Q2'22 results exceed high end of guidance across key metrics

Raises 2022 operating margin outlook; Maintains 2022 revenue outlook

RingCentral, Inc. (NYSE:RNG), a leading provider of global enterprise cloud communications, video meetings, collaboration, and contact center solutions, today announced financial results for the second quarter ended June 30, 2022.

Second Quarter Financial Highlights

Total revenue increased 28% year over year to $487 million.
Subscriptions revenue increased 32% year over year to $463 million.
Annualized Exit Monthly Recurring Subscriptions (ARR) increased 31% year over year to $2.0 billion.
Mid-market and Enterprise ARR increased 38% year over year to $1.2 billion.
Net cash provided by operating activities was $51 million and non-GAAP free cash flow was $29 million. Free cash flow represented 6.0% as a percent of total revenue, up 220 basis points year over year.

"Our second quarter key metrics exceeded the high end of our guidance range and demonstrated our consistent execution," said Vlad Shmunis, RingCentral's founder, chairman and CEO. "We continue to see the benefits of scale, with solid top line contributions complemented by increasing bottom line profitability. The market opportunity in front of us is large, and customers continue to gravitate to RingCentral because of our industry leading UCaaS and integrated CCaaS solution, proven reliability and broad geographic reach."

"We achieved a record quarterly non-GAAP operating margin," said Sonalee Parekh, RingCentral's CFO. "This showcases our ability to drive strong growth while increasing profitability. All while providing our customers with a leading product and a strong ROI."

Financial Results for the Second Quarter 2022

Revenue: Total revenue was $487 million for the second quarter of 2022, up from $379 million in the second quarter of 2021, representing 28% growth. Adjusted for constant currency, total revenue rose 30%. Subscriptions revenue of $463 million increased 32% year over year. Adjusted for constant currency, subscriptions revenue rose 33%.

Operating Income (Loss): GAAP operating loss was ($108) million, compared to ($73) million in the same period last year, primarily driven by higher amortization of acquired intangibles. Non-GAAP operating income was $55 million, compared to a non-GAAP operating income of $39 million in the same period last year.

Net Income (Loss) Per Share: GAAP net loss per share was ($1.68), compared to ($1.22) in the same period last year, primarily driven by higher amortization of acquired intangibles, and mark-to-market losses associated with investments. Diluted non-GAAP net income per share was $0.45, compared to $0.32 per share in the same period last year. The second quarters of 2022 and 2021 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 second quarter of 2022 was $306 million. Our cash balance reflects $25 million in cash paid for the share repurchases under the plan announced in December 2021.

Financial Outlook

Full Year 2022 Guidance:

Maintaining subscriptions revenue range of $1.882 to $1.898 billion, representing annual growth of 27% to 28%.
Maintaining total revenue range of $1.990 to $2.015 billion. This represents annual growth of 25% to 26%.
GAAP operating margin range of (19.2%) to (18.3%) compared to the prior range of (20.1%) to (19.0%).
Raising non-GAAP operating margin to 12.0%. This is up from our prior outlook of 11.5%.
Non-GAAP tax rate assumed to be 22.5%. No material cash taxes expected given net operating loss carryforwards.
Raising non-GAAP EPS to $1.91 to $1.95 based on 96 to 97 million fully diluted shares. This is up from our prior range of $1.83 to $1.87 based on 96 to 97 million fully diluted shares.
Share-based compensation range of $415 to $425 million. As a percent of revenue, this represents over 250 basis points of improvement at the midpoint versus last year.
Amortization of acquired intangibles of $173 million, third-party relocation and other costs of $19 million, and acquisition related and other matters of $4 million.

Third Quarter 2022 Guidance:

Subscriptions revenue range of $473.5 to $476.5 million, representing year-over-year growth of 23% to 24%.
Total revenue range of $500.0 to $504.0 million, representing year-over-year growth of 21% to 22%.
GAAP operating margin range of (18.3%) to (17.1%).
Non-GAAP operating margin of 12.5%.
Non-GAAP tax rate assumed to be 22.5%. No material cash taxes expected given net operating loss carryforwards.
Non-GAAP EPS of $0.50 to $0.51 based on 96 to 97 million fully diluted shares.
Share-based compensation range of $105 to $110 million.
Amortization of acquired intangibles of $44 million.

