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8-K - 8-K - RingCentral, Inc.d643585d8k.htm

Exhibit 99.1

 

LOGO

RingCentral Announces Third Quarter 2018 Results

Total Revenue up 33%

Mid-market and Enterprise ARR up 75%

Enterprise ARR up over 100%

Belmont, Calif. – November 5, 2018 – RingCentral, Inc. (NYSE: RNG), a leading provider of global enterprise cloud communications and collaboration solutions, today announced financial results for the third quarter ended September 30, 2018.

Third Quarter Financial Highlights

 

   

Software subscriptions revenue increased 32% year over year to $158 million.

 

   

Total revenue increased 33% year over year to $174 million.

 

   

RingCentral Office® ARR increased 36% year over year to $592 million.

 

   

Annualized Exit Monthly Recurring Subscriptions (ARR) increased 31% year over year to $674 million.

 

   

Mid-market and Enterprise ARR increased 75% year over year to $270 million.

 

   

Enterprise ARR increased over 100% year over year to $146 million.

“Third quarter results were excellent. Our mid-market and enterprise businesses continue to lead the way supported by momentum from our channel partners.” said Vlad Shmunis, RingCentral’s founder, chairman and CEO. “With our relentless focus on innovation, through R&D investments and strategic acquisitions, we continue to expand our product portfolio and extend our lead in cloud communications. We believe we are well positioned to achieve our goal of exceeding $1 billion in revenue in 2020.”

New Accounting Standard

The Company adopted the new standard related to revenue recognition (Topic 606) effective January 1, 2018. The financial information in this press release is prepared in accordance with Topic 606, and the comparison period amounts used to calculate growth rates are based on amounts that have been adjusted from previously reported amounts to conform to the requirements of Topic 606.

Financial Results for the Third Quarter 2018

 

   

Revenue and Gross Margin: Total revenue was $174 million for the third quarter of 2018, up from $130 million in the third quarter of 2017, representing 33% growth. Total GAAP gross margin was 77.4% for the third quarter of 2018, up 1.0 points compared to 76.4% in the third quarter of 2017.

 

   

Operating Margin: GAAP operating margin was (4.0%), compared to (0.2%) in the year ago quarter, primarily driven by higher stock-based compensation and acquisition related expenses. Non-GAAP operating margin was 8.2%, compared to 8.3% in the year ago period.

 

   

Net Income (Loss) Per Share: GAAP net loss per share was ($0.12) for the third quarter of 2018 compared with breakeven for the third quarter of 2017, primarily driven by higher stock-based compensation, amortization of debt discount and issuance costs, and acquisition related expenses. Non-GAAP net income per diluted share was $0.19 for the third quarter of 2018, compared with $0.13 per diluted share for the third quarter of 2017.


   

Balance Sheet: Total cash and cash equivalents at the end of the third quarter of 2018 was $577 million, up from $567 million at the end of the second quarter of 2018.

Recent Highlights

 

   

Announced that RingCentral closed the acquisition of Dimelo, a leading cloud-based digital customer engagement platform. Dimelo enables enterprises to manage all of their digital customer interactions through a single platform. Dimelo is deployed by leading global organizations such as Allianz, AXA, BNP Paribas, ENGIE, Orange, and Telenor, spanning multiple industries including telecom, financial services, insurance and retail.

 

   

Announced that AT&T and RingCentral extended their relationship to provide cloud-based communications services to more businesses by entering into an agreement under which AT&T will resell RingCentral solutions to its customers. AT&T Office@Hand, based on the global RingCentral Office® platform, allows employees to work virtually anywhere and enhance their ability to connect with their customers. AT&T plans to sell the solution through direct and indirect sales channels to enterprises and to vertical sectors like financial services, healthcare and government.

 

   

Announced that BT enhanced and extended its Cloud Phone solution – which is hosted by RingCentral – to meet the needs of medium and large enterprise customers. The mobile-first solution, which has been rebranded as BT Cloud Work, provides the key communications capabilities enterprises need to engage customers, drive greater workforce productivity, and enhance mobility.

