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Financials : Banks | Large Cap Value
Company profile

U.S. Bancorp is a financial services holding company. The Company provides a range of financial services, including lending and depository services, cash management, capital markets, and trust and investment management services. It also engages in credit card services, merchant and automated teller machine (ATM) processing, mortgage banking, insurance, brokerage and leasing. Its banking subsidiary, U.S. Bank National Association, is engaged in the general banking business and offers commercial and consumer lending, lending services, depository services and ancillary services. Its non-banking subsidiaries offer investment and insurance products to the Company's customers principally within its domestic markets, and fund administration services to a range of mutual and other funds. The Company's bank and trust subsidiaries provide a range of asset management and fiduciary services for individuals, estates, foundations, business corporations and charitable organizations.

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RingCentral Announces Third Quarter 2020 Results

1:03 pm ET November 9, 2020 (BusinessWire) Print

--Subscriptions Revenue up 33%

RingCentral, Inc. (NYSE: RNG), a leading provider of global enterprise cloud communications, collaboration, and contact center solutions, today announced financial results for the third quarter ended September 30, 2020.

Third Quarter Financial Highlights

Total revenue increased 30% year over year to $304 million. Subscriptions revenue increased 33% year over year to $280 million. Annualized Exit Monthly Recurring Subscriptions (ARR) increased 34% year over year to $1.2 billion. RingCentral Office(R) ARR increased 36% year over year to $1.1 billion. Mid-market and Enterprise ARR increased 49% year over year to $633 million. Enterprise ARR increased 55% year over year to $401 million. Channel ARR increased 59% year over year to $419 million.

"We delivered a solid third quarter driven by strong new logo momentum across SMB, mid-market, and enterprise sized businesses and continued contributions from channel partners," said Vlad Shmunis, RingCentral's founder, chairman and CEO. "We are excited to add Alcatel-Lucent Enterprise and expand our relationship with BT as we further expand and deepen our unique global distribution network. We believe our customers and partners are embracing RingCentral's differentiated Message Video Phone (MVP) cloud platform as a go forward staple of their digital transformation journeys."

Financial Results for the Third Quarter 2020

Revenue: Subscriptions revenue of $280 million increased 33% year over year and accounted for 92% of total revenue. Other revenue of $24 million increased 7% year over year, reflecting higher adoption of RingCentral apps in the current work from anywhere environment. Total revenue was $304 million for the third quarter of 2020, up from $233 million in the third quarter of 2019, representing 30% growth. Operating Income (Loss): GAAP operating loss was ($30) million, compared to a GAAP operating loss of ($11) million in the same period last year, primarily driven by higher share-based compensation and amortization of acquisition intangibles. Non-GAAP operating income was $31 million, compared to a non-GAAP operating income of $22 million in the same period last year. Net Income (Loss) Per Share: GAAP net loss per diluted share was ($0.24), compared to ($0.15) in the same period last year, primarily driven by higher share-based compensation, amortization of acquisition intangibles, and amortization of debt discount and issuance costs, offset by gains associated with investments and strategic partnerships. Non-GAAP net income per diluted share was $0.26, compared to $0.22 per diluted share in the same period last year. The third quarters of 2020 and 2019 reflected a 22.5% non-GAAP tax rate. There were no material cash taxes given our net operating loss carryforwards. Cash and Cash Equivalents: Total cash and cash equivalents at the end of the third quarter of 2020 was $746 million, which reflects a one-time payment related to our recent strategic partnership for exclusive access, a minimum seat commitment, and future commissions. This compares to $774 million at the end of the second quarter of 2020.

Additional Highlights

RingCentral Video

Announced that RingCentral has released more than 70 new features to RingCentral Video(TM) since it launched in April 2020. Key innovations include security enhancements, waiting rooms, flexible video layouts, participant view pagination, and network quality indicators. We believe this rapid innovation makes business video meetings fast, smart, open, and secure while delivering a great user experience within a browser, with no downloads required, or via mobile or desktop apps, as per user preference. Also announced that RingCentral Video(TM) is now available as part of the RingCentral Office(R) solution in Europe. Based on these innovations, RingCentral Video(TM) has been recognized by the Academy of Interactive and Visual Arts with a W3 Gold award in the General Website Applications-Services category. RingCentral Video also received two W3 Silver awards for Best Visual Appeal - Experience and Best Visual Appeal - Utility. Announced RingCentral Rooms(TM) for Poly, bringing the power and ease-of-use of RingCentral Video(TM) to every work space. Designed for a flexible and hybrid workforce, the powerful and intuitive RingCentral Rooms service will be built into the simple Poly Studio X all-in-one video bars.

