Ringcentral, Inc. reports 270% EBITDA decline in 2020 while 31.1% Revenue growth
02/16/2021 • About Ringcentral, Inc. (
$RNG) • By InTwits
Ringcentral, Inc. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Ringcentral, Inc. is a fast growth stock: 2020 revenue growth was 31.1%, 5 year revenue CAGR was 31.9% at 2020 ROIC -7.5%
- The company operates at negative EBITDA Margin: -1.4%
- Ringcentral, Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2016-2020 was 3.9% while average EBITDA Margin was -0.0% for the sames years
- Ringcentral, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.4%. At the same time it's in pair with industry average of 5.5%
- CAPEX is quite volatile: $82m in 2020, $44m in 2019, $39m in 2018, $27m in 2017, $16m in 2016
- The company has unprofitable business model: ROIC is -7.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Ringcentral, Inc.'s Revenue surged on 31.1%. Revenue growth showed acceleration in 20Q4 - it increased 32.3% YoY. During the last 5 years Revenue growth topped in 2019 at 34.0%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.3 pp from 7.6% to 9.0% in 2020.
Gross Margin decreased slightly on 1.7 pp from 74.4% to 72.7% in 2020. During the last 5 years Gross Margin topped in 2018 at 76.7% and was declining since that time. SG&A as a % of Revenue increased slightly on 1.9 pp from 64.4% to 66.2% in 2020. During 2016-2020 SG&A as a % of Revenue bottomed in 2017 at 62.1% and was growing since that time.
Net Income margin decreased slightly on 1.1 pp from -5.9% to -7.0% in 2020. During 2016-2020 Net Income margin topped in 2017 at -0.83% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In 2020 the company had CAPEX/Revenue of 6.9%. The company's CAPEX/Revenue increased slightly on 1.6 pp from 5.3% in 2017 to 6.9% in 2020. It's average CAPEX/Revenue for the last three years was 5.8%.
Return on investment
The company operates at negative ROIC (-7.5%) and ROE (-15.7%). ROIC decreased on 2.8 pp from -4.7% to -7.5% in 2020. ROE decreased on 5.6 pp from -10.1% to -15.7% in 2020. During 2016-2020 ROIC topped in 2017 at -2.9% and was declining since that time. During the last 5 years ROE topped in 2017 at -2.3% and was declining since that time.
Leverage (Debt)
Debt level is 2.5x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA dropped on 8.8x from 8.8x to in 2020. Debt surged on 240% while cash jumped on 86.2%.
Ringcentral, Inc. has no short term refinancing risk: cash is higher than short term debt (1,349.5%).
Management team
Ringcentral, Inc.'s CEO Vladimir Shmunis "Vlad" has spent 22 years with the company. Mitesh Dhruv is a Ringcentral, Inc.'s CFO. Mitesh Dhruv has spent 3 years at the company.
Financial and operational results
FY ended 12/31/2020
Ringcentral, Inc. ($RNG) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 380 | 504 | 674 | 903 | 1,184 | 31.1% |
| Gross Profit | 288 | 382 | 516 | 672 | 860 | 28.0% |
| SG&A | 248 | 313 | 432 | 581 | 784 | 34.9% |
| EBITDA | -11 | 11 | 7 | 10 | -17 | -269.7% |
| EBIT | -26 | -5 | -16 | | | |
| Interest expence | 1 | 0 | 16 | | | |
| Tax | 0 | 0 | 0 | | | |
| Net Income | -29 | -4 | -26 | -54 | -83 | |
