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What changed in RingCentral, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of RingCentral, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+505 added−723 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-22)

Top changes in RingCentral, Inc.'s 2024 10-K

505 paragraphs added · 723 removed · 403 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe believe that this flexibility in contract duration is important to meet the different needs of our customers. For the years ended December 31, 2023 and 2022, subscriptions revenues accounted for 90% or more of our total revenues. The remainder of our revenues has historically been primarily comprised of product revenues from the sale of pre-configured phones and professional services.
Biggest changeWe primarily generate revenues from the sale of subscriptions to our offerings. Our subscription plans have monthly, annual, or multi-year contractual terms. We believe that this flexibility in contract duration is important to meet the different needs of our customers. For the years ended December 31, 2024 and 2023, subscriptions revenues accounted for over 90% of our total revenues.
We believe that our approach to talent development and innovation enables our team members to grow in their current positions and build new skills. We provide learning courses across a broad range of categories such as leadership, inclusion and diversity, technical and compliance, among others.
We believe that our approach to talent development and innovation enables our team members to grow in their current positions and build new skills. We provide learning courses across a broad range of categories such as leadership, inclusion and diversity, and technical and compliance, among others.
(acquired by Salesforce.com, Inc.), on which customers can build diverse solutions by integrating cloud communications into business applications; • contact center and customer relationship management providers such as Amazon.com, Inc., Alvaria, Inc., Avaya Inc., Five9, Inc., NICE InContact (including LiveVox Holdings, Inc.), Genesys Telecommunications Laboratories, Inc., Serenova, LLC (acquired by Enghouse Systems Ltd.), Talkdesk, Inc., Vonage Holdings Corp.
(acquired by Salesforce.com, Inc.), on which customers can build diverse solutions by integrating cloud communications into business applications; • contact center and customer relationship management providers such as Amazon.com, Inc., Alvaria, Inc., Avaya LLC, Five9, Inc., NICE Ltd. (including LiveVox Holdings, Inc.), Genesys Telecommunications Laboratories, Inc., Serenova, LLC (acquired by Enghouse Systems Ltd.), Talkdesk, Inc., Vonage Holdings Corp.
Some of these competitors include: • traditional on-premise, hardware business communications providers such as Alcatel-Lucent Enterprise, Avaya Inc., Cisco Systems, Inc., Mitel Networks Corporation, NEC Corporation, and Siemens Enterprise Networks, LLC, any of which may now or in the future also host their solutions through the cloud; • software providers such as Microsoft Corporation and Cisco Systems, Inc. that generally license and/or host their software solutions, and their resellers including major global service providers and cable companies; • established business communications providers that resell on-premise hardware, software, and hosted solutions, such as Comcast, COX, TMU, Orange, and others, all of whom currently have significantly greater resources than us and now or in the future also may develop and/or host their own or other solutions through the cloud; • other cloud companies such as 8x8, Inc., Amazon.com, Inc., DialPad, Inc., GoTo, Microsoft Corporation, Nextiva, Inc., Twilio Inc., Vonage Holdings Corp.
Some of these competitors include: • traditional on-premise, hardware business communications providers such as Alcatel-Lucent Enterprise, Avaya LLC, Cisco Systems, Inc., Mitel Networks Corporation, NEC Corporation, and Siemens Enterprise Networks, LLC, any of which may now or in the future also host their solutions through the cloud; • software providers such as Microsoft Corporation, Zoom Communications, Inc. and Cisco Systems, Inc. that generally license and/or host their software solutions, and their resellers including major global service providers and cable companies; • established business communications providers that resell on-premise hardware, software, and hosted solutions, such as Comcast, TMU, Orange, and others, all of whom currently have significantly greater resources than us and now or in the future also may develop and/or host their own or other solutions through the cloud; • other cloud companies such as 8x8, Inc., Amazon.com, Inc., DialPad, Inc., GoTo, Microsoft Corporation, Nextiva, Inc., Twilio Inc., Vonage Holdings Corp.
(acquired by Ericsson), Salesforce.com, Inc., Twilio Inc., and Zoom Video Communications, Inc.; and • digital engagement vendors such as eGain Corporation, LivePerson, Inc., among others named above that may offer similar features. Employees and Human Capital We believe that our culture and our workforce are critically important to our success.
(acquired by Ericsson), Salesforce.com, Inc., Twilio Inc., and Zoom Communications, Inc.; and • digital engagement vendors such as eGain Corporation, LivePerson, Inc., among others named above that may offer similar features. Employees and Human Capital We believe that our culture and our workforce are critically important to our success.
(acquired by Ericsson), and Zoom Video Communications, Inc.; • video meeting and collaboration service providers such as Amazon.com, Inc., Apple Inc., Alphabet Inc. (Google G-Suite and Meet), Meta Platforms, Inc., Microsoft Teams, Slack Technologies, Inc. (acquired by Salesforce.com, Inc.), and Zoom Video Communications, Inc.; • other technology companies such as Alphabet Inc.
(acquired by Ericsson), Alianza, Inc., and Zoom Communications, Inc.; • video meeting and collaboration service providers such as Amazon.com, Inc., Apple Inc., Alphabet Inc. (Google G-Suite and Meet), Meta Platforms, Inc., Microsoft Teams, Slack Technologies, Inc. (acquired by Salesforce.com, Inc.), and Zoom Communications, Inc.; • other technology companies such as Alphabet Inc.
We encourage investors and others to review the information we make public in these locations, as such information could be deemed to be material information. Please note that this list may be updated from time to time. 13 Table of Contents
We encourage investors and others to review the information we make public in these locations, as such information could be deemed to be material information. Please note that this list may be updated from time to time. 11 Table of Contents
Globally, these regulations continue to be introduced and to change over time. Such regulations can impact our ability to offer services to various customer segments, and our cost to deliver our services. See the section entitled “Risk Factors” for more information.
Globally, these regulations continue to be introduced and to change over time. Such regulations can impact our ability to offer services to various customer markets, and our cost to deliver our services. See the section entitled “Risk Factors” for more information.
We typically have multiple releases per year, where we constantly improve our solutions and introduce new capabilities and features to make our customers’ workforce more productive and to build out the feature set required by larger and global enterprises. As part of our strategy to expand our technological capabilities, we engage in strategic transactions from time to time.
We typically have multiple releases per year, where we constantly improve our solutions and introduce new capabilities and features to make our customers’ workforce more productive and to build out the feature set required by larger and global enterprises. 7 Table of Contents As part of our strategy to expand our technological capabilities, we engage in strategic transactions from time to time.
Additionally, the French regulatory agency, ARCEP, has made major changes to its telephone numbering plan that went into effect in January 2023, allowing for greater nomadic use of services like ours, and prohibiting the sub-assignment of phone numbers to resellers, 12 Table of Contents requiring each provider to obtain numbers directly from ARCEP.
