Slide 1: Q1 2023 Earnings Presentation
Q1 2023 Earnings Presentation May 9, 2023 ©2023 RingCentral
Slide 2: Safe Harbor and Non-GAAP Measures
Safe Harbor and Non-GAAP Measures This presentation includes forward-looking statements within the meaning We provide guidance on forecasted non-GAAP operating margin, non-GAAP tax rates, of the federal securities laws. These statements relate to, among other and non-GAAP EPS. Reconciliations of our
Slide 3: Vlad Shmunis, CEO, Founder and Chairman
Vlad Shmunis Chief Executive Officer, Founder, and Chairman of the Board
Slide 4: Q1 2023 Highlights
Q1 2023 Highlights Total Revenue ARR Record Operating Margin1 $534M $2.2B 17.2% Up 14% Y/Y Up 14% Y/Y Up 680 bps Y/Y ©2023 RingCentral 1) Non-GAAP Operating Margin
Slide 5: Near Term Focus
Near Term Focus Innovation Healthy Increasing Growth Profitability ©2023 RingCentral
Slide 6: Commitment to Trust
Commitment to Trust 100x Better Reliability vs Three Nines 99.9% 99.99% 99.999% Annual downtime allowed: 8.8 hours 52.6 minutes 5.3 minutes 19 straight quarters Reliability is of 99.999% Mission Critical performance ©2023 RingCentral
Slide 7: New Product Innovations
New Product Innovations RingCentral for RingSense RingCentral for RingCentral Teams 2.0 AI Platform Frontline Workers Overlay Current Availability Current Availability Current Availability Current Availability Open beta Open beta Open beta Generally available end of May 2023 RingSense for Sales ©202
Slide 8: RingCentral for Teams 2.0
RINGCENTRAL FOR TEAMS 2.0 Next generation integrated calling for Microsoft Teams • New design and faster performance • No Teams Phone license required • Brings RingCentral’s 99.999% reliability, superior mobile experience, SMS, fax, and integrations to Teams • Pricing and packaging to meet the needs
Slide 9: New RingSense AI Platform
NEW RINGSENSE AI PLATFORM A new type of conversation intelligence platform RingSense for Sales: first commercial application of RingSense • AI-generated engagement scoring • Automated summaries and customer follow-ups to improve productivity • Big picture views for decision makers • Easier to use, f
Slide 10: New RingCentral for Frontline Workers
NEW RINGCENTRAL FOR FRONTLINE WORKERS Digital transformation for the frontline workforce ▪ Push-to-talk functionality, combined with mobile camera sharing, AI, and more. ▪ Elevate ‘see what I see’ video ▪ Live transcriptions in busy, loud environments ▪ Fewer devices, saving enterprises money ©2023
Slide 11: New RingCentral Overlay for Vodafone Business
NEW RINGCENTRAL OVERLAY Bringing RingCentral messaging and video to Vodafone Business + ▪ Unified experience across desktop and mobile ▪ Capabilities such as call queueing, holding, call transfer, time frame setting, and customized voicemail work seamlessly with existing Vodafone One Net End user po
Slide 12: Mo Katibeh, President & Chief Operating Officer
Mo Katibeh President & Chief Operating Officer ©2023 RingCentral
Slide 13: Fortune 500 Customer Win – Why We Win
Fortune 500 Customer Win – Why We Win Ability to integrate Leading, integrated Saves customers money seamlessly with key UCaaS + CCaaS by standardizing on workflows, including provides ease of single platform Teams, ServiceNow management and Salesforce ©2023 RingCentral
Slide 14: RingCentral UC + CC – Better Together
RingCentral UC + CC – Better Together Economic Benefits Productivity Benefits 211% 45% Reduction in call handling time, Return on investment versus 20% for standalone contact center offering ≤6 Months 30% Reduction in support tickets Payback Conducted by Forrester for RingCentral, the Total Economic
Slide 15: Unmatched Partner Ecosystem
Unmatched Partner Ecosystem 15,000+ Channel Partners ©2023 RingCentral
Slide 16: Q1'23 Go-to-Market Update
Q1’23 Go-to-Market Update Sales cycles Upsell slower Lead flow strong; remain elevated given macro win rates stable ©2023 RingCentral
Slide 17: Sonalee Parekh, Chief Financial Officer
Sonalee Parekh Chief Financial Officer
Slide 18: Overall Average Revenue per User (ARPU)
