Ringcentral, Inc. · NYSE:RNG
Ringcentral — Q1 2022 Earnings Presentation
36 slides from Ringcentral's earnings presentation, May 9, 2022
Slide 1: Q1 2022 Earnings Presentation
Q1 2022 Earnings Presentation May 9, 2022 ©2022 RingCentral
Slide 2: Safe Harbor and Non-GAAP Measures
Safe Harbor and Non-GAAP Measures This presentation includes forward-looking statements within the meaning of the We provide guidance on forecasted non-GAAP operating margin, non-GAAP tax rates, federal securities laws. These statements relate to, among other things, our and non-GAAP EPS. Reconcilia
Slide 3: Vlad Shmunis
Vlad Shmunis Chief Executive Officer, Founder, and Chairman of the Board
Slide 4: Slide 4
Slide 5: Executive Announcements
Executive Announcements Sonalee Parekh Mo Katibeh Chief Financial Officer President & Chief Operating Officer 5 ©2022 RingCentral
Slide 6: Strong Start to the Year
Strong Start to the Year Total ARR Total Revenue Subscriptions Revenue $1.9B $468M $440M Up 35% Y/Y Up 33% Y/Y Up 35% Y/Y Mid-Market and Operating Free Cash Enterprise ARR1 Margin2 Flow Margin3 $1.2B 10.4% 8.2% Up 46% Y/Y Up 120 bps Y/Y Up 170 bps Y/Y 6 1) Mid-Market and Enterprise ARR is defined as
Slide 7: “TIP” on Why We Win
“TIP” on Why We Win Reliability, Security, Trust Trust Data Privacy Best in Class Innovation UCaaS Platform Partnerships Innovation Global Network with Partnerships Industry Leaders 7 ©2022 RingCentral
Slide 8: Commitment to Trust
Commitment to Trust 100x Better Reliability vs Three Nines 99.9% 99.99% 99.999% 8.8 hours 52.6 minutes 5.3 minutes Annual downtime allowed 15 straight quarters of 99.999% performance 8 ©2022 RingCentral
Slide 9: Driving Innovation with Webinar
Driving Innovation with Webinar (Attendees can easily join on mobile browsers too!) RingCentral Webinar Delivering a stress-free webinar experience that’s as simple to host and join as a video meeting. Run engaging webinars with integrations, analytics, and customization to connect at scale - built
Slide 10: Driving Innovation through AI
Driving Innovation through AI Advanced Meeting Insights Ester will have eight to ten laptops. Brian will have a demo environment for RingCentral at the enterprise connect. The RingCentral attendees have not seen where the desktop monitors are placed at the booth. Rose has included the major booth zo
Slide 11: Differentiated GTM Partner Network of Industry Leaders
Differentiated GTM Partner Strategic Partners Network of Industry Leaders Global Service Providers 11 Partners are ordered chronologically ©2022 RingCentral
Slide 12: Hybrid Work, Mobility, MSFT Teams Megatrends
1 Hybrid Work Megatrends 2 Mobility 3 MSFT Teams 4 Integrated Message, Video, Phone + Contact Center 12 ©2022 RingCentral
Slide 13: Confident about the Future
Confident about the Future Strong Performance Seasoned Management Team 35 Straight Quarters Driving next stage of growth Large Market Opportunities Relentless Focus Key Differentiators • Durable Revenue Growth • Innovation • Sustainable Profitability • GTM Strength • Strong Cash Flows 13 ©2022 RingC
Slide 14: Mo Katibeh
Mo Katibeh President & Chief Operating Officer
Slide 15: Megatrends Drive Growth
Megatrends Drive Growth Hybrid Work Mobility MSFT Teams Integrated Suffolk County, SCM Insurance Large dental Message, Video, New York Services organization and Phone + Contact healthcare staffing Center company Fortune 500 Logistics Company 15 ©2022 RingCentral
Slide 16: Go-To-Market Update
Go-To-Market Update Pipeline Strategic Partnerships International • ~+50% Q/Q • Rapid Mitel ramp • ~10% of revenues • Record increase from channel • Avaya up ~30% Q/Q • Wholesale Program 16 ©2022 RingCentral
Slide 17: Vaibhav Agarwal
Vaibhav Agarwal Interim Chief Financial Officer
Slide 18: Q1 2022 Highlights
Q1 2022 Highlights Subscriptions Operating Free Cash Flow Revenue Margin1 Margin2 $440M 10.4% 8.2% Up 35% Y/Y Up 120 bps Y/Y Up 170bps Y/Y 18 1) Non-GAAP Operating Margin ©2022 RingCentral 2) Non-GAAP Free Cash Flow Margin
Slide 19: Operating Above Rule of 40
Operating Above Rule of 40 Subscriptions Revenue Y/Y Growth + Operating Margin Rule of 40 Operating Margin Subscriptions Revenue Y/Y Growth 2018 2019 2020 2021 Q1'21 Q1'22 19 Note: Rule of 40 defined as subscriptions revenue Y/Y growth + Non-GAAP operating margin ©2022 RingCentral
Slide 20: Key Growth Drivers
Key Growth Drivers Enterprise ARR Contact Center Partnerships $790M >10% ~500K Up 53% Y/Y of Total ARR Seats across strategic partners 20 Note: Partnerships include Avaya, Atos, and Alcatel-Lucent Enterprise ©2022 RingCentral
