Slide 1: Corporate Overview and Q3'24 Financial Results
Corporate Overview and Q3ʼ24 Financial Results November 07, 2024 ©2024 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 In this presentation, we provide guidance on forecasted non-GAAP operating margin, federal securities laws. These statements relate to, among other things, our business non-GAAP tax rate
Slide 3: Your Business Voice Matters
Your Business Voice Matters™ 3 ©2024 RingCentral
Slide 4: Table of Contents
Table of 1 Solidifying Our UCaaS Leadership and Infusing AI Across the Portfolio Contents Expand TAM with AI-Powered 2 New Products Nurturing and Growing Our Large 3 Partner Network Executing on Our Strategic Priorities 4 Drives a Strong Financial Profile 5 Q3ʼ24 Financial Highlights 4 ©2024 RingCen
Slide 5: What We Do
What We Do We empower businesses to communicate effortlessly through the cloud, and use the power of AI to unlock conversational insights… …making every employee and customer experience smarter, and everyday work more productive and efficient. 5 ©2024 RingCentral
Slide 6: Legacy Way vs RingCentral Way
Legacy RingCentral Way Way Voice only Omnichannel On prem only Any device, any mode, anywhere Siloed Global Hard to scale Infinitely scalable Limited integrations Open platform Expensive to maintain High ROI / Low TCO Disparate PBX & CC solutions Tightly integrated UCaaS CCaaS No AI AI-first 6 ©2024
Slide 7: Our Product Portfolio
Our Product Portfolio RingCX Omnichannel IVA RingEX AI-Assist Business Phone System WEM, QM SMS, Fax Conversational Intelligence Push to Talk Team Messaging AI Assistant AI meets trusted RingSense communications Conversation Intelligence Global | Open Platform | AI | Analytics AI Coaching CRM automa
Slide 8: RingCentral is a Business Communications Leader
RingCentral is a Business Communications Leader #1 Market Share in UCaaS Leader in Gartner 2024 Magic Quadrant by Synergy based on paid & provisioned seats for UCaaS Worldwide Source: Synergy Research Group This graphic was published by Gartner, Inc. as part of a larger research document and should
Slide 9: Operating at Scale
Operating at Scale #1 in UCaaS 46 ~7K Market Share¹ Countries where Full time employees² RingEX is available $2.48B $250M+ $400M+ Q3ʼ24 Annualized Committed to Annual Free Cash Flow4 Recurring Revenue Innovation3 Unless otherwise noted, company metrics as of Q3ʼ24 1. Source: Synergy Research Group,
Slide 10: RingCentral's Market Opportunity is Large
RingCentralʼs Market Opportunity is Large ~$100B $100B Events $5B $6B $75B Video $39B ~$50B IVA / Revenue $50B $3B $5B Intelligence $5B $21B $12B $25B CCaaS $29B $24B Cloud Telephony $0B 2024 2028 Source: UCaaS and Video Conf. - Gartner Forecast Analysis: Unified Communications, Worldwide, 3Q24 Upda
Slide 11: Why We Win
Trust Built on world-class security, privacy, and 25 quarters of 99.999% reliability Why We Win Innovation Leading Innovation in UCaaS + CCaaS + AI + Events + Open Platform Partnerships With Service Providers, 15,000+ Channel Partners, Strategic Partners, and Developers 11 ©2024 RingCentral
Slide 12: Commitment to Trust: Unmatched Reliability
Commitment to Trust RingCentral Offering 100x Better Reliability vs Three Nines Unmatched Reliability Relative Incidents Reported Annual downtime allowed Nov 2020 - August 2024 99.9% 99.99% 99.999% 20x 12x 5.3 minutes 52.6 minutes 25 straight quarters 99.999% of 99.999% Competitor 2 performance “Rin
Slide 13: Robust Security and Compliance
Robust Security and Compliance 13 ©2024 RingCentral
