EX-99.1 2 d811013dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

LOGO

RingCentral Announces Revenue Increase of 36% for Third Quarter 2014

RingCentral Office® Annualized Exit Monthly Recurring Subscriptions Grew 53%

Reports Greater Than 500 Basis Point Improvement in Non-GAAP Operating Margins

San Mateo, Calif. – October 29, 2014 – RingCentral, Inc. (NYSE: RNG), a leading provider of cloud-business communications solutions, today announced financial results for the third quarter ended September 30, 2014.

Third Quarter Highlights:

 

    Revenue increased 36% year-over-year to $56.9 million.

 

    Total annualized exit monthly recurring subscriptions were up 37% year-over-year to $219.8 million.

 

    RingCentral Office® annualized exit monthly recurring subscriptions were up 53% year-over-year to $153.7 million.

 

    Net monthly subscription dollar retention was over 99%.

“I’m pleased to report another strong quarter with results above our guidance on both the top and bottom line,” said Vlad Shmunis, RingCentral’s Chairman and CEO. “Larger businesses are increasingly adopting our cloud-based offerings, as we continued to make meaningful strides up-market in the quarter. In addition, we were able to further demonstrate operating leverage in the quarter, as we improved our Non-GAAP operating margins significantly on both a quarter-over-quarter and year-over-year basis.”

Financial Results of the Third Quarter 2014:

 

    Revenue: Total revenue was $56.9 million for the third quarter of 2014, up 36% from the third quarter of 2013. Services revenue was $52.0 million for the third quarter of 2014, up 37% from the third quarter of 2013. Product revenue was $5.0 million for the third quarter of 2014, up 25% from the third quarter of 2013.

 

    Net Income (Loss): Net income (loss) per diluted share was ($0.18) for the third quarter of 2014 compared with ($0.36) for the third quarter of 2013. Non-GAAP net income (loss) per diluted share was ($0.11) for the third quarter of 2014, compared with ($0.32) per diluted share for the third quarter of 2013.

 

    Balance Sheet: Total cash and short-term investments at the end of the third quarter of 2014 were $149.4 million, compared to $151.4 million at the end of the second quarter of 2014.


Third Quarter 2014 and Recent Business Highlights:

 

    Announced that Gartner has positioned RingCentral furthest along the completeness of vision axis in the August 28, 2014 “Magic Quadrant for Unified Communications as a Service, Multiregional.”

 

    RingCentral Meetings offering earned a 2014 Internet Telephony TMC Labs Innovation Award, for its innovative technology enabling online meetings with HD video and web conferencing on any device.

 

    Received the “Global Excellence Award for Outstanding Product/Service”, recognizing its innovative mobile-centric approach to cloud-based business communications technology.

 

    Named to the inaugural CRN Cloud Partner Program Guide, a valuable resource used by solution providers to connect and partner with the IT industry’s top cloud technologies.

Conference Call Details:

 

    What: RingCentral financial results for the third quarter of 2014 and outlook for the fourth quarter and full year of 2014.

 

    When: Wednesday, October 29, 2014 at 2PM PT (5PM 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 13592807 to access the call more quickly, and are encouraged to dial into the call 10 to 15 minutes prior to the start to prevent any delay in joining.

 

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

 

    Replay: A replay of the call will be available via telephone for seven days, beginning two hours after the call. To listen to the telephone replay in the U.S., please dial (877) 870-5176 from the United States or (858) 384-5517 internationally with recording access code 13592807.

About RingCentral

RingCentral, Inc. (NYSE: RNG) is a leading provider of cloud-based business communications solutions. Easier to manage and more flexible than on-premise communications phone systems, RingCentral’s cloud solution meets the needs of modern distributed and mobile workforces, while eliminating the expense and complications of on-premise traditional hardware-based systems and software. RingCentral is headquartered in San Mateo, California.

Forward-Looking Statements

This press release contains “forward-looking statements”, including statements regarding the continued adoption of our cloud-based offerings by large businesses and our future operating results. 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 customers and enter new geographies and markets; our ability to continue to release, and gain customer acceptance of, new and improved versions of our services; our ability to compete successfully against existing and new competitors; our ability to enter into and maintain relationships with carriers and other resellers; our ability to manage our expenses and growth; and general market, political, economic, and business conditions; as well as those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Form 10-Q for the quarter ended June 30, 2014, 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 results include certain Non-GAAP financial measures, including Non-GAAP operating income (loss) and Non-GAAP net income (loss) per share. We define Non-GAAP operating income (loss) as operating income (loss) excluding share-based compensation, legal settlements and other one-time items. We define Non-GAAP net income (loss) per share as net income (loss) per share assuming all preferred stock converted into common stock at the later of the start of the period or the date of issuance.

