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8-K - 8-K - RingCentral, Inc.d480672d8k.htm

Exhibit 99.1

 

LOGO

RingCentral Announces Fourth Quarter and Full Year 2017 Results

Software Subscriptions ARR of $546 million up 32%

Q4’17 Software Subscriptions Revenue up 32%

RingCentral Office ARR up 36%

Belmont, Calif. – February 12, 2018 – RingCentral, Inc. (NYSE: RNG), a leading provider of global enterprise cloud communications and collaboration solutions, today announced financial results for the fourth quarter and full year ended December 31, 2017.

Fourth Quarter Financial Highlights

 

    Total revenue grew 34% year over year to $140.5 million.

 

    Software subscriptions revenue grew 32% year over year to $129.7 million.

 

    Software subscriptions annualized exit recurring software subscriptions (ARR) grew 32% year over year to $546.4 million.

 

    RingCentral Office® ARR grew 36% year over year to $466.2 million.

 

    GAAP software subscriptions gross margin was 81.3%, up 1.1 points year over year, while Non-GAAP software subscriptions gross margin was 82.1%, up 0.9 points year over year.

 

    GAAP operating margin was (4.4%), up 1.9 points year over year, while Non-GAAP operating margin was 3.9%, up 1.8 points year over year.

 

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

“The fourth quarter was an outstanding finish to a great year. This was led by our mid-market and enterprise business and further supported by continuing momentum from our channel partners. And we capped off the year with a record 15 deals with total contract value (TCV) of more than $1 million, up from 10 deals last quarter.” said Vlad Shmunis, RingCentral’s Chairman and CEO. “We further extended our leadership position in the UCaaS market driven by our relentless focus on innovation and commitment to customer success. We believe we are well positioned heading into 2018 and look forward to an exciting year ahead.”

Financial Results for the Fourth Quarter 2017

 

    Revenue and Gross Margin: Total revenue was $140.5 million for the fourth quarter of 2017, up from $104.5 million in the fourth quarter of 2016, representing 34% growth. Total gross margin was 76.1% for the fourth quarter of 2017, down 0.3% points compared to 76.4% in the fourth quarter of 2016.

As of January 1, 2017, RingCentral transitioned from an agency model to a direct phone sales model, under which RingCentral is recognizing the full sale price and cost of the product instead of receiving a commission for phone sales. Adjusting for the direct phone sales model on a comparable basis, total revenue in the fourth quarter grew 31% year over year and the total gross margin would have been 1.5% higher year over year.


    Net Income (Loss) Per Share: GAAP net loss per share was ($0.08) for the fourth quarter of 2017 compared with ($0.09) for the fourth quarter of 2016. Non-GAAP net income per diluted share was $0.07 for the fourth quarter of 2017, compared with $0.03 per diluted share for the fourth quarter of 2016.

 

    Balance Sheet: Total cash and cash equivalents at the end of the fourth quarter of 2017 was $181.2 million, compared with $172.3 million at the end of the third quarter of 2017.

Financial Results for the Full Year 2017

 

    Revenue and Gross Margin: Total revenue was $501.5 million for the full year of 2017, up from $379.7 million in the full year of 2016, representing 32% growth. Total gross margin was 75.8% for the full year of 2017, up 0.1% points compared to 75.7% in the full year of 2016.

Adjusting for the direct phone sales model on a comparable basis, total revenue for the full year of 2017 grew 29% year over year and the total gross margin would have been 1.7% higher year over year.

 

    Net Income (Loss) Per Share: GAAP net loss per share was ($0.34) for the full year of 2017 compared with ($0.40) for the full year of 2016. Non-GAAP net income per diluted share was $0.20 for the full year of 2017, compared with $0.09 per diluted share for the full year of 2016.

 

    Balance Sheet: Total cash and cash equivalents at the end of 2017 was $181.2 million, compared with $160.4 million at the end of 2016.

Recent Business Highlights

 

    Achieved compliance in security controls established by the Financial Industry Regulatory Authority, Inc. (FINRA) for cloud service providers. Through compliance with applicable FINRA cyber security controls, RingCentral’s financial customers, including banks, brokers, and traders, can trust that RingCentral Office® and RingCentral Glip® products meet regulatory requirements for security and reliability.

