EX-99.1 2 d230833dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

RingCentral Announces Second Quarter 2016 Results

Software Subscriptions Revenue up 34%

RingCentral Office® ARR up 42%

GAAP Software Subscriptions Gross Margin of 79%; Non-GAAP 80%

Belmont, Calif. – August 3, 2016 – RingCentral, Inc. (NYSE: RNG), a leading provider of cloud business communications and collaboration solutions, today announced financial results for the second quarter ended June 30, 2016.

Second Quarter Financial Highlights

 

    Software subscriptions revenue grew 34% year-over-year to $86.1 million; total revenue was $91.8 million.

 

    RingCentral Office® annualized exit monthly recurring software subscriptions (ARR) grew 42% year-over-year to $291.9 million.

 

    Total annualized exit monthly recurring software subscriptions (ARR) grew 33% year-over-year to $364.0 million.

 

    GAAP software subscriptions gross margin was 78.9% up 4.5 points year-over-year while Non-GAAP software subscriptions gross margin was 80.0%, up 5 points year-over-year.

 

    GAAP operating margin was (6.9%) while Non-GAAP operating margin was 1.9%, both representing improvements of approximately 7 points year-over-year.

 

    Net monthly subscriptions dollar retention: RingCentral Office® over 100% and overall subscriptions over 99%.

“We had an outstanding second quarter that reflects the continued traction we are seeing across all of our growth drivers,” said Vlad Shmunis, RingCentral’s Chairman and CEO. “We believe we are ahead of our peers in terms of product innovation, partnerships, and integrations and we will continue to invest to maintain that lead. With our differentiated solutions and a large, underpenetrated market ahead of us, I am confident in our ability to grow revenues to $1 billion in the next 4-5 years.”

Financial Results for the Second Quarter 2016

 

    Revenue: Total revenue was $91.8 million for the second quarter of 2016, up from $70.7 million in the second quarter of 2015. Software subscriptions revenue was $86.1 million for the second quarter of 2016, up from $64.4 million in the second quarter of 2015.

 

    Pro Forma Revenue Comparison: Total revenue of $91.8 million in the second quarter of 2016, up from $68.6 million in the second quarter of 2015, representing 34% growth, adjusting for the agency model on a comparable basis.

 

    Net Income (Loss) Per Share: GAAP net income (loss) per share was ($0.11) for the second quarter of 2016 compared with ($0.12) for the second quarter of 2015. Non-GAAP net income (loss) per diluted share was $0.02 for the second quarter of 2016, compared with ($0.06) per diluted share for the second quarter of 2015.

 

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    Balance Sheet: Total cash and short-term investments at the end of the second quarter of 2016 was $147.8 million, compared with $137.6 million at the end of the fourth quarter of 2015.

Pro Forma1 Financial Results Comparison

RingCentral’s transition of direct phone sales to an agency model was completed in the second quarter of 2016 and reported revenues reflect the new business model. During the transition, the decision was made to exclude RingCentral’s carrier partners’ phone sales from the agency model, as the billing relationships to these customers are through the carriers. To provide the appropriate full year-over-year comparisons, pro forma adjustments to certain financial metrics for 2015 and first quarter of 2016 can be found in Table 6, which includes a reconciliation to the corresponding GAAP measures.

Second Quarter 2016 and Recent Business Highlights

 

    Announced the release of a new RingCentral Office Google Apps Edition to allow businesses to transition all of their business productivity and communication needs to the cloud.

 

    Made a number of key strategic hires to expand our enterprise go-to-market efforts, including the appointment of a new CMO, VP of enterprise, VP of customer success, and head of professional services.

 

    Expanded the worldwide footprint of our Global Office solution, adding 12 countries during the quarter, bringing the total to 24 countries with true local dialing capabilities and the adoption of Global Office by more than 200 multinational customers. In total, RingCentral users are located in over 140 countries around the world.

 

    Announced Box, Inc as a new customer. Box selected RingCentral Office because it reduced their operational challenges of managing multiple single point solutions and cut their legacy communications and conferencing costs by 80%.

 

    Continued to drive channel program success with 5-star rating recognition by CRN (Channel Reseller News), and the addition of new master agent relationships with Telarus, TBI, and Avant.

