Ringcentral, Inc. · NYSE:RNG

Ringcentral — Q1 2024 Earnings Presentation

31 slides from Ringcentral's earnings presentation, May 7, 2024

  1. Slide 1: Q1 2024 Earnings Presentation

    Q1 2024 Earnings Presentation May 7, 2024 ©2024 RingCentral

  2. 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 federal securities We do not provide guidance on forecasted GAAP EPS because of the inherent uncertainty and laws. These statements relate to, among other things, our business strategy a

  3. Slide 3: RingCentral at a Glance

    RingCentral at a Glance Global Scale 400K+ #1 ~4K 18 Customers In UCaaS Revenue Employees (2) Languages + Market Share (1) 46 MVP Countries Expanding Profitability 82% 24% 21% 99%+ Q1’24 Q1’24 Adj. Q1’24 Q1’24 Net Monthly with Consistent Subscription GM% (3) EBITDA Margin (3) Operating Margin (3) Su

  4. Slide 4: Strategic Priorities

    Deliver durable, profitable growth and value from core Expand Total Addressable Strategic Market through Priorities multi-product portfolio Drive continued free cash flow (FCF) generation and materially reduce SBC 4 ©2024 RingCentral

  5. Slide 5: Commitment to Trust

    Commitment to Trust 100x Better Reliability vs Three Nines 23 straight quarters Annual of 99.999% 99.9% 99.99% 99.999% downtime performance allowed 8.8 hours 52.6 minutes 5.3 minutes “RingCentral is fully redundant geographically in every location where the company operates. This is a key differenti

  6. Slide 6: Trusted communications for everyone

    Mobile Worker RingEX Trusted Customers RingEX and RingCX communications Customer Service Teams RingCX Marketers RC Events for everyone Knowledge Workers RingEX Sales Teams RingSense for Sales Frontline Workers Push-to-Talk 6 ©2024 RingCentral

  7. Slide 7: Innovation Leader

    Innovation Leader RingSense AI 7 ©2024 RingCentral

  8. Slide 8: New RingSense AI Capabilities in RingEX

    New RingSense AI Capabilities in RingEX Real-time smart notes Post-call highlights AI writer Generative AI search Instantly captures call notes, key Enrich recordings with AI- AI speeds up work by Simplify search by naturally updates, decisions taken, and generated distilled summaries, composing mes

  9. Slide 9: Why RingCX wins

    Why RingCX wins AI-powered Rich omnichannel Easy-to-deploy Simple-to-use Best value • Before, during and • Single pane of glass for • Administer from • Unified with • Unlimited post interactions voice and all digital single interface RingEx App minutes • AI-based Workforce • Omnichannel reporting •

  10. Slide 10: What RingCX customers are saying

    What RingCX customers are saying “What amazes me is how intuitive “We switched to RingCX, which “RingCX gives us everything RingCX is. It provides voice and all translated to $1000/agent cost we need - voice call routing, digital channels in a single savings per year.” fantastic analytics, and digit

  11. Slide 11: At least $100M of ARR from new products by 2025-end

    At least $100M of ARR $100M+ from new products by 2025-end RingCX Multi-product portfolio benefits: RingSense RingCentral Events 1 Attract new customers 2 Drive higher uptake with existing customers 3 Increase retention Today 2025-End 11 New products include RingCX, RingSense and RingCentral Events

  12. Slide 12: Q1'24 Highlights

    Q1’24 Highlights ARR Total Revenue Operating Margin(1) $2.37B $584M 20.7% Up 10% Y/Y Up 9% Y/Y Up 350 bps Y/Y 1. Non-GAAP Operating Margin 12 ©2024 RingCentral

  13. Slide 13: Q1'24 New Customer Wins

    Q1’24 New Customer Wins Fortune 500 retailer that Sanitas, a leading Rotherham Metropolitan generates >$20B in operator of medical Borough Council in the U.K. annual revenue centers in the U.S. Highlights: Highlights: Highlights: • Purchased 40K RingEX seats • Won because of our integrated • Purchas

  14. Slide 14: Overall Average Revenue per User (ARPU)

    Overall Average Revenue per User (ARPU) Remains Steady >$30 $30 $20 $10 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 14 ©2024 RingCentral

  15. Slide 15: Non-GAAP Subscriptions Gross Margin

    Non-GAAP Subscriptions Gross Margin Solidly Above 80% 82.7% 82.4% 82.6% 82.0% 81.8% 82.0% 81.8% 81.9% 81.5% Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 15 ©2024 RingCentral

  16. Slide 16: Expanding Operating Margin - Quarterly

    Expanding Operating Margin - Quarterly(1) Up 350 bps Y/Y in Q1’24 Drivers of margin expansion 20.7% Operating leverage 20.5% 19.4% Actively managing workforce 19.1% Lowering costs of acquiring new customers 17.2% Vendor rationalization 14.0% 13.5% 11.3% 10.4% Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'2

  17. Slide 17: Net debt to LTM adjusted EBITDA

    Net debt to LTM adjusted EBITDA(1) Leverage ratio improvement driven by higher adjusted EBITDA 4.5x 4.3x 4.0x 3.7x 3.5x 3.2x 3.0x 3.0x 2.6x 2.5x 2.5x 2.0x Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 1. See Appendix for calculation. 17 ©2024 RingCentral

