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BELMONT, Calif.--(BUSINESS WIRE)--RingCentral, Inc. (NYSE: RNG), a leading provider of global enterprise cloud communications, video meetings, collaboration, and contact center solutions, today announced financial results for the first quarter ended March 31, 2021. First Quarter Financial Highlights First quarter results were exceptional, with meaningful contributions from key partners including Avaya, Atos, AT&T, BT, and Telus, said Vlad Shmunis, RingCentrals founder, chairman and CEO. We believe we are witnessing the intersection of two megatrends of digital transformation and hybrid workforce adoption, which is creating a structural shift in awareness and demand for cloud communications solutions. RingCentral has always been about work from anywhere. With our proven UCaaS platform and a comprehensive CCaaS portfolio, RingCentral continues to win as a trusted communications partner of choice for businesses of all sizes in their digital transformation journeys. (1) Direct and Partners Office ARR is defined to include direct, Avaya, Atos, Alcatel-Lucent Enterprise, AT&T, BT, Telus, and other non-channel partners. Financial Results for the First Quarter 2021 Additional Highlights Partnerships Platform Recognition Financial Outlook Full Year 2021 Guidance: Second Quarter 2021 Guidance: 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 its respective forecasted GAAP measure 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), gain (loss) associated with investments and strategic partnerships, gain (loss) on early debt conversions, and provision (benefit) from income taxes, which could be significant reconciling items between the non-GAAP and respective GAAP measures. The intercompany remeasurement gain (loss) is affected by the movement in various exchange rates relative to the U.S. Dollar, which is difficult to predict and subject to constant change. We do not provide guidance on gain (loss) associated with investments and strategic partnerships as it is based on future share prices, which are difficult to predict and subject to inherent uncertainties. We do not provide guidance on gain (loss) on debt early conversions as it is based on future conversion requests, future share prices, and interest rates, which are difficult to predict and are subject to inherent uncertainties. We do not provide guidance on forecasted GAAP tax rates as we do not forecast discrete tax items as they are difficult to predict. The provision (benefit) from income taxes, excluding discrete items, is expected to have an immaterial impact to our GAAP EPS. We utilized a projected long-term tax rate in our computation of the non-GAAP income tax provision. For fiscal 2021, we have determined the projected non-GAAP tax rate to be 22.5%. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort. Conference Call Details: 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 business cloud communications and contact center solutions based on its powerful Message Video Phone(MVP) platform. More flexible and cost effective than legacy on-premise PBX and video conferencing systems that it replaces, RingCentral empowers modern mobile and distributed workforces to communicate, collaborate, and connect via any mode, any device, and any location. RingCentral offers three key products in its portfolio including RingCentral Office, a Unified Communications as a Service (UCaaS) platform including team messaging, video meetings, and a cloud phone system, Glipthe companys free video meetings solution with team messaging that enables Smart Video Meetings, and RingCentral cloud Contact Center solutions. RingCentrals open platform integrates with leading third party business applications and enables customers to easily customize business workflows. RingCentral is headquartered in Belmont, California, and has offices around the world. 2021 RingCentral, Inc. All rights reserved. RingCentral, Message Video Phone, MVP, RingCentral Office, Glip, Smart Video Meetings, 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 momentum in mid-market and enterprise, contributions from channel partners, the success of our strategic relationships, such as our relationships with Avaya, Atos, AT&T, Alcatel-Lucent Enterprise, BT, Eclipse Technology Solutions, ecotel communication, Telus, and Vodafone Business, our expectations regarding our strategic acquisitions, such as Kindite, our ability to expand and deepen our global distribution network, our market opportunity, our expectations around market trends, including digital transformation and hybrid workforce adoption, our expectations with respect to awareness and demand for cloud communications solutions, our ability to address business communication needs in the new work from anywhere environment, and the effects of the COVID-19 pandemic. 