Slide 1: Q2 2024 Earnings Presentation
Q2 2024 Earnings Presentation August 1, 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 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
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 RingEX Countries Expanding Profitability $2.43B 81% 20.9% 99%+ Q2’24 Annualized Q2’24 Q2’24 Q2’24 Net Monthly with Consistent Recurring Revenue Subscription GM% (3) Operating
Slide 4: Q2'24 Financial Highlights
Q2’24 Financial Highlights Above Guide ARR Total Revenue $2.43B $593M Up 9% Y/Y Up 10% Y/Y Operating Margin(1) Free Cash Flow(2) Stock-based Compensation 20.9% $109M 15% Above Guide Quarterly Record Down ~500 bps Y/Y 1. Non-GAAP 4 ©2024 RingCentral 2. Defined as net cash provided by operating activi
Slide 5: Our Differentiation: Trust, Innovation, Partnerships
OUR DIFFERENTIATION Trust Innovation Partnerships 5
Slide 6: Why We Win
Trust - our carrier grade 99.999% reliability, secure, standards compliant, and battle tested platform continue to be a key differentiator Why We Innovation – robust pace of innovations over last Win twelve months are delivering value, as evidenced by traction with new products Partnerships - large
Slide 7: 400K+ Customers Trust in RingCentral
400K+ Customers Trust in RingCentral Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 99.999% Q3’20 Q4’20 Q1’21 Q2’21 E911 less than 6 mins of RAY BAUMS ACT annualQ4’21 Q3’21 downtime Q1’22 for 24 Q2’22 straight quarters Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q1 ’24 Q2’24 Reliabiltity and certifications
Slide 8: Recognized Market and Innovation Leader
Recognized Market and Innovation Leader 9 Consecutive Years of Gartner MQ UCaaS Leadership Strengths • Platform and integrations • RingCX [CCaaS] introduction • Reliable 99.999% calling • Recognition for RingSense AI © 2024 RingCentral. Confidential & Proprietary. 8
Slide 9: Major Recent Innovations
Major Recent Innovations RingEX RingCX RingSense RingCentral for Sales Events New hybrid solution Added more than 300 New integration with New LinkedIn that allows customers additional features, Microsoft, which now integration, which to integrate existing including integrations captures and creates
Slide 10: Robust Innovation Over Past 12 Months Leading to Strong New Product Traction
Robust Innovation Over Past 12 Months Leading to Strong New Product Traction RingCX RingSense for Sales RingCentral Events 350+ customers, up 70%+ Q/Q 800+ customers at 2Q24 Customer count up 30%+ Q/Q Net new bookings grew ~2x Q/Q Net new bookings grew ~3x Q/Q Net new bookings grew 40%+ Q/Q 10 ©2024
Slide 11: Channel Partners
Unmatched Partnership Ecosystem 16,000+ Channel Partners New Now Selling RingCX 11 ©2024 RingCentral
Slide 12: Q2'24 Notable Customer Wins
Q2’24 Notable Customer Wins RingEX RingCX RingSense RingCentral Events Whirlpool, a Fortune One of the top 25 TarryTown A leading, global 500 company, and largest counties in ExpoCare, the management two 10,000 plus seat the U.S, with a largest IDD consulting firm, one wins in gold retail population
Slide 13: On track for at least $100M of ARR from new products
On track for at least $100M of ARR from new products $100M+ by 2025-end Multi-product portfolio benefits: RingCX RingSense 1 Attract new customers RingCentral Events 2 Drive higher uptake with existing customers 3 Increase retention Today 2025-End New products include RingCX, RingSense and For illus
Slide 14: Financial Highlights
Financial Highlights 14 ©2024 RingCentral
Slide 15: Overall Average Revenue per User (ARPU)
Overall Average Revenue per User (ARPU) $30 $20 $10 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 15 ©2024 RingCentral
Slide 16: Non-GAAP Subscriptions Gross Margin
Non-GAAP Subscriptions Gross Margin 82.7% 82.4% 82.6% 81.8% 82.0% 81.8% 81.9% 81.5% 80.9% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 16 ©2024 RingCentral
Slide 17: Expanding Operating Margin - Quarterly
Expanding Operating Margin - Quarterly(1) Drivers of margin expansion Operating leverage 20.9% 20.7% 20.5% Actively managing workforce 19.4% 19.1% Lowering costs of acquiring new customers 17.2% Vendor rationalization 14.0% 13.5% 11.3% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 17 ©2024 R
Slide 18: Net debt to LTM adjusted EBITDA
Net debt to LTM adjusted EBITDA(1) Leverage ratio improvement driven by higher adjusted EBITDA 4.0x 3.7x 3.5x 3.2x 3.0x 3.0x 2.6x 2.5x 2.5x 2.4x 2.0x 18 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 ©2024 RingCentral 1. See Appendix for calculation.