| Stock Based Compensation | 31 | 42 | 68 | | | |
Balance Sheet
|
|---|
| Cash | 160 | 181 | 566 | 344 | 640 | 86.2% |
| Accounts Receivable | 30 | 47 | 94 | | | |
| Inventory | 0 | | | | | |
| Accounts Payable | 8 | 7 | 10 | | | |
| Short Term Debt | 15 | 0 | 0 | 14 | 47 | 232.8% |
| Long Term Debt | 0 | 0 | 367 | 415 | 1,414 | 240.4% |
Cash flow
|
|---|
| Capex | 16 | 27 | 39 | 44 | 82 | 84.5% |
| Acquisitions | | | 26 | | | |
Ratios
|
|---|
| Revenue growth | 28.2% | 32.6% | 33.8% | 34.0% | 31.1% | |
| EBITDA growth | -35.4% | -196.3% | -37.1% | 43.0% | -269.7% | |
|
|---|
| Gross Margin | 75.7% | 75.9% | 76.7% | 74.4% | 72.7% | -1.7% |
| EBITDA Margin | -3.0% | 2.2% | 1.0% | 1.1% | -1.4% | -2.5% |
| EBIT Margin | -6.8% | -1.1% | -2.4% | | |
| SG&A, % of revenue | 65.3% | 62.1% | 64.1% | 64.4% | 66.2% | 1.9% |
| SBC, % of revenue | 8.1% | 8.4% | 10.1% | | |
| Net Income Margin | -7.7% | -0.8% | -3.9% | -5.9% | -7.0% | -1.1% |
| CAPEX, % of revenue | 4.3% | 5.3% | 5.7% | 4.9% | 6.9% | 2.0% |
|
|---|
| ROIC | -18.9% | -2.9% | -3.6% | -4.7% | -7.5% | -2.8% |
| ROE | -24.4% | -2.3% | -9.6% | -10.1% | -15.7% | -5.6% |
| Net Debt/EBITDA | | -16.7x | -29.2x | 8.8x | |
| Interest expence / Average debt | 5.0% | | 8.8% | | | |
People
|
|---|
| Insider ownership | 1.9% | 1.9% | 1.9% | | | |
| Employees | 1,037 | 1,352 | 1,352 | | | |
| Revenue/Employee, th. $ | 366 | 372 | 498 | | | |
Ringcentral, Inc. ($RNG) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 268 | 278 | 304 | 335 | | 32.8% | 29.2% | 30.1% | 32.3% |
| EBITDA | -9 | -11 | -11 | -7 | | -308.8% | -289.8% | -412.6% | - |
| Net Income | -61 | 1 | -21 | -2 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 762 | 774 | 746 | 640 | | 38.8% | 36.3% | 28.0% | 86.2% |
| Short Term Debt | 15 | 60 | 31 | 47 | | 26.4% | 359.9% | 124.3% | 232.8% |
| Long Term Debt | 1,069 | 1,034 | 1,433 | 1,414 | | 170.5% | 157.5% | 247.1% | 240.4% |
Ratios
|
|---|
| Gross Margin | 72.5% | 72.4% | 72.9% | 72.7% | | -2.2% | -2.6% | -1.5% | -0.8% |
| EBITDA Margin | -3.3% | -4.1% | -3.5% | -2.0% | | -5.5% | -6.9% | -4.9% | -0.5% |
| Net Income Margin | -22.7% | 0.2% | -6.9% | -0.5% | | -19.5% | 4.5% | -1.4% | 9.4% |
Peers in Application Software
Below you can find Ringcentral, Inc. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 14.8% | 15.1% | 19.4% | 14.5% |
|---|
| Ringcentral, Inc. ($RNG) | - | 32.6% | 33.8% | 34.0% | 31.1% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (89 companies) | 63.8% | 64.4% | 65.3% | 67.9% | 69.4% |
|---|
| Ringcentral, Inc. ($RNG) | 75.7% | 75.9% | 76.7% | 74.4% | 72.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -5.3% | -4.2% | -3.3% | 4.5% | 7.7% |
|---|
| Ringcentral, Inc. ($RNG) | -3.0% | 2.2% | 1.0% | 1.1% | -1.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 2.9% | 2.3% | 2.4% | 2.9% | 2.5% |
|---|
| Ringcentral, Inc. ($RNG) | 4.3% | 5.3% | 5.7% | 4.9% | 6.9% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.2% | -11.8% | -10.6% | -4.2% | -1.8% |
|---|
| Ringcentral, Inc. ($RNG) | -18.9% | -2.9% | -3.6% | -4.7% | -7.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| |
|---|
| Median (54 companies) | -0.9x | -0.8x | -0.6x | 0.4x | 0.2x |
|---|