MVP Platform

Announced a new high-volume SMS service that enables businesses to send SMS messages and updates to their customers rapidly and reliably. Using this service, developers can build customized apps using RingCentral's business communications platform for use cases such as mass marketing, automated messages, notifications, customer polls/surveys, chatbots, Two-Factor Authentication (2FA), and One Time Passwords (OTP). Announced that RingCentral is now featured in the new Amazon Web Services (AWS) Activate Console Exclusive Offers program. This means startups building on AWS can now access customized, discounted offers on RingCentral Office(R) directly through the AWS Activate Console. Announced that RingCentral Global Office(TM) will be available in six continents including Africa, Asia, Australia, Europe, North America, and South America, with expansion into several countries including Estonia, Greece, Lithuania, Slovenia, and South Africa. Also announced RingCentral's unified communications platform will now be available in Germany with a new datacenter in Frankfurt, and a new office in Hamburg, Germany.

Strategic Partnerships

Announced a strategic partnership with Alcatel-Lucent Enterprise to introduce a new co-branded cloud solution - Rainbow Office powered by RingCentral - making it unique and exclusive for Alcatel-Lucent Enterprise. RingCentral and Alcatel-Lucent Enterprise will jointly develop programs enabling both companies to lead the cloud communications services for the enterprise market. In partnership with Atos SE, launched Unify Office by RingCentral in Germany and its strong partner community of 800 partners, as well as in France, Austria, Belgium, Ireland, Italy, Spain and the Netherlands. Announced expansion of Avaya Cloud Office(TM) by RingCentral(R) across Europe, with general availability in France, Ireland, and the Netherlands. In addition, announced several new ACO capabilities including additional network performance and quality controls, admin and security controls, and adoption and usage analytics.

Financial

Issued $650 million aggregate principal amount of 0% Convertible Senior Notes due 2026 priced with a 52.5% conversion premium to the last reported sale price per share of RingCentral's Class A common stock on September 10, 2020 ('last reported price'). We also purchased a capped call in conjunction with these Notes with a cap price of approximately $556 per share, representing a premium of 100% over the last reported price.

Financial Outlook

Full Year 2020 Guidance:

Raising subscriptions revenue range to $1.070 to $1.072 billion, representing annual growth of 31%. This is up from our prior range of $1.043 to $1.048 billion and annual growth of 28%. Raising total revenue range to $1.164 to $1.167 billion, representing annual growth of 29%. This is up from our prior range of $1.135 to $1.143 billion and annual growth of 26% to 27%. GAAP operating margin range of (9.9%) to (9.8%), up from our prior range of (10.8%) to (10.1%). Non-GAAP operating margin of 9.7%, up from our prior range of 9.6% to 9.7%. Non-GAAP tax rate for 2020 assumed to be 22.5%. No material cash taxes expected given net operating loss carryforwards. Raising non-GAAP EPS to $0.96 based on 93 million fully diluted shares. This is up from our prior range of $0.92 to $0.94. Share-based compensation range of $190 to $191 million, amortization of debt discount and issuance costs of $49 million, amortization of acquisition intangibles of $34 million, and acquisition related matters of approximately $2.6 million.

Fourth Quarter 2020 Guidance:

Subscriptions revenue range of $290.5 to $292.5 million, representing annual growth of 27% to 28%. Total revenue range of $315 to $318 million, representing annual growth of 25% to 26%. GAAP operating margin range of (9.8%) to (9.2%). Non-GAAP operating margin range of 10.0% to 10.1%. Non-GAAP tax rate assumed to be 22.5%. No material cash taxes expected given net operating loss carryforwards. Non-GAAP EPS range of $0.26 to $0.27 based on 93 million fully diluted shares. Share-based compensation range of $53 to $54 million, amortization of debt discount and issuance costs of $16 million, and amortization of acquisition intangibles of $8.5 million.

For a reconciliation of our forecasted non-GAAP operating margin, see "Reconciliation of Forecasted Operating Margin GAAP Measures to Non-GAAP Measures." We have not reconciled our forecasted non-GAAP EPS to its respective forecasted GAAP measure because we do not provide guidance on it. We do not provide guidance on forecasted GAAP EPS because of the inherent uncertainty and complexity involved in forecasting the intercompany remeasurement gain (loss), gain (loss) associated with investments and strategic partnerships, and provision (benefit) from income taxes, which could be significant reconciling items between the non-GAAP and respective GAAP measures. The intercompany remeasurement gain (loss) is affected by the movement in various exchange rates relative to the U.S. Dollar, which is difficult to predict and subject to constant change. We do not provide guidance on gain (loss) associated with investments and strategic partnerships as it is based on future share prices, which are difficult to predict and subject to inherent uncertainties. We do not provide guidance on gain (loss) on debt early conversions as it is based on future conversion requests, future share prices, and interest rates, which are difficult to predict and are subject to inherent uncertainties. We do not provide guidance on forecasted GAAP tax rates as we do not forecast discrete tax items as they are difficult to predict. The provision (benefit) from income taxes, excluding discrete items, is expected to have an immaterial impact to our GAAP EPS. We utilized a projected long-term tax rate in our computation of the non-GAAP income tax provision. For fiscal 2020, we have determined the projected non-GAAP tax rate to be 22.5%. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort.