Additionally, the French regulatory agency, ARCEP, has made major changes to its telephone numbering plan that went into effect in January 2023, allowing for greater nomadic use of services like ours, and prohibiting the sub-assignment of phone numbers to resellers, requiring each provider to obtain numbers directly from ARCEP.
We are committed to being inclusive to enable our workforce and customers to succeed. 11 Table of Contents We invest in developing our talent and creating a superior employee experience. We believe that a highly engaged workforce will continue to drive RingCentral’s competitive advantage as an innovative company and will also keep RingCentral as an employer of choice.
We are committed to being inclusive to enable our workforce and customers to succeed. We invest in developing our talent and creating a superior employee experience. We believe that a highly engaged workforce will continue to drive RingCentral’s competitive advantage as an innovative company and will also keep RingCentral as an employer of choice.
Our engineering team has significant experience in various disciplines related to our platform, such as voice, video, events, text, team messaging and collaboration, mobile application development, IP networking and infrastructure, contact center, digital customer engagement, user experience, security, and robust multi-tenant cloud-based system architecture.
Our engineering team has relevant industry experience in various disciplines related to our platform, such as voice, video, events, text, team messaging and collaboration, mobile application development, IP networking and infrastructure, contact center, digital customer engagement, user experience, security, and robust multi-tenant cloud-based system architecture.
Research and Development 9 Table of Contents We believe that continued investment in research and development is critical to expanding our leadership position within the cloud-based business communications, collaboration, and contact center solutions market and is a key element of our culture. We devote the majority of our research and development resources to software development.
Research and Development We believe that continued investment in research and development is critical to expanding our leadership position within the cloud-based business communications, collaboration, and contact center solutions market and is a key element of our culture. We devote the majority of our research and development resources to software development.
We believe that the principal competitive factors in our market include: • product features and capabilities; 10 Table of Contents • system reliability, availability, and performance; • speed and ease of activation, setup, and configuration; • ownership and control of the underlying technology; • open platform; • incumbency; • integration with mobile devices; • brand awareness and recognition; • simplicity of the pricing model; and • total cost of ownership.
We believe that the principal competitive factors in our market include: • product features and capabilities; • system reliability, availability, and performance; • speed and ease of activation, setup, and configuration; • ownership and control of the underlying technology; • open platform; • generative AI; • incumbency; • integration with mobile devices; • brand awareness and recognition; • simplicity of the pricing model; and 8 Table of Contents • total cost of ownership.
Our equity and cash incentive plans are designed to attract, retain and reward employees, in order to increase stockholder value and to enable the success of our Company by motivating such individuals to perform to the best of their abilities and share in the value creation process.
Our equity and cash incentive plans are designed to attract, retain and reward employees, in order to increase stockholder value and to 9 Table of Contents enable the success of our Company by motivating such individuals to perform to the best of their abilities and share in the value creation process.
Our development methodology, in combination with our SaaS delivery model, allows us to provide new and enhanced capabilities on a regular basis. Based on feedback from our customers and prospects and our review of the broader business communications and SaaS markets, we continuously develop new functionality while maintaining and enhancing our existing solutions.
Our development methodology, in combination with our software-as-a-service (“SaaS”) delivery model, allows us to provide new and enhanced capabilities on a regular basis. Based on feedback from our customers and prospects and our review of the broader business communications and SaaS markets, we continuously develop new functionality while maintaining and enhancing our existing solutions.
There are a number of federal, state, local, and foreign laws and regulations, such as the European Union’s General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act (“CCPA”), and the California Privacy Rights Act (“CPRA”), which extended the CCPA, the Virginia Consumer Data Protection Act, the Colorado Privacy Act, the Connecticut Privacy Act and the Utah Consumer Privacy Act, as well as contractual obligations and industry standards, that provide for certain obligations and restrictions with respect to data privacy and security, and the collection, storage, retention, protection, use, processing, transmission, sharing, disclosure, and protection of personal information and other customer data.
There are a number of federal, state, local, and foreign laws and regulations, such as the European Union’s General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act (“CCPA”), the California Privacy Rights Act (“CPRA”), which extended the CCPA, and numerous other state privacy laws imposing obligations and restrictions similar to the CCPA as well as contractual obligations and industry standards, that provide for certain obligations and restrictions with respect to data privacy and security, and the collection, storage, retention, protection, use, processing, transmission, sharing, disclosure, and protection of personal information and other customer data.
We believe that both hardware and software components of our platform can be replaced, upgraded or added with minimal or no interruption in service. The system is designed to have no single point-of-failure. We also utilize Amazon’s public cloud services, and for the foreseeable future, we expect to increase our utilization of such services.
We believe that both hardware and software components of our platform can be replaced, upgraded or added with minimal or no interruption in service. The system is designed to be redundant. We also utilize Amazon’s and Google's public cloud services, and for the foreseeable future, we expect to increase our utilization of such services.
We expect that with the expansion of our Global MVP solution and sales of our services into new countries, we will become subject to additional data privacy regulations in other countries throughout the world.
We expect that with the expansion of our Global RingEX solution and sales of our services into new countries, we will become subject to additional data privacy regulations in 10 Table of Contents other countries throughout the world.
Over the course of 2023, many countries across Europe implemented the EU Electronic Communications Code, clarifying and updating obligations on PSTN-connected voice service providers as well as imposing new requirements on number-independent services such as videoconferencing and team messaging.
Countries across Europe have now implemented the EU Electronic Communications Code, clarifying and updating obligations on PSTN-connected voice service providers as well as imposing new requirements on number-independent services such as videoconferencing and team messaging.
Our worldwide intellectual property portfolio includes over 450 issued patents, which expire between 2024 and 2041, and over 90 patent applications, pending examination in the U.S. and in foreign jurisdictions, all of which are related to U.S. applications. In general, our patents and patent applications apply to certain aspects of our SaaS and mobile applications and underlying communications infrastructure.
Our worldwide intellectual property portfolio includes 478 issued patents, which expire between 2025 and 2042, and 99 patent applications, pending examination in the U.S. and in foreign jurisdictions, all of which are related to U.S. applications. In general, our patents and patent applications apply to certain aspects of our SaaS and mobile applications and underlying communications infrastructure.
Our marketing efforts include search engine marketing, search engine optimization, affiliates, list buys, shared leads, content leads, appointment setting, radio advertising, online display advertising, sports sponsorships, billboard advertising, tradeshows and events, and other forms of demand generation.
Our marketing efforts include search engine marketing, search engine optimization, affiliates, list buys, shared leads, content leads, appointment setting, radio advertising, online display advertising, sports sponsorships, billboard advertising, tradeshows and events, and other forms of demand generation. • Direct Sales. We primarily sell our solutions and subscriptions through direct inbound and outbound sales efforts.