Slide 14: Executing Against Strategic Priorities Through Innovation & Partnerships
Executing Against Strategic Priorities Through Innovation & Partnerships Solidifying our Expand TAM Nurturing UCaaS leadership with new AI-powered and growing by infusing AI across our products our large and diverse entire portfolio amongst partner network and other initiatives expanding into new ge
Slide 15: Solidifying Our UCaaS Leadership and Infusing AI Across the Portfolio
Solidifying Our UCaaS Leadership and Infusing AI Across the Portfolio 15 ©2024 RingCentral
Slide 16: Business Voice Matters
Business Voice Matters Service Organizations that use the Telephony is still integral to businesses, and 73% following modes of communications of organizations agree that voice calling will remain a priority mode of communication in their employee and customer interactions 90% 77% 81% 82% 81% 84% 90
Slide 17: Supercharge Microsoft Teams with RingCentral RingEX
Supercharge Microsoft Teams with RingCentral RingEX MS Teams Native SMS ✓ ✗ Native Fax ✓ ✗ Unified management for phone, fax, and SMS ✓ ✗ Global PSTN Coverage 46 31 Rich communications APIs (including AI) ✓ ✗ Integrations with major CRMs ✓ ✗ Enhanced overflow queue management ✓ ✗ Call monitoring (wh
Slide 18: RingCentral for MS Teams customer feedback
RingCentral “ I'm impressed. Just updated the “ RingCentral's integration with for MS Teams Teams Beta and the HUD is there and I can see all voicemails for all call queues.” Microsoft Teams has been crucial in achieving our goals for integration across workflows.” customer feedback “ RingCentralʼs
Slide 19: Infusing AI Across Our Portfolio
Infusing AI Across Our Portfolio Conversational Inputs AI-Powered Outputs Voice Video Messaging RingCentral AI Augment Accelerate Digital & Social RingCentral Models (SLMs) Automate Support Interactions Leading LLMs Assist Knowledge Base Across Marketing, Sales, Customer & Employee Communications 19
Slide 20: Monetizing AI Across Our Portfolio
Monetizing AI Across Our Portfolio Product Key capabilities Pricing RingCentral AI Assistant Call transcription, call notes, and AI writer for text & chat Included Personal Assistants Conversational EX Personal Assistants RingSense for EX Intelligence Conversational insights, coaching, and call-scor
Slide 21: RingCentral AI Assistant for RingEX
RingCentral AI Assistant for “ BDRs are saving time because they no longer have to worry about “ It's giving us a competitive edge by ensuring no valuable insight or strategy falls RingEX writing a summary of what was discussed.” through the cracks.” customer feedback “ Once you see the value “ Our
Slide 22: First Cloud Provider to Deliver UCaaS & CCaaS for All of India
Significant Milestone First Cloud Provider to Deliver UCaaS & CCaaS “ Global RingEX Select and RingCX cloud-based architecture aligns well Solutions for All of India with India's digital transformation initiatives, offering scalability and flexibility that traditional on-premise solutions struggle t
Slide 23: Expand TAM with AI-Powered New Products
Expand TAM with AI-Powered New Products RingCX RingSense RingCentral Events 23 ©2024 RingCentral
Slide 24: Integrated UCaaS-CCaaS platforms are the future of business communications
“ Integrated UCaaS-CCaaS platforms are the future of business communications” - IDC Over 80% of Benefits of UC+CC: organizations feel Forrester Survey of RNG Customers combining UCaaS and CCaaS is important to their organization 45% 30% Reduction in decrease in internal contact call-handling time ce