Financial Outlook

Full Year 2018 Guidance:

 

   

Raising software subscriptions revenue range to $606 to $608 million, representing annual growth of 30% to 31%. This is up from our prior range of $595 to $600 million and annual growth of 28% to 29%.

 

   

Raising total revenue range to $664 to $667 million, representing annual growth of 32%. This is up from our prior range of $649 to $656 million and annual growth of 29% to 30%.

 

   

Raising GAAP operating margin range of (3.1%) to (2.8%), up from the prior range of (3.5%) to (2.9%).

 

   

Raising non-GAAP operating margin to 8.4%, up from the prior range of 8.2% to 8.4%.

 

   

Raising non-GAAP EPS range to $0.71 to $0.73 based on 86.0 million fully diluted shares. This is up from our prior range of $0.66 to $0.70.


Fourth Quarter 2018 Guidance:

 

   

Software subscriptions revenue range of $165 to $167 million, representing annual growth of 27% to 28%

 

   

Total revenue range of $179 to $182 million, representing annual growth of 27% to 29%

 

   

GAAP operating margin range of (4.1%) and (3.1%)

 

   

Non-GAAP operating margin range of 7.9% and 8.1%

 

   

Non-GAAP EPS range of $0.17 to $0.19 based on 87.0 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 affected by the movement in various exchange rates relative to the US Dollar, 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 third quarter of 2018 and outlook for the fourth quarter and full year of 2018.

 

   

When: Monday, November 5, 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: Following the completion of the call through 11:59 PM ET on November 12, 2018, a telephone replay will be available by dialing (844) 512-2921 from the United States or (412) 317-6671 internationally with recording access code 13684259.

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 and the RingCentral logo are trademarks of RingCentral, Inc.


Forward-Looking Statements

This press release contains “forward-looking statements,” including but not limited to, statements regarding our future financial results, our GAAP and non-GAAP guidance, our revenue growth and our expectation of exceeding $1 billion in revenue in 2020, our strength in the mid-market and enterprise segments and our channel partner momentum, the expected expansion of our product portfolio through our research and development investments and strategic acquisitions, the success of our reseller arrangement with AT&T, the extension of our lead in cloud communications, and our market opportunity. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on assumptions that may prove to be incorrect, which could cause actual results to differ materially from those expected or implied by the forward-looking statements. Among the important factors that could cause actual results to differ materially from those in any forward-looking statements are: our ability to grow at our expected rate of growth; our ability to add and retain larger and enterprise customers and enter new geographies and markets; our ability to continue to release, and gain customer acceptance of, new and improved versions of our services; our ability to compete successfully against existing and new competitors; our ability to enter into and maintain relationships with carriers and other resellers; our ability to successfully and timely integrate, and realize the benefits of any significant acquisition we may make; our ability to manage our expenses and growth; and general market, political, economic, and business conditions, as well as those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Form 10-Q for the quarter ended June 30, 2018, filed with the Securities and Exchange Commission; and in other filings we make with the Securities and Exchange Commission from time to time.

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

Non-GAAP Financial Measures

Our reported financial results and financial outlook include 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 including transaction costs, integration costs, restructuring costs, and acquisition-related retention payments, as well as changes in the fair value of contingent consideration obligations. Non-GAAP operating margin is defined as Non-GAAP operating income (loss) divided by total GAAP revenue. Non-GAAP net income (loss) is defined as GAAP net income (loss) excluding share-based compensation, intercompany remeasurement gains or losses, acquisition related matters, amortization of acquisition intangibles, non-cash interest expense associated with amortization of debt discount and issuance costs related to our convertible senior notes, and the related income tax effect of these adjustments.

Non-GAAP diluted shares outstanding include the impact on shares used in per share calculations of our outstanding capped call transactions. Our outstanding capped call transactions are anti-dilutive in GAAP earnings per share but are expected to mitigate the dilutive effect of our convertible notes and therefore are included in the calculations of non-GAAP diluted shares outstanding.