 

    Announced RingCentral Rooms, a new cloud software solution for room video conferencing, that enables businesses overcome the pain points of fixed, costly hardware based systems.

Conference Call Details:

 

    What: RingCentral financial results for the second quarter of 2016 and outlook for the third quarter and full year of 2016.

 

    When: Wednesday, August 3, 2016 at 1:30PM PT (4:30PM ET).

 

    Dial in: To access the call in the United States, please dial (877) 705-6003, and for international callers dial (201) 493-6725. Callers may provide confirmation number 13641081 to access the call more quickly, and are encouraged to dial into the call 10 to 15 minutes prior to the start to prevent any delay in joining.

 

    Webcast: http://ir.ringcentral.com/ (live and replay).

 

    Replay: A replay of the call will be available via telephone for seven days, beginning two hours after the call. To listen to the telephone replay in the U.S., please dial (877) 870-5176 from the United States or (858) 384-5517 internationally with recording access code 13641081.
 

 

1  In 1Q16 RingCentral transitioned direct phone sales to an agency model, in which RingCentral receives a commission for phone sales instead of separately recognizing the full sale price and cost of the product. RingCentral is providing supplemental information on a pro forma basis to provide a clear comparison of the Company’s results with prior periods as-if the Company had transitioned phone sales to the new agency model on January 1, 2015. Carrier phone sales will remain under the direct phone sales model.

 

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About RingCentral

RingCentral, Inc. (NYSE: RNG) is a leading provider of cloud-based business communications and collaboration solutions. RingCentral’s cloud solution is easier to manage, and more flexible and cost-efficient than legacy on-premises communications systems. It meets the needs of modern distributed and mobile workforces spanning SMB to Enterprises globally. RingCentral, Business Communications Made Simple. RingCentral is headquartered in Belmont, California. RingCentral and the RingCentral logo are registered trademarks of RingCentral, Inc.

Forward-Looking Statements

This press release contains “forward-looking statements”, including statements regarding our expectations regarding future financial results including our future revenues, our expectations regarding the traction of our growth drivers, our leadership position, and our planned investments. 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: 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; our ability to compete successfully against existing and new competitors; our ability to enter into and maintain relationships with carriers and other resellers; 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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Form 10-Q for the quarter ended March 31, 2016, 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 include certain Non-GAAP financial measures, including Non-GAAP operating income (loss), Non-GAAP operating margin, and Non-GAAP net income (loss) per share. Non-GAAP operating income (loss) is defined as operating income (loss) excluding share-based compensation, acquisition related matters, and amortization of acquisition intangibles. Non-GAAP operating margin is defined as Non-GAAP operating income (loss) divided by total GAAP revenue. Non-GAAP net income (loss) is defined as net income (loss) excluding share-based compensation, acquisition related matters, amortization of acquisition intangibles, tax benefit for release of valuation allowance, and intercompany remeasurement gains or losses.

We have included Non-GAAP operating income (loss), Non-GAAP operating margin, and Non-GAAP net income (loss) per share in this press release because they are key measures used by us to understand and evaluate our core 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 in calculating Non-GAAP operating income (loss), Non-GAAP operating margin, and Non-GAAP net income (loss) per share can provide a useful measure for period-to-period comparisons of our core business.

Although Non-GAAP operating income (loss), Non-GAAP operating margin, and Non-GAAP net income (loss) per share 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.

Our reported results also include our total annualized exit monthly recurring subscriptions, RingCentral Office® annualized exit monthly recurring subscriptions, and net monthly subscriptions dollar retention. We define our total annualized exit monthly recurring subscriptions as our total monthly recurring subscriptions multiplied by 12. Our total

 

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monthly recurring subscriptions equal the monthly value of all customer subscriptions in effect 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 total annualized exit monthly recurring subscriptions, except that only customer subscriptions from RingCentral Office® customers are included when determining monthly recurring subscriptions for the purposes of calculating this key business metric. 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.