Conference Call Details:

What: RingCentral financial results for the third quarter of 2020 and outlook for the fourth quarter and full year of 2020. When: Monday, November 9, 2020 at 2:00PM PT (5:00PM 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 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: Following the completion of the call through 11:59 PM ET on November 16, 2020, a telephone replay will be available by dialing (844) 512-2921 from the United States or (412) 317-6671 internationally with recording access code 13711153.

Investor Presentation Details

An investor presentation providing additional information and analysis can be found at http://ir.ringcentral.com/.

About RingCentral

RingCentral, Inc. (NYSE: RNG) is a leading provider of cloud Message Video Phone (MVP), customer engagement and contact center solutions for businesses worldwide. More flexible and cost-effective than legacy on-premise PBX and video conferencing systems that it replaces, RingCentral empowers modern mobile and distributed workforces to communicate, collaborate, and connect via any mode, any device, and any location. RingCentral's open platform integrates with leading third-party business applications and enables customers to easily customize business workflows. RingCentral is headquartered in Belmont, California, and has offices around the world.

(C)2020 RingCentral, Inc. All rights reserved. RingCentral, RingCentral Office, RingCentral Video, Message Video Phone, and the RingCentral logo are trademarks of RingCentral, Inc.

Forward-Looking Statements

This press release contains "forward-looking statements," including but not limited to, statements regarding our future financial results, our GAAP and non-GAAP guidance, our momentum in SMB, mid-market and enterprise, contributions from channel partners, the success of our RCV solution, the success of our strategic relationships, such as our relationships with Avaya, Atos, Alcatel-Lucent Enterprise, and BT, our ability to expand and deepen our global distribution network, our market opportunity, and the effects of the COVID-19 pandemic. 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: the future effects of the COVID-19 pandemic, our ability to realize the anticipated benefits of our strategic relationships, such as our relationships with Avaya, Atos, Alcatel-Lucent Enterprise, and BT; 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, including RCV; our ability to compete successfully against existing and new competitors; our ability to enter into and maintain relationships with resellers, carriers, channel partners and strategic partners; our ability to successfully and timely integrate, and realize the benefits of any significant acquisition we may make; 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 June 30, 2020, 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 and financial outlook include certain Non-GAAP financial measures, including Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP income (loss) from operations, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP net cash provided by (used in) operating activities, and non-GAAP free cash flow. Non-GAAP subscriptions gross margin is defined as Non-GAAP subscriptions gross profit divided by GAAP subscriptions revenue. Non-GAAP other gross margin is defined as Non-GAAP other gross profit divided by GAAP other revenue. Non-GAAP income (loss) from operations is defined as GAAP income (loss) from operations excluding share-based compensation, amortization of acquisition intangibles, and acquisition related matters including transaction costs, integration costs, restructuring costs, and acquisition-related retention payments, as well as changes in the fair value of contingent consideration obligations. Non-GAAP operating margin is defined as Non-GAAP income (loss) from operations divided by total GAAP revenue. Non-GAAP net income (loss) is defined as GAAP net income (loss) excluding share-based compensation, intercompany remeasurement gains or losses, acquisition related matters, amortization of acquisition intangibles, non-cash interest expense associated with amortization of debt discount and issuance costs related to our convertible senior notes, gain (loss) associated with investments and strategic partnerships, tax benefit from release of valuation allowance, and the related income tax effect of these adjustments.

Non-GAAP diluted shares outstanding include the impact on shares used in per share calculations of our outstanding capped call transactions. Our outstanding capped call transactions are anti-dilutive in GAAP earnings per share but are expected to mitigate the dilutive effect of our convertible notes and therefore are included in the calculations of non-GAAP diluted shares outstanding.

Non-GAAP net cash provided by (used in) operating activities is defined as net cash provided by (used in) operating activities plus cash paid for repayments of convertible senior notes attributable to debt discount and cash paid for strategic partnerships. Non-GAAP free cash flow is defined as Non-GAAP net cash provided by (used in) operating activities reduced by purchases of property and equipment and capitalized internal-use software. We believe information regarding free cash flow provides useful information to investors in understanding and evaluating the strength of liquidity and available cash.

