Summary
RingCentral's fiscal 2021 second quarter revenue rose 36.4% year over year to $379.27 million. Total annualized exit monthly recurring subscriptions increased 37% year over year to $1.5 billion. RingCentral Office ARR, which combines UCaaS and CCaaS, rose 41% to $1.4 billion. The net monthly subscription dollar retention rate stayed above 99% at June 30, 2021. Management credited upmarket momentum and key partners including Avaya, Atos, AT&T, BT, and Telus. Subscriptions revenue rose 37% to $351 million and accounted for 93% of total revenue.
Gross profit rose 36.3% to $274.35 million, and gross margin was 72.3%, flat versus the prior-year quarter. The operating loss widened to $73.38 million, and operating margin fell to -19.3%. The net loss was $110.96 million, and diluted EPS swung to a loss of $1.22. The company attributed the GAAP loss mainly to higher share-based compensation and mark-to-market losses tied to investments. Those are non-cash items, but they dominated the GAAP picture. For the first six months, revenue rose 34.1% to $731.63 million and gross profit rose 34.0% to $529.72 million. The first-half operating loss widened to $115.39 million, and the first-half net loss widened to $111.14 million.
Cash flow was mixed. Operating cash flow for the quarter was $24.52 million, down 9.3% year over year. Capital expenditures were $5.66 million, down 35.0%. Year to date, operating cash flow rose 53.3% to $61.47 million, while capital expenditures fell 7.7% to $14.38 million. Deferred revenue, current portion only, was $165.58 million at June 30, 2021, up 35.2% from the prior-year date. Remaining performance obligations were $1.60 billion, up 45.5%. RingCentral ended the quarter with a larger deferred revenue balance and a bigger remaining performance obligation than a year earlier.
Guidance moved higher. For the full fiscal year 2021, the company now guides to total revenue annual growth of 30% to 31%, up from a prior range of 27% to 28%. Full-year subscriptions revenue guidance calls for annual growth of 31% to 32%, up from 28% to 29% previously. Full-year non-GAAP operating margin guidance is 10.0% to 10.1%, and full-year non-GAAP EPS guidance is $1.28 to $1.30. For the third quarter of 2021, total revenue guidance calls for annual growth of 29% to 30%, with subscriptions revenue growth of 30% to 31%. Third-quarter non-GAAP operating margin guidance is 10.2% to 10.3%, and non-GAAP EPS guidance is $0.33 to $0.34.
Operationally, the company announced a strategic partnership with Verizon Business and launched RingCentral with Verizon. It extended its long-term agreement with NICE to market and sell RingCentral Contact Center worldwide. With Alcatel-Lucent Enterprise, it launched Rainbow Office powered by RingCentral in the United Kingdom. A partnership with Deutsche Telekom will offer a co-branded version of RingCentral Video. With Avaya, it added new capabilities to Avaya Cloud Office. Product updates included voice-activated control for RingCentral Rooms and compatibility with Logitech Rally devices. C&S Wholesale Grocers moved to the next generation RingCentral MVP.