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: the future effects of the COVID-19 pandemic; our ability to realize the anticipated benefits of our strategic relationships, such as our relationships with Avaya, Atos, AT&T, Alcatel-Lucent Enterprise, BT, Eclipse Technology Solutions, ecotel communication, Telus, and Vodafone Business; our expectations regarding our strategic acquisitions, such as Kindite; 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, including RingCentral Office and Glip; our ability to compete successfully against existing and new competitors; our ability to enter into and maintain relationships with resellers, carriers, channel partners and strategic partners; 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 Managements Discussion and Analysis of Financial Condition and Results of Operations, in our Form 10-K for the year ended December 31, 2020, 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 subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP income (loss) from operations, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP net cash provided by (used in) operating activities, and Non-GAAP free cash flow. Non-GAAP 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 income (loss) from operations is defined as GAAP income (loss) from operations excluding share-based compensation which includes related employer payroll taxes, 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 income (loss) from operations divided by total GAAP revenue. Non-GAAP net income (loss) is defined as GAAP net income (loss) excluding share-based compensation which includes related employer payroll taxes, 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, gain (loss) associated with investments and strategic partnerships, loss on early extinguishment of debt, tax benefit from release of valuation allowance, 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. Non-GAAP net cash provided by (used in) operating activities is defined as net cash provided by (used in) operating activities plus cash paid for repayments of convertible senior notes attributable to debt discount and cash paid for strategic partnerships. Non-GAAP free cash flow is defined as Non-GAAP net cash provided by (used in) operating activities reduced by purchases of property and equipment and capitalized internal-use software. We believe information regarding free cash flow provides useful information to investors in understanding and evaluating the strength of liquidity and available cash. We have included Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP net cash provided by (used in) operating activities, and Non-GAAP free cash flow 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 and cash flow items in calculating Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP net cash provided by (used in) operating activities, and Non-GAAP free cash flow provide useful measure for period-to-period comparisons of our business. Although Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP net cash provided by (used in) operating activities, and Non-GAAP free cash flow 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 Companys 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 annualized exit monthly recurring subscriptions, enterprise annualized exit monthly recurring subscriptions, channel partner 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 customer recurring charges contracted 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 and RingCentral customer engagement solutions 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 RingCentral Office annualized exit monthly recurring subscriptions, except that only customer subscriptions from customers generating $25,000 or more in annual recurring revenue are included. We calculate enterprise annualized exit monthly recurring subscriptions in the same manner as we calculate our RingCentral Office annualized exit monthly recurring subscriptions, except that only customer subscriptions from customers generating $100,000 or more in annual recurring revenue are included. We calculate channel partner Office annualized exit monthly recurring subscriptions in the same manner as we calculate our annualized exit monthly revenue subscriptions, except that only customer subscriptions generated from channel