Additional Highlights

Announced the launch of ‘Vodafone Business UC with RingCentral' in Germany. This enables RingCentral's flagship offering RingCentral Message Video Phone™ (MVP™) with Vodafone's mobility and 5G capabilities. The solution gives companies more choice, flexibility and simplicity in how their employees communicate and collaborate - in the office, at home or on the go.

Announced an expansion of the RingCentral Rooms hardware ecosystem and associated feature enhancements. With return to office becoming a focus for many organizations, 76% of respondents in a recent survey reported that technological improvements and upgrades to conference rooms is a key priority.

Recognized by Frost & Sullivan as a Growth and Innovation leader in the Frost Radar™: North American Unified Communications-as-a-Service Market, 2021. Frost & Sullivan highlighted RingCentral's strong position in North America by leveraging creative partnerships. RingCentral's unwavering commitment to innovation and comprehensive–yet tiered service bundles were also highlighted.

Comparably recognized RingCentral's CEO Vlad Shmunis as a top ten Best CEO for Women and Best CEO for Diversity. Additionally, the company earned a top 10 ranking for Best Leadership Team and Best Company for Career Growth.

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, gain (loss) on early debt conversions, 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 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 2022, 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 second quarter of 2022 and outlook for the third quarter and full year of 2022.
When: Tuesday, August 2, 2022 at 2:00PM PT (5:00PM ET).
Dial-in: 1-888-349-0093 from the United States; 1-412-317-5201 internationally
Webcast: RingCentral Q2 2022 Earnings Webcast (live and replay).
Replay: Following the completion of the call through 11:59 PM ET on August 9, 2022, a telephone replay will be available by dialing 1-844-512-2921 from the United States or 412-317-6671 internationally with recording access code 10168368.

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 business cloud communications and contact center solutions based on its powerful Message Video Phone™ (MVP®) global platform. More flexible and cost-effective than legacy on-premises PBX and video conferencing systems, RingCentral empowers modern mobile and distributed workforces to communicate, collaborate, and connect via any mode, any device, and any location. RingCentral offers three key products in its portfolio including RingCentral MVP™, a Unified Communications as a Service (UCaaS) platform including team messaging, video meetings, and cloud phone system; RingCentral Video®, the company's video meetings solution with team messaging that enables Smart Video Meetings™; and RingCentral cloud Contact Center solutions. RingCentral's open platform integrates with leading third-party business applications and allows customers to customize business workflows easily. RingCentral is headquartered in Belmont, California, and has offices worldwide.

© 2022 RingCentral, Inc. All rights reserved. RingCentral, Message Video Phone, MVP, RingCentral MVP, RingCentral Video, Smart Video Meetings, 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, the results of the pace of our innovation and our partner networks, and our ability to execute and lead in the UCaaS digital transformation market, our expectations around the demand for our products and the growth of the markets in which we compete. 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 realize the anticipated benefits of our strategic relationships; our expectations regarding our strategic acquisitions; 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 RingCentral MVP™, and RingCentral Video®; 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 March 31, 2022, 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, Non-GAAP free cash flow, and constant currency revenue. 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 which includes related employer payroll taxes, amortization of acquired intangibles, third-party relocation and other costs tied to the conflict between Russia and Ukraine, and acquisition related and other matters including transaction costs, restructuring costs, acquisition-related retention payments, as well as changes in the fair value of contingent consideration obligations and certain litigation related costs. 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 which includes related employer payroll taxes, intercompany remeasurement gains or losses, acquisition related and other matters, amortization of acquired intangibles, third-party relocation and other costs tied to the conflict between Russia and Ukraine, non-cash interest expense associated with amortization of debt discount and issuance costs related to our convertible senior notes, gain (loss) associated with investments, loss (gain) on early extinguishment of debt, 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 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, Non-GAAP free cash flow and constant currency revenue 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 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 provide useful measure for period-to-period comparisons of our business.

The Company has provided certain revenue related information adjusted for constant currency to provide a framework for assessing how the Company's underlying business performed excluding the effect of foreign currency rate fluctuations. To present this information, current period results in currencies other than United States dollars are converted into United States dollars at the average exchange rate prevailing for the quarter being compared to for growth rate calculations presented, rather than the actual exchange rates in effect during that period.