We have included Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP net cash provided by (used in) operating activities, and Non-GAAP free cash flow in this press release because they are key measures used by us to understand and evaluate our 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 and cash flow items in calculating Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP net cash provided by (used in) operating activities, and Non-GAAP free cash flow provide useful measure for period-to-period comparisons of our business.

Although Non-GAAP subscriptions gross margin, Non-GAAP other gross margin, Non-GAAP operating margin, Non-GAAP net income (loss), Non-GAAP net income (loss) per diluted share, Non-GAAP net cash provided by (used in) operating activities, and Non-GAAP free cash flow 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.

Reconciliations of the Company's non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included in this press release.

Other Measures

Our reported results also include our annualized exit monthly recurring subscriptions, RingCentral Office(R) annualized exit monthly recurring subscriptions, mid-market and enterprise annualized exit monthly recurring subscriptions, enterprise annualized exit monthly recurring subscriptions, channel partner annualized exit monthly recurring subscriptions, and net monthly subscriptions dollar retention. We define our annualized exit monthly recurring subscriptions as our monthly recurring subscriptions multiplied by 12. Our monthly recurring subscriptions equal the monthly value of all customer recurring charges contracted 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(R) annualized exit monthly recurring subscriptions in the same manner as we calculate our annualized exit monthly recurring subscriptions, except that only customer subscriptions from RingCentral Office(R) and RingCentral customer engagement solutions customers are included when determining monthly recurring subscriptions for the purposes of calculating this key business metric. We calculate mid-market and enterprise annualized exit monthly recurring subscriptions in the same manner as we calculate our RingCentral Office(R) annualized exit monthly recurring subscriptions, except that only customer subscriptions from customers generating $25,000 or more in annual recurring revenue are included. We calculate enterprise annualized exit monthly recurring subscriptions in the same manner as we calculate our RingCentral Office(R) annualized exit monthly recurring subscriptions, except that only customer subscriptions from customers generating $100,000 or more in annual recurring revenue are included. We calculate channel partner annualized exit monthly recurring subscriptions in the same manner as we calculate our annualized exit monthly revenue subscriptions, except that only customer subscriptions generated from channel partners are included. 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.

                                                                                       TABLE 1
                                                                                  RINGCENTRAL, INC.
                                                                        CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                              (Unaudited, in thousands)
                                                                                      
                                                                          September 30, 2020                       December 31, 2019
                                                                                   -----------------------------------                        ------------------------------------
Assets                                                                                                   
Current assets                                                                                           
                                                                                   $        745,558     $         343,606  
   Cash and cash equivalents
                                                                                            153,583               129,990  
   Accounts receivable, net
                                                                                             53,212                36,589  
   Deferred and prepaid sales commission costs
                                                                                             40,251                25,354  
   Prepaid expenses and other current assets
                                                                                   ---------------  --------------------                      ----------------  --------------------
Total current assets                                                                        992,604               535,539  
Property and equipment, net                                                                 132,967                89,230  
Operating lease right-of-use assets                                                          50,414                39,269  
Long-term investments                                                                       173,641               132,188  
Deferred and prepaid sales commission costs, non-current                                    599,759               462,344  
Goodwill                                                                                     56,223                55,278  
Acquired intangibles, net                                                                   101,894               127,338  
Other assets                                                                                  8,812                 9,561  
                                                                                   ---------------  --------------------                      ----------------  --------------------
Total assets                                                                       $      2,116,314     $       1,450,747  
                                                                                   ====== ========= ====================                      ======= ========= ====================
Liabilities, Temporary Equity, and Stockholders' Equity                       
Current liabilities                                                                                      
                                                                                   $         38,002     $          34,612  
   Accounts payable
                                                                                            189,555               138,729  
   Accrued liabilities
                                                                                             14,156        --  
   Current portion of convertible senior notes, net
                                                                                            127,500               107,372  
   Deferred revenue
                                                                                   ---------------  --------------------                      ----------------  --------------------
Total current liabilities                                                                   369,213               280,713  
Convertible senior notes, net                                                             1,394,898               386,889  
Operating lease liabilities                                                                  37,973                28,516  
Other long-term liabilities                                                                  14,555                 8,929  
                                                                                   ---------------  --------------------                      ----------------  --------------------
Total liabilities                                                                         1,816,639               705,047  
                                                                                      
Temporary equity                                                                              1,934        --  
                                                                                   ---------------  --------------------                      ----------------  --------------------
                                                                                      
Stockholders' equity                                                          
                                                                                                  9                     9  
   Common stock
                                                                                            664,689             1,033,053  
   Additional paid-in capital
                                                                                              3,522                 1,948  
   Accumulated other comprehensive income
                                                                                           (370,479 )                               (289,310 )
   Accumulated deficit
                                                                                   ---------------  --------------------                      ----------------  --------------------
Total stockholders' equity                              $        297,741     $         745,700  
                                                                                   ------ --------- --------------------                      ------- --------- --------------------
                                                                                                                                        TABLE 2
                                                                                                                                   RINGCENTRAL, INC.
                                                                                                                    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                                                   (Unaudited, in thousands, except per share data)
                                                                                                                                 