Our indirect sales channel consists of global and regional networks of resellers and distributors, strategic partners and global and regional service providers. Our indirect sales channels help broaden the adoption of our solutions and enable us to leverage the channel to sell our services as well as access their customer bases. • Customer Support and Services.
Our indirect sales channels help broaden the adoption of our solutions and enable us to leverage the channel to sell our services as well as access their customer bases. • Customer Support and Services.
“RingCentral” and other of our trademarks appearing in this report are our property. This report also contains trade names and trademarks of other companies. We do not intend our use or display of other companies’ trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.
This report also contains trade names and trademarks of other companies. We do not intend our use or display of other companies’ trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies. Segment Reporting Our organizational structure is a single reportable segment.
We also provide access to a variety of flexible health and wellness programs to our employees. As of December 31, 2023, we had 4,084 full-time employees located in 16 countries. As of December 31, 2023, approximately 47% of our full-time employees were located outside of the United States.
We also provide access to a variety of flexible health and wellness programs to our employees. As of December 31, 2024, we had 4,260 full-time employees and 3,140 contractors located in over 29 countries. As of December 31, 2024, approximately 72% of our personnel were located outside of the United States.
Our principal address is 20 Davis Drive, Belmont, California 94002, and our primary website address is www.ringcentral.com . Information contained on, or that can be accessed through, our website, does not constitute part of this Annual Report on Form 10-K and inclusion of our website address in this Annual Report on Form 10-K is an inactive textual reference only.
Information contained on, or that can be accessed through, our website, does not constitute part of this Annual Report on Form 10-K and inclusion of our website address in this Annual Report on Form 10-K is an inactive textual reference only. “RingCentral” and other of our trademarks appearing in this report are our property.
In certain countries in which we operate, we are subject to, and comply with, local labor law requirements, which may automatically make our employees subject to industry-wide collective bargaining agreements. For instance, our employees in France are covered by the Syntec Collective Bargaining Agreement. We are not subject to any other collective bargaining agreements.
In certain countries in which we operate, we are subject to, and comply with, local labor law requirements, which may automatically make our employees subject to industry-wide collective bargaining agreements. For instance, some of our European employees are covered by collective bargaining agreements. We believe that our employee relations are good, and we have never experienced any work stoppages.
We believe that our employee relations are good, and we have never experienced any work stoppages. Regulatory As a provider of communication services over the Internet, we are subject to regulation in the U.S. by the FCC.
Regulatory As a provider of communication services over the Internet, we are subject to regulation in the U.S. by the FCC.
We do not have significant customer concentration and no individual customer accounted for more than 10% of total revenue for the years ended December 31, 2023, 2022, and 2021. We believe that we will not have significant customer concentration in the future. We sell our solutions to enterprise customers, and small and medium-sized businesses.
We do not have significant customer concentration and no individual customer accounted for more than 10% of total revenue for the years ended December 31, 2024, 2023, and 2022.
We define a “customer” as a party that purchases or subscribes to our products and services directly or through our indirect sales channel, which includes resellers and distributors, strategic partners and global service providers. We continuously expand our solution offering globally and believe that there are additional growth opportunities in international markets.
We sell our solutions to enterprise customers, and small and medium-sized businesses. We define a “customer” as a party that purchases or subscribes to our products and services directly or through our indirect sales channel, which includes resellers and distributors, strategic partners and global service providers.
We provide onboarding implementation services to help our customers set up and configure their newly purchased communications system, as well as ongoing self-service, phone support, online chat support, and training. We also closely track and monitor customer acquisition costs to assess how we are deploying our marketing, sales, and customer support spending. • Marketing.
We sell globally through both direct and indirect channels, which includes resellers and distributors, strategic partners and global service providers. We provide onboarding implementation services to help our customers set up and configure their newly purchased communications system, as well as ongoing self-service, phone support, online chat support, and training.
We do not develop or manufacture physical phones and offer them as a convenience to our customers. We rely on third-party providers to develop and manufacture these devices and fulfillment partners to successfully serve our customers. We continue to support our direct inside sales force while also developing indirect sales channels to market our brand and our subscription offerings.
The remainder of our revenues are primarily comprised of product revenues from the sale of pre-configured phones and professional services. We do not develop or manufacture physical phones and only offer them as a convenience to our customers. We rely on third-party providers to develop and manufacture these devices and fulfillment partners to successfully serve our customers.
Marketing, Sales and Support We use a variety of marketing, sales, and support activities to generate and cultivate ongoing customer demand for our subscriptions, acquire new customers, and engage with our existing customers. We sell globally through both direct and indirect channels, which includes resellers and distributors, strategic partners and global service providers.
We continue to look to expand our offerings in new geographies and believe that there are additional growth opportunities in international markets. Marketing, Sales and Support We use a variety of marketing, sales, and support activities to generate and cultivate ongoing customer demand for our subscriptions, acquire new customers, and engage with our existing customers.
Our indirect sales channels who sell our solutions consist of: • Regional and global network of resellers and distributors; • Strategic partners who market and sell our MVP or other solutions, including co-branded solutions. Such partnerships include Alcatel-Lucent Enterprise (“ALE”), Amazon Web Services (“Amazon”), Atos SE (“Atos”), Avaya LLC (“Avaya”), and Mitel US Holdings, Inc.
We use our direct inside sales force and indirect sales channels to market our product and our subscription offerings. Our indirect sales channels who sell our solutions consist of: • Regional and global network of resellers and distributors; • Global Service Providers and strategic partners who market and sell our RingEX, RingCX or other solutions, including co-branded solutions.
We have periodic employee surveys that allow employees to voice their perceptions of the Company and their work experience. Our diversity and inclusion initiatives honor the unique background, identity and perspectives of each individual in our organization and we are committed to the success of our workforce and customers.
We have periodic employee surveys that allow employees to voice their perceptions of the Company and their work experience. We face competition for highly skilled and technical workforce with experience in our industry and locations where we maintain offices. We strive to provide competitive pay, benefits, and services to attract and retain our employees.
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ITEM 1. BUSINESS Overview We are a leading provider of AI-driven cloud business communications, contact center, video and hybrid event solutions. We believe that our innovative solutions enable smarter interactions among customers and employees, turning conversations into meaningful insights that drive better business outcomes.
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ITEM 1. BUSINESS Overview Over the past 25 years, RingCentral has transformed business communications, leading the shift from on-premises legacy communications to the cloud. Today, the company has an AI-powered multi-product portfolio including Unified Communications as a Service (“UCaaS”), Contact Center as a Service (“CCaaS”), Video & Events, and RingSense AI solutions.
