Summary
RingCentral opened fiscal 2021 with total revenue of $352.4 million, up 31.7% from the prior-year quarter. Subscription revenue grew 34% and accounted for 92% of the total. Annualized Exit Monthly Recurring Subscriptions reached $1.4 billion, up 37% year over year. RingCentral Office ARR rose 40% to $1.3 billion. Enterprise ARR climbed 62% to more than $500 million, and the Global 2000 and Fortune 1000 enterprise business now surpasses $100 million. Management credited meaningful contributions from partners including Avaya, Atos, AT&T, BT and Telus. The CEO framed the quarter around digital transformation and hybrid work, which the company sees as a structural shift in demand for cloud communications.
Gross profit of $255.4 million rose 31.6%, and gross margin held flat at 72.5%. Below that line, the picture darkened. The GAAP operating loss widened to $42.0 million, 64.8% deeper than a year earlier, and operating margin fell 2.4 percentage points to negative 11.9%. The company said higher share-based compensation and amortization of acquisition intangibles drove the wider loss. Strip those items out and the business is profitable. Non-GAAP operating income was $33 million, up from $22 million, for a 9.2% non-GAAP operating margin.
The GAAP net loss narrowed to $186,000 from $60.7 million in the prior-year quarter, largely on mark-to-market gains tied to investments and strategic partnerships. Diluted EPS was $0.00, compared with a loss of $0.70 per share a year earlier. Non-GAAP net income per diluted share was $0.27, up from $0.19. Operating cash flow was $37.0 million, up 182.8%, and capital expenditures were $8.7 million, up 27.1%. Non-GAAP free cash flow, a separate measure from operating cash flow, came to $23.2 million.
Deferred revenue, current portion, rose 32.7% to $146.2 million. Remaining performance obligations reached $1.5 billion, up 50%. The net monthly subscription dollar retention rate stayed above 99% through the five quarters ended March 31, 2021. Demand metrics like these remain the strongest part of the story. GAAP profitability does not.
Full-year 2021 guidance moved higher. RingCentral now expects total revenue of $1.500 billion to $1.510 billion, annual growth of 27% to 28%, up from a prior range of $1.475 billion to $1.490 billion. Subscriptions revenue guidance is $1.388 billion to $1.396 billion, growth of 28% to 29%. The full-year GAAP operating margin outlook is negative 21.3% to negative 20.1%, alongside a non-GAAP operating margin of 10.0% to 10.1% and non-GAAP EPS of $1.24 to $1.27. For the second quarter of 2021, total revenue is guided to $356.5 million to $359.5 million, growth of 28% to 29%, with non-GAAP EPS of $0.27 to $0.28 and a GAAP operating margin of negative 23.2% to negative 21.6%.
The risk list in the 10-Q is familiar and mostly macro. COVID-19 could bring curtailed customer demand, shorter contract durations, higher churn, longer payment terms, credit card declines, delayed professional services work and softer demand for desktop phones. Unrealized investment gains can reverse with investee share prices, and interest income is expected to shrink as rates stay low. The company also carries convertible notes and delivered a notice in March 2021 to redeem the remaining 2023 notes, a redemption that settled in April 2021. Competition, dependence on partners such as Avaya and AT&T, and the integration of acquisitions like Kindite round out the concerns. Management expects research and development, sales and marketing and general and administrative spending to keep rising in absolute dollars, so GAAP losses may persist even as bookings climb.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2021 | Q4 FY2020 | QoQ | Q1 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $352.4M | $334.5M | +5.3% | $267.5M | +31.7% |
| Gross profit | $255.4M | $243.3M | +5.0% | $194.1M | +31.6% |
| Gross margin | 72.5% | 72.7% | -0.3 pp | 72.5% | -0.1 pp |
| Research & development | $62.7M | $56.6M | +10.8% | $40.9M | +53.2% |
| Sales & marketing | $179.2M | $161.8M | +10.8% | $131.3M | +36.5% |
| General & administrative | $55.5M | $53.7M | +3.4% | $47.3M | +17.2% |
| Total operating expenses | $297.4M | $272.1M | +9.3% | $219.6M | +35.4% |
| Operating income (loss) | -$42.0M | -$28.7M | -46.2% | -$25.5M | -64.8% |
| Operating margin | -11.9% | -8.6% | -3.3 pp | -9.5% | -2.4 pp |
| Net income (loss) | -$186.0K | -$1.8M | +89.8% | -$60.7M | +99.7% |
| Net margin | -0.1% | -0.6% | +0.5 pp | -22.7% | +22.6 pp |
| Diluted EPS | $0.00 | — | — | — | — |
Risks
The COVID-19 pandemic continues to disrupt customer demand, contract duration, churn, payment terms, credit card collections, professional services timing, and desktop phone demand as customers shift to apps on laptops and mobile devices. MD&A notes the full impact may not be reflected until future periods, even though revenue increased 31.7% in the quarter ended March 31, 2021 versus the prior-year quarter.
Future operating results rely in part on successful execution with Avaya, Atos/Unify, ALE, and Vodafone and co-branded solutions such as Avaya Cloud Office, Unify Office, and Rainbow Office. The risk factor notes that AT&T previously launched a competing hosted solution and new subscriptions sold through AT&T declined to an immaterial level in 2017 and into 2018.
RingCentral faces intense competition from Microsoft, Cisco, Zoom, 8x8, Amazon, and others, many with greater resources and ability to use aggressive pricing, freemium, or bundled offerings. The filing states that video and web conferencing solutions from Zoom and Microsoft saw dramatically increased adoption in connection with the global response to COVID-19.
The push to target medium-sized and larger businesses is expected to bring higher costs, longer sales cycles, more technical and management approvals, greater customization demands, and possible delays in revenue recognition. MD&A confirms this move up market and the related need for more sales and support resources.
The company outsources software development, quality assurance, and operations to contractors in St. Petersburg, Russia, Odessa, Ukraine, and Manila, Philippines. Recent political and military events in Ukraine, poor U.S.-Russia relations, and U.S. and EU sanctions against Russia could adversely impact those third-party operations.
Cyber-attack, information security breach, and denial of service risks are expanded by COVID-19 increasing the attack surface and by rising supply chain attacks. The filing says RingCentral evaluated the SolarWinds issue, found no evidence of unauthorized access to customer data, and continues to investigate third-party supply chain partners.
Convertible senior notes may require cash settlement upon conversion, repurchase upon a fundamental change, or repayment at maturity, and the conditional conversion feature if triggered could require cash settlement or reclassification of principal as a current liability. MD&A also notes a March 2021 notice to redeem remaining 2023 Notes, which was settled in April 2021.
A significant portion of revenues comes from small and medium-sized businesses, which typically have fewer financial resources and may be more vulnerable to economic downturns. The risk factor states COVID-19 has particularly impacted many small and medium-sized businesses and could increase rejected credit and debit card payments.
SaaS KPIs
All quarters →Net Monthly Subscription Dollar Retention Rate
Non-GAAP Operating Margin
Annualized Exit Monthly Recurring Subscriptions (ARR)
Non-GAAP Free Cash Flow
Enterprise ARR
Summary, forecast, risks and KPIs are extracted from RingCentral, Inc.'s SEC filings for Q1 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.