- Total quarterly revenue increased 33% year-over-year to $174 million.
- Software subscriptions increased 32% year-over-year to $158 million.
- Annualized Monthly Recurring Subscriptions (ARR) increased 31% year-over-year to $674 million.
- The company re-engaged and extended a reseller relationship with AT&T; ATT sells to enterprises through both direct and indirect sales channels.
- Formed a new relationship with BT to resell RingCentral branded as BT Cloud Work.
- Closed the acquisition of Paris-based Dimelo.
Q3-2018 vs. Q3-2017 Changes
Comments and Reflections
As we said last quarter, RingCentral continued its methodical expansion into mid-market and enterprise accounts. This effort appears to be supported by growing channel partner support assisted by a brand awareness campaign based on radio and billboard advertising (at least in the greater Boston area).
As is the case for many in this market, the cost of acquiring a customer is a first-order challenge. The financial documents from RingCentral (and others) are challenging for non-financial analysts due to accounting rule changes, accounting complexities around acquisitions (such as this quarter’s acquisition of Dimelo), stock options, capitalization of R&D, one-time costs, and subscription revenues.
In addition, or perhaps as a result, there is typically a huge gap between what is reported according to GAAP (Generally Accepted Accounting Principles) and non-GAAP numbers. Such is the case for RingCentral.
For Q3, RingCentral’s net income per share was -$0.12 for GAAP and +$0.19 non-GAAP. Given the trajectory of the company’s share price, it appears that Wall Street is either much more focused on non-GAAP or just focused on revenue and subscriber growth, with the assumption that real profits will follow.
While the devil remains in the details, RingCentral’s goal is to provide a comprehensive cloud-based platform that can manage a customer’s internal and external communications needs, while also integrating to third party applications – CRM in particular.
 In this quarter, RingCentral completed its acquisition of Dimelo – a cloud based digital customer engagement platform that allows subscribers to manage their customer interactions through a single platform. Dimelo supports external customer communications via non-voice channels such as messaging, social media, live chat, email, and forums. Dimelo is a technology play and is the first acquisition for RingCentral since its June 2015 acquisition of Glip.