Slide 25: Strong Early RingCX Traction
Strong Early RingCX Traction 45%+ 500+ Customers 350+ Customers Q2ʼ24 Q3ʼ24 Easy to Use and Deploy Natively Integrated with RingEX Transparent Pricing AI-First Omnichannel CC 25 ©2024 RingCentral
Slide 26: RingCX customer feedback
RingCX customer feedback “Now that we have this intelligent omnichannel capability “Today, with RingCX, we are down to under 10 with RingCX, we can tell clients that weʼre going to provide seconds with that average hold time. That is incredible. them with more services, tailored to their businesses,
Slide 27: New Strategic Partnership
New Strategic Partnership Intelligent Omnichannel Workforce Engagement Management (WEM) Native Conversation Intelligence CX Automation AI Quality Management Intelligent Virtual Agents UC+CC Knowledge Management Enhance employee productivity and improve customer 27 experiences for Larger Enterprises
Slide 28: RingSense
RingSense Customer Growth Up Solidly ~45% 1,200+ Customers 800+ Customers AI-Powered Coaching Natively Integrated with RingEX Q2ʼ24 Q3ʼ24 Disruptive Pricing Deep Integrations with CRMs 28 ©2024 RingCentral
Slide 29: RingCentral Events
RingCentral Events Growth Led by Marquee Customers ~20% 600+ 500+ Customers Customers AI-Powered Virtual, Hybrid and Onsite Q2ʼ24 Q3ʼ24 Disruptive Pricing Highly Personalized 29 ©2024 RingCentral
Slide 30: AI-first New Products Growth Drivers
AI-first New Products New Product Annualized RingCX, RingSense and Recurring Revenue RingCentral Events are On track Growth Drivers to achieve $100M+ Multi-product portfolio benefits: Target by Q4ʼ25 Attract new customers Increase wallet share with existing customers Increase retention Replace OEM p
Slide 31: Select Land & Expand Case Studies
Select Land & Expand Case Studies 31 ©2024 RingCentral
Slide 32: A Leading Hotel & Vacation Brand: 5X ARR
A Leading Hotel & Vacation Brand ~5x Initial FYʼ24 Enterprise customer expanding ARR with both UCaaS and CCaaS Added UCaaS FYʼ23 and CCaaS seats, ~4x Initial plus 3rd party IVA ARR Added UCaaS seats FYʼ22 ~3.5x Initial ARR FYʼ21 Added CCaaS 5X ARR UCaas | CCaaS | Global | Open Platform | AI | Analyt
Slide 33: Fortune Transportation & Logistics Company: 17X ARR
Fortune 500 Transportation ~17x FYʼ24 & Logistics Company Initial Land Enterprise customer expanding Added UCaaS and ~15x FYʼ23 CCaaS seats with both UCaaS and CCaaS Initial Land Added UCaaS & CCaaS seats ~10x FYʼ22 Initial Land FYʼ20 Added CCaaS 17X ARR UCaas | CCaaS | Digital Channels | AI | Analy
Slide 34: Global Retailer: 1.4X ARR
Global Retailer Enterprise customer in Gold Vertical expanding with both UCaaS and CCaaS FYʼ24 ~1.4x Initial Land Expansion of UCaaS seats Added SIP Trunk into Contact Center FYʼ23 UCaaS Phone, Messaging, Video Business Analytics 1.4X ARR Advanced Support UCaas | Global | Open Platform | AI | Analyt
Slide 35: Nurturing and Growing Our Large Partner Network
Nurturing and Growing Our Large Partner Network 35 ©2024 RingCentral
Slide 36: Differentiated GTM, Including Expansive Partnerships
Resold by Many Top Service Providers Now Selling RingEX Differentiated GTM, Partnership Extended in Q3 Including Expansive Partnerships Service providers deliver RingCentral EX and CX to their large and global customer bases Now Selling RingEX & RingCX Service provider growth in excess of overall Ri
Slide 37: Powered by RingCentral
Powered by RingCentral Office@Hand - powered by RingCentral Avaya Cloud Office by RingCentral Vodafone Business 37 UC with RingCentral ©2024 RingCentral