 

    Earned Certified status for information security by the Health Information Trust (HITRUST) Alliance. Certified status indicates that RingCentral Office and RingCentral Glip have a comprehensive framework of prescriptive and scalable security controls for our healthcare customers that met HITRUST requirements for protecting and securing sensitive private healthcare information.

 

    Announced Amazon® Alexa for Business integration that enables the use of voice commands to join meetings, send text messages, listen to voicemails, and make calls in an easy and intuitive way. In addition, RingCentral users can join any meeting scheduled in other Amazon Alexa–compatible third-party meeting applications without the need to download those applications.


    Added Latin America support to RingCentral Global OfficeTM including Brazil, Peru, and Argentina. RingCentral Global Office is now available in 37 countries.

Financial Outlook

Our guidance reflects the adoption of the new Topic 606 revenue recognition standard that is effective for us beginning January 1, 2018. The comparison period amounts used to calculate growth rates have been restated from previously reported amounts to conform to the requirements of Topic 606.

Full Year 2018 Guidance:

 

    Software subscriptions revenue between $581 and $589 million or an annual growth of 25% to 27%

 

    Total revenue guidance between $629 and $639 million, or an annual growth rate of 25% to 27%

 

    GAAP operating margin between (4.5%) and (3.5%), and Non-GAAP operating margin between 7.8% and 8.2%

 

    Non-GAAP EPS between $0.56 to $0.60 based on 86.5 million fully diluted shares

First Quarter 2018 Guidance:

 

    Software subscriptions revenue between $134 and $135 million, or an annual growth of 29% to 30%

 

    Total revenue between $144.5 and $146.5 million, or an annual growth of 29% to 31%

 

    GAAP operating margin between (4.4%) and (3.2%), and Non-GAAP operating margin between 7.0% and 7.6%

 

    Non-GAAP EPS between $0.11 and $0.13 based on 85 million fully diluted shares

For a reconciliation of our forecasted non-GAAP operating margin, see “Reconciliation of Forecasted Operating Margin GAAP Measures to Non-GAAP Measures.” We have not reconciled our forecasted non-GAAP EPS to GAAP EPS because we do not provide guidance on it. We do not provide guidance on forecasted GAAP EPS because of the inherent uncertainty and complexity involved in forecasting the intercompany remeasurement gain (loss), which could be a significant reconciling item between the non-GAAP and respective GAAP measure. The intercompany remeasurement gain (loss) is impacted by the movement in various exchange rates relative to the USD, which is difficult to predict and subject to constant change. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort.

Conference Call Details:

 

    What: RingCentral financial results for the fourth quarter, full year 2017 and outlook for the first quarter and full year of 2018.

 

    When: Monday, February 12, 2018 at 2:00PM PT (5:00PM ET).

 

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

 

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


    Replay: A replay of the call will be available via telephone for seven days, following the completion of 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 13675598.

Investor Presentation Details

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

About RingCentral

RingCentral, Inc. (NYSE:RNG) is a leading provider of global enterprise cloud communications and collaboration solutions. More flexible and cost-effective than legacy on-premises systems, RingCentral empowers today’s mobile and distributed workforce to communicate, collaborate, and connect from anywhere, on any device. RingCentral unifies voice, video, team messaging and collaboration, conferencing, online meetings, and integrated contact center solutions. RingCentral’s open platform integrates with leading business apps and enables customers to easily customize business workflows. RingCentral is headquartered in Belmont, California, and has offices around the world.

©2018 RingCentral, Inc. All rights reserved. RingCentral, RingCentral Office, RingCentral Global Office, RingCentral Glip and the RingCentral logo are trademarks of RingCentral, Inc.

New Revenue Recognition Standard Under Topic 606

In May 2014, the Financial Accounting Standards Board issued a new standard related to revenue recognition from contracts with customers (Topic 606), which is effective beginning January 1, 2018. Topic 606 supersedes the prior revenue recognition standard (Topic 605). The Company will adopt the requirements of the new standard in the first quarter of 2018, using the full retrospective transition method.