                                                                                                                                                  
                                                                                                              Three Months Ended                                                                                                Nine Months Ended
                                                                                                                September 30,                                                                                                     September 30,
                                                                       --------------------------------------------------------------------------------------                            --------------------------------------------------------------------------------------
                                                                                                                                                                     
                                                                                         2020                                                     2019                                                     2020                                                     2019
                                                                       ---------------------------------                        ---------------------------------                        ---------------------------------                        ---------------------------------
Revenues                                                                                                                         
                                                                       $      279,639     $      210,906     $      779,781     $      588,406  
   Subscriptions
                                                                               23,985             22,446             69,340             61,587  
   Other
                                                                       -------------  --------------------                      -------------  --------------------                      -------------  --------------------                      -------------  --------------------
Total revenues                                                                303,624            233,352            849,121            649,993  
                                                                       -------------  --------------------                      -------------  --------------------                      -------------  --------------------                      -------------  --------------------
Cost of revenues                                                                                                                 
                                                                               60,531             40,930            169,685            114,343  
   Subscriptions
                                                                               21,783             18,775             62,710             49,827  
   Other
                                                                       -------------  --------------------                      -------------  --------------------                      -------------  --------------------                      -------------  --------------------
Total cost of revenues                                                         82,314             59,705            232,395            164,170  
                                                                       -------------  --------------------                      -------------  --------------------                      -------------  --------------------                      -------------  --------------------
Gross profit                                                                  221,310            173,647            616,726            485,823  
Operating expenses                                                                                                               
                                                                               48,481             35,286            132,910             97,705  
   Research and development
                                                                              152,986            109,882            421,931            313,023  
   Sales and marketing
                                                                               49,513             39,142            146,381            100,401  
   General and administrative
                                                                       -------------  --------------------                      -------------  --------------------                      -------------  --------------------                      -------------  --------------------
Total operating expenses                                                      250,980            184,310            701,222            511,129  
                                                                       -------------  --------------------                      -------------  --------------------                      -------------  --------------------                      -------------  --------------------
Loss from operations                                                          (29,670 )                             (10,663 )                             (84,496 )                             (25,306 )
Other income (expense), net                                                                                                      
                                                                              (12,680 )                              (5,160 )                             (32,780 )                             (15,280 )
   Interest expense
                                                                               21,824              2,926             36,910              9,118  
   Other income, net
                                                                       -------------  --------------------                      -------------  --------------------                      -------------  --------------------                      -------------  --------------------
Other income (expense), net                                                     9,144             (2,234 )                               4,130             (6,162 )
                                                                       -------------  --------------------                      -------------  --------------------                      -------------  --------------------                      -------------  --------------------
Loss before income taxes                                                      (20,526 )                             (12,897 )                             (80,366 )                             (31,468 )
Provision for (benefit from) income taxes                                         431               (148 )                                 803             (3,118 )
                                                                       -------------  --------------------                      -------------  --------------------                      -------------  --------------------                      -------------  --------------------
Net loss                                                               $      (20,957 )                      $      (12,749 )                      $      (81,169 )                      $      (28,350 )
                                                                       ====== ======= ====================                      ====== ======= ====================                      ====== ======= ====================                      ====== ======= ====================
Net loss per common share                                                                                                        
                                                                       $        (0.24 )                      $        (0.15 )                      $        (0.92 )                      $        (0.34 )
   Basic and diluted
                                                                       ====== ======= ====================                      ====== ======= ====================                      ====== ======= ====================                      ====== ======= ====================
Weighted-average number of shares used in computing net loss per share                                                           
                                                                                    TABLE 3
                                                                               RINGCENTRAL, INC.
                                                                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                           (Unaudited, in thousands)
                                                              