Investor Relations Contact:

Darren Yip, RingCentral

(650) 641-2220

ir@RingCentral.com

Media Contact:

Jennifer Caukin, RingCentral

650-561-6348

Jennifer.caukin@ringcentral.com

 

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TABLE 1

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

 

     June 30, 2016     December 31, 2015  

Assets

    

Current assets

    

Cash and cash equivalents

   $ 147,791      $ 137,588   

Accounts receivable, net

     24,170        19,163   

Inventory

     122        2,317   

Prepaid expenses and other current assets

     14,624        11,978   
  

 

 

   

 

 

 

Total current assets

     186,707        171,046   

Property and equipment, net

     29,103        28,160   

Goodwill

     9,393        9,393   

Acquired intangibles, net

     2,755        3,266   

Other assets

     3,237        2,948   
  

 

 

   

 

 

 

Total assets

   $ 231,195      $ 214,813   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Accounts payable

   $ 2,016      $ 5,196   

Accrued liabilities

     44,705        34,702   

Current portion of capital lease obligation

     273        269   

Current portion of long-term debt

     3,750        3,750   

Deferred revenue

     42,105        36,657   
  

 

 

   

 

 

 

Total current liabilities

     92,849        80,574   

Long-term debt

     12,965        14,840   

Sales tax liability

     3,527        3,670   

Capital lease obligation

     —          181   

Other long-term liabilities

     3,939        5,416   
  

 

 

   

 

 

 

Total liabilities

     113,280        104,681   

Stockholders’ equity

    

Common stock

     7        7   

Additional paid-in capital

     340,283        319,792   

Accumulated other comprehensive income

     2,203        527   

Accumulated deficit

     (224,578     (210,194
  

 

 

   

 

 

 

Total stockholders’ equity

     117,915        110,132   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 231,195      $ 214,813   
  

 

 

   

 

 

 

 

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TABLE 2

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

 

     Three Months Ended     Six Months Ended  
     June 30,     June 30,  
     2016     2015     2016     2015  

Revenues

        

Software subscriptions

   $ 86,067      $ 64,441      $ 166,045      $ 124,392   

Other

     5,777        6,250        12,337        11,617   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     91,844        70,691        178,382        136,009   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues

        

Software subscriptions

     18,173        16,505        34,896        32,419   

Other

     4,191        5,024        9,208        9,657   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     22,364        21,529        44,104        42,076   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     69,480        49,162        134,278        93,933   

Operating expenses

        

Research and development

     16,681        12,297        31,607        24,137   

Sales and marketing

     45,662        34,626        87,490        66,595   

General and administrative

     13,441        11,778        27,465        22,309   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     75,784        58,701        146,562        113,041   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (6,304     (9,539     (12,284     (19,108

Other income (expense), net

        

Interest expense

     (193     (279     (409     (682

Other income (expense), net

     (1,217     238        (1,584     (318
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense), net

     (1,410     (41     (1,993     (1,000
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before provision (benefit) for income taxes

     (7,714     (9,580     (14,277     (20,108

Provision (benefit) for income taxes

     57        (1,369     107        (1,286
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (7,771   $ (8,211   $ (14,384   $ (18,822
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share

        

Basic and diluted

   $ (0.11   $ (0.12   $ (0.20   $ (0.27
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average number of shares used in computing net loss per share

        

Basic and diluted

     72,649        69,487        72,380        69,124   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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TABLE 3

RINGCENTRAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

     Six Months Ended  
     June 30,  
     2016     2015  

Cash flows from operating activities

    

Net loss

   $ (14,384   $ (18,822

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization

     6,953        6,529   

Share-based compensation

     14,214        10,038   

Foreign currency remeasurement loss

     1,708        80   

Tax benefit from release of valuation allowance

     —          (1,411

Non-cash interest expense and other expenses related to debt

     —          119   

Net accretion of discount and amortization of premium on available-for-sale securities

     —          402   

Provision for bad debt

     388        130   

Deferred income taxes

     (4     12   

Others

     113        128   

Changes in assets and liabilities:

    

Accounts receivable

     (5,395     (4,721

Inventory

     2,195        (661

Prepaid expenses and other current assets

     (2,647     (1,976

Other assets

     131        279   

Accounts payable

     (3,911     1,338   

Accrued liabilities

     11,492        3,105   

Deferred revenue

     5,448        5,440   

Other liabilities

     (1,620     374   
  

 