partners are included. We calculate direct and partners Office annualized exit monthly recurring subscriptions in the same manner as we calculate our annualized exit monthly revenue subscriptions, except that only customer subscriptions not generated from channel partners 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. TABLE 1 RINGCENTRAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands) March 31, 2021 December 31, 2020 Assets Current assets Cash and cash equivalents $ 463,067 $ 639,853 Accounts receivable, net 166,852 176,034 Deferred and prepaid sales commission costs 73,578 63,726 Prepaid expenses and other current assets 40,206 46,516 Total current assets 743,703 926,129 Property and equipment, net 145,598 142,208 Operating lease right-of-use assets 48,938 51,115 Long-term investments 270,697 213,176 Deferred and prepaid sales commission costs, non-current 680,988 667,779 Goodwill 56,295 57,313 Acquired intangibles, net 115,040 118,313 Other assets 8,453 8,564 Total assets $ 2,069,712 $ 2,184,597 Liabilities, Temporary Equity, and Stockholders Equity Current liabilities Accounts payable $ 44,719 $ 54,043 Accrued liabilities 216,343 210,654 Current portion of convertible senior notes, net 37,051 31,148 Deferred revenue 146,245 142,223 Total current liabilities 444,358 438,068 Convertible senior notes, net 1,350,792 1,375,320 Operating lease liabilities 36,070 38,722 Other long-term liabilities 21,299 20,241 Total liabilities 1,852,519 1,872,351 Temporary equity 4,125 3,787 Stockholders equity Common stock 9 9 Additional paid-in capital 582,157 673,950 Accumulated other comprehensive income 3,394 6,806 Accumulated deficit (372,492 ) (372,306 ) Total stockholders equity $ 213,068 $ 308,459 Total liabilities, temporary equity and stockholders equity $ 2,069,712 $ 2,184,597 TABLE 2 RINGCENTRAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except per share data) Three Months Ended March 31, 2021 2020 Revenues Subscriptions $ 325,223 $ 243,104 Other 27,133 24,408 Total revenues 352,356 267,512 Cost of revenues Subscriptions 73,247 52,433 Other 23,734 21,011 Total cost of revenues 96,981 73,444 Gross profit 255,375 194,068 Operating expenses Research and development 62,676 40,910 Sales and marketing 179,249 131,312 General and administrative 55,461 47,336 Total operating expenses 297,386 219,558 Loss from operations (42,011 ) (25,490 ) Other income (expense), net Interest expense (16,278 ) (7,502 ) Other income (expense) 58,543 (27,517 ) Other income (expense), net 42,265 (35,019 ) Gain (loss) before income taxes 254 (60,509 ) Provision for income taxes 440 212 Net loss $ (186 ) $ (60,721 ) Net loss per common share Basic and diluted $ $ (0.70 ) Weighted-average number of shares used in computing net loss per share Basic and diluted 90,634 87,339 TABLE 3 RINGCENTRAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Three Months Ended March 31, 2021 2020 Cash flows from operating activities Net loss $ (186 ) $ (60,721 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 24,577 16,548 Share-based compensation 54,962 36,589 Amortization of deferred and prepaid sales commission costs 15,644 9,809 Amortization of debt discount and issuance costs 16,200 7,452 Loss on early extinguishment of debt 658 7,250 Repayment of convertible senior notes attributable to debt discount (4,712 ) (13,894 ) Reduction of operating lease right-of-use assets 4,322 3,843 Unrealized (gain) loss on investments (57,521 ) 22,246 Foreign currency remeasurement loss 194 964 Provision for bad debt 1,485 1,492 Deferred income taxes (274 ) (33 ) Other 153 45 Changes in assets and liabilities: Accounts receivable 7,697 (6,935 ) Deferred and prepaid sales commission costs (36,502 ) (22,544 ) Prepaid expenses and other current assets 6,310 (8,958 ) Other assets 818 131 Accounts payable (8,109 ) 888 Accrued liabilities 9,063 19,948 Deferred revenue 4,022 2,806 Operating lease liabilities (4,382 ) (3,783 ) Other liabilities 2,536 (74 ) Net cash provided by operating activities 36,955 13,069 Cash flows from investing activities Purchases of property and equipment (8,721 ) (6,861 ) Capitalized internal-use software (9,757 ) (7,389 ) Cash paid for acquisition of intangible assets (8,358 ) Net cash used in investing activities (26,836 ) (14,250 ) Cash flows from financing activities Proceeds from issuance of convertible senior notes, net of issuance costs 986,508 Payments for 2023 convertible senior notes partial repurchase (178,911 ) (495,704 ) Payments for capped calls and transaction costs (60,900 ) Proceeds from issuance of stock in connection with stock