RingCentral Announces First Quarter 2023 Results
4:03 PM ET, 05/09/2023 - Business Wire
Q1'23 results exceed high end of guidance across key metrics
Raises 2023 revenue and operating margin outlook
BELMONT, Calif.--(BUSINESS WIRE)--May 9, 2023--RingCentral, Inc. (NYSE: RNG), a leading provider of AI-powered global enterprise cloud communications, video meetings, collaboration, and contact center solutions, today announced financial results for the first quarter ended March 31, 2023.
First Quarter Financial Highlights
Total revenue increased 14% year over year to $534 million.
Subscriptions revenue increased 16% year over year to $508 million.
Annualized Exit Monthly Recurring Subscriptions (ARR) increased 14% year over year to $2.16 billion.
Mid-market and Enterprise ARR increased 15% year over year to $1.33 billion.
GAAP operating margin of (10.2%), compared to (22.1%) in the prior year.
Non-GAAP operating margin of 17.2%, up 680 basis points year-over-year and a quarterly record
“We had a good first quarter, as we exceeded the high end of guidance across key metrics,” said Vlad Shmunis, RingCentral’s founder, chairman and CEO. “Our open platform, deep integrations to top third party applications, 99.999% reliability, global reach and integrated UCaaS and CCaaS platform continue to resonate with customers and distinguish RingCentral from competitors. We also introduced several new products and features this quarter that we believe further differentiate our platform.”
“Innovation is the lifeblood of RingCentral,” said Sonalee Parekh, RingCentral's CFO. “We continue to invest in our product while demonstrating solid execution on our productivity initiatives.”
Financial Results for the First Quarter 2023
Revenue: Total revenue was $534 million for the first quarter of 2023, up from $468 million in the first quarter of 2022, representing 14% growth. Adjusted for constant currency, total revenue rose 15%. Subscriptions revenue of $508 million increased 16% year over year and accounted for 95% of total revenue. Adjusted for constant currency, subscriptions revenue rose 17%.
Operating Income (Loss): GAAP operating loss was ($55) million, compared to ($104) million in the same period last year. Non-GAAP operating income was $92 million, or 17.2% of total revenue, compared to $49 million, or 10.4% of total revenue, for the first quarter of 2022.
Adjusted EBITDA: Adjusted EBITDA for the first quarter of 2023 was $112 million, or 21.0% of total revenue, compared to $66 million, or 14.0% of total revenue, for the first quarter of 2022.
Net Income (Loss) Per Share: GAAP net loss per share was ($0.57), compared to ($1.60) in the same period last year. Diluted non-GAAP net income per share was $0.76, compared to $0.39 per share in the same period last year. The first quarters of 2023 and 2022 reflected an approximately 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 first quarter of 2023 was $275 million. This compares to $270 million at the end of the fourth quarter of 2022. Our cash balance reflects approximately $75 million in cash paid during the first quarter of 2023 for the repurchase of shares under the plan announced in February 2023. At March 31, 2023, approximately $100 million remains available under the plan.
Financial Outlook
Full Year 2023 Guidance:
Raising subscriptions revenue range to $2.086 to $2.104 billion, representing annual growth of 11%.
Raising total revenue range to $2.187 to $2.205 billion, representing annual growth of 10% to 11%.
Raising GAAP operating margin range to (7.9%) to (6.6%), compared to the prior range of (8.3%) to (6.9%).
Raising non-GAAP operating margin to at least 18.5%, compared to at least 18.0% previously.
Non-GAAP tax rate assumed to be 22.5%. No material cash taxes expected given net operating loss carryforwards.
Raising non-GAAP EPS to $3.19 to $3.25 based on 98.0 to 99.0 million fully diluted shares. This is up from our prior range of $3.04 to $3.10 based on 99.0 to 100.0 million fully diluted shares. Outlook does not include interest income (expense).
Share-based compensation range of $395 to $415 million.
Amortization of acquired intangibles of $149 million.
Third-party relocation and other costs, net, of $3 million.
Restructuring costs of $8 to $10 million.
Second Quarter 2023 Guidance:
Subscriptions revenue range of $511 to $513 million, representing year-over-year growth of 10% to 11%.
Total revenue range of $535 to $537 million, representing year-over-year growth of 10%.
GAAP operating margin range of (10.0%) to (8.9%).
Non-GAAP operating margin of 17.5%.
Non-GAAP tax rate assumed to be 22.5%. No material cash taxes expected given net operating loss carryforwards.
Non-GAAP EPS of $0.74 to $0.76 based on 96.5 to 97.5 million fully diluted shares. Outlook does not include interest income (expense).
Share-based compensation range of $102 to $107 million.
Amortization of acquired intangibles of $38 million.
Restructuring costs of $3 million.
Additional Highlights
Introduced RingCentral for Teams 2.0. This solution brings RingCentral’s world class cloud PBX capabilities into Microsoft Teams with a fully native experience, without requiring a second application. This means that end customers can now enjoy RingCentral’s renowned 99.999% reliability, global availability, advanced analytics, industry leading features and third party integration capabilities entirely within Teams’ single pane of glass.
Introduced RingSense by RingCentral, an AI platform for enhanced business communications. Leveraging generative AI, RingSense enables organizations to turn their conversation data into powerful insights that will unlock productivity and drive business outcomes. RingSense for Sales, the first offering in the RingSense AI portfolio, is available in beta today.
Introduced RingCentral for Frontline Workers. With this powerful solution, which combines push to talk capabilities with video and messaging, frontline workers across all industries can use any smart mobile device to seamlessly and efficiently connect with their front and back office teams. It is available in beta today as either a standalone solution or an add-on to RingCentral MVP. It will be available in open beta at the end of May and generally available this summer.
Introduced RingCentral Overlay, which is being used by Vodafone Business in their new offering for the Italian market, with more markets coming soon. Called Vodafone Business UC with RingCentral, this powerful, integrated communications solution brings together RingCentral’s messaging and video capabilities with Vodafone Business' existing fixed and mobile voice communications functionality.