                                                                                                    Nine Months Ended
                                                                                                                         September 30,
                                                                                ----------------------------------------------------------------------------------------
                                                                             2020                                   2019
                                                                                ----------------------------------                        ----------------------------------
Cash flows from operating activities                                                                 
Net loss                                                                        $       (81,169 )                      $       (28,350 )
Adjustments to reconcile net loss to net cash provided by operating activities:                      
                                                                                         53,563              26,060  
   Depreciation and amortization
                                                                                        137,410              71,690  
   Share-based compensation
                                                                                         33,060              21,189  
   Amortization of deferred and prepaid sales commission costs
                                                                                         32,613              15,149  
   Amortization of debt discount and issuance costs
                                                                                         12,323      --  
   Loss on early extinguishment of debt
                                                                                        (32,640 )                       --  
   Repayment of convertible senior notes attributable to debt discount
                                                                                         11,478              10,166  
   Reduction of operating lease right-of-use assets
                                                                                        (41,453 )                       --  
   Unrealized gain and other related costs on investments
                                                                                             63                  61  
   Foreign currency remeasurement (gain) loss
                                                                                          3,909               2,339  
   Provision for bad debt
                                                                                           (267 )                                 (632 )
   Deferred income taxes
                                                                                 --              (3,210 )
   Tax benefit from release of valuation allowance
                                                                                            203               1,925  
   Other
Changes in assets and liabilities:                                                                   
                                                                                        (27,502 )                              (24,845 )
   Accounts receivable
                                                                                       (183,745 )                              (51,467 )
   Deferred and prepaid sales commission costs
                                                                                        (14,613 )                               (8,125 )
   Prepaid expenses and other current assets
                                                                                            322                 400  
   Other assets
                                                                                          5,180              10,626  
   Accounts payable
                                                                                         41,530              22,432  
   Accrued liabilities
                                                                                         20,128              16,632  
   Deferred revenue
                                                                                        (11,019 )                              (10,507 )
   Operating lease liabilities
                                                                                          7,919                (525 )
   Other liabilities
                                                                                --------------  --------------------                      --------------  --------------------
                                                                                        (32,707 )                               71,008  
      Net cash (used in) provided by operating activities
                                                                                --------------  --------------------                      --------------  --------------------
Cash flows from investing activities                                                                 
Purchases of property and equipment                                                     (33,992 )                              (21,355 )
Capitalized internal-use software                                                       (28,049 )                              (11,472 )
Cash paid for business combination, net of cash acquired                         --             (27,870 )
                                                                                --------------  --------------------                      --------------  --------------------
                                                                                        (62,041 )                              (60,697 )
      Net cash used in investing activities
                                                                                --------------  --------------------                      --------------  --------------------
Cash flows from financing activities                                                                 
Proceeds from issuance of convertible senior notes, net of issuance costs             1,627,209      --  
Payments for 2023 convertible senior notes partial repurchase                        (1,019,813 )                       --  
Payments for capped calls and transaction costs                                        (102,695 )                       --  
Proceeds from issuance of stock in connection with stock plans                           24,123              17,590  
Payments for taxes related to net share settlement of equity awards                     (27,698 )                              (10,244 )
Payment for contingent consideration for business acquisition                            (3,548 )                       --  
Repayment of financing obligations                                                       (1,215 )                                 (943 )
                                                                                --------------  --------------------                      --------------  --------------------
                                                                                        496,363               6,403  
      Net cash provided by financing activities
                                                                                --------------  --------------------                      --------------  --------------------
Effect of exchange rate changes                                                             337                (380 )
                                                                                        401,952              16,334  
      Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash                                                           
Beginning of period                                                                     343,606             566,329  
                                                                                --------------  --------------------                      --------------  --------------------
                                                                                                                             TABLE 4
                                                                                                                        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,
                                              ----------------------------------------------------------------------------------------                            ---------------------------------------------------------------------------------------
                                           2020                                   2019                                   2020                                   2019
                                              ----------------------------------                        ----------------------------------                        ----------------------------------                        ---------------------------------
Revenues                                                                                                   
                                              $       279,639     $       210,906     $       779,781     $      588,406  
      Subscriptions
                                                       23,985              22,446              69,340             61,587  
      Other
                                              --------------  --------------------                      --------------  --------------------                      --------------  --------------------                      -------------  --------------------
                                                      303,624             233,352             849,121            649,993  
   Total revenues
                                              ==============  ====================                      ==============  ====================                      ==============  ====================                      =============  ====================
Cost of revenues reconciliation                                                                            
                                                       60,531              40,930             169,685            114,343  
      GAAP Subscriptions cost of revenues
                                                       (2,871 )                               (1,759 )                               (7,623 )                              (4,796 )
      Share-based compensation
                                                       (7,577 )                               (1,338 )                              (22,950 )                              (3,688 )
      Amortization of acquisition intangibles
                                               --      --      --                (64 )
      Acquisition related matters
                                              --------------  --------------------                      --------------  --------------------                      --------------  --------------------                      -------------  --------------------
                                                       50,083              37,833             139,112            105,795  
   Non-GAAP Subscriptions cost of revenues
                                              ==============  ====================                      ==============  ====================                      ==============  ====================                      =============  ====================
                                                                                                           