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Our cloud-based business solutions are designed to be easy to use, providing a global user identity across multiple locations and devices, including smartphones, tablets, PCs and desk phones. Our solutions can be deployed rapidly and configured and managed easily.
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RingCentral’s core tenets include: a) Trust: We provide communications that businesses can trust with reliability, security, and privacy; b) Innovation: We execute through focused and strategic innovation, setting the bar in the industry for many market firsts; c) Partnerships: We have a diverse set of strategic partners, global service providers, channel partners, and third-party developers.
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Our cloud-based solutions are location and device independent and better suited to address the needs of modern mobile and global enterprise workforces than are legacy on-premises systems. Through our open platform, we enable third-party developers and customers to develop integrations and workflows using our robust set of Application Programming Interfaces (“APIs”) and software developers’ kits (“SDKs”).
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RingCentral is designed for intelligent, connected, and effortless businesses communications, making employee and customer experiences more productive and efficient. Our multi-product portfolio includes: • RingEX.
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For today’s mobile and highly distributed workforce, RingCentral empowers people to connect from anywhere on any device, across any mode of communication. This gives today’s workforce the ability to communicate more productively and seamlessly in ways that traditional on-premises systems do not support.
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RingEX (formerly RingCentral MVP) is our AI-powered Unified Communications as a Service (UCaaS) platform available in 46 countries and phone number availability in 100 countries, enabling seamless collaboration across voice, messaging, and video: ◦ Cloud phone system with IVR, advanced call queues, call management, and deep telephony integrations, where we historically have strived for 99.999% availability. ◦ Business messaging, including enhanced SMS, MMS, and team chat for streamlined communication. ◦ Cloud fax solutions for secure, integrated document receiving and transmission on mobile or desktop. 4 Table of Contents ◦ AI-enhanced video meetings, featuring meeting summaries, and smart collaboration tools, with conference room solutions and interoperability, integrating with third-party meetings. ◦ Comprehensive business analytics and cloud migration tools. ◦ APIs and integrations, allowing businesses to customize workflows and connect with existing applications. • RingCentral Contact Center.
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RingCentral offers a fully integrated business communications platform, which includes cloud private branch exchanges (“PBX”), cloud contact center, video meetings and webinars, and events.
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RingCentral Contact Center is a collaborative contact center solution that delivers AI-powered omni-channel and workforce engagement solutions integrated with RingEX.
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RingCentral is focused on embedding AI into our product portfolio, which we believe is a key product differentiator for the markets and customers we serve. 4 Table of Contents Our cloud communications and customer engagement solutions are based on our Message Video Phone (MVP) platform.
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RingCentral Contact Center brings together the powerful integration of Contact Center as a Service (CCaaS) which leverages technology from NICE Ltd., along with RingEX, enabling an easy collaboration while delivering seamless omnichannel experiences across more than 30 digital and voice channels. • RingCX is our native next-generation CCaaS solution, delivering an AI-powered customer engagement solution with deep CRM integrations and a broad ecosystem of integrated partner solutions, including the following capabilities: ◦ Omnichannel support across voice, chat, email, and messaging for a seamless customer experience. ◦ Real time and historical analytics for supervisors ◦ Outbound engagement, including predictive dialing, automated campaigns, and proactive customer outreach to drive conversions and engagement. ◦ Bring-Your-Own IVA (Intelligent Virtual Assistant) for custom AI-powered self-service AI agents tailored to business needs. ◦ Deep CRM integrations, including Salesforce, Zendesk, ServiceNow, HubSpot, Microsoft Dynamics, and others, ensuring customer interactions are context-aware and data-driven. ◦ Seamless integration with RingEX, enabling a fully connected UCaaS and CCaaS powered by RingCentral global network. • RingCentral Artificial Intelligence Solutions.
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This open platform enables seamless integration with third-party and custom software applications, helping improve business workflows, drive higher employee productivity and enhance better customer service. Our global delivery capabilities support the needs of multi-national enterprises in multiple countries.
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RingCentral provides multiple AI solutions designed to improve employee productivity, elevate customer experience and automate routine tasks: ◦ AI Solutions for RingEx. ▪ AI Receptionist is an AI phone agent that uses generative AI to automatically answer customer questions and transfer callers to the right place, much like traditional full-time receptionists do. ▪ AI Assistant automates conversation recaps, captures notes and summarizes actions, thus freeing employees from taking notes. ▪ RingSense, transforms conversations into actionable conversational intelligence, helping teams improve productivity with AI-driven insights including among others: automated meeting and call summaries that capture key points and action items; sentiment and trend analysis; performance insights for managers and teams, providing benchmarking, coaching opportunities, and operational movements; and AI-powered sales intelligence, analyzing customer interactions to optimize engagement and improve sales efficiency. ◦ AI Solutions for RingCX. ▪ AI-based Quality Management (QM) powered by RingSense AI for smarter coaching and operational insights. ▪ AI Agent Assist offers real-time suggestions and contextual responses to improve service efficiency.(This product is currently in beta). ▪ AI Supervisor Assist enables real-time monitoring, coaching, and sentiment analysis to enhance team performance.
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Our multi-product portfolio includes: • RingCentral MVP, an AI-driven Unified Communications as a Service (“UCaaS”) platform, which includes team messaging, video meetings, business SMS and a cloud phone system; • Contact Center as a Service (“CCaaS”), a set of cloud-based customer experience solutions that includes RingCentral Contact Center, and RingCX, a native omnichannel contact center with generative AI capabilities and conversation analytics launched in 2023; • RingCentral Video, our branded video meeting solution with team messaging that enables smart video meetings, rooms solutions, and webinars; • RingCentral Events, announced in November 2023 following the acquisition of Hopin Events and Session Platforms provides a robust set of features to host virtual, hybrid, and in-person events of all sizes and formats, spanning from single-session events to multi-day & multi-session conferences; and • RingSense, announced in March 2023, is an AI platform for enhanced business communications and revenue intelligence that helps organizations unlock powerful insights from conversation data.
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(This product is currently in beta). 5 Table of Contents • RingCentral for Microsoft Teams.
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RingSense for Sales, the first offering in this portfolio, analyzes interactions among salespeople and their prospects to surface key insights and performance measures, helping increase sales efficiency. We primarily generate revenues from the sale of subscriptions to our offerings. Our subscription plans have monthly, annual, or multi-year contractual terms.
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RingCentral seamlessly embeds into Microsoft Teams, providing reliable, global enterprise-grade phone, SMS, fax, and customer experience solutions—without requiring a Teams Phone license: ◦ Embedded telephony, fax, and SMS, delivering a fully featured business phone system inside Teams. ◦ RingSense conversation intelligence, providing AI-driven insights. ◦ A personal AI assistant, automating notes, transcriptions, and follow-ups. ◦ AI writer for SMS, automating composing texts. • RingCentral Events.
