Summary
RingCentral closed the June 2022 quarter with total revenue of $486.9 million, up 28.4% from $379.3 million in the same quarter a year earlier. Revenue rose 30% after adjusting for constant currency, which shows how much the stronger dollar held back the reported number. Subscriptions, the bulk of the business, grew 32% year over year; other revenue, mostly phones and professional services, slipped 15%. Annualized exit monthly recurring subscriptions reached $2.0 billion at June 30, 2022, up 31%, and mid-market and enterprise ARR hit $1.2 billion, up 38%. Monthly recurring subscriptions at the end of June were $165.1 million. First-half revenue was $954.6 million, up 30.5%.
The GAAP picture is far less comfortable. Gross profit rose 19.8% to $328.7 million, but it lagged revenue growth. Gross margin fell to 67.5% from 72.3%, a drop of 4.8 percentage points, as amortization of acquired intangibles and infrastructure spending grew faster than the top line. The operating loss widened to $107.8 million from $73.4 million, pushing operating margin down to -22.1% from -19.3%. Net loss was $159.5 million, or -$1.68 per diluted share, against $111.0 million, or -$1.22 per diluted share, a year earlier. Management pointed to higher amortization and mark-to-market losses on investments, including $51.9 million of unrealized losses on equity investments in the quarter. First-half gross margin was 67.1%, down 5.3 percentage points.
Non-GAAP numbers look much better. Non-GAAP operating income was $55 million versus $39 million a year earlier, and non-GAAP diluted EPS was $0.45 against $0.32. Cash generation held up as well. Operating cash flow was $50.7 million in the quarter, up from $24.5 million, and $109.7 million for the first six months compared with $61.5 million. Non-GAAP free cash flow, a different measure that also subtracts property purchases and capitalized internal-use software, was $29.4 million, equal to 6.0% of total revenue, up 220 basis points year over year. First-half non-GAAP free cash flow was $68.0 million versus $37.6 million. Capital expenditures were $8.6 million in the quarter, up 52.5%. Cash and cash equivalents ended June at $306 million.
Backlog measures moved higher. Deferred revenue, the current portion, rose 25.0% to $207.0 million, and remaining performance obligations reached $1.90 billion, up 18.8%. Net Monthly Subscription Dollar Retention Rate stayed above 99%, as it has in each of the last five quarters.
Management kept its full-year 2022 revenue outlook unchanged. Total revenue is guided to $1.990 to $2.015 billion, growth of 25% to 26%, with subscriptions revenue of $1.882 to $1.898 billion, growth of 27% to 28%. The company raised its full-year non-GAAP operating margin to 12.0% from 11.5% and lifted non-GAAP EPS guidance to $1.91 to $1.95 from $1.83 to $1.87. Full-year GAAP operating margin is guided to -19.2% to -18.3%, better than the prior range of -20.1% to -19.0%. For the third quarter, total revenue is guided to $500.0 to $504.0 million, growth of 21% to 22%, with subscriptions revenue of $473.5 to $476.5 million, GAAP operating margin of -18.3% to -17.1%, non-GAAP operating margin of 12.5%, and non-GAAP EPS of $0.50 to $0.51.
