Summary
RingCentral closed fiscal 2022 with fourth quarter revenue of $524.75 million, up 17.0% from the prior-year quarter. Full year revenue reached $1.99 billion, up 24.7% from 2021. Gross profit was $364.15 million in the quarter, up 16.5%, and $1.35 billion for the full year, up 17.5%. Gross margin was 69.4% in the quarter, down 0.3 percentage points from the prior-year quarter, and 67.7% for the full year, down 4.2 percentage points. The top line kept growing, but profitability on a GAAP basis deteriorated sharply.
GAAP operating loss widened to $255.61 million in the fourth quarter. For the full year, operating loss widened to $649.48 million. Net loss was $284.06 million in the quarter, and the loss widened from the prior-year quarter. The full-year net loss was $879.17 million, and that loss also widened. Diluted EPS for the full year was -$9.23, and the loss widened. Operating margin was -48.7% in the quarter, down 25.7 percentage points from the prior-year quarter, and -32.7% for the full year, down 13.7 percentage points. The GAAP losses include a non-cash charge tied to the Avaya prepaid commissions balance and mark-to-market losses on the Avaya preferred stock investment.
Non-GAAP figures show a different profit picture. Non-GAAP operating income was $73 million in the fourth quarter, with a non-GAAP operating margin of 14.0%, up 340 basis points year over year. Adjusted EBITDA was $93 million, or 17.7% of total revenue, compared with $63 million, or 14.1%. For the full year, non-GAAP operating income was $246 million and non-GAAP operating margin was 12.4%. ARR ended the year at $2.10 billion, up 17%, and mid-market and enterprise ARR reached $1.30 billion, up 20%. The Net Monthly Subscription Dollar Retention Rate stayed above 99%, and Monthly Recurring Subscriptions at December 31, 2022 were $175.0 million. The company said it is in a select category of SaaS companies with over $2 billion of recurring revenue.
Cash generation and backlog metrics were mixed. Operating cash flow was $39.37 million in the quarter, down 17.4% from the prior-year quarter, but full-year operating cash flow was $191.30 million, up 25.7%. Capital expenditures were $8.88 million in the quarter, up 23.9%, and $32.71 million for the full year, up 13.0%. Deferred revenue was $209.72 million at quarter end, up 18.9% from the prior-year quarter. Remaining performance obligations were $2.10 billion, up 16.7%. The company also announced a new five-year, $600 million credit facility, made up of a $400 million delayed draw term loan A and a $200 million revolver. In February 2023, the board authorized a new share repurchase program for up to $175 million, effective until December 31, 2023.
Guidance for the full year 2023 calls for annual revenue growth of 10% to 11%, with subscription revenue growth of 10% to 11%. Management guided a non-GAAP operating margin of at least 18.0% and non-GAAP EPS of $3.04 to $3.10. For the first quarter of 2023, revenue growth guidance is 12% to 13%, with non-GAAP operating margin of 16.5% and non-GAAP EPS of $0.69 to $0.70. Management said it will continue to drive increasing profitability and cash generation while investing in research and development and go-to-market efforts. Risks include macroeconomic uncertainty, inflation, interest rates, supply chain disruptions, and currency fluctuations. The company noted more cautious buying behavior from larger customers, smaller initial deployments, and elongated sales cycles for up-market customers. It also faces potential churn and down-sell. The Russia-Ukraine conflict led to direct and incremental relocation expenses in 2022. The Avaya partnership was expanded, but Avaya will now be compensated in cash as ACO seats are sold, and there is no prepaid commissions amount to Avaya.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2022 | Q3 FY2022 | QoQ | Q4 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $524.7M | $509.0M | +3.1% | $448.5M | +17.0% |
| Gross profit | $364.2M | $341.6M | +6.6% | $312.5M | +16.5% |
| Gross margin | 69.4% | 67.1% | +2.3 pp | 69.7% | -0.3 pp |
| Research & development | $88.8M | $86.7M | +2.4% | $86.8M | +2.3% |
| Sales & marketing | $275.5M | $261.9M | +5.2% | $246.4M | +11.8% |
| General & administrative | $75.1M | $72.3M | +3.9% | $82.6M | -9.1% |
| Total operating expenses | $619.8M | $524.1M | +18.2% | $415.7M | +49.1% |
| Operating income (loss) | -$255.6M | -$182.6M | -40.0% | -$103.3M | -147.5% |
| Operating margin | -48.7% | -35.9% | -12.9 pp | -23.0% | -25.7 pp |
| Net income (loss) | -$284.1M | -$284.6M | +0.2% | -$118.4M | -140.0% |
| Net margin | -54.1% | -55.9% | +1.8 pp | -26.4% | -27.7 pp |
| Diluted EPS | -$2.98 | -$2.98 | ±$0.00 | -$1.29 | -$1.69 |
Risks
Avaya initiated a prepackaged Chapter 11 restructuring in February 2023, and RingCentral recorded a non-cash asset write-down charge of $279.3 million for FY2022, including $21.7 million of accrued interest, tied to prepaid sales commissions. The new Avaya partnership includes minimum volume commitments and exclusive UCaaS terms, but success depends on Avaya's restructuring and performance.
MD&A states sales cycles normalized to pre-COVID norms and larger customers showed more cautious buying behavior with smaller initial deployments; up-market sales cycle times elongated incrementally in 2022. This may reduce acquisition and renewal rates, increase churn or down-sell, and pressure future revenue growth.
MD&A reports the U.S. Dollar strengthened significantly against the British Pound Sterling, Euro, and Canadian Dollar. Subscriptions revenues included an adverse foreign currency impact of approximately 2% for FY2022 compared to the prior year, and other revenues had an adverse impact of approximately 1%.
Russia's invasion of Ukraine disrupted third-party development contractors, and RingCentral incurred $21.9 million in direct and incremental relocation expenses during FY2022. The company may face discontinued partner operations in Ukraine, product development delays, and higher costs in alternative locations.
MD&A notes competitive pressures may lead to a reduction in average subscription revenue per user, decreased acquisition and renewal rates, or increased down-sell and churn. Risk factors cite intense competition from Microsoft, Cisco, Zoom, and others with greater resources and bundled offerings.
SaaS KPIs
All quarters →Net Monthly Subscription Dollar Retention Rate
Non-GAAP Operating Margin
Annualized Exit Monthly Recurring Subscriptions (ARR)
Mid-market and Enterprise ARR
Non-GAAP Free Cash Flow
Summary, forecast, risks and KPIs are extracted from RingCentral, Inc.'s SEC filings for Q4 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.