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 annualized exit monthly recurring subscriptions, RingCentral Office® annualized exit monthly recurring subscriptions, mid-market and enterprise and enterprise annualized exit monthly recurring subscriptions, and net monthly subscriptions dollar retention. We define our annualized exit monthly recurring subscriptions as our monthly recurring subscriptions multiplied by 12. Our monthly recurring subscriptions equal the monthly value of all recurring charges 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 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 calculate mid-market and enterprise annualized exit monthly recurring subscriptions in the same manner as we calculate our annualized exit monthly recurring subscriptions, except that only customer subscriptions from customers with 50 seats or more are included. We calculate enterprise annualized exit monthly recurring subscriptions in the same manner as we calculate our annualized exit monthly recurring subscriptions, except that only customer subscriptions from customers generating $100,000 or more in monthly recurring revenue are included. We define Dollar Net Change as the quotient of (i) the difference of our Monthly Recurring Subscriptions at the end of a period minus our Monthly Recurring Subscriptions at the beginning of a period minus our Monthly Recurring Subscriptions at the end of the period from new customers we added during the period, (ii) all divided by the number of months in the period. We define our Average Monthly Recurring Subscriptions as the average of the Monthly Recurring Subscriptions at the beginning and end of the measurement period.

Investor Relations Contact:

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.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

 

     September 30,
2018
    December 31,
2017
 
    

 

    *As Adjusted  

Assets

    

Current assets

    

Cash and cash equivalents

   $ 577,283     $ 181,192  

Accounts receivable, net

     74,183       46,690  

Deferred sales commission costs

     20,869       15,424  

Prepaid expenses and other current assets

     29,823       21,512  
  

 

 

   

 

 

 

Total current assets

     702,158       264,818  

Property and equipment, net

     60,200       43,298  

Deferred sales commission costs, noncurrent

     50,263       37,871  

Goodwill

     9,393       9,393  

Acquired intangibles, net

     8,366       1,462  

Other assets

     11,463       2,972  
  

 

 

   

 

 

 

Total assets

   $ 841,843     $ 359,814  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Accounts payable

   $ 6,017     $ 7,322  

Accrued liabilities

     85,714       54,977  

Current portion of capital lease obligation

     943       —    

Deferred revenue

     80,024       62,917  
  

 

 

   

 

 

 

Total current liabilities

     172,698       125,216  

Convertible senior notes, net

     361,637       —    

Capital lease obligation

     2,829       —    

Other long-term liabilities

     5,232       6,252  
  

 

 

   

 

 

 

Total liabilities

     542,396       131,468  

Stockholders’ equity:

    

Common stock

     8       8  

Additional paid-in capital

     526,891       434,840  

Accumulated other comprehensive income

     2,573       2,998  

Accumulated deficit

     (230,025     (209,500
  

 

 

   

 

 

 

Total stockholders’ equity

   $ 299,447     $ 228,346  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 841,843     $ 359,814  
  

 

 

   

 

 

 

* Prior-period information has been adjusted for the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on January 1, 2018.


TABLE 2

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2018     2017     2018     2017  
    

 

    *As Adjusted    

 

    *As Adjusted  

Revenues

        

Software subscriptions

   $ 158,068     $ 119,916     $ 440,987     $ 334,942  

Other

     15,757       10,363       44,013       27,490  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     173,825       130,279       485,000       362,432  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues

        

Software subscriptions

     27,958       22,912       79,200       64,970  

Other

     11,316       7,872       33,814       22,681  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     39,274       30,784       113,014       87,651  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     134,551       99,495       371,986       274,781  

Operating expenses

        

Research and development

     26,347       19,082       73,812       54,786  

Sales and marketing

     86,279       61,605       237,222       172,231  

General and administrative

     28,952       19,073       73,984       52,885  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     141,578       99,760       385,018       279,902  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (7,027     (265     (13,032     (5,121

Other income (expense), net

        

Interest expense

     (4,916     (6     (11,163     (94

Other income, net

     2,533       613       3,944       1,313  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense), net

     (2,383     607       (7,219     1,219  
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before income taxes

     (9,410     342       (20,251     (3,902

Provision for income taxes

     108       73       274       181  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ (9,518   $ 269     $ (20,525   $ (4,083
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income per common share

        

Basic

   $ (0.12   $ 0.00     $ (0.26   $ (0.05
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.12   $ 0.00     $ (0.26   $ (0.05
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic

     79,903       76,915       79,116       75,815  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     79,903       83,109       79,116       75,815  
  

 

 

   

 

 

   

 

 

   

 

 

 

* Prior-period information has been adjusted for the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on January 1, 2018.


