Investor Presentation Vlad Shmunis Founder, Chairman and CEO Clyde R. Hosein Chief Financial Officer November 2014
Safe Harbor This presentation includes forward-looking statements within the meaning of the federal securities laws. These statements relate to, among other things, our business strategy, goals and expectations concerning our market position, the size and growth of the markets in which we compete, our carrier relationships and the benefits that our customers will realize from our services. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Actual results and trends in the future may differ materially from those suggested or implied by the forward-looking statements depending on a variety of factors including those that are described in greater detail in our filings with the Securities and Exchange Commission, including our 10-K for the year ended December 31, 2013 and our 10-Q for the quarter ended September 30, 2014. All future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the previous statements. We undertake no obligation to update any forward-looking statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of this presentation. 2
Investment Highlights Revenue $218M $161M Disrupting large global business communications market through the cloud $79M $115M Leading pure-play SaaS platform with mobile-first approach $30M $50M RingCentral Office driving rapid growth and expansion up-market Strong results and operating leverage demonstrated since IPO 2009 2010 2011 2012 RingCentral Office Annualized Exit Monthly Recurring Subscriptions 2013 $112M 2014e $154M Q3 Recurring revenue model with attractive unit economics $38M $67M 3 $6M $17M Send to Bruce to see if he wants to update 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14
RingCentral Is Designed for Today s World Replacing legacy communication systems with SaaS Designed for mobile and distributed businesses Connect people, not devices Embraces BYOD Scalable, with no upfront costs and low TCO San Francisco Connected to a business communications solution New York Seamless integration with other systems 4
Disrupting a Massive, Underpenetrated Global Market Global Opportunity Penetration of Cloud $15B U.S. PBX Replacement Market $15B ~60M PBX- Connected Employees <5% Cloud Phone Systems U.S. Unconnected Greenfield Opportunity Rest of World approximately 2-3X U.S. Market Unconnected Employees Rest of World 99% On-premise Phone Systems Source: Infonetics Research Based on selling price of $20/month per RingCentral Office user
RingCentral Office Analytics User Templates Call Control Business Voice Mobile Apps Call Park Web Conferencing Company Directory Call Forwarding Departments and Queues SaaS App Integration Business Rules Auto Call Record Voicemail-to-Email Integrated business communications Rich, enterprise-grade functionality Designed for wireless & wired devices Seamless cloud apps integration Auto Attendant Multi-Level IVR Platform-as-a-Service HD Video Business SMS Presence Single Identity One-click Conferencing Intercom Integrated voice, SMS, video and web conferencing 6
New Functionality Highlights Meetings User Templates Analytics / Reporting HIPAA Sales HR Finance PM Multi-Level IVR Mobile Call Control Cloud Integrations Mobile Presence 1 2 Press 1 for Press 2 for Press 3 for Press 1 for Press 2 for Press 3 for
Growing Carrier Relationships Co-branded solutions Thousands of feet on the street TELUS launching this quarter/q4 2014 BT launching 1H 2015 8
RingCentral s S&M Machine 2013
RingCentral s S&M Machine 2014 Leads Math Campaign Execution Lead Management
Why We Win Cloud vs. Other Cloud Mobility Easy to buy, set up and use Carrier relationships Deep technology Hardware On Premise Software vs. On Premise HW & SW Multi-location BYOD Easy to deploy and manage No capital expenditure 11
Winning in the Enterprise 550 users +11 locations Replaced on- premise systems 1,500+ users 400+ locations +10,000 total employees
Predictable SaaS Recurring Revenue Model Service Revenue from New Customers Service Revenue from Existing Customers >90% of next quarter revenue from existing customers >99% monthly retention* >100% Office monthly retention* 8x revenue and 5x contribution payback 2010 2011 2012 2013 *Net Monthly Subscription Dollar Retention Rate 2014 13 13
Rapid Revenue Growth Driven by Office Monthly Recurring Subscription Mix as of 9/30/14 Net New Subscriptions TTM as of 9/30/14 70% Other RingCentral Office Other ~90% RingCentral Office 14
Improving Margins Driven by Compelling Unit Economics Percent of Revenue 2012 2013 Q3 2013 Q3 2014 Target Service Gross Margin 66% 68% 68% 72% 75-80% Consolidated Gross Margin 61% 62% 62% 67% 70-75% Sales & Marketing 47% 44% 44% 44% 25-30% Research & Development 21% 20% 19% 19% 13-15% General & Administrative 19% 17% 16% 14% 7-9% Pro-forma Operating Margin -26% -19% -17% Send to Bruce to see if he wants to update -12% 20-25% 15
Expanding Up-Market 50+ MRS growth >100% YoY 50+ ~20% of total new bookings Channel ~20% of exit MRS Office net dollar retention >100% 16
Summary Disrupting large global business communications market through the cloud Leading pure-play SaaS platform with mobile-first approach RingCentral Office driving rapid growth and expansion up-market Strong results and operating leverage demonstrated since IPO Recurring revenue model with attractive unit economics 17
Thank You