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(“Mitel” or “Unify”); and • Global Service Providers including AT&T (“AT&T”), TELUS Communications Company (“TELUS”), BT Group plc (“BT”), Vodafone Group Services Limited (“Vodafone”), Deutsche Telekom (“DT”), Optus Networks Pty Ltd (“Optus”) in Australia, 1&1 Versatel and Ecotel in Germany, MCM in Mexico, Frontier, Charter Communications and others. Our principal executive offices are located in Belmont, California.
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RingCentral Events, built on the Hopin Events and Session acquisition, enables businesses to host virtual, hybrid, and in-person events with AI-powered engagement tools: ◦ Multi-session event hosting, from small gatherings to large-scale conferences. ◦ AI-driven attendee engagement, including automated networking and personalized recommendations to foster community ◦ Deep integrations with CRM and marketing automation Our flagship cloud-based offerings, RingEX and RingCX, are subscription based and made available at different rates varying by the specific functionalities, services, and number of users.
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Our Solutions Our AI-driven cloud-based business communications, collaboration, and customer engagement solutions function across multiple locations and devices, including smartphones, tablets, PCs and desk phones, allow for communication across multiple modes, including high-definition (“HD”) voice, video, SMS, messaging and collaboration, conferencing, and fax.
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Our principal executive offices are located in Belmont, California. Our principal address is 20 Davis Drive, Belmont, California 94002, and our primary website address is www.ringcentral.com .
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Our proprietary solutions enable a more productive and dynamic workforce and are architected using industry standards to meet 5 Table of Contents modern business communications and collaboration requirements, including workforce mobility, “bring-your-own” communications device environments and multiple communications methods.
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We believe that we will not have significant customer concentration in the future. 6 Table of Contents RingCentral powers customer engagement and intelligent communication across industries: • Retail and e-commerce businesses use AI-assisted agents to reduce wait times, automate order inquiries, and personalize customer interactions. • Financial services firms ensure compliance while enhancing client engagement with voice and digital experiences, personalized coaching, and intelligent risk and compliance monitoring. • Healthcare providers streamline patient communication and care coordination with scheduling, automated documentation, and HIPAA-compliant messaging. • Customer service teams improve response times with real-time agent assistance, self-service tools, and personalized coaching. • Sales and marketing teams accelerate deals with conversation insights, automated follow-ups, and smarter customer engagement strategies.
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Our solutions are delivered using a highly available, and rapidly and easily scalable infrastructure, allowing our customers to add new users regardless of where they are located within our service footprint and promote business continuity.
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We also closely track and monitor customer acquisition costs to assess how we are deploying our marketing, sales, and customer support spending. • Marketing.
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Our solutions require little to no upfront infrastructure hardware costs or ongoing maintenance and upgrade costs commonly associated with on-premise systems and can be integrated with other existing communication systems.
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We have direct sales representatives located in the U.S. and internationally. • Indirect Sales. Our indirect sales channel consists of global and regional networks of resellers and distributors, strategic partners and global and regional service providers.
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We believe that our solutions go beyond the core functionality of existing on-premise communications solutions by providing additional key benefits that address the changing requirements of business to allow business communications using HD voice, video, SMS, messaging, collaboration, conferencing, and fax. The key benefits of our solutions include: • Location Independence. Our cloud-based solutions are designed to be location independent.
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We seamlessly connect distributed and mobile users, enabling employees to communicate with a single identity whether working from a central location, a branch office, on the road, or at home. • Global.
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Our core UCaaS capabilities support multinational enterprise workforces, connecting multinational workforces globally, while reducing the complexity and high costs of maintaining multiple legacy private branch exchanges (“PBX systems”) with a single global cloud solution. • Generative AI.
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We are focused on embedding AI capabilities into all of our products, providing our customers with an affordable way to benefit from advancements of this key technology.
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RingCentral has developed a set of unique AI models that deliver conversational speech analysis and emotional sentiment recognition, which allows the Company to deliver a set of enhanced features across its product portfolio. • Device Independence.
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Our solutions are designed to work with a broad range of devices, including smartphones, tablets, PCs, and desk phones, enabling businesses to successfully implement a “bring-your-own” communications device strategy. • Instant Activation and Easy Account Management. Our solutions are designed for rapid deployment and ease of management.
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Our intuitive graphical user interfaces allow administrators and users to set up and manage their business communications system with little or no IT expertise, training, or dedicated staffing. • Analytics.
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Our solutions enable superior user experience and drive business decisions through a single, real-time intuitive interface with configurable, out-of-the-box KPIs and metrics for monitoring all users, calls, meetings, devices, numbers, and queues, along with call quality scores and parameters. • Scalability. Our cloud-based solutions scale easily and efficiently with the growth of our customers.
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Customers can add users, regardless of their location, without having to purchase additional infrastructure hardware or software upgrades. • Lower Cost of Ownership. We believe that our customers experience significantly lower cost of ownership compared to legacy on-premise systems.
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Using our cloud-based solutions, our customers can avoid the significant upfront costs of infrastructure hardware, software, ongoing maintenance and upgrade costs, and the need for dedicated and trained IT personnel to support these systems. • Seamless and Intuitive Integration with Other Applications. Applications are proliferating within businesses of all sizes.
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Integration of these business applications with legacy on-premise systems is typically complex and expensive, which limits the ability of businesses to leverage cloud-based applications.
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Our platform provides seamless and intuitive integration with multiple popular cloud-based business applications such as Microsoft productivity and CRM tools, Google G-Suite, Salesforce CRM, Oracle, Okta, Zendesk, Box, and Workday, as well as line-of business applications. • Enterprise-grade Security and Compliance. RingCentral emphasizes data security through a secure cloud platform demonstrated through numerous third-party attestations and certifications.
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These certifications and attestations highlight RingCentral's strong commitment to maintaining high standards of data security and regulatory compliance. • Mission Critical Reliability. RingCentral has a long-standing industry-leading service level agreement (SLA) of 99.999% uptime offered in over 45+ countries.
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With over 15 geographically dispersed data centers and media points of presence, RingCentral provides a global infrastructure that ensures mission critical continuity for your organization. 6 Table of Contents We have a portfolio of cloud-based offerings that are subscription-based and made available at different monthly rates, varying by the specific functionalities, services, and number of users.
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We primarily generate revenues from the sale of subscriptions to our offerings, which include the following: RingCentral MVP. RingCentral MVP, our flagship solution, provides an AI-embedded experience for communication and collaboration across multiple modes, including HD voice, video, SMS, messaging and collaboration, conferencing, online meetings, and fax.
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RingCentral MVP offers a unified Message, Video, and Phone experience on our global platform. Customers can extend RingCentral MVP to support their multinational workforce in many countries around the world. This subscription is designed primarily for businesses that require a communications solution, regardless of location, type of device, expertise, size, or budget.