Although 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, Non-GAAP free cash flow and constant currency revenue 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, mid-market and enterprise annualized exit monthly recurring subscriptions, enterprise 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 mid-market and enterprise annualized exit monthly recurring subscriptions in the same manner as we calculate our 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 annualized exit monthly recurring subscriptions, except that only customer subscriptions from customers generating $100,000 or more in annual recurring revenue are included. We define our Net Monthly Subscription Dollar Retention Rate as (i) one plus (ii) the quotient of Dollar Net Change divided by Average Monthly Recurring Subscriptions. We calculate 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)

	June 30, 2022			December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	306,497		$	267,162
Accounts receivable, net		253,571			232,842
Deferred and prepaid sales commission costs		126,854			102,572
Prepaid expenses and other current assets		52,376			48,165
Total current assets		739,298			650,741
Property and equipment, net		178,240			166,910
Operating lease right-of-use assets		40,515			47,294
Long-term investments		113,220			210,445
Deferred and prepaid sales commission costs, non-current		758,687			723,448
Goodwill		53,780			55,490
Acquired intangibles, net		628,559			716,606
Other assets		7,122			8,105
Total assets	$	2,519,421		$	2,579,039
Liabilities, Temporary Equity, and Stockholders' Equity
Current liabilities
Accounts payable	$	96,647		$	70,022
Accrued liabilities		318,272			279,798
Deferred revenue		207,044			176,450
Total current liabilities		621,963			526,270
Convertible senior notes, net		1,636,175			1,398,489
Operating lease liabilities		25,436			31,812
Other long-term liabilities		74,087			84,052
Total liabilities		2,357,661			2,040,623

Temporary equity
Series A convertible preferred stock		199,449			199,449

Stockholders' equity
Common stock		9			9
Additional paid-in capital		937,119			1,086,870
Accumulated other comprehensive income (loss)		(9,600	)		644
Accumulated deficit		(965,217	)		(748,556	)
Total stockholders' equity	$	(37,689	)	$	338,967
Total liabilities, temporary equity and stockholders' equity	$	2,519,421		$	2,579,039

TABLE 2 RINGCENTRAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
		2022			2021			2022			2021
Revenues
Subscriptions	$	462,984		$	351,203		$	902,911		$	676,426
Other		23,912			28,070			51,641			55,203
Total revenues		486,896			379,273			954,552			731,629
Cost of revenues
Subscriptions		131,022			79,243			260,711			152,490
Other		27,168			25,680			52,953			49,414
Total cost of revenues		158,190			104,923			313,664			201,904
Gross profit		328,706			274,350			640,888			529,725
Operating expenses
Research and development		96,518			76,161			186,792			138,837
Sales and marketing		265,398			203,398			519,853			382,647
General and administrative		74,554			68,172			145,549			123,633
Total operating expenses		436,470			347,731			852,194			645,117
Loss from operations		(107,764	)		(73,381	)		(211,306	)		(115,392	)
Other income (expense), net
Interest expense		(1,203	)		(15,942	)		(2,435	)		(32,220	)
Other income (expense)		(49,500	)		(21,223	)		(94,719	)		37,320
Other income (expense), net		(50,703	)		(37,165	)		(97,154	)		5,100
Loss before income taxes		(158,467	)		(110,546	)		(308,460	)		(110,292	)
Provision for income taxes		1,048			410			2,027			850
Net loss	$	(159,515	)	$	(110,956	)	$	(310,487	)	$	(111,142	)
Net loss per common share
Basic and diluted	$	(1.68	)	$	(1.22	)	$	(3.27	)	$	(1.22	)
Weighted-average number of shares used in computing net loss per share
Basic and diluted		95,130			91,181			94,854			90,909

TABLE 3 RINGCENTRAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands)