We have included Non-GAAP operating income (loss) and Non-GAAP net income (loss) per 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) and Non-GAAP net income (loss) per share can provide a useful measure for period-to-period comparisons of our core business.

Although Non-GAAP operating income (loss) and Non-GAAP net income (loss) per 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.


We have not reconciled Non-GAAP operating income (loss) to operating income (loss) guidance or Non-GAAP net income (loss) per share to net income (loss) per share guidance because we do not provide guidance for share-based compensation expense, provision for income taxes, interest income, interest expense, and other income and expenses, which are reconciling items between Non-GAAP operating income (loss) to operating income (loss) guidance or Non-GAAP net income (loss) per share to net income (loss) per share. As items that impact net income (loss) are out of our control and/or cannot be reasonably predicted, we are unable to provide such guidance. Accordingly, reconciliation to net income (loss) is not available without unreasonable effort. For a reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see the reconciliation tables included in this press release.

Our reported results also include our total annualized exit monthly recurring subscriptions and RingCentral Office annualized exit monthly recurring subscriptions. We define our total annualized exit monthly recurring subscriptions as our total monthly recurring subscriptions multiplied by 12. Our total monthly recurring subscriptions equals 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 services revenues. 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.

Investor Relations Contact:

Mitesh Dhruv, RingCentral

Greg Kleiner, ICR for RingCentral

(650) 581-9443

ir@RingCentral.com

Media Contact:

SSPR

Kristin Miller

(415) 470-2138

kmiller@sspr.com


RINGCENTRAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

 

     September 30,
2014
    December 31,
2013
 

Assets:

    

Current assets:

    

Cash and cash equivalents

   $ 120,691      $ 116,378   

Short-term investments

     28,662        —     

Accounts receivable, net

     7,443        3,045   

Inventory

     2,012        2,111   

Prepaid expenses and other current assets

     8,369        5,214   
  

 

 

   

 

 

 

Total current assets

     167,177        126,748   

Property and equipment, net

     25,862        16,660   

Other assets

     2,866        1,777   
  

 

 

   

 

 

 

Total assets

   $ 195,905      $ 145,185   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity:

    

Current liabilities:

    

Accounts payable

   $ 5,700      $ 4,414   

Accrued liabilities

     31,659        20,559   

Current portion of capital lease obligation

     615        347   

Current portion of long-term debt

     18,489        9,871   

Deferred revenue

     23,415        16,552   
  

 

 

   

 

 

 

Total current liabilities

     79,878        51,743   

Long-term debt

     8,750        24,356   

Sales tax liability

     3,953        3,988   

Capital lease obligation

     618        247   

Other long-term liabilities

     2,771        1,336   
  

 

 

   

 

 

 

Total liabilities

     95,970        81,670   

Stockholders’ equity:

    

Common stock

     7        6   

Additional paid-in capital

     268,189        193,574   

Accumulated other comprehensive loss

     (286     (310

Accumulated deficit

     (167,975     (129,755
  

 

 

   

 

 

 

Total stockholders’ equity

     99,935        63,515   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 195,905      $ 145,185   
  

 

 

   

 

 

 


RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2014     2013     2014     2013  

Revenues:

        

Services

   $ 51,951     $ 37,925      $ 143,668      $ 104,669  

Product

     4,993       4,009        14,325        10,494  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     56,944       41,934        157,993        115,163  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues:

        

Services

     14,799       12,080        43,305        34,178  

Product

     4,606       3,888        13,546        10,189  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     19,405       15,968        56,851        44,367  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     37,539       25,966        101,142        70,796  

Operating expenses:

        

Research and development

     11,931       8,150        32,478        24,260  

Sales and marketing

     26,697       18,889        76,342        52,355  

General and administrative

     9,725       7,078        28,184        24,859  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     48,353       34,117        137,004        101,474  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (10,814 )     (8,151     (35,862     (30,678 )

Other income (expense), net

     (1,153 )     (647     (2,174     (2,120 )
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before provision (benefit) for income taxes

     (11,967 )     (8,798     (38,036     (32,798 )

Provision (benefit) for income taxes

     19       54        184        (66 )
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (11,986 )   $ (8,852   $ (38,220   $ (32,732 )
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share:

        

Basic and diluted

   ($ 0.18 )   ($ 0.36   ($ 0.58   ($ 1.41
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic and diluted

     67,800       24,452        66,313        23,290  
  

 

 

   

 

 

   

 

 

   

 

 

 


RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

     Nine Months Ended
September 30,
 
     2014     2013  

Cash flows from operating activities:

    

Net loss

   $ (38,220   $ (32,732

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization

     7,409        6,606   

Share-based compensation

     11,306        4,546   

Non-cash interest expense related to debt

     194        412   

Loss on disposal of assets

     24        —    

Deferred income tax

     82        (45

Changes in assets and liabilities:

    

Accounts receivable

     (4,398     198   

Inventory

     100        (1,202

Prepaid expenses and other current assets

     (3,155     (4,340

Other assets

     (1,109     (155

Accounts payable

     1,078        1,652   

Accrued liabilities

     11,318        (366

Deferred revenue

     6,863        4,283   

Other liabilities

     1,400        553   
  

 

 

   

 

 

 

Net cash used in operating activities

     (7,108     (20,590
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of property and equipment

     (15,169     (9,024

Purchases of available-for-sale securities

     (28,696     —    

Restricted investments

     —         (130
  

 

 

   

 

 

 

Net cash used in investing activities

     (43,865     (9,154
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Net proceeds from secondary offering of common stock

     57,167        —    

Net proceeds from debt agreements

     —          22,907   

Repayment of debt

     (7,182     (5,928

Repayment of capital lease obligations

     (509     (312

Proceeds from issuance of preferred stock warrants

     —          1,625   

Payment of offering costs

     (1,219     (1,773

Proceeds from issuance of stock in connection with stock plans

     7,010        835   
  

 

 

   

 

 

 

Net cash provided by financing activities

     55,267        17,354   
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     19        (22

Net increase (decrease) in cash and cash equivalents

     4,313        (12,412

Cash and cash equivalents:

    

Beginning of period

     116,378        37,864   
  

 

 

   

 

 

 

End of period

   $ 120,691      $ 25,452   
  

 

 

   

 

 

 


RINGCENTRAL, INC.

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

(In thousands, except per share data)

(Unaudited)

 

     Three Months
Ended
September 30,
2014
    Three Months
Ended
September 30,
2013
    Nine Months
Ended
September 30,
2014
    Nine Months
Ended
September 30,
2013
 

Revenues:

        

Services

   $ 51,951      $ 37,925      $ 143,668      $ 104,669   

Product

     4,993        4,009        14,325        10,494   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenues

     56,944        41,934        157,993        115,163   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of Revenues reconciliation:

        

GAAP Services cost of revenues

     14,799        12,080        43,305        34,178   

Share-based compensation

     (330     (129     (974     (297
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP services cost of revenues

     14,469        11,951        42,331        33,881   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Product cost of revenues

     4,606        3,888        13,546        10,189   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin reconciliation:

        

Non-GAAP Services

     72.1     68.5     70.5     67.6

Non-GAAP Product

     7.8     3.0     5.4     2.9

Non-GAAP Gross margin

     66.5     62.2     64.6     61.7

Operating expenses reconciliation:

        

GAAP Research and development

     11,931        8,150        32,478        24,260   

Share-based compensation

     (926     (367     (2,426     (884
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP research and development

     11,005        7,783        30,052        23,376   
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     19.3     18.6     19.0     20.3

GAAP Sales and marketing

     26,697        18,889        76,342        52,355   

Share-based compensation

     (1,396     (330     (3,661     (734
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP sales and marketing

     25,301        18,559        72,681        51,621   
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     44.4     44.3     46.0     44.8

GAAP General and administrative

     9,725        7,078        28,184        24,859   

Share-based compensation

     (1,546     (1,384     (4,245     (2,631

Legal related matters

     —          1,160        —          (3,097
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP general and administrative

     8,179        6,854        23,939        19,131   
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     14.4     16.3     15.2     16.6
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations reconciliation:

        

GAAP loss from operations

     (10,814     (8,151     (35,862     (30,678

Share-based compensation

     4,198        2,210        11,306        4,546   

Legal related matters

     —          (1,160     —          3,097   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP loss from Operations

     (6,616     (7,101     (24,556     (23,035
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss reconciliation:

        

GAAP Net loss

     (11,986     (8,852     (38,220     (32,732

Share-based compensation

     4,198        2,210        11,306        4,546   

Legal related matters

     —          (1,160     —          3,097   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net loss

   $ (7,788   $ (7,802   $ (26,914   $ (25,089
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net loss per share

        

GAAP

   $ (0.18   $ (0.36   $ (0.58   $ (1.41

Non-GAAP

   $ (0.11   $ (0.32   $ (0.41   $ (1.08

Shares used to compute basic and diluted GAAP and Non-GAAP net loss per share

     67,800        24,452        66,313        23,290