plans 1,192 4,802 Payments for taxes related to net share settlement of equity awards (4,900 ) (10,351 ) Payment for contingent consideration for business acquisition (3,600 ) (3,548 ) Repayment of financing obligations (277 ) (511 ) Net cash (used in) provided by financing activities (186,496 ) 420,296 Effect of exchange rate changes (409 ) (657 ) Net (decrease) increase in cash, cash equivalents, and restricted cash (176,786 ) 418,458 Cash, cash equivalents, and restricted cash Beginning of period 639,853 343,606 End of period $ 463,067 $ 762,064 TABLE 4 RINGCENTRAL, INC. RECONCILIATION OF OPERATING INCOME (LOSS) GAAP MEASURES TO NON-GAAP MEASURES (Unaudited, in thousands) Three Months Ended March 31, 2021 2020 Revenues Subscriptions $ 325,223 $ 243,104 Other 27,133 24,408 Total revenues 352,356 267,512 Cost of revenues reconciliation GAAP Subscriptions cost of revenues 73,247 52,433 Share-based compensation (3,978 ) (2,076 ) Amortization of acquisition intangibles (10,618 ) (7,701 ) Acquisition related matters Non-GAAP Subscriptions cost of revenues 58,651 42,656 GAAP Other cost of revenues 23,734 21,011 Share-based compensation (1,656 ) (650 ) Non-GAAP Other cost of revenues 22,078 20,361 Gross profit and gross margin reconciliation Non-GAAP Subscriptions 82.0 % 82.5 % Non-GAAP Other 18.6 % 16.6 % Non-GAAP Gross profit 77.1 % 76.4 % Operating expenses reconciliation GAAP Research and development 62,676 40,910 Share-based compensation (14,649 ) (7,467 ) Acquisition related matters Non-GAAP Research and development 48,027 33,443 As a % of total revenues non-GAAP 13.6 % 12.5 % GAAP Sales and marketing 179,249 131,312 Share-based compensation (24,767 ) (11,291 ) Amortization of acquisition intangibles (970 ) (931 ) Acquisition related matters 4 Non-GAAP Sales and marketing 153,512 119,094 As a % of total revenues non-GAAP 43.6 % 44.5 % GAAP General and administrative 55,461 47,336 Share-based compensation (17,443 ) (15,105 ) Acquisition related matters (438 ) (1,863 ) Non-GAAP General and administrative 37,580 30,368 As a % of total revenues non-GAAP 10.7 % 11.4 % Income (loss) from operations reconciliation GAAP loss from operations (42,011 ) (25,490 ) Share-based compensation 62,493 36,589 Amortization of acquisition intangibles 11,588 8,632 Acquisition related matters 438 1,859 Non-GAAP Income from operations 32,508 21,590 Non-GAAP Operating margin 9.2 % 8.1 % 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 March 31, 2021 2020 Net income (loss) reconciliation GAAP net loss $ (186 ) $ (60,721 ) Share-based compensation 62,493 36,589 Amortization of acquisition intangibles 11,588 8,632 Acquisition related matters 438 1,859 Amortization of debt discount and issuance costs 16,200 7,452 Loss (gain) associated with investments and strategic partnerships (59,597 ) 20,148 Loss on early extinguishment of debt 658 7,250 Intercompany remeasurement loss 735 898 Income tax expense effects (6,933 ) (4,809 ) Non-GAAP net income $ 25,396 $ 17,298 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 basic net (loss) income per share 90,634 87,339 Effect of dilutive securities 2,349 4,927 Non-GAAP weighted average shares used in computing non-GAAP diluted net income per share 92,983 92,266 Diluted net income (loss) per share GAAP net loss per share $ $ (0.70 ) Non-GAAP net income per share $ 0.27 $ 0.19 TABLE 6 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, 2021 2020 Net cash provided by operating activities $ 36,955 $ 13,069 Repayment of convertible senior notes attributable to debt discount 4,712 13,894 Non-GAAP net cash provided by operating activities 41,667 26,963 Purchases of property and equipment (8,721 ) (6,861 ) Capitalized internal-use software (9,757 ) (7,389 ) Non-GAAP free cash flow $ 23,189 $ 12,713 TABLE 7 RINGCENTRAL, INC. RECONCILIATION OF FORECASTED OPERATING MARGIN GAAP MEASURES TO NON-GAAP MEASURES (Unaudited, in millions) Q2 2021 FY 2021 Low Range High Range Low Range High Range GAAP revenues 356.5 359.5 1,500.0 1,510.0 GAAP loss from operations (82.8 ) (77.6 ) (319.4 ) (303.9 ) GAAP operating margin (23.2 %) (21.6 %) (21.3 %) (20.1 %) Share-based compensation 104.0 99.0 420.0 410.0 Amortization of acquisition intangibles 12.0 12.0 49.0 46.0 Acquisition related matters 0.4 0.4 Non-GAAP income from operations 33.2 33.4 150.0 152.5 Non-GAAP operating margin 9.3 % 9.3 % 10.0 % 10.1 %

Answer: RingCentral Announces First Quarter 2021 Results RingCentral Office ARR up 40% to $1.3 billion Enterprise ARR up 62% to over $500 million Global 2000 and Fortune 1000 Enterprise Business now surpasses $100 million ARR