TABLE 3

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

     Nine months ended
September 30,
 
     2018     2017  
    

 

    *As Adjusted  

Cash flows from operating activities

    

Net loss

   $ (20,525   $ (4,083

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

    

Depreciation and amortization

     17,194       11,929  

Share-based compensation

     49,379       30,504  

Amortization of deferred sales commission costs

     13,956       8,874  

Amortization of debt discount and issuance costs

     11,003       —    

Foreign currency remeasurement (gain) loss

     657       (700

Provision for bad debt

     2,390       1,508  

Deferred income taxes

     15       (18

Other

     458       123  

Changes in assets and liabilities

    

Accounts receivable

     (29,883     (11,188

Deferred sales commission costs

     (31,793     (23,402

Prepaid expenses and other current assets

     (6,256     (6,872

Other assets

     (406     1,419  

Accounts payable

     (1,128     2,168  

Accrued liabilities

     27,954       9,426  

Deferred revenue

     17,107       11,288  

Other liabilities

     (1,020     (100
  

 

 

   

 

 

 

Net cash provided by operating activities

     49,102       30,876  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Purchases of property and equipment

     (17,852     (15,886

Capitalized internal-use software

     (8,117     (5,432

Cash paid for acquisition of intangible assets

     (18,470     —    

Restricted investment

     —         530  
  

 

 

   

 

 

 

Net cash used in investing activities

     (44,439     (20,788
  

 

 

   

 

 

 

Cash flows from financing activities

    

Proceeds from issuance of convertible senior notes, net of issuance costs

     449,457       —    

Payments for capped call transactions and costs

     (49,910     —    

Repurchase of common stock

     (15,000     —    

Proceeds from issuance of stock in connection with stock plans

     13,632       19,685  

Taxes paid related to net share settlement of equity awards

     (5,457     (2,125

Repayment of debt

     —         (14,840

Repayment of capital lease obligations

     (741     (181
  

 

 

   

 

 

 

Net cash provided by financing activities

     391,981       2,539  
  

 

 

   

 

 

 

Effect of exchange rate changes

     (553     (676

Net increase in cash, cash equivalents and restricted cash

     396,091       11,951  

Cash, cash equivalents and restricted cash

    

Beginning of period

     181,192       160,355  
  

 

 

   

 

 

 

End of period

   $ 577,283     $ 172,306  
  

 

 

   

 

 

 

* Prior-period information has been adjusted for the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on January 1, 2018.


TABLE 4

RINGCENTRAL, INC.

RECONCILIATION OF OPERATING INCOME (LOSS)

GAAP MEASURES TO NON-GAAP MEASURES

(Unaudited, in thousands)

 

     Three Months Ended
September 30,
    Nine Months ended
September 30,
 
     2018     2017     2018     2017  
    

 

    *As Adjusted    

 

    *As Adjusted  

Revenues

        

Software subscriptions

   $ 158,068     $ 119,916     $ 440,987     $ 334,942  

Other

     15,757       10,363       44,013       27,490  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     173,825       130,279       485,000       362,432  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues reconciliation

        

GAAP Software subscriptions cost of revenues

     27,958       22,912       79,200       64,970  

Stock-based compensation

     (1,169     (981     (3,181     (2,703

Amortization of acquisition intangibles

     (151     (151     (452     (452
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Software subscriptions cost of revenues

     26,638       21,780       75,567       61,815  
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Other cost of revenues

     11,316       7,872       33,814       22,681  

Stock-based compensation

     (146     (45     (445     (118
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Other cost of revenues

     11,170       7,827       33,369       22,563  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit and gross margin reconciliation

        

Non-GAAP Subscriptions

     83.1     81.8     82.9     81.5

Non-GAAP Other

     29.1     24.5     24.2     17.9

Non-GAAP Gross profit

     78.2     77.3     77.5     76.7

Operating expenses reconciliation

        