       
                                                       21,783              18,775              62,710             49,827  
      GAAP Other cost of revenues
                                                         (976 )                                 (592 )                               (2,796 )                              (1,316 )
      Share-based compensation
                                              --------------  --------------------                      --------------  --------------------                      --------------  --------------------                      -------------  --------------------
                                                       20,807              18,183              59,914             48,511  
   Non-GAAP Other cost of revenues
                                              ==============  ====================                      ==============  ====================                      ==============  ====================                      =============  ====================
Gross profit and gross margin reconciliation                                                               
                                                         82.1 %                                 82.1 %                                 82.2 %                                82.0 %
      Non-GAAP Subscriptions
                                                         13.2 %                                 19.0 %                                 13.6 %                                21.2 %
      Non-GAAP Other
                                                         76.7 %                                 76.0 %                                 76.6 %                                76.3 %
      Non-GAAP Gross profit
Operating expenses reconciliation                                                                          
                                                       48,481              35,286             132,910             97,705  
      GAAP Research and development
                                                      (10,679 )                               (6,230 )                              (27,918 )                             (16,000 )
      Share-based compensation
                                               --      --      --               (352 )
      Acquisition related matters
                                              --------------  --------------------                      --------------  --------------------                      --------------  --------------------                      -------------  --------------------
                                                       37,802              29,056             104,992             81,353  
   Non-GAAP Research and development
                                              ==============  ====================                      ==============  ====================                      ==============  ====================                      =============  ====================
                                                         12.5 %                                 12.5 %                                 12.4 %                                12.5 %
   As a % of total revenues non-GAAP
                                                                                                           
       
                                                      152,986             109,882             421,931            313,023  
      GAAP Sales and marketing
                                                      (17,552 )                              (10,182 )                              (45,165 )                             (27,589 )
      Share-based compensation
                                                         (959 )                                 (931 )                               (2,819 )                              (2,791 )
      Amortization of acquisition intangibles
                                               --                (499 )                                    4             (2,109 )
      Acquisition related matters
                                              --------------  --------------------                      --------------  --------------------                      --------------  --------------------                      -------------  --------------------
                                                      134,475              98,270             373,951            280,534  
   Non-GAAP Sales and marketing
                                              ==============  ====================                      ==============  ====================                      ==============  ====================                      =============  ====================
                                                         44.3 %                                 42.1 %                                 44.0 %                                43.2 %
   As a % of total revenues non-GAAP
                                                                                                           
       
                                                       49,513              39,142             146,381            100,401  
      GAAP General and administrative
                                                      (19,488 )                               (8,613 )                              (53,908 )                             (21,989 )
      Share-based compensation
                                                         (420 )                               (2,183 )                               (2,576 )                              (3,008 )
      Acquisition related matters
                                              --------------  --------------------                      --------------  --------------------                      --------------  --------------------                      -------------  --------------------
                                                       29,605              28,346              89,897             75,404  
   Non-GAAP General and administrative
                                              ==============  ====================                      ==============  ====================                      ==============  ====================                      =============  ====================
                                                          9.8 %                                 12.1 %                                 10.6 %                                11.6 %
   As a % of total revenues non-GAAP
Income (loss) from operations reconciliation                                                               
                                                      (29,670 )                              (10,663 )                              (84,496 )                             (25,306 )
      GAAP loss from operations
                                                       51,566              27,376             137,410             71,690  
      Share-based compensation
                                                        8,536               2,269              25,769              6,479  
      Amortization of acquisition intangibles
                                                          420               2,682               2,572              5,533  
      Acquisition related matters
                                              --------------  --------------------                      --------------  --------------------                      --------------  --------------------                      -------------  --------------------
                                                       30,852              21,664              81,255             58,396  
   Non-GAAP Income from operations
                                              ==============  ====================                      ==============  ====================                      ==============  ====================                      =============  ====================
                                                                                                                                                                          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                                                                               Nine Months Ended
                                                                                                                                                                                  September 30,                                                                                                      September 30,
                                                                                                                                         ---------------------------------------------------------------------------------------                            ---------------------------------------------------------------------------------------
                                                                                                                                      2020                                  2019                                   2020                                  2019
                                                                                                                                         ---------------------------------                        ----------------------------------                        ---------------------------------                        ----------------------------------
Net income (loss) reconciliation                                                                                                                                                                    
                                                                                                                                         $      (20,957 )                      $       (12,749 )                      $      (81,169 )                      $       (28,350 )
   GAAP net loss
                                                                                                                                                 51,566              27,376            137,410              71,690  
   Share-based compensation
                                                                                                                                                  8,536               2,269             25,769               6,479  
   Amortization of acquisition intangibles
                                                                                                                                                    420               2,682              2,572               5,533  
   Acquisition related matters
                                                                                                                                                 12,595               5,118             32,613              15,149  
   Amortization of debt discount and issuance costs
                                                                                                                                                (26,447 )                       --            (47,805 )                       --  
   Gain associated with investments and strategic partnerships
                                                                                                                                                  5,116      --             12,323      --  
   Loss on early extinguishment of debt
                                                                                                                                                   (121 )                                  340                416                 264  
   Intercompany remeasurement (gain) loss
                                                                                                                                                 (6,575 )                               (5,751 )                             (17,857 )                              (18,341 )
   Income tax expense effects (1)
                                                                                                                                         -------------  --------------------                      --------------  --------------------                      -------------  --------------------                      --------------  --------------------
                                                                                                                                         $       24,133     $        19,285     $       64,272     $        52,424  
   Non-GAAP net income
                                                                                                                                         ====== ======= ====================                      ======= ======= ====================                      ====== ======= ====================                      ======= ======= ====================
Reconciliation between GAAP and non-GAAP weighted average shares used in computing basic and diluted net income (loss) per common share:                                                            
                                                                                                                                                 89,173              83,283             88,259              82,348  
   Weighted average number of shares used in computing basic net (loss) income per share
                                                                                                                                                  3,751               5,127              4,577               5,263  
   Effect of dilutive securities
                                                                                                                                         -------------  --------------------                      --------------  --------------------                      -------------  --------------------                      --------------  --------------------
                                                                                                                                                 92,924              88,410             92,836              87,611  
   Non-GAAP weighted average shares used in computing non-GAAP diluted net income per share
                                                                                                                                         =============  ====================                      ==============  ====================                      =============  ====================                      ==============  ====================
                                                                                                                                                                                 