Slide 38: Access to over 30 geographies with Vodafone
Access to over 30 geographies with Vodafone Business by 2025 Select Wins 38 ©2024 RingCentral
Slide 39: Executing on Our Strategic Priorities Drives a Strong Financial Profile
Executing on Our Strategic Priorities Drives a Strong Financial Profile 39 ©2024 RingCentral
Slide 40: Healthy Growth and Improving Profitability
Healthy Growth and Improving Profitability… Total Revenue Operating Profit ($ and % total rev) ($ in million) ($ in million) 21.0% 19.1% $2,398 $503 $2,202 12.4% $1,988 $420 9.7% 10.2% $1,595 $1,184 $246 $162 $115 2020 2021 2022 2023 2024E 2020 2021 2022 2023 2024E Sales and Marketing Expense ($ and
Slide 41: While Reducing SBC & Share Count
…While Reducing SBC & Share Count… Net Shares Granted Stock Based Compensation (in millions of shares) (% of total revenue) 23.6% 11.3M shares 19.9% 19.7% 16.0% 14.7% Do w n 63 % Y/ Y 2020 2021 2022 2023 2024E 4.2M shares Fully Diluted Share Count (in millions of shares) 96.6 96.2 94.5 93.4 92.8 Bel
Slide 42: Resulting in Expanding FCF Per Share
… Resulting in Expanding FCF Per Share FCF vs. Shares Granted ($)1 FCF /share E $4.26 ($ in million) -2 024 R 2 021A $3.35 CAG 71% FCF($) > Shares $0.85 $1.09 Granted ($) 2020 2021 2022 2023 2024E -$1.26 16.8% FCF ($ and % total rev) 14.7% ($ in million) $403 5.0% 5.3% $324 -9.9% FCF ($) Shares Gran
Slide 43: Strong Balance Sheet
Strong Balance Sheet(1) Improving leverage ratio allows flexibility around capital allocation and capital structure options Net Debt to Adj. EBITDA 3.7x 3.2x 3.0x 2.6x 2.5x 2.4x 2.3x Q1ʼ23 Q2ʼ23 Q3ʼ23 Q4ʼ23 Q1ʼ24 Q2ʼ24 Q3ʼ24 43 See Appendix for calculation. ©2024 RingCentral
Slide 44: Near-term Maturities Addressed with Cash + Existing Liquidity
Near-term Maturities Addressed with Cash + Existing Liquidity(1) We are targeting to reduce our gross debt from $1.5 billion Liquidity as of September 30, 2024 today to no more than $1 billion by the end of 2026 ✓ $213M Cash and Cash Equivalents $609M ✓ $350M Term Loan A commitment ✓ $225M Revolving
Slide 45: Your Business Voice Matters
Your Business Voice Matters™ 45 ©2024 RingCentral
Slide 46: Q3'24 Financial Highlights
Q3ʼ24 Financial Highlights 46 ©2024 RingCentral
Slide 47: Total Revenue
Total Revenue ($ in millions) $609 $593 $584 $571 $558 $539 $534 Q1ʼ23 Q2ʼ23 Q3ʼ23 Q4ʼ23 Q1ʼ24 Q2ʼ24 Q3ʼ24 Y/Y 14% 11% 10% 9% 9% 10% 9% Growth 47 ©2024 RingCentral
Slide 48: Total ARR
Total ARR ($ in millions) $2,480 $2,427 $2,371 $2,329 $2,265 $2,219 $2,161 Q1ʼ23 Q2ʼ23 Q3ʼ23 Q4ʼ23 Q1ʼ24 Q2ʼ24 Q3ʼ24 Y/Y 14% 12% 11% 11% 10% 9% 9% Growth 48 ©2024 RingCentral
Slide 49: Free Cash Flow
Free Cash Flow ($ and % of total revenue) ($ in millions) 17.3% 12.5% 5.9% 4.0% $92$24 $21 $107 $70 $105 Q3ʼ21 Q3ʼ22 Q3ʼ23 Q3ʼ24 49 Note cash interest on notes due 2030 paid in Q1 and Q3 each year. ©2024 RingCentral Free cash flow is non-GAAP, see appendix for reconciliation to the most comparable G
Slide 50: Operating Profit
Operating Profit ($ and % of total revenue) ($ in millions) 21.0% 20.9% 20.7% 20.5% 19.4% 19.1% 17.2% $92 $104 $107 $117 $121 $124 $128 Q1ʼ23 Q2ʼ23 Q3ʼ23 Q4ʼ23 Q1ʼ24 Q2ʼ24 Q3ʼ24 (1) Operating profit is non-GAAP, see appendix for reconciliation to the most comparable GAAP metric. 50 ©2024 RingCentral
Slide 51: Fully Diluted Share Count
Fully Diluted Share Count (in millions) 96.9 97.0 96.7 96.0 95.9 94.9 93.8 Q1ʼ23 Q2ʼ23 Q3ʼ23 Q4ʼ23 Q1ʼ24 Q2ʼ24 Q3ʼ24 51 ©2024 RingCentral
Slide 52: Stock Based Compensation
Stock Based Compensation ($ and % of total revenue) ($ in millions) 19.0% 19.7% 20.3% 19.8% 15.6% 15.0% 14.0% $101 $106 $113 $113 $91 $89 $85 Q1ʼ23 Q2ʼ23 Q3ʼ23 Q4ʼ23 Q1ʼ24 Q2ʼ24 Q3ʼ24 52 ©2024 RingCentral
