,606        3,612        3,414        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     77,567        75,032        76,408        70,069   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Net loss per share

   $ (0.09   $ (0.10   $ (0.40   $ (0.46
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net income (loss) per share

   $ 0.03      $ 0.01      $ 0.09      $ (0.12
  

 

 

   

 

 

   

 

 

   

 

 

 

 

9 | Page


TABLE 6

RINGCENTRAL, INC.

PRO FORMA2 STATEMENT OF GROSS MARGIN UNDER AGENCY MODEL

(Unaudited, in thousands)

 

    2015     2016     4Q’16  
    1Q     2Q     3Q     4Q     1Q     2Q     3Q     4Q     Q/Q     Y/Y  

GAAP Software subscription revenue

  $ 59,951      $ 64,441      $ 70,321      $ 76,532      $ 79,978      $ 86,067      $ 91,853      $ 97,952        7     28

GAAP Other revenue

  $ 5,367      $ 6,250      $ 6,459      $ 6,907      $ 6,560      $ 5,777      $ 4,986      $ 6,551       

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      $ 6,551        31     52
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total pro forma revenue

  $ 63,096      $ 68,590      $ 74,502      $ 80,842      $ 85,102      $ 91,844      $ 96,839      $ 104,503        8     29
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Software subscription cost of revenue

  $ 15,914      $ 16,505      $ 17,084      $ 16,851      $ 16,723      $ 18,173      $ 19,211      $ 19,363       

Stock-based compensation

    (457     (476     (535     (586     (634     (781     (824     (810    

Amortization of acquisition intangibles

    —          —          —          —          (151     (151     (151     (151    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

Non-GAAP Software subscriptions cost of revenue

  $ 15,457      $ 16,029      $ 16,549      $ 16,265      $ 15,938      $ 17,241      $ 18,236      $ 18,402       

GAAP Other cost of revenue

  $ 4,633      $ 5,024      $ 5,249      $ 6,011      $ 5,017      $ 4,191      $ 4,244      $ 5,289       

Stock-based compensation

    —          —          —          —          (19     (32     (35     (31    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

Non-GAAP Other cost of revenue

  $ 4,633      $ 5,024      $ 5,249      $ 6,011      $ 4,998      $ 4,159      $ 4,209      $ 5,258       

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      $ 5,258       
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total pro forma cost of revenue

  $ 17,868      $ 18,952      $ 19,520      $ 19,679      $ 19,500      $ 21,400      $ 22,445      $ 23,660        5     20
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pro forma software subscriptions revenue gross profit

  $ 44,494      $ 48,412      $ 53,772      $ 60,267      $ 64,040      $ 68,826      $ 73,617      $ 79,550        8     32

Pro forma other revenue gross profit

    734        1,226        1,210        896        1,562        1,618        777        1,293        66     44
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total pro forma gross profit

  $ 45,228      $ 49,638      $ 54,982      $ 61,163      $ 65,602      $ 70,444      $ 74,394      $ 80,843        9     32
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pro forma software subscriptions revenue gross margin

    74     75     76     79     80     80     80     81    

Pro forma other revenue gross margin

    23     30     29     21     30     28     16     20    

Total pro forma gross margin

    72     72     74     76     77     77     77     77    

 

2  In 1Q’16, 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.

 

10 | Page