Costs tied to the Russia-Ukraine conflict remain a drag. RingCentral spent $14.4 million in the quarter and $18.7 million in the first half relocating third-party contractors. Management also flagged inflation, rising interest rates, supply chain disruptions and currency swings, and said larger customers are buying more cautiously, with sales cycles back to pre-pandemic norms and smaller initial deployments. The company repurchased 421,041 shares for $25.0 million during the quarter and had $75.0 million left under its authorization. Revenue is growing 28.4%, yet the GAAP net loss is $159.5 million, so the model still leans on heavy sales and research spending to keep the top line moving.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $486.9M | $467.7M | +4.1% | $379.3M | +28.4% |
| Gross profit | $328.7M | $312.2M | +5.3% | $274.4M | +19.8% |
| Gross margin | 67.5% | 66.8% | +0.8 pp | 72.3% | -4.8 pp |
| Research & development | $96.5M | $90.3M | +6.9% | $76.2M | +26.7% |
| Sales & marketing | $265.4M | $254.5M | +4.3% | $203.4M | +30.5% |
| General & administrative | $74.6M | $71.0M | +5.0% | $68.2M | +9.4% |
| Total operating expenses | $436.5M | $415.7M | +5.0% | $347.7M | +25.5% |
| Operating income (loss) | -$107.8M | -$103.5M | -4.1% | -$73.4M | -46.9% |
| Operating margin | -22.1% | -22.1% | +0.0 pp | -19.4% | -2.8 pp |
| Net income (loss) | -$159.5M | -$151.0M | -5.7% | -$111.0M | -43.8% |
| Net margin | -32.8% | -32.3% | -0.5 pp | -29.3% | -3.5 pp |
| Diluted EPS | -$1.68 | -$1.60 | -$0.08 | -$1.22 | -$0.46 |
Risks
MD&A states sales cycles are normalizing to pre-Covid norms and larger customers are showing more cautious buying behavior, manifesting as smaller initial deployments. It also cites inflation, rising interest rates, supply chain disruptions, and a strengthening U.S. Dollar, particularly against the Euro and British Pound, which could adversely impact near-term results.
RingCentral relies on third-party contractors in Ukraine for software development, quality assurance, and operations, and incurred direct and incremental relocation expenses of $14.4 million in Q2 2022 and $18.7 million in the first half. Russia's ongoing invasion may reduce or discontinue partner operations, delay product development, and increase costs.
Gross margin declined to 67.5% in Q2 2022 from 72.3% in Q2 2021, down 4.8 percentage points, and operating loss widened to $107.8 million. MD&A attributes lower subscription gross margin partly to $31.8 million of incremental amortization from intangible assets acquired in Q4 2021 and increased infrastructure and third-party costs.
MD&A and risk factors emphasize reliance on strategic partnerships with Avaya, Atos/Unify, ALE, Mitel, Vodafone, DT, Verizon and others to sell subscriptions. Failure to successfully market co-branded solutions such as Avaya Cloud Office, Unify Office, and Rainbow Office could reduce anticipated revenue benefits.
The filing states RingCentral faces intense competition from Microsoft, Cisco, Zoom, 8x8, Vonage, and others, many with greater resources, and competitors may adopt aggressive pricing or bundled offerings. This could decrease prices, slow growth, increase customer turnover, or reduce market share.
A significant portion of revenues comes from small and medium-sized businesses with fewer financial resources, and customer turnover or reductions in user counts could materially affect financial performance. MD&A notes macroeconomic factors could impact customer buying behavior, contract duration, churn, payment terms, and credit card declines.
Risk factors highlight heightened cyber-attack risk from Russia's invasion of Ukraine, including ransomware and phishing, and a security incident could interrupt service, expose customer data, cause contractual liability, and harm reputation. The company relies on third-party vendors with access to its data.
RingCentral depends on senior management, including co-founder and CEO Vladimir Shmunis, and faces intense competition for highly skilled technical personnel in the San Francisco Bay Area, Denver, and other locations. Loss of key employees could delay business objectives.
MD&A states subscriptions revenues included a foreign currency impact of approximately 1% for Q2 2022 compared with the respective prior year period, and the U.S. Dollar strengthened significantly against the Euro and British Pound Sterling. If these conditions continue, they could adversely impact near-term results.
SaaS KPIs
All quarters →Net Monthly Subscription Dollar Retention Rate
Non-GAAP Operating Margin
Monthly Recurring Subscriptions
Mid-market and Enterprise ARR
Free Cash Flow Margin
Non-GAAP Free Cash Flow
Summary, forecast, risks and KPIs are extracted from RingCentral, Inc.'s SEC filings for Q2 FY2022 (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.