 

   

 

 

 

Net cash provided by operating activities

     14,681        383   
  

 

 

   

 

 

 

Cash flows from investing activities

    

Purchases of property and equipment

     (6,056     (7,716

Capitalized internal-use software

     (961     (610

Cash paid in business combination, net of cash acquired

     —          (4,670

Proceeds from the maturity of available-for-sale securities

     —          16,260   

Proceeds from the maturity of restricted investments

     —          100   
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (7,017     3,364   
  

 

 

   

 

 

 

Cash flows from financing activities

    

Proceeds from issuance of stock in connection with stock plans

     6,168        8,511   

Payment of holdback from Glip acquisition

     (1,500     —     

Repayment of debt

     (1,875     (4,267

Repayment of capital lease obligations

     (177     (426
  

 

 

   

 

 

 

Net cash provided by financing activities

     2,616        3,818   
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (77     42   

Net increase in cash and cash equivalents

     10,203        7,607   

Cash and cash equivalents

    

Beginning of period

     137,588        113,182   
  

 

 

   

 

 

 

End of period

   $ 147,791      $ 120,789   
  

 

 

   

 

 

 

 

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TABLE 4

RINGCENTRAL, INC.

RECONCILIATION OF OPERATING 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,  
     2016     2015     2016     2015  

Revenues

        

Software subscriptions

   $ 86,067      $ 64,441      $ 166,045      $ 124,392   

Other

     5,777        6,250        12,337        11,617   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     91,844        70,691        178,382        136,009   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues reconciliation

        

GAAP Software subscriptions cost of revenues

     18,173        16,505        34,896        32,419   

Stock-based compensation

     (781     (476     (1,415     (933

Amortization of acquisition intangibles

     (151     —          (301     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Software subscriptions cost of revenues

     17,241        16,029        33,180        31,486   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Other cost of revenues

     4,191        5,024        9,208        9,657   

Stock-based compensation

     (32     —          (51     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Other cost of revenues

     4,159        5,024        9,157        9,657   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit and gross margin reconciliation

        

Non-GAAP Subscriptions

     80.0     75.1     80.0     74.7

Non-GAAP Other

     28.0     19.6     25.8     16.9

Non-GAAP Gross profit

     76.7     70.2     76.3     69.7

Operating expenses reconciliation

        

GAAP Research and development

     16,681        12,297        31,607        24,137   

Stock-based compensation

     (1,857     (1,281     (3,494     (2,394

Amortization of acquisition intangibles

     —          (73     —          (73

Acquisition related matters

     (242     —          (483     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Research and development

     14,582        10,943        27,630        21,670   
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     15.9     15.5     15.5     15.9

GAAP Sales and marketing

     45,662        34,626        87,490        66,595   

Stock-based compensation

     (2,578     (1,692     (4,767     (3,536

Amortization of acquisition intangibles

     (105     —          (210     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Sales and marketing

     42,979        32,934        82,513        63,059   
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     46.8     46.6     46.3     46.4

GAAP General and administrative

     13,441        11,778        27,465        22,309   

Stock-based compensation

     (2,231     (1,842     (4,487     (3,175

Acquisition related matters

     (47     (747     (59     (747
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP General and administrative

     11,163        9,189        22,919        18,387   
  

 

 

   

 

 

   

 

 

   

 

 

 

As a % of total revenues non-GAAP

     12.2     13.0     12.8     13.5
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations reconciliation

        

GAAP loss from operations

     (6,304     (9,539     (12,284     (19,108

Stock-based compensation

     7,479        5,291        14,214        10,038   

Amortization of acquisition intangibles

     256        73        511        73   

Acquisition related matters

     289        747        542        747   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Income (loss) from operations

     1,720        (3,428     2,983        (8,250
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Operating margin

     1.9     -4.8     1.7     -6.1

 

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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     Six Months Ended  
     June 30,     June 30,  
     2016     2015     2016     2015  

Net Income (loss) reconciliation

        