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Businesses are able to seamlessly connect users working in multiple office locations on smartphones, tablets, PCs and desk phones. The features, capabilities and price per user increase from Core to Ultra.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

279 edited+60 added−217 removed158 unchanged
Biggest changeAs a result, we may fail to meet or to exceed the expectations of research analysts or investors, which could cause our stock price to fluctuate. • We rely on third parties, including third parties in countries outside the U.S., primarily in Georgia and the Philippines for a significant portion of our software development, quality assurance, operations, and customer support. • Global economic conditions may harm our industry, business and results of operations, including the effects of the ongoing war between Russia and Ukraine and related international sanctions against Russia, the ongoing war between Israel and Hamas, and relations between the United States and China. • Our historically rapid growth and the quickly changing markets in which we operate make it difficult to evaluate our current business and future prospects, which may increase the risk of investing in our stock. • Our future operating results will rely in part upon the successful execution of our relationships with our strategic partners and global service providers, including Avaya, Amazon, Atos, ALE, Mitel (Unify), Charter Communications, Vodafone, DT, Optus, and other partners and resellers, some or all of which may not be successful. • We face intense competition in our markets and may lack sufficient financial or other resources to compete successfully. • We rely and may in the future rely significantly on our strategic partners, agents, brokers, resellers, and global service providers to sell our subscriptions; our failure to effectively develop, manage, and maintain our indirect sales channels could materially and adversely affect our revenues. • To deliver our subscriptions, we rely on third parties for our network connectivity and for certain of the features in our subscriptions. • Interruptions or delays in service from our third-party data center hosting facilities, co-location facilities and other third-party providers could impair the delivery of our subscriptions, require us to issue credits or pay penalties and harm our business. • Failures in Internet infrastructure or interference with broadband access could cause current or potential users to believe that our systems are unreliable, possibly leading our customers to switch to our competitors or to avoid using our subscriptions. • A security incident, such as a cyber-attack, information security breach or denial of service event could delay or interrupt service to our customers, harm our reputation or business, impact our subscriptions, and subject us to significant liability. 14 Table of Contents • We depend largely on the continued services of our senior management and other highly-skilled employees, and if we are unable to hire, retain, manage and motivate our employees, we may not be able to grow effectively and our business, results of operations and financial condition could be adversely affected. • Increased customer turnover, or costs we incur to retain and upsell our customers, could materially and adversely affect our financial performance. • If we are unable to attract new customers to our subscriptions or upsell to those customers on a cost-effective basis, our business will be materially and adversely affected. • Our Credit Agreement imposes operating and financial restrictions on us. • Servicing our debt, including the Notes, may require a significant amount of cash, and we may not have sufficient cash flow from our business to pay all of our indebtedness. • The Senior Notes Indenture contains restrictive covenants that may limit our ability to engage in activities that may be in our long-term best interest. • For as long as the dual class structure of our common stock as contained in our charter documents is in effect, voting control will be concentrated with a limited number of stockholders that held our stock prior to our initial public offering, including primarily our founders and their affiliates, and limiting other stockholders’ ability to influence corporate matters. • Our Series A Convertible Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to the rights of, our common stockholders, which could adversely affect our liquidity and financial condition.
Biggest changeAs a result, we may fail to meet or to exceed the expectations of research analysts or investors, which could cause our stock price to fluctuate. • If we are unable to develop, license, or acquire new services or applications on a timely and cost-effective basis, our business, financial condition, and results of operations may be materially and adversely affected. • If we are unable to attract new customers to our subscriptions or upsell to those customers on a cost-effective basis, our business will be materially and adversely affected. • We rely and may in the future rely significantly on our channel partners and global service providers to market and sell our subscriptions; our failure to effectively develop, manage, and maintain our indirect sales channels could materially and adversely affect our revenues. • Increased customer turnover, or costs we incur to retain and upsell our customers, could materially and adversely affect our financial performance. • Economic and political conditions may harm our industry, business and results of operations. • We face intense competition in our markets and may lack sufficient financial or other resources to compete successfully. • We face significant risks in our efforts to sell and market to medium-sized and larger businesses for sales of our subscriptions and, if we do not manage these efforts effectively, our business and results of operations could be materially and adversely affected. • If we fail to continue to develop our brand or our reputation is harmed, our business may suffer. • We depend largely on the continued services of our senior management and other highly-skilled employees, and if we are unable to hire, retain, manage and motivate our employees, we may not be able to grow effectively and our business, results of operations and financial condition could be adversely affected. • We may expand through acquisitions of and investments in other companies, each of which may divert our management’s attention, result in additional dilution to our stockholders, increase expenses, disrupt our operations, and harm our results of operations. • Interruptions or delays in service whether caused by our third-party data center hosting facilities, other third-party providers, internal process failures, human errors, internal bugs or otherwise could impair the delivery of our subscriptions, require us to issue credits or pay penalties and harm our business. • A security incident, such as a cyber-attack, information security breach, or denial of service event could delay or interrupt service to our customers, harm our reputation or business, impact our subscriptions, and subject us to significant liability. • The AI technology and features incorporated into our solutions include new and evolving technologies that may present both legal and business risks. 12 Table of Contents • We rely on third-party vendors and competitors to deliver video, contact center and SMS services to customers, and changes in these relationships could have a material adverse effect on our business, results of operations and financial condition. • Our subscriptions are subject to regulation, and future legislative or regulatory actions could adversely affect our business and expose us to liability in the U.S. and internationally. • We may require additional capital or need to restructure our existing debt to pursue our business objectives and to respond to business opportunities, challenges or unforeseen circumstances.
The counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our Class A Common Stock and/or purchasing or selling our Class A Common Stock or other securities of ours in secondary market transactions at any time prior to the respective maturity of the Convertible Notes (and are likely to do so on each exercise date of the capped call transactions).
The counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our Class A Common Stock and/or purchasing or selling our Class A Common Stock or other securities of ours in secondary market transactions at any time prior to the maturity of the 2026 Convertible Notes (and are likely to do so on each exercise date of the capped call transactions).
Determining whether a cybersecurity incident is notifiable or reportable may not be straightforward and may be costly and could lead to negative publicity, loss of customer or partner confidence in the effectiveness of our security measures, diversion of management’s attention, governmental investigations, and the expenditure of significant capital and other resources to respond to or alleviate problems caused by the actual or perceived security breach.
Determining whether a security breach or incident is notifiable or reportable may not be straightforward and may be costly and could lead to negative publicity, loss of customer or partner confidence in the effectiveness of our security measures, diversion of management’s attention, governmental investigations, and the expenditure of significant capital and other resources to respond to or alleviate problems caused by the actual or perceived security breach or incident.