GAAP Research and development

     26,347       19,082       73,812       54,786  

Stock-based compensation

     (4,069     (2,598     (11,069     (6,799

Acquisition related matters

     —         —         —         (443
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Research and development

     22,278       16,484       62,743       47,544  
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     12.8     12.7     12.9     13.1

GAAP Sales and marketing

     86,279       61,605       237,222       172,231  

Stock-based compensation

     (7,449     (4,105     (19,679     (11,556

Amortization of acquisition intangibles

     (876     —         (2,891     (180
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Sales and marketing

     77,954       57,500       214,652       160,495  
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     44.8     44.1     44.3     44.3

GAAP General and administrative

     28,952       19,073       73,984       52,885  

Stock-based compensation

     (5,682     (3,213     (15,005     (9,328

Acquisition related matters

     (1,742     —         (1,742     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP General and administrative

     21,528       15,860       57,237       43,557  
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     12.4     12.2     11.8     12.0

Income (loss) from operations reconciliation

        

GAAP loss from operations

     (7,027     (265     (13,032     (5,121

Stock-based compensation

     18,515       10,942       49,379       30,504  

Amortization of acquisition intangibles

     1,027       151       3,343       632  

Acquisition related matters

     1,742       —         1,742       443  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Income from operations

     14,257       10,828       41,432       26,458  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Operating margin

     8.2     8.3     8.5     7.3

* Prior-period information has been adjusted for the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on January 1, 2018.


TABLE 5

RINGCENTRAL, INC.

RECONCILIATION OF NET INCOME (LOSS)

GAAP MEASURES TO NON-GAAP MEASURES

(In thousands, except per share data) (Unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2018     2017     2018     2017  
    

 

    *As Adjusted    

 

    *As Adjusted  

Net Income (loss) reconciliation

        

GAAP net (loss) income

   $ (9,518   $ 269     $ (20,525   $ (4,083

Stock-based compensation

     18,515       10,942       49,379       30,504  

Amortization of acquisition intangibles

     1,027       151       3,343       632  

Acquisition related matters

     1,742       —         1,742       443  

Amortization of debt discount and issuance costs

     4,849       —         11,003       —    

Intercompany remeasurement loss (gain)

     (149     (392     874       (870

Income tax expense effects **

     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

   $ 16,466     $ 10,970     $ 45,816     $ 26,626  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation between GAAP and non-GAAP weighted average shares used in computing basic and diluted net (loss) income per common share:

        

Weighted average number of shares used in

computing basic net (loss) income per share

     79,903       76,915       79,116       75,815  

Effect of dilutive securities

     —         6,194       —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP weighted average shares used in

computing GAAP diluted net (loss) income per share

     79,903       83,109       79,116       75,815  

Effect of dilutive securities

     6,463       —         6,557       5,784  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP weighted average shares used in

computing non-GAAP diluted net income per share

     86,366       83,109       85,673       81,599  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income (loss) per share

        

GAAP Net (loss) income per share

   $ (0.12   $ 0.00     $ (0.26   $ (0.05
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net income per share

   $ 0.19     $ 0.13     $ 0.53     $ 0.33  
  

 

 

   

 

 

   

 

 

   

 

 

 

* Prior-period information has been adjusted for the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on January 1, 2018.

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


TABLE 6

RINGCENTRAL, INC.

RECONCILIATION OF FORECASTED OPERATING MARGIN

GAAP MEASURES TO NON-GAAP MEASURES

(Unaudited, in millions)

 

     Q4 2018     FY 2018  
     Low Range     High Range     Low Range     High Range  

GAAP revenues

     179.0       182.0       664.0       667.0  
        

GAAP loss from operations

     (7.4     (5.7     (20.4     (18.7

GAAP operating margin

     (4.1 %)      (3.1 %)      (3.1 %)      (2.8 %) 

Stock-based compensation

     19.8       18.8       69.2       68.2  

Amortization of acquisition intangibles and acquisition related matters

     1.7       1.6       6.8       6.7  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP income from operations

   $ 14.1     $ 14.7     $ 55.6     $ 56.2  

Non-GAAP operating margin

     7.9     8.1     8.4     8.4