Under the new standard, the Company expects in some cases to recognize revenue earlier for subscription plans when the customer receives services for no consideration during the initial months (i.e., initial period is discounted) as a result of elimination of contingent revenue guidance (i.e., amounts allocated to delivered items are limited to amounts that are not contingent on the provision of future services) in the new standard. The most significant impact of adoption the new standard primarily relates to the deferral of incremental commission costs of obtaining subscription contracts, which previously were expensed as incurred. Under the new standard, the Company will defer all incremental commission costs to obtain the contract and amortize them over the expected period of benefit, which is estimated to be five years.

The financial information under the heading “Financial Outlook” above is prepared in accordance with Topic 606, and the comparison period amounts used to calculate growth rates are based on amounts that have been restated from previously reported amounts to conform to the requirements of Topic 606 (see Table 6). Unless otherwise indicated, all other financial information in this release is prepared in accordance with Topic 605.

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, our strength in the mid-market and enterprise segments, our growth from our channel partners, and our leadership in the UCaaS market. 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, 2017, filed with the Securities and Exchange Commission; and in other filings we make with the Securities and Exchange Commission from time to time.

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

Non-GAAP Financial Measures

Our reported financial results and financial outlook include certain Non-GAAP financial measures, including Non-GAAP software subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP operating income (loss), Non-GAAP net income (loss) and Non-GAAP net income (loss) per diluted share. Non-GAAP software subscriptions gross margin is defined as Non-GAAP subscriptions gross profit divided by GAAP subscriptions revenue. Non-GAAP other gross margin is defined as Non-GAAP other gross profit divided by GAAP other revenue. Non-GAAP operating income (loss) is defined as operating income (loss) excluding share-based compensation, amortization of acquisition intangibles, and acquisition related matters. 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 the related income tax effect of these adjustments.

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

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

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


Other Measures

Our reported results also include our software subscriptions annualized exit monthly recurring subscriptions, RingCentral Office® annualized exit monthly recurring subscriptions, and net monthly subscriptions dollar retention. We define our software subscriptions annualized exit monthly recurring subscriptions as our software subscriptions monthly recurring subscriptions multiplied by 12. Our software subscriptions monthly recurring subscriptions equal the monthly value of all software 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 software subscriptions 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:

Paul Thomas, RingCentral

(650) 458-4462

Paul.Thomas@RingCentral.com

Media Contact:

Jennifer Caukin, RingCentral

(650) 561-6348

Jennifer.Caukin@ringcentral.com


TABLE 1

RINGCENTRAL, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

 

     December 31,
2017
    December 31,
2016
 

Assets

    

Current assets

    

Cash and cash equivalents

   $ 181,192     $ 160,355  

Accounts receivable, net

     45,339       30,243  

Prepaid expenses and other current assets

     21,512       15,313  
  

 

 

   

 

 

 

Total current assets

     248,043       205,911  

Property and equipment, net

     43,298       31,994  

Goodwill

     9,393       9,393  

Acquired intangibles, net

     1,462       2,244  

Other assets

     2,972       3,087  
  

 

 

   

 

 

 

Total assets

   $ 305,168     $ 252,629  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Accounts payable

   $ 7,322     $ 7,810  

Accrued liabilities

     54,977       48,322  

Current portion of capital lease obligation

     —         181  

Current portion of long-term debt

     —         14,528  

Deferred revenue

     64,415       45,159  
  

 

 

   

 

 

 

Total current liabilities

     126,714       116,000  

Long-term debt

     —         312  

Other long-term liabilities

     6,252       6,276  
  

 

 

   

 

 

 

Total liabilities

     132,966       122,588  

Stockholders’ equity:

    

Common stock

     8       7  

Additional paid-in capital

     434,840       366,800  

Accumulated other comprehensive income

     2,998       2,737  

Accumulated deficit

     (265,644     (239,503
  

 

 

   

 

 

 

Total stockholders’ equity

   $ 172,202     $ 130,041  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 305,168     $ 252,629  
  

 

 

   

 

 

 


TABLE 2

RINGCENTRAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2017     2016     2017     2016  

Revenues

        

Software subscriptions

   $ 129,662     $ 97,952     $ 463,163     $ 355,850  

Other

     10,873       6,551       38,363       23,874  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     140,535       104,503       501,526       379,724  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues

        