In addition, our employees use AI tools for various design and engineering tasks such as writing code and building content, and these AI technology tools may produce inaccurate responses that could lead to errors in our decision-making, solution development or other business activities, which could have a negative impact on our business, operating results and financial condition.
In addition, our employees use AI tools for various design and engineering tasks such as writing code and building content, and these tools may produce inaccurate responses that could lead to errors in our decision-making, solution development or other business activities, which could have a negative impact on our business, operating results and financial condition.
In particular, we depend to a considerable degree on the vision, skills, experience, and effort of our co-founder, Chairman and Chief Executive Officer, Vladimir Shmunis, who has provided our strategic direction for over 20 years and has built and maintained what we believe is an attractive workplace culture. Mr.
In particular, we depend to a considerable degree on the vision, skills, experience, and effort of our co-founder, Chairman and Chief Executive Officer, Vladimir Shmunis, who has provided our strategic direction for over 20 years and has built and maintained what we believe is an attractive workplace culture.
Operating in international markets requires significant resources and management attention and will subject us to regulatory, economic, and political risks that are different from those in the U.S. Due to our limited experience with international operations and developing and managing sales and distribution channels in international markets, our international expansion efforts may not be successful.
Operating in international markets requires significant resources and management attention and will subject us to regulatory, economic, and political risks that are different from those in the U.S. Due to our relatively limited experience with international operations and developing and managing sales and distribution channels in international markets, our international expansion efforts may not be successful.
Customer turnover, as well as reductions in the number of users or pricing tier(s) for which a customer subscribes, each could have a significant impact on our results of operations, as does the cost we incur in our efforts to retain our customers and encourage them to upgrade their subscriptions and increase their number of users.
Customer turnover, as well as reductions in the number of users or pricing tier(s) for which a customer subscribes, each could have a significant impact on our results of operations, as does the cost we incur in our efforts to retain our customers and encourage them to renew and upgrade their subscriptions and increase their number of users.
We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may have on the price of the Convertible Notes or the shares of our Class A Common Stock. In addition, we do not make any representation that these transactions will not be discontinued without notice.
We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may have on the price of the 2026 Convertible Notes or the shares of our Class A Common Stock. In addition, we do not make any representation that these transactions will not be discontinued without notice.
In addition, because of the ten-to-one voting ratio between our Class B and Class A Common Stock, the holders of Class B Common Stock collectively will continue to control many matters submitted to our stockholders for approval even if their stock holdings represent less than 50% of the voting power of the outstanding shares of our capital stock.
In addition, because of the ten-to-one voting ratio between our Class B Common Stock and Class A Common Stock, the holders of Class B Common Stock collectively will continue to control many matters submitted to our stockholders for approval even if their stock holdings represent less than 50% of the outstanding shares of our capital stock.
As our customer base grows and their usage of our services increases, we will be required to make additional investments in network capacity to maintain adequate data transmission speeds, the availability of which may be limited, or the cost of which may be on terms unacceptable to us.
As our customer base grows and their usage of our services increases, we will likely be required to make additional investments in network capacity to maintain adequate data transmission speeds, the availability of which may be limited, or the cost of which may be on terms unacceptable to us.
Moreover, the development of new or enhanced services or applications may require substantial investment, and we must continue to invest a significant amount of resources in our research and development efforts to develop these services and applications to remain competitive. We do not know whether these investments will be successful.
Moreover, the development of new or enhanced services or applications will require substantial investment, and we must continue to invest a significant amount of resources in our research and development efforts to develop these services and applications to remain competitive. We do not know whether these investments will be successful.
In addition, the counterparties to the capped call transactions are financial institutions and we will be subject to the risk that one or more of the counterparties may default or otherwise fail to perform, or may exercise certain rights to terminate, their obligations under the capped call transactions.
In addition, the option counterparties are financial institutions and we will be subject to the risk that one or more of the counterparties may default or otherwise fail to perform, or may exercise certain rights to terminate, their obligations under the capped call transactions.
Finally, if problems occur with any of these third-party network or service providers, it may cause errors or poor call quality in our subscriptions, and we could encounter difficulty identifying the source of the problem.
Finally, if problems occur with any of these third-party network service providers, it may cause outages, errors or poor call quality in our subscriptions, and we could encounter difficulty identifying the source of the problem.
Regulation of personal information is evolving, and new laws could further impact how we handle personal information or could require us to incur additional compliance costs, either of which could have an adverse impact on our operations.
Regulation of personal information is evolving, and new laws could further impact how we handle personal information and/or could require us to incur additional compliance costs, either or both of which could have an adverse impact on our operations.
None of our executive officers or other senior management personnel is bound by a written employment agreement and any of them may therefore terminate employment with us at any time with no advance notice.
None of our executive officers or other senior management personnel is bound by a written employment agreement and any of them may therefore terminate employment with us at any time with limited or no advance notice.
As new smart devices and operating systems are released, we may encounter difficulties supporting these devices and services, and we may need to devote significant resources to the creation, support, and maintenance of our mobile applications.
As new smart devices and operating systems are released, we may encounter difficulties supporting these devices and services. We also need to devote significant resources to the creation, support, and maintenance of our mobile applications.
Any future growth, particularly further international expansion and the transition to a multi-product company, could add complexity to our organization, require effective communication and coordination throughout our organization, and result in additional costs.
Any future growth, particularly further international expansion and our transition to a multi-product company, could add complexity to our organization, require effective communication and coordination throughout our organization, and result in additional costs.
The amount of data we store for our customers and users increases as our business grows. We host services, which includes hosting customer data, both in co-located data centers and in multiple public cloud services.
The amount of data we store for our customers and users increases as our business grows. We host services, which includes hosting customer data, in co-located data centers and in multiple public cloud services.
We also contract with third parties to provide emergency services calls in the U.S., Canada, the U.K., and other jurisdictions in which we provide access to emergency services dialing, including assistance in routing emergency calls and terminating emergency services calls.
We contract with third parties to provide emergency services calls in the U.S., Canada, the U.K., and other jurisdictions in which we provide access to emergency services dialing, including assistance in routing emergency calls and terminating emergency services calls.
Third parties may also attempt to induce employees, consultants, or customers into disclosing information regarding our and our customers’ intellectual property, personal data and other confidential business information.
Third parties may also attempt to induce employees, consultants, or customers into disclosing information regarding our and our customers’ intellectual property, personal data and other confidential information.
Many of these locations are near known earthquake fault zones, which are vulnerable to damage from earthquakes and tsunamis, or are in areas subject to hurricanes.
Many of these locations are near known earthquake fault zones, which are vulnerable to damage from earthquakes and tsunamis, or are in areas subject to hurricanes and typhoons.