Slide 53: Q3 2024 Financial Highlights
Q3 2024 Financial Highlights $ Metric Y/Y Growth Revenue Subscriptions Revenue $583.0M 10% Other Revenue $25.8M (5%) Total Revenue $608.8M 9% ARR Total $2,480M 9% Customer ARR by Size1 Mid-Market and Enterprise $1,553M 10% Enterprise $1,073M 11% 1) Our reported results also include our annualized ex
Slide 54: Q3 2024 Results vs Guidance
Q3 2024 Results vs Guidance Q3 Guidance Q3 Results Subscriptions Revenue $572.0M to $575.0M $583.0M Subscriptions Revenue Growth Y/Y 8% 10% Total Revenue $600.5M to $603.5M $608.8M Total Revenue Growth Y/Y 8% 9% GAAP Operating Margin (1.3%) to (0.7%) 0.5% Non-GAAP Operating Margin 21.0% 21.0% Non-GA
Slide 55: Q4 2024 Guidance
Q4 2024 Guidance Q4 2024 Subscriptions Revenue $587.0M to $589.0M Subscriptions Revenue Growth Y/Y 7% to 8% Total Revenue $611.0M to $613.0M Total Revenue Growth Y/Y 7% GAAP Operating Margin (0.1%) to 0.8% Non-GAAP Operating Margin 21.2% Non-GAAP Tax Rate 22.5% Non-GAAP EPS $0.96 to $0.97 Fully Dilu
Slide 56: FY 2024 Guidance
FY 2024 Guidance Prior Current Subscriptions Revenue $2,282M to $2,288M $2,295M to $2,297M Subscriptions Revenue Growth Y/Y 9% 9% Total Revenue $2,393M to $2,399M $2,397M to $2,399M Total Revenue Growth Y/Y 9% 9% GAAP Operating Margin (1.3%) to (0.8%) (0.7%) to (0.5%) Non-GAAP Operating Margin 21.0%
Slide 57: Appendix
Appendix 57 ©2024 RingCentral
Slide 58: Debt Profile as of September 30, 2024
Debt Profile as of September 30, 2024 (1) The Company has $350.0 million available for drawdown under the Term Loan as of September 30, 2024. (2) The Company has $225.0 million available for borrowing under the Revolving Credit Facility as of September 30, 2024. 58
Slide 59: Net debt to adjusted EBITDA
Net debt to adjusted EBITDA ($millions) Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4ʼ23 Q1ʼ24 Q2ʼ24 Q3ʼ24 Adj. EBITDA $65.5 $72.7 $87.0 $92.7 $112.3 $125.0 $127.8 $138.0 $142.8 $145.8 $149.0 LTM Adj. EBITDA 317.9 364.7 416.9 457.8 503.1 533.6 554.4 575.7 Total Debt 1,638.4 1,639.5 1,578.8 1,801.3 1,
Slide 60: Reconciliation of Operating Income (Loss)
60 RINGCENTRAL, INC. RECONCILIATION OF OPERATING INCOME (LOSS) GAAP MEASURES TO NON-GAAP MEASURES. (Unaudited, in thousands) ‘Three Months Ended ‘Nine Months Ended September 30, September 30, 20m 2033 7 Emr Revenues Subscriptions $ 582970 $ 531,030 $ 1,707,515 $ 1,352,956 Other 25,795 134 78,368 78,
Slide 61: Reconciliation of Operating Income (Loss)
RINGCENTRAL, INC. RECONCILIATION OF OPERATING INCOME (LOSS) GAAP MEASURES TO NON-GAAP MEASURES (Unaudited, in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Income (loss) from operations reconciliation GAAP income (loss) from operations $ 3,291 $ (54,
Slide 62: Reconciliation of Net Income (Loss)
62 RINGCENTRAL, INC. RECONCILIATION OF NET INCOME (LOSS) GAAP MEASURES TO NON-GAAP MEASURES (In thousands, except per share data) (Unaudited) Net income (loss) reconciliation GAAP net loss Share-based compensation Amortization of acquired intangibles Third-party relocation and other costs, net Restr
Slide 63: 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 Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Net cash provided by operating activities $ 127,219 $ 86,594 $ 350
Slide 64: Reconciliation of Forecasted Operating Margin and Free Cash Flow
64 RECONCILIATION OF FORECASTED OPERATING MARGIN AND FREE CASH FLOW 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 Restructuri