	Six Months Ended June 30,
		2022			2021
Cash flows from operating activities
Net loss	$	(310,487	)	$	(111,142	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		122,201			50,724
Share-based compensation		198,119			150,323
Amortization of deferred and prepaid sales commission costs		50,068			33,398
Amortization of debt discount and issuance costs		2,232			32,082
Loss on early extinguishment of debt		—			1,736
Repayment of convertible senior notes attributable to debt discount		—			(10,131	)
Reduction of operating lease right-of-use assets		9,857			8,778
Unrealized loss (gain) on investments		98,045			(34,361	)
Provision for bad debt		7,103			3,743
Other		1,736			70
Changes in assets and liabilities:
Accounts receivable		(27,832	)		(26,589	)
Deferred and prepaid sales commission costs		(108,349	)		(86,378	)
Prepaid expenses and other assets		(1,984	)		6,562
Accounts payable		28,494			3,490
Accrued and other liabilities		20,147			24,912
Deferred revenue		30,594			23,359
Operating lease liabilities		(10,271	)		(9,105	)
Net cash provided by operating activities		109,673			61,471
Cash flows from investing activities
Purchases of property and equipment		(15,489	)		(14,385	)
Capitalized internal-use software		(26,232	)		(19,600	)
Purchases of intangible assets and long-term investments		(3,990	)		(9,623	)
Net cash used in investing activities		(45,711	)		(43,608	)
Cash flows from financing activities
Payments for repurchase or redemption of convertible senior notes		—			(333,632	)
Payments for repurchase of common stock		(25,004	)		—
Proceeds from issuance of stock in connection with stock plans		10,889			18,857
Payments for taxes related to net share settlement of equity awards		(3,182	)		(11,566	)
Payment for contingent consideration for business acquisition		(1,538	)		(3,600	)
Repayment of financing obligations		(3,092	)		(2,295	)
Net cash used in financing activities		(21,927	)		(332,236	)
Effect of exchange rate changes		(2,700	)		(183	)
Net increase (decrease) in cash, cash equivalents, and restricted cash		39,335			(314,556	)
Cash, cash equivalents, and restricted cash
Beginning of period		267,162			639,853
End of period	$	306,497		$	325,297

TABLE 4 RINGCENTRAL, INC. RECONCILIATION OF OPERATING INCOME (LOSS) GAAP MEASURES TO NON-GAAP MEASURES (Unaudited, in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
		2022			2021			2022			2021
Revenues
Subscriptions	$	462,984		$	351,203		$	902,911		$	676,426
Other		23,912			28,070			51,641			55,203
Total revenues		486,896			379,273			954,552			731,629
Cost of revenues reconciliation
GAAP Subscriptions cost of revenues		131,022			79,243			260,711			152,490
Share-based compensation		(6,648	)		(5,853	)		(13,844	)		(9,831	)
Amortization of acquired intangibles		(42,758	)		(11,002	)		(85,859	)		(21,620	)
Third-party relocation and other costs		(1,155	)		—			(1,155	)		—
Acquisition related and other matters		(156	)		—			(156	)		—
Non-GAAP Subscriptions cost of revenues		80,305			62,388			159,697			121,039

GAAP Other cost of revenues		27,168			25,680			52,953			49,414
Share-based compensation		(2,231	)		(2,347	)		(4,639	)		(4,003	)
Amortization of acquired intangibles		(19	)		—			(31	)		—
Non-GAAP Other cost of revenues		24,918			23,333			48,283			45,411
Gross profit and gross margin reconciliation
Non-GAAP Subscriptions		82.7	%		82.2	%		82.3	%		82.1	%
Non-GAAP Other		(4.2	) %		16.9	%		6.5	%		17.7	%
Non-GAAP Gross profit		78.4	%		77.4	%		78.2	%		77.2	%
Operating expenses reconciliation
GAAP Research and development		96,518			76,161			186,792			138,837
Share-based compensation		(23,761	)		(22,380	)		(48,159	)		(37,029	)
Third-party relocation and other costs		(12,541	)		—			(16,092	)		—
Acquisition related and other matters		(89	)		—			(339	)		—
Non-GAAP Research and development		60,127			53,781			122,202			101,808
As a % of total revenues non-GAAP		12.3	%		14.2	%		12.8	%		13.9	%

GAAP Sales and marketing		265,398			203,398			519,853			382,647
Share-based compensation		(39,697	)		(38,618	)		(81,610	)		(63,385	)
Amortization of acquired intangibles		(915	)		(971	)		(1,852	)		(1,941	)
Third-party relocation and other costs		(14	)		—			(14	)		—
Acquisition related and other matters		(737	)		—			(937	)		—
Non-GAAP Sales and marketing		224,035			163,809			435,440			317,321
As a % of total revenues non-GAAP		46.0	%		43.2	%		45.6	%		43.4	%

