RingCentral Announces First Quarter 2016 Results
Software Subscriptions Revenue up 33%
RingCentral Office® ARR up 45%
Record Software Subscriptions Gross Margin of 80%
BELMONT, Calif. — April 27, 2016 — RingCentral, Inc. (NYSE:RNG), a leading provider of cloud business communications and collaboration solutions, today announced financial results for the first quarter ended March 31, 2016.
First Quarter Financial Highlights
- GAAP software subscriptions revenue grew 33% year-over-year to $80.0 million; total revenue was $86.5 million.
- RingCentral Office® annualized exit monthly recurring software subscriptions (ARR) grew 45% year-over-year to $269.3 million.
- Total annualized exit monthly recurring software subscriptions (ARR) grew 34% year-over-year to $340.3 million.
- Non-GAAP software subscriptions gross margin was a record 80.1%, up 6 points year-over-year. GAAP software subscriptions gross margin was 79.1%, up 6 points year-over-year.
- Non-GAAP operating margin improved to 1.5%, up 9 points year-over-year. GAAP operating margin (loss) improved to (6.9%), up 8 points year-over-year.
- Net monthly subscriptions dollar retention: RingCentral Office® over 100% and overall subscriptions over 99%.
“The first quarter was a great start to 2016 for RingCentral with revenue and margins showing significant year-over-year performance, driving them both ahead of the high end of our guidance. We believe our multiple growth vectors and significant market opportunity put RingCentral in a great position to continue to see strong growth over the next few years,” said Vlad Shmunis, RingCentral’s Chairman and CEO. “We believe we are well ahead of the competition in terms of investments in innovation, partnerships, and integrations, and we are investing to extend that lead. Looking at our pipeline, innovation roadmap, and the potential for future partnerships, I feel great about the opportunity ahead of us.”
Financial Results for the First Quarter 2016
- GAAP Revenue: Total revenue was $86.5 million for the first quarter of 2016, up from $65.3 million in the first quarter of 2015. Software subscriptions revenue was $80.0 million for the first quarter of 2016, up from $60.0 million in the first quarter of 2015.
- GAAP & Non-GAAP Net Income (Loss) Per Share: GAAP net loss per share was ($0.09) for the first quarter of 2016 compared with ($0.15) for the first quarter of 2015. Non-GAAP net income (loss) per share was $0.01 for the first quarter of 2016, compared with a loss of ($0.08) per share for the first quarter of 2015.
- Balance Sheet: Total cash and cash equivalents at the end of the first quarter of 2016 was $139.1 million, compared with $137.6 million at the end of the fourth quarter of 2015.
Pro Forma Financial Results for the First Quarter 2016
In the first quarter of 2016, RingCentral began to transition direct phone sales to an agency model in which phones are sold to RingCentral’s customers directly by a third party distributor. Under the new agency model, RingCentral receives a commission for phone sales instead of separately recognizing the full sale price and cost of the product. In order to provide transparency to investors, RingCentral is providing supplemental information on a pro forma basis to provide a clear comparison of the Company’s current results with prior periods under the new model. The pro forma information reflects results as-if the Company had fully transitioned to the new agency model for the first quarter of 2016 and for all periods in 2015. This pro forma information is in addition to GAAP and Non-GAAP results.
- Pro Forma Revenue: Adjusting for the new agency model on a comparable basis, pro forma total revenue grew 34% year-over-year to $83.9 million in the first quarter of 2016, up from $62.7 million in the first quarter of 2015.
- For the complete pro forma results, please refer to Table 5 included below.
- For a reconciliation of GAAP to pro forma results for the first quarter of 2016 and for all periods in 2015, please refer to Table 6 included below.
First Quarter 2016 and Recent Business Highlights
- Recently won a 2,000 user deployment with ARC Document Solutions. ARC is a global technology company focused on document and information management. With over 180 locations around the world, ARC was looking for a single, reliable global solution to cover their needs. RingCentral Global OfficeTM and GlipTM enterprise messaging and collaboration capabilities were some of the key differentiators in winning this business.
- Announced that New Relic, an industry leading software analytics company, will expand its RingCentral deployment globally, including the implementation of RingCentral Contact CenterTM. After a multi-vendor review of contact center solutions, New Relic determined that RingCentral Contact CenterTM was the ideal solution and the best fit for the company's overall business requirements for engaging customers - with a more reliable and feature-rich offering than other solutions in the market.
- Announced that well over 100 multinational customers are already using RingCentral's newly launched Global Office solution for their needs abroad.
- Announced that RingCentral ConnectTM Platform has surpassed the milestone of one million third party API requests per day, up 40% quarter-over-quarter.
- Announced that GlipTM messaging is experiencing significant traction among RingCentral customers with 3x the usage since the product's acquisition.
Conference Call Details
- What: RingCentral financial results for the first quarter of 2016 and outlook for the second quarter and full year of 2016.
- When: Wednesday, April 27, 2016 at 1:30PM PT (4:30PM ET).
- Dial in: To access the call in the United States, please dial (877) 705-6003, and for international callers dial (201) 493-6725. Callers may provide confirmation number 13634552 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 13634552.
RingCentral, Inc. (NYSE: RNG) is a leading provider of cloud-based business communications and collaboration solutions. RingCentral’s cloud solution is easier to manage, and more flexible and cost-efficient than legacy on-premises communications systems. It meets the needs of modern distributed and mobile workforces spanning SMB to Enterprises globally. RingCentral, Business Communications Made Simple. RingCentral is headquartered in Belmont, California. RingCentral, RingCentral Office, RingCentral Connect, RingCentral Global Office, RingCentral Contact Center, Glip and the RingCentral logo are trademarks of RingCentral, Inc.
This press release contains “forward-looking statements”, including statements regarding our future financial results, our expectations regarding our continued growth and expansion, our pipeline, our planned investments, our pace of innovation and integration with other technologies, and our future partnerships. 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 continue successfully our transition from direct phone sales to acting as Westcon’s agent to sell phones to our customers; 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-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission; and in other filings we make with the Securities and Exchange Commission from time to time.
All forward-looking statements in this press release are based on information available to RingCentral as of the date hereof, and we undertake no obligation to update these forward-looking statements, to review or confirm analysts’ expectations, or to provide interim reports or updates on the progress of the current financial quarter.
Non-GAAP Financial Measures
Our reported financial results include certain Non-GAAP financial measures, including Non-GAAP operating income (loss) and Non-GAAP net income (loss) per share. We define Non-GAAP net income (loss) as net income (loss) excluding share-based compensation, acquisition related matters, intercompany translation gains or losses, and other one-time items.
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.
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.
Source: RingCentral, Inc.
For additional information,
Jennifer Dong 650-288-0485