Diluted net income (loss) per share                                                                                                                                                                 
                                                                                                                                         $        (0.24 )                      $         (0.15 )                      $        (0.92 )                      $         (0.34 )
   GAAP net loss per share
                                                                                                                                         ====== ======= ====================                      ======= ======= ====================                      ====== ======= ====================                      ======= ======= ====================

(1) Income tax expense effects for the nine months ended September 30, 2019 include the tax benefit from release of valuation allowance.

                                                                              TABLE 6
                                                                         RINGCENTRAL, INC.
                                                      RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
                                                         GAAP MEASURES TO NON-GAAP FREE CASH FLOW MEASURES
                                                                     (Unaudited, in thousands)
                                                  
                                                                                        Nine Months Ended
                                                                                                             September 30,
                                                                    ---------------------------------------------------------------------------------------
                                                                 2020                                  2019
                                                                    ---------------------------------                        ----------------------------------
Net cash (used in) provided by operating activities                 $      (32,707 )                      $        71,008  
Strategic partnerships                                                     100,000      --  
Repayment of convertible senior notes attributable to debt discount         32,640      --  
                                                                    -------------  --------------------                      --------------  --------------------
                                                                            99,933              71,008  
   Non-GAAP net cash provided by operating activities
                                                                    -------------  --------------------                      --------------  --------------------
Purchases of property and equipment                                        (33,992 )                              (21,355 )
Capitalized internal-use software                                          (28,049 )                              (11,472 )
                                                                    -------------  --------------------                      --------------  --------------------
                                                                                                                      TABLE 7
                                                                                                                 RINGCENTRAL, INC.
                                                                                                   RECONCILIATION OF FORECASTED OPERATING MARGIN
                                                                                                        GAAP MEASURES TO NON-GAAP MEASURES
                                                                                                             (Unaudited, in millions)
                                                                                                     
                                                                   Q4 2020                                                                                    FY 2020
                                           ----------------------------------------------------------------------------------------                          --------------------------------------------------------------------------------
                                      Low Range                            High Range                           Low Range                        High Range
                                           ----------------------------------                       ----------------------------------                       ------------------------------                       ------------------------------
GAAP revenues                                       315.0              318.0        1,164.1        1,167.1  
                                                                              
GAAP loss from operations                           (31.0 )                               (29.4 )                          (115.5 )                          (113.9 )
GAAP operating margin                                (9.8 %)                               (9.2 %)                           (9.9 %)                           (9.8 %)
                                                     54.0               53.0          191.4          190.4  
   Share-based compensation
                                                      8.5                8.5           34.3           34.3  
   Amortization of acquisition intangibles
                                           --     --            2.6            2.6  
   Acquisition related matters
                                           -------------- --------------------                      -------------- --------------------                      ---------- --------------------                      ---------- --------------------
Non-GAAP income from operations                      31.5               32.1          112.8          113.4  

View source version on businesswire.com: https://www.businesswire.com/news/home/20201109006086/en/

SOURCE: RingCentral, Inc.">

Investor Relations Contact: 
Ryan Goodman, RingCentral
(650) 918-5356
Ryan.Goodman@ringcentral.com

Media Contact: 
Mariana Leventis, RingCentral
(650) 562-6545
Mariana.Leventis@ringcentral.com
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