GAAP General and administrative		74,554			68,172			145,549			123,633
Share-based compensation		(29,982	)		(30,502	)		(56,413	)		(47,945	)
Third-party relocation and other costs		(694	)		—			(1,469	)		—
Acquisition related and other matters		(1,534	)		(499	)		(2,558	)		(937	)
Non-GAAP General and administrative		42,344			37,171			85,109			74,751
As a % of total revenues non-GAAP		8.7	%		9.8	%		8.9	%		10.2	%
Income (loss) from operations reconciliation
GAAP loss from operations		(107,764	)		(73,381	)		(211,306	)		(115,392	)
Share-based compensation		102,319			99,700			204,665			162,193
Amortization of acquired intangibles		43,692			11,973			87,742			23,561
Third-party relocation and other costs		14,404			—			18,730			—
Acquisition related and other matters		2,516			499			3,990			937
Non-GAAP Income from operations		55,167			38,791			103,821			71,299
Non-GAAP Operating margin		11.3	%		10.2	%		10.9	%		9.7	%

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 June 30,						Six Months Ended June 30,
		2022			2021			2022			2021
Net income (loss) reconciliation
GAAP net loss	$	(159,515	)	$	(110,956	)	$	(310,487	)	$	(111,142	)
Share-based compensation		102,319			99,700			204,665			162,193
Amortization of acquired intangibles		43,692			11,973			87,742			23,561
Third-party relocation and other costs		14,404			—			18,730			—
Acquisition related and other matters		2,502			499			3,976			937
Amortization of debt discount and issuance costs		1,116			15,882			2,232			32,082
Loss (gain) associated with investments		48,769			20,138			94,245			(39,459	)
Loss (gain) on early extinguishment of debt		—			1,078			—			1,736
Intercompany remeasurement loss		456			75			484			810
Income tax expense effects		(10,986	)		(8,320	)		(21,286	)		(15,253	)
Non-GAAP net income	$	42,757		$	30,069		$	80,301		$	55,465
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 basic net loss per share		95,130			91,181			94,854			90,909
Effect of dilutive securities		932			1,714			1,002			2,032
Non-GAAP weighted average shares used in computing non-GAAP diluted net income per share		96,062			92,895			95,856			92,941

Diluted net income (loss) per share
GAAP net loss per share	$	(1.68	)	$	(1.22	)	$	(3.27	)	$	(1.22	)
Non-GAAP net income per share	$	0.45		$	0.32		$	0.84		$	0.60

TABLE 6 RINGCENTRAL, INC. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES GAAP MEASURES TO NON-GAAP FREE CASH FLOW MEASURES (Unaudited, in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
		2022			2021			2022			2021
Net cash provided by operating activities	$	50,678		$	24,516		$	109,673		$	61,471
Repayment of convertible senior notes attributable to debt discount		—			5,419			—			10,131
Non-GAAP net cash provided by operating activities		50,678			29,935			109,673			71,602
Purchases of property and equipment		(8,637	)		(5,664	)		(15,489	)		(14,385	)
Capitalized internal-use software		(12,641	)		(9,843	)		(26,232	)		(19,600	)
Non-GAAP free cash flow	$	29,400		$	14,428		$	67,952		$	37,617

TABLE 7 RINGCENTRAL, INC. RECONCILIATION OF FORECASTED OPERATING MARGIN GAAP MEASURES TO NON-GAAP MEASURES (Unaudited, in millions)

	Q3 2022				FY 2022
	Low Range		High Range		Low Range		High Range
GAAP revenues	500.0		504.0		1,990.0		2,015.0

GAAP loss from operations	(91.5	)	(86.0	)	(381.9	)	(368.9	)
GAAP operating margin	(18.3	%)	(17.1	%)	(19.2	%)	(18.3	%)
Share-based compensation	110.0		105.0		425.0		415.0
Amortization of acquired intangibles	44.0		44.0		173.0		173.0
Third-party relocation and other costs	—		—		18.7		18.7
Acquisition related and other matters	—		—		4.0		4.0
Non-GAAP income from operations	62.5		63.0		238.8		241.8
Non-GAAP operating margin	12.5	%	12.5	%	12.0	%	12.0	%

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RingCentral Announces Second Quarter 2022 Results