Software subscriptions

     24,223       19,363       89,193       73,470  

Other

     9,397       5,289       32,078       18,741  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     33,620       24,652       121,271       92,211  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     106,915       79,851       380,255       287,513  

Operating expenses

        

Research and development

     20,362       17,417       75,148       65,514  

Sales and marketing

     73,310       54,701       260,069       192,497  

General and administrative

     19,428       14,339       72,313       55,454  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     113,100       86,457       407,530       313,465  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (6,185     (6,606     (27,275     (25,952

Other income (expense), net

        

Interest expense

     (5     (162     (99     (746

Other income (expense), net

     178       (94     1,491       (2,375
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense), net

     173       (256     1,392       (3,121
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (6,012     (6,862     (25,883     (29,073

Provision for income taxes

     77       84       258       236  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (6,089   $ (6,946   $ (26,141   $ (29,309
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share

        

Basic and diluted

   $ (0.08   $ (0.09   $ (0.34   $ (0.40
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic and diluted

     77,665       73,961       76,281       72,994  
  

 

 

   

 

 

   

 

 

   

 

 

 


TABLE 3

RINGCENTRAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

     Year ended December 31,  
     2017     2016  

Cash flows from operating activities

    

Net loss

   $ (26,141   $ (29,309

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

    

Depreciation and amortization

     16,214       14,663  

Share-based compensation

     42,060       30,840  

Foreign currency remeasurement (gain) loss

     (666     2,615  

Provision for bad debt

     1,674       648  

Deferred income tax

     (47     (36

Others

     181       583  

Changes in assets and liabilities

    

Accounts receivable

     (16,770     (11,728

Prepaid expenses and other current assets

     (6,199     (1,018

Other assets

     1,533       76  

Accounts payable

     176       1,516  

Accrued liabilities

     9,918       15,165  

Deferred revenue

     19,256       8,502  

Other liabilities

     (24     (2,809
  

 

 

   

 

 

 

Net cash provided by operating activities

     41,165       29,708  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Purchases of property and equipment

     (19,497     (14,236

Capitalized internal-use software

     (7,420     (2,162

Restricted investments

     530       —    
  

 

 

   

 

 

 

Net cash used in investing activities

     (26,387     (16,398
  

 

 

   

 

 

 

Cash flows from financing activities

    

Proceeds from issuance of stock in connection with stock plans

     25,495       15,104  

Payment of holdback from Glip acquisition

     —         (1,500

Repayment of debt

     (14,840     (3,750

Repayment of capital lease obligations

     (181     (269

Taxes paid related to net share settlement of equity awards

     (3,691     (255
  

 

 

   

 

 

 

Net cash provided by financing activities

     6,783       9,330  
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (724     127  

Net increase in cash and cash equivalents

     20,837       22,767  

Cash and cash equivalents

    

Beginning of period

     160,355       137,588  
  

 

 

   

 

 

 

End of period

   $ 181,192     $ 160,355  
  

 

 

   

 

 

 


TABLE 4

RINGCENTRAL, INC.

RECONCILIATION OF OPERATING INCOME (LOSS)

GAAP MEASURES TO NON-GAAP MEASURES

(Unaudited, in thousands)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2017     2016     2017     2016  

Revenues

        

Software subscriptions

   $ 129,662     $ 97,952     $ 463,163     $ 355,850  

Other

     10,873       6,551       38,363       23,874  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     140,535       104,503       501,526       379,724  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues reconciliation

        

GAAP Software subscriptions cost of revenues

     24,223       19,363       89,193       73,470  

Stock-based compensation

     (849     (810     (3,552     (3,048

Amortization of acquisition intangibles

     (150     (151     (602     (603
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Software subscriptions cost of revenues

     23,224       18,402       85,039       69,819  
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Other cost of revenues

     9,397       5,289       32,078       18,741  

Stock-based compensation

     (65     (31     (183     (117
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Other cost of revenues

     9,332       5,258       31,895       18,624  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit and gross margin reconciliation

        

Non-GAAP Subscriptions

     82.1     81.2     81.6     80.4

Non-GAAP Other

     14.2     19.7     16.9     22.0

Non-GAAP Gross profit

     76.8     77.4     76.7     76.7

Operating expenses reconciliation

        