Slide 21: Overall Average Revenue per User (ARPU)
Overall Average Revenue per User (ARPU) Remains $30 Stable >$30 $20 $10 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 21 ©2022 RingCentral
Slide 22: Subscription Gross Margin
Subscription Gross Margin 80% Remains Stable 60% ~82% 40% 20% Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 22 ©2022 RingCentral
Slide 23: Attractive Unit Economics from Strategic Partners
Attractive Unit Economics from Strategic Partners Lower Acquisition Costs LTV/CAC Lower Churn Total Company Strategic Partners 23 Note: For Illustrative purposes only ©2022 RingCentral Life Time Value is measured as cumulative gross profit dollar over the life of the customer adjusted for churn Cust
Slide 24: Improved Cash Flow Generation
Improved Cash Flow Generation Free Cash Flow ($ in millions) 0.09 8.2% 0.08 Strong Start to 0.07 6.6% $39 0.06 2022 0.05 4.8% 0.04 $23 0.03 0.02 $13 0.01 0 ($1) (0.6%) -0.01 Q1'19 Q1'20 Q1'21 Q1'22 -0.02 24 Free cash flow is defined as cash flow from operations, less cash paid for capital expenditur
Slide 25: FY 2022 Guidance Summary
FY 2022 Guidance Summary FY22 Prior FY22 Current Subscriptions Revenue Growth Y/Y 26%-28% 27%-28% Total Revenue Growth Y/Y 25%-26% 25%-26% Non-GAAP Operating Margin 10.6% 11.5% Non-GAAP EPS $1.69 - $1.72 $1.83 - $1.87 25 ©2022 RingCentral
Slide 26: Appendix
Appendix
Slide 27: Q1 2022 Financial Highlights
Q1 2022 Financial Highlights: Strong Momentum Across All Metrics $ Metric Y/Y Growth Revenue Subscriptions Revenue $440 million 35% Other Revenue $28 million 2% Total Revenue $468 million 33% ARR Total $1,895 million 35% RingCentral Office (UCaaS + CCaaS)1 $1,814 million 37% Customer ARR by Size Mid
Slide 28: Total ARR
Total ARR $ millions & $1,895 Y/Y Growth $1,800 $1,636 $1,516 +35% Y/Y $1,407 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 28 ©2022 RingCentral
Slide 29: RingCentral Office ARR
RingCentral Office ARR $ millions & $1,814 Y/Y Growth $1,716 $1,551 $1,431 +37% Y/Y $1,322 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 29 ©2022 RingCentral
Slide 30: Q1 2022 Results vs Guidance
Q1 2022 Results vs Guidance: Key Metrics Above Guidance Q1 Guidance Q1 Results Subscriptions Revenue $426M - $429M $440M Subscriptions Revenue Growth Y/Y 31% - 32% 35% Total Revenue $455M - $459M $468M Total Revenue Growth Y/Y 29% - 30% 33% GAAP Operating Margin (25.1%) – (23.7%) (22.1%) Non-GAAP Op
Slide 31: FY 2022 Guidance
FY 2022 Guidance Prior New Subscriptions Revenue $1.870B - $1.890B $1.882B - $1.898B Subscriptions Revenue Growth Y/Y 26% - 28% 27% - 28% Total Revenue $1.990B - $2.015B $1.990B - $2.015B Total Revenue Growth Y/Y 25% - 26% 25% - 26% GAAP Operating Margin (21.7%) - (20.3%). (20.1%) - (19.0%) Non-GAAP
Slide 32: Q2 2022 Guidance
Q2 2022 Guidance Q2 2022 Subscriptions Revenue $449M - $452M Subscriptions Revenue Growth Y/Y 28% - 29% Total Revenue $475.5M - $479.0M Total Revenue Growth Y/Y 25% - 26% GAAP Operating Margin (22.4%) – (21.1%) Non-GAAP Operating Margin 10.4% Non-GAAP Tax Rate 22.5% Non-GAAP EPS $0.40 - $0.41 32 ©20
Slide 33: Reconciliation of Operating Income (Loss)
RINGCENTRAL, INC. RECONCILIATION OF OPERATING INCOME (LOSS) GAAP MEASURES TO NON-GAAP MEASURES (Unaudited, in thousands) Three Months Ended March 31, 2022 2021 Revenues Subscriptions $ 439,927 $ 325,223 Other 27,729 27,133 Total revenues 467,656 352,356 Cost of revenues reconciliation GAAP Subscript
Slide 34: Reconciliation of Net Income (Loss)
RECONCILIATION OF NET INCOME (LOSS) GAAP MEASURES TO NON-GAAP MEASURES (In thousands, except per share data) (Unaudited) Three Months Ended March 31, 2022 2021 Net income (loss) reconciliation GAAP net loss $ (150,972) $ (186) Share-based compensation 102,346 62,493 Amortization of acquisition intan
Slide 35: Reconciliation of Cash Flows from Operating Activities
RINGCENTRAL, INC. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES GAAP MEASURES TO NON-GAAP FREE CASH FLOW MEASURES (Unaudited, in thousands) Three Months Ended March 31, 2022 2021 Net cash provided by operating activities $ 58,995 $ 36,955 Repayment of convertible senior notes attributable t
Slide 36: Reconciliation of Forecasted Operating Margin
RINGCENTRAL, INC. RECONCILIATION OF FORECASTED OPERATING MARGIN GAAP MEASURES TO NON-GAAP MEASURES (Unaudited, in millions) Q2 2022 FY 2022 Low Range High Range Low Range High Range GAAP revenues 475.5 479.5 1,990.0 2,015.0 GAAP loss from operations (106.5) (101.1) (400.0) (382.1) GAAP operating mar