GAAP Net loss

     (7,771     (8,211     (14,384     (18,822

Stock-based compensation

     7,479        5,291        14,214        10,038   

Amortization of acquisition intangibles

     256        73        511        73   

Acquisition related matters

     289        747        542        747   

Intercompany remeasurement loss (gain)

     1,258        (489     1,596        75   

Tax benefit from release of valuation allowance

     —          (1,411     —          (1,411
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net income (loss)

   $ 1,511      $ (4,000   $ 2,479      $ (9,300
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net income (loss) per share

        

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 net loss per share

     72,649        69,487        72,380        69,124   

Effect of dilutive securities (stock options and restricted stock awards)

     3,148        —          3,128        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP weighted average shares used in computing non-GAAP net income per share

     75,797        69,487        75,508        69,124   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Net loss per share

   $ (0.11   $ (0.12   $ (0.20   $ (0.27
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net income (loss) per share

   $ 0.02      $ (0.06   $ 0.03      $ (0.13
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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TABLE 6

RINGCENTRAL, INC.

PRO FORMA2 STATEMENT OF GROSS MARGIN UNDER AGENCY MODEL

(Unaudited, in thousands)

 

     2015     2016     2Q16  
     1Q     2Q     3Q     4Q     1Q     2Q     Q/Q     Y/Y  

GAAP Software subscription revenue

   $ 59,951      $ 64,441      $ 70,321      $ 76,532      $ 79,978      $ 86,067        8     34

GAAP Other revenue

   $ 5,367      $ 6,250      $ 6,459      $ 6,907      $ 6,560      $ 5,777       

Revised Agency Model adjustment

     (2,222     (2,101     (2,278     (2,597     (1,436     —         
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

Pro forma other revenue

   $ 3,145      $ 4,149      $ 4,181      $ 4,310      $ 5,124      $ 5,777        13     39
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total pro forma revenue

   $ 63,096      $ 68,590      $ 74,502      $ 80,842      $ 85,102      $ 91,844        8     34
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Software subscription cost of revenue

   $ 15,914      $ 16,505      $ 17,084      $ 16,851      $ 16,723      $ 18,173       

Stock-based compensation

     (457     (476     (535     (586     (634     (781    

Amortization of acquisition intangibles

     —          —          —          —          (151     (151    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

Non-GAAP Software subscriptions cost of revenue

   $ 15,457      $ 16,029      $ 16,549      $ 16,265      $ 15,938      $ 17,241       

GAAP Other cost of revenue

   $ 4,633      $ 5,024      $ 5,249      $ 6,011      $ 5,017      $ 4,191       

Stock-based compensation

     —          —          —          —          (19     (32    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

Non-GAAP Other cost of revenue

   $ 4,633      $ 5,024      $ 5,249      $ 6,011      $ 4,998      $ 4,159       

Revised Agency Model adjustment

     (2,222     (2,101     (2,278     (2,597     (1,436     —         
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

Pro forma other cost of revenue

   $ 2,411      $ 2,923      $ 2,971      $ 3,414      $ 3,562      $ 4,159       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total pro forma cost of revenue

   $ 17,868      $ 18,952      $ 19,520      $ 19,679      $ 19,500      $ 21,400        10     13
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pro forma software subscriptions revenue gross profit

   $ 44,494      $ 48,412      $ 53,772      $ 60,267      $ 64,040      $ 68,826        7     42

Pro forma other revenue gross profit

     734        1,226        1,210        896        1,562        1,618        4     32
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total pro forma gross profit

   $ 45,228      $ 49,638      $ 54,982      $ 61,163      $ 65,602      $ 70,444        7     42
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pro forma software subscriptions revenue gross margin

     74     75     76     79     80     80    

Pro forma other revenue gross margin

     23     30     29     21     30     28    

Total pro forma gross margin

     72     72     74     76     77     77    

 

2  In 1Q16 RingCentral transitioned direct phone sales to an agency model, in which RingCentral receives a commission for phone sales instead of separately recognizing the full sale price and cost of the product. RingCentral is providing supplemental information on a pro forma basis to provide a clear comparison of the Company’s results with prior periods as-if the Company had transitioned phone sales to the new agency model on January 1, 2015. Carrier phone sales will remain under the direct phone sales model.

 

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