  18. Slide 18: Debt Maturity Profile

    Debt Maturity Profile(1) Addressing 2025 Convertible Notes • $75M incremental capacity from $609M Term Loan A(2) • Incremental free cash flow we expect to generate between now and maturity in March 2025 $385M $400M Addressing 2026 Convertible Notes • Low and improving leverage ratio, strong BB credi

  19. Slide 19: Q2 2024 Guidance

    Q2 2024 Guidance Q2 2024 Subscriptions Revenue $558.0M to $561.0M Subscriptions Revenue Growth Y/Y 9% Total Revenue $584.5M to $587.5M Total Revenue Growth Y/Y 8% to 9% GAAP Operating Margin (2.7%) to (1.9%) Non-GAAP Operating Margin 20.7% Non-GAAP Tax Rate 22.5% Non-GAAP EPS $0.87 to $0.88 19

  20. Slide 20: FY 2024 Guidance

    FY 2024 Guidance Current Prior Subscriptions Revenue $2,267M to $2,287M $2,260M to $2,285M Subscriptions Revenue Growth Y/Y 8% to 9% 8% to 9% Total Revenue $2,379M to $2,399M $2,370M to $2,395M Total Revenue Growth Y/Y 8% to 9% 8% to 9% GAAP Operating Margin (1.6%) to (0.9%) (1.7%) to (0.9%) Non-GAA

  21. Slide 21: Appendix

    Appendix 21

  22. Slide 22: Total ARR

    Total ARR $2,371 $2,329 $2,265 $2,219 $2,161 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 22 ©2024 RingCentral

  23. Slide 23: Q1 2024 Financial Highlights

    Q1 2024 Financial Highlights $ Metric Y/Y Growth Revenue Subscriptions Revenue $557.5M 10% Other Revenue $26.7M 5% Total Revenue $584.2M 9% ARR Total $2,371M 10% Customer ARR by Size1 Mid-Market and Enterprise $1,481M 11% Enterprise $1,023M 13% 1) Our reported results also include our annualized exi

  24. Slide 24: Q1 2024 Results vs Guidance

    Q1 2024 Results vs Guidance Q1 Guidance Q1 Results Subscriptions Revenue $550.0M to $555.0M $557.5M Subscriptions Revenue Growth Y/Y 8% to 9% 10% Total Revenue $575.0M to $580.0M $584.2M Total Revenue Growth Y/Y 8% to 9% 9% GAAP Operating Margin (5.2%) to (4.3%) (1.9%) Non-GAAP Operating Margin 19.5

  25. Slide 25: Debt Profile as of March 31, 2024

    Debt Profile as of March 31, 2024 Debt Instrument Maturity Date March 31, 2024 December 31, 2023 2025 Convertible Notes March 1, 2025 $ 161,326 $ 161,326 2026 Convertible Notes March 15, 2026 609,065 609,065 Term Loan under Credit Agreement (1) February 14, 2028 385,000 390,000 Revolving Credit Faci

  26. Slide 26: 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 Q4’23 Q1’24 Adj. EBITDA $65.5 $72.7 $87.0 $92.7 $112.3 $125.0 $127.8 $138.0 $142.8 LTM Adj. EBITDA 317.9 364.7 416.9 457.8 503.1 533.6 Total Debt 1,638.4 1,639.5 1,578.8 1,801.3 1,545.5 1,541.4 Total Cash 270.0 274.8 2

  27. Slide 27: Gross profit and gross margin reconciliation

    7 Total revenues 384.211 533,689 tt i ij Aa il Bae i g Gross profit and gross margin reconciliation | 86% i Hl ; aE es 434 ‘Restructuring costs 4 ©2024 RingCentral

  28. Slide 28: Reconciliation of Operating Income (Loss)

    28 RINGCENTRAL, INC. RECONCILIATION OF OPERATING INCOME (LOSS) GAAP MEASURES TO NON-GAAP MEASURES Income (loss) from operations reconciliation GAAP loss from operations Share-based compensation Amortization of acquired intangibles Third-party relocation and other costs, net Restructuring costs Non-G

  29. Slide 29: Reconciliation of Net Income (Loss)

    29 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, 2024 2023 Net income (loss) reconciliation GAAP net loss $s (28,494) $ (54,399) Share-based compensation 91,016 101,295 Amortizat

  30. Slide 30: Reconciliation of Cash Flows from Operating Activities

    30 RINGCENTRAL, INC. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES GAAP MEASURES TO NON-GAAP FREE CASH FLOW MEASURES Net cash provided by operating activities Capitalized expenditures Non-GAAP free cash flow Non-GAAP free cash flow margin (Unaudited, in thousands) Three Months Ended March 3

  31. Slide 31: Reconciliation of Forecasted Operating Margin and Free Cash Flow

    31 RINGCENTRAL, INC. RECONCILIATION OF FORECASTED OPERATING MARGIN AND FREE CASH FLOW GAAP MEASURES TO NON-GAAP MEASURES GAAP revenues GAAP loss from operations GAAP operating margin Share-based compensation Amortization of acquired intangibles Restructuring costs Non-GAAP income from operations ‘No

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