Overall Average Revenue per User (ARPU) Remains $30 Steady >$30 $20 $10 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 ©2023 RingCentral
Slide 19: Non-GAAP Subscriptions Gross Margin
Non-GAAP Subscriptions Gross Margin 80% Above 80% 60% 40% 20% Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 ©2023 RingCentral
Slide 20: Expanding Operating Margin
Expanding Operating Margin Quarterly Record Drivers of margin expansion 17.2% ❖ Operating leverage ❖ Actively managing workforce ❖ Lowering costs of acquiring new customers 14.0% 13.5% ❖ Vendor rationalization 11.3% 10.5% 10.5% 10.4% 10.2% Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 ©2023 RingCe
Slide 21: Q2 2023 Guidance
Q2 2023 Guidance Q2 2023 Subscriptions Revenue Growth Y/Y 10% – 11% Total Revenue Growth Y/Y 10% Non-GAAP Operating Margin 17.5% Non-GAAP EPS $0.74 - $0.76 ©2023 RingCentral
Slide 22: FY 2023 Guidance
FY 2023 Guidance Prior Current Subscriptions Revenue Growth Y/Y 10% – 11% 11% Total Revenue Growth Y/Y 10% - 11% 10% – 11% Non-GAAP Operating Margin At least 18.0% At least 18.5% Non-GAAP EPS $3.04- $3.10 $3.19 - $3.25 ©2023 RingCentral
Slide 23: Appendix
Appendix
Slide 24: Total ARR
Total ARR $2,161M $2,100M $2,047M $1,981M Q1'22 Q2'22 Q3'22 qQa'22 Q1'23 ©2023 RingCentral
Slide 25: Q1 2023 Financial Highlights
Q1 2023 Financial Highlights $ Metric Y/Y Growth Revenue Subscriptions Revenue $508 million 16% Other Revenue $25 million (8%) Total Revenue $534 million 14% ARR Total $2,161 million 14% Customer ARR by Size Mid-Market and Enterprise1 $1,332 million 15% Enterprise2 $905 million 15% 1) Mid-market and
Slide 26: Q1 2023 Results vs Guidance
Q1 2023 Results vs Guidance Q1 Guidance Q1 Results Subscriptions Revenue $503M - $505M $508M Subscriptions Revenue Growth Y/Y 14% – 15% 16% Total Revenue $526M – $530M $534M Total Revenue Growth Y/Y 12% - 13% 14% GAAP Operating Margin (11.5%) - (9.4%) (10.2%) Non-GAAP Operating Margin 16.5% 17.2% No
Slide 27: Q2 2023 Guidance
Q2 2023 Guidance Q2 2023 Subscriptions Revenue $511M - $513M Subscriptions Revenue Growth Y/Y 10% – 11% Total Revenue $535M – $537M Total Revenue Growth Y/Y 10% GAAP Operating Margin (10.0%) - (8.9%) Non-GAAP Operating Margin 17.5% Non-GAAP Tax Rate 22.5% Non-GAAP EPS $0.74 - $0.76(1) (1) Outlook do
Slide 28: FY 2023 Guidance
FY 2023 Guidance Prior Current Subscriptions Revenue $2,080M - $2,100M $2,086M - $2,104M Subscriptions Revenue Growth Y/Y 10% - 11% 11% Total Revenue $2,180M - $2,200M $2,187M - $2,205M Total Revenue Growth Y/Y 10% - 11% 10% - 11% GAAP Operating Margin (8.3%) - (6.9%) (7.9%) - (6.6%) Non-GAAP Operat
Slide 29: Reconciliation of Operating Income (Loss)
RINGCENTRAL, INC. RECONCILIATION OF OPERATING INCOME (LOSS) GAAP MEASURES TO NON-GAAP MEASURES (Unaudited, in thousands) i a i | $ 508,294 $439,927 z g & ; GAAP Subscription: cost of revenues 136425 129,689 | Shuretbaredcompensation 6951) .186) Amortzation of acquired intangibles (36,640) (43,101) |
Slide 30: Reconciliation of Operating Income (Loss)
RINGCENTRAL, INC. RECONCILIATION OF OPERATIN' (COME (LOSS) GAAP MEASURES TO NON-GAAP MEASURES (Unaudited, in thousands) Three Months Ended March 31, 2023 2022 Income (loss) from operations reconciliation GAAP loss from operations (54.531) (103.342) Share-based compensation 101,295 102.346 Amortizati
Slide 31: Reconciliation of Net Income (Loss)
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, 2023 2022 Net income (loss) reconciliation GAAP net loss $ ($4,399) $ (150,972) Share-based compensation 101,295 102.346 Amortizatio
Slide 32: 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, 2023 2022 Net cash provided by operating activities $ 108,533 $ 58,995 Strategic partnerships (33.250) — Non-GAAP net cash
Slide 33: Reconciliation of Forecasted Operating Margin
RECONCILIATION OF FORECASTED OPERATING MARGIN RINGCENTRAL, INC. GAAP MEASURES TO NON-GAAP MEASURES GAAP revenues GAAP loss from operations GAAP operating margin Share-based compensation Amortization of acquired intangibles Third-party relocation and other costs, net Restructuring costs Non-GAAP inco