Slide 19: Debt Maturity Profile
Debt Maturity Profile(1) We are targeting to reduce our gross debt from $1.5 billion Addressing 2025 Convertible Notes today to no more than $1 billion before the end of 2026. • Incremental free cash flow we expect to generate between now and March 2025, reducing our gross debt by approximately 10%
Slide 20: Q3 2024 Guidance
Q3 2024 Guidance Q3 2024 Subscriptions Revenue $572.0M to $575.0M Subscriptions Revenue Growth Y/Y 8% Total Revenue $600.5M to $603.5M Total Revenue Growth Y/Y 8% GAAP Operating Margin (1.3%) to (0.7%) Non-GAAP Operating Margin 21.0% Non-GAAP Tax Rate 22.5% Non-GAAP EPS $0.92 to $0.93 20
Slide 21: FY 2024 Guidance
FY 2024 Guidance Current Prior Subscriptions Revenue $2,282M to $2,288M $2,267M to $2,287M Subscriptions Revenue Growth Y/Y 9% 8% to 9% Total Revenue $2,393M to $2,399M $2,379M to $2,399M Total Revenue Growth Y/Y 9% 8% to 9% GAAP Operating Margin (1.3%) to (0.8%) (1.6%) to (0.9%) Non-GAAP Operating
Slide 22: Appendix
Appendix 22
Slide 23: Total ARR
Total ARR $2,427 $2,371 $2,329 $2,265 $2,219 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 23 ©2024 RingCentral
Slide 24: Q2 2024 Financial Highlights
Q2 2024 Financial Highlights $ Metric Y/Y Growth Revenue Subscriptions Revenue $567.1M 10% Other Revenue $25.8M 1% Total Revenue $592.9M 10% ARR Total $2,427M 9% Customer ARR by Size1 Mid-Market and Enterprise $1,519M 11% Enterprise $1,048M 12% 1) Our reported results also include our annualized exi
Slide 25: Q2 2024 Results vs Guidance
Q2 2024 Results vs Guidance Q2 Guidance Q2 Results Subscriptions Revenue $558.0M to $561.0M $567.1M Subscriptions Revenue Growth Y/Y 9% 10% Total Revenue $584.5M to $587.5M $592.9M Total Revenue Growth Y/Y 8% to 9% 10% GAAP Operating Margin (2.7%) to (1.9%) (0.9%) Non-GAAP Operating Margin 20.7% 20.
Slide 26: Debt Profile as of June 30, 2024
Debt Profile as of June 30, 2024 (1) The Company has $75.0 million available for drawdown under the Term Loan as of June 30, 2024. (2) The Company has $225.0 million available for borrowing under the Revolving Credit Facility as of June 30, 2024. 26
Slide 27: Net debt to adjusted EBITDA
Net debt to adjusted EBITDA ($millions) Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4’23 Q1’24 Q2’24 Adj. EBITDA $65.5 $72.7 $87.0 $92.7 $112.3 $125.0 $127.8 $138.0 $142.8 $145.8 LTM Adj. EBITDA 317.9 364.7 416.9 457.8 503.1 533.6 554.4 Total Debt 1,638.4 1,639.5 1,578.8 1,801.3 1,545.5 1,541.4 1,537
Slide 28: Reconciliation of Operating Income (Loss)
28 RINGCENTRAL, INC. RECONCILIATION OF OPERATING INCOME (LOSS) GAAP MEASURES TO NON-GAAP MEASURES Revenues Subscriptions Other Total ceveaues Cost of revenues reconciliation GAAP Subscriptions cost of reveaues Share-based compensation “Amortization of acquired intangibles ‘Third-party relocation aad
Slide 29: Reconciliation of Operating Income (Loss)
29 RECONCILIATION OF OPERATING INCOME (LOSS) RINGCENTRAL, INC. 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
Slide 30: Reconciliation of Net Income (Loss)
30 RINGCENTRAL, INC. RECONCILIATION OF NET INCOME (LOSS) GAAP MEASURES TO NON-GAAP MEASURES (In thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2024 2023, 2024 2023 Net income (loss) reconciliation GAAP net loss $ (14,753) $ (21,482) $ (43,247) $ (
Slide 31: 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 Net cash provided by operating activities Capitalized expenditures Non-GAAP free cash flow Non-GAAP free cash flow margin 31 (Unaudited, in thousands) Three Months Ended Six Mon
Slide 32: Reconciliation of Forecasted Operating Margin and Free Cash Flow
32 RINGCENTRAL, INC. RECONCILIATION OF FORECASTED OPERATING MARGIN AND FREE CASH FLOW GAAP MEASURES TO NON-GAAP MEASURES (Unaudited, in millions) Q3 2024 FY 2024 LowRange __HighRange__ LowRange __ High Range _ GAAP revenues 600.5 603.5 2,393.0 2,399.0 GAAP loss from operations (7.9) (4.3) (30.5) (18