GAAP Research and development

     20,362       17,417       75,148       65,514  

Stock-based compensation

     (2,751     (1,805     (9,550     (7,296

Acquisition related matters

     —         (309     (443     (1,411
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Research and development

     17,611       15,303       65,155       56,807  
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     12.5     14.6     13.0     15.0

GAAP Sales and marketing

     73,310       54,701       260,069       192,497  

Stock-based compensation

     (4,459     (3,111     (16,015     (10,902

Amortization of acquisition intangibles

     —         (105     (180     (420
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Sales and marketing

     68,851       51,485       243,874       181,175  
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     49.0     49.3     48.6     47.7

GAAP General and administrative

     19,428       14,339       72,313       55,454  

Stock-based compensation

     (3,432     (2,480     (12,760     (9,477

Acquisition related matters

     —         —         —         (59
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP General and administrative

     15,996       11,859       59,553       45,918  
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     11.4     11.3     11.9     12.1
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations reconciliation

        

GAAP loss from operations

     (6,185     (6,606     (27,275     (25,952

Stock-based compensation

     11,556       8,237       42,060       30,840  

Amortization of acquisition intangibles

     150       256       782       1,023  

Acquisition related matters

     —         309       443       1,470  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Income from operations

     5,521       2,196       16,010       7,381  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Operating margin

     3.9     2.1     3.2     1.9


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,  
     2017     2016     2017     2016  

Net Income (loss) reconciliation

        

GAAP Net loss

   $ (6,089   $ (6,946   $ (26,141   $ (29,309

Stock-based compensation

     11,556       8,237       42,060       30,840  

Amortization of acquisition intangibles

     150       256       782       1,023  

Acquisition related matters

     —         309       443       1,470  

Intercompany remeasurement loss (gain)

     50       167       (820     2,508  

Income tax expense effects *

     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net income

   $ 5,667     $ 2,023     $ 16,324     $ 6,532  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     77,665       73,961       76,281       72,994  

Effect of dilutive securities

     6,356       3,606       5,925       3,414  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     84,021       77,567       82,206       76,408  
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Net loss per share

   $ (0.08   $ (0.09   $ (0.34   $ (0.40
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net income per share

   $ 0.07     $ 0.03     $ 0.20     $ 0.09  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* The non-GAAP adjustments do not have an impact on our income tax provision due to our history of non-GAAP losses and full valuation allowance.


TABLE 6

RINGCENTRAL, INC.

RECONCILIATION OF FORECASTED OPERATING MARGIN

GAAP MEASURES TO NON-GAAP MEASURES

(In millions, except per share data)

(Unaudited)

 

     Q1 2018     FY 2018  
     Low Range     High Range     Low Range     High Range  

GAAP revenues

     144.5       146.5       629.0       639.0  

GAAP loss from operations

     (6.3     (4.7     (28.3     (22.2

GAAP operating margin

     (4.4 %)      (3.2 %)      (4.5 %)      (3.5 %) 

Stock-based compensation

     15.3       14.7       72.6       69.8  

Amortization of acquisition intangibles and acquisition related matters

     1.1       1.1       4.8       4.8  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP income from operations

   $ 10.1     $ 11.1     $ 49.1     $ 52.4  

Non-GAAP operating margin

     7.0     7.6     7.8     8.2


TABLE 7

RINGCENTRAL, INC.

FORECASTED GUIDANCE UNDER TOPIC 606

(In millions, except per share data)

(Unaudited)

 

     Q1 2018 Guidance     Q1 2017
Actual
    Growth rates  
     Low     High     Adjusted for
ASC 606
    Low     High  

Software subscriptions revenue

     134.0       135.0       104.1       29     30

Total revenues

     144.5       146.5       112.2       29     31

GAAP operating margin

     (4.4 %)      (3.2 %)      (2.0 %)     

Non-GAAP operating margin

     7.0     7.6     6.4    
     FY 2018 Guidance     FY 2017
Actual
    Growth rates  
     Low     High     Adjusted for
ASC 606
    Low     High  

Software subscriptions revenue

     581.0       589.0       465.3       25     27

Total revenues

     629.0       639.0       503.6       25     27

GAAP operating margin

     (4.5 %)      (3.5 %)      (1.1 %)     

Non-GAAP operating margin

     7.8     8.2     7.5