Risks sit mainly around the pandemic and the investment portfolio. RingCentral lists possible curtailed customer demand, reduced customer spend, shortened contract duration, higher churn, lengthened payment terms, credit card declines, delays in professional services implementations, and lower demand for desktop phones. Gains and losses on long-term investments swing with investee stock prices, which drove part of the quarter's net loss. Foreign currency moves and market volatility can also hit revenue.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2021 | Q1 FY2021 | QoQ | Q2 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $379.3M | $352.4M | +7.6% | $278.0M | +36.4% |
| Gross profit | $274.4M | $255.4M | +7.4% | $201.3M | +36.3% |
| Gross margin | 72.3% | 72.5% | -0.1 pp | 72.4% | -0.1 pp |
| Research & development | $76.2M | $62.7M | +21.5% | $43.5M | +75.0% |
| Sales & marketing | $203.4M | $179.2M | +13.5% | $137.6M | +47.8% |
| General & administrative | $68.2M | $55.5M | +22.9% | $49.5M | +37.6% |
| Total operating expenses | $347.7M | $297.4M | +16.9% | $230.7M | +50.7% |
| Operating income (loss) | -$73.4M | -$42.0M | -74.7% | -$29.3M | -150.1% |
| Operating margin | -19.4% | -11.9% | -7.4 pp | -10.6% | -8.8 pp |
| Net income (loss) | -$111.0M | -$186.0K | -59553.8% | $509.0K | -21898.8% |
| Net margin | -29.3% | -0.1% | -29.2 pp | 0.2% | -29.4 pp |
| Diluted EPS | -$1.22 | $0.00 | -$1.22 | $0.01 | -$1.23 |
Risks
Future operating results rely on successful execution of partnerships with Avaya, Atos/Unify, ALE, Vodafone, Deutsche Telekom, and Verizon Business, including co-branded solutions such as Avaya Cloud Office and Rainbow Office. The company also made a $345 million prepayment to Avaya in Class A Common Stock.
Faces intense competition from Microsoft, Cisco, Zoom, and others. The filing states that due to ongoing litigation with Zoom, RingCentral no longer offers RingCentral Meetings to new customers and instead offers RingCentral Video, which may cause prospective customers not to purchase or existing customers to renew for fewer seats.
Delivery of subscriptions relies on third-party network service providers such as CenturyLink and Bandwidth.com, and on third-party features from Zoom, Bandwidth, and NICE inContact. Loss of these providers or failure to switch cost-effectively could materially harm operations.
Customers are served from third-party data center and co-location facilities including Equinix, AWS, NICE inContact, and Google Cloud. Interruptions could require service credits or penalties, harm renewal rates, and reduce revenues.
Risk of cyber-attack, information security breach, or denial of service is increasing as the COVID-19 pandemic expands the attack surface. The filing notes evaluation of SolarWinds-related supply chain exposure and the increasing sophistication of attacks.
Increased customer turnover or costs to retain and upsell customers could materially affect financial performance. Customers without long-term contracts may terminate at any time, and renewals may be for fewer users, shorter contract lengths, or less expensive plans.
A significant portion of revenues comes from small and medium-sized businesses, which may have fewer financial resources to weather an economic downturn. COVID-19 has adversely affected economies and could decrease technology spending and increase rejected credit card payments.
Strategy to target medium-sized and larger businesses is expected to incur higher costs and longer sales cycles, require approval from more technical personnel, and may delay revenue recognition until implementation requirements are met.
Future performance depends on senior management, including CEO Vladimir Shmunis, and highly skilled personnel. Competition for talent in the San Francisco Bay Area and Denver, immigration restrictions, and higher share-based compensation increase retention risk.
The company outsources software development, quality assurance, and customer support to contractors in St. Petersburg, Russia, Odessa, Ukraine, and Manila, Philippines. Political and military events in Ukraine, poor U.S.-Russia relations, and sanctions could adversely impact these operations.
Convertible senior notes require cash settlement or repurchase in certain events. If the conditional conversion feature is triggered, liquidity could be adversely affected, and capped call counterparties are subject to default risk.
The company is subject to infringement claims and litigation, including ongoing litigation with Zoom. Its broad technology range increases the likelihood of claims, and settlements or licenses may be costly or unavailable on acceptable terms.
FCC rules and state initiatives on broadband access may allow providers to charge for priority access, which could increase costs, impair customer acquisition, and adversely affect growth.
SaaS KPIs
All quarters →Net Monthly Subscription Dollar Retention Rate
Non-GAAP Operating Margin
Monthly Recurring Subscriptions
Non-GAAP Subscriptions Gross Margin
Summary, forecast, risks and KPIs are extracted from RingCentral, Inc.'s SEC filings for Q2 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.