If our internal control over financial reporting is not effective, it may adversely affect investor confidence in our company. Pursuant to Section 404 of the Sarbanes-Oxley Act, our independent registered public accounting firm, KPMG LLP, is required to and has issued an attestation report as of December 31, 2023.
If our internal control over financial reporting is not effective, it may adversely affect investor confidence in our company. Pursuant to Section 404 of the Sarbanes-Oxley Act, our independent registered public accounting firm, KPMG LLP, is required to and has issued an attestation report as of December 31, 2024.
In addition, the techniques used to obtain unauthorized access, to perform hacking, phishing and social engineering, or to sabotage systems change and evolve frequently and may not be recognized until launched against a target, may be new and previously unknown or little-known, or may not be detected or understood until well after such actions are conducted.
The techniques used to obtain unauthorized access, to perform hacking, phishing and social engineering, or to sabotage systems change and evolve frequently and may not be recognized until launched against a target, may be new and previously unknown or little-known, or may not be detected or understood until well after such actions are conducted.
Furthermore, as we expand our operations internationally, we may need to make significant expenditures and investments in our customer service and support to adequately address the complex needs of international customers, such as support in additional foreign languages. We also use third parties to deliver onsite professional services to our customers in deploying our solutions.
Furthermore, as we continue to expand our operations internationally, we may need to make further significant expenditures and investments in our customer service and support to adequately address the complex needs of international customers, such as support in additional foreign languages. We also use third parties to deliver onsite professional services to our customers in deploying our solutions.
Upon a default or other failure to perform, or a termination of obligations, by a counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our Class A Common Stock. We can provide no assurances as to the financial stability or viability of the counterparties.
Upon a default or other failure to perform, or a termination of obligations, by an option counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our Class A Common Stock. We can provide no assurances as to the financial stability or viability of the option counterparties.
As a result of these factors, these sales opportunities may require us to devote greater research and development resources and sales support to individual customers, and invest in hiring and retaining highly skilled personnel, resulting in increased costs and could likely lengthen our typical sales cycle, which could strain our sales and support resources.
As a result of these factors, these medium and large sales opportunities may require us to devote greater research and development resources and sales support to individual customers, and invest in hiring and retaining highly skilled personnel, resulting in increased costs and could likely lengthen our typical sales cycle, which could strain our sales and support resources.
Any of these developments or changes in U.S. federal or state, or international tax laws or tax rulings could adversely affect our effective tax rate and our operating results. There can be no assurance that our effective tax rates, tax payments, tax credits, or incentives will not be adversely affected by these or other developments or changes in law.
Any further developments or changes in U.S. federal or state, or international tax laws or tax rulings could adversely affect our effective tax rate and our operating results. There can be no assurance that our effective tax rates, tax payments, tax credits, or incentives will not be adversely affected by these or other developments or changes in law.
Thus, our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro, British Pound Sterling, Bulgarian Lev, Chinese Yuan, Indian Rupee, and Canadian Dollar, and may be adversely affected in the future due to changes in foreign currency exchange rates.
Thus, our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro, British Pound Sterling, Bulgarian Lev, Chinese Yuan, Indian Rupee, Canadian Dollar, Australian Dollar, and Singapore Dollar, and may be adversely affected in the future due to changes in foreign currency exchange rates.
Interruptions in our services caused by undetected errors, failures, or bugs in our services could harm our reputation, result in significant costs to us, and impair our ability to sell our subscriptions. Our services may have errors or defects that customers identify after they begin using them that could result in unanticipated interruptions of service.
Interruptions in our services caused by undetected errors, failures, or bugs in our services and/or human error could harm our reputation, result in significant costs to us, and impair our ability to sell our subscriptions. Our services may have errors or defects that customers identify after they begin using them that could result in unanticipated interruptions of service.
In addition, our competitors may independently develop technologies that are similar or superior to our technology, duplicate our technology in a manner that does not infringe our intellectual property rights or design around any of our patents. Furthermore, detecting and policing unauthorized use of our intellectual property is difficult and resource-intensive.
Also, our competitors may independently develop technologies that are similar or superior to our technology, duplicate our technology in a manner that does not infringe our intellectual property rights or design around any of our patents. Furthermore, detecting and policing unauthorized use of our intellectual property is difficult and resource-intensive.
We believe that continuing to strengthen our current brand will be critical to achieving widespread acceptance of our subscriptions and will require continued focus on active marketing efforts. The demand for and cost of online and traditional advertising have been increasing and may continue to increase.
We believe that continuing to strengthen our current brand will be critical to achieving widespread acceptance of our subscriptions and will require continued focus on active marketing efforts. The demand for and cost of online and traditional advertising has been increasing and may continue to increase.
If such owners prevail in such claim, we could be required to make the source code for our 44 Table of Contents proprietary software (which contains our valuable trade secrets) generally available to third parties, including competitors, at no cost, to seek licenses from third parties in order to continue offering our subscriptions, to re-engineer our technology, or to discontinue offering our subscriptions in the event re-engineering cannot be accomplished on a timely basis or at all, any of which could cause us to discontinue our subscriptions, harm our reputation, result in customer losses or claims, increase our costs or otherwise materially and adversely affect our business and results of operations.
If such owners prevail in such claim, we could be required to make the source code for our proprietary software (which contains our valuable trade secrets) generally available to third parties, including competitors, at no cost, to seek licenses from third parties in order to continue offering our subscriptions, to re-engineer our technology, or to discontinue offering our subscriptions in the event re-engineering cannot be accomplished on a timely basis or at all, any of which could cause us to discontinue offering our products, harm our reputation, result in customer losses or claims, increase our costs or otherwise materially and adversely affect our business and results of operations.
Shmunis owes fiduciary duties to our stockholders and must act in good faith in a manner he reasonably believes to be in the best interests of our stockholders. As a stockholder, even a controlling stockholder, Mr. Shmunis is generally entitled to vote his shares in his own interests, which may not always be in the interests of our stockholders generally.
Shmunis owes fiduciary duties to our stockholders and must act in good faith in a manner he reasonably believes to be in the best interests of our stockholders. As a stockholder, Mr. Shmunis is generally entitled to vote his shares in his own interests, which may not always be in the interests of our stockholders generally.
In addition, the United States recently introduced a 1% excise tax on stock buybacks, which could increase the cost to us of implementing our share repurchase programs or repurchasing our Series A Preferred Stock, and a 15% alternative minimum tax on adjusted financial statement income.
In addition, the United States introduced a 1% excise tax on stock buybacks, which could increase the cost to us of implementing our share repurchase programs or repurchasing our Series A Convertible Preferred Stock, and a 15% alternative minimum tax on adjusted financial statement income.
If our assumptions change or if actual circumstances differ from those in our assumptions, our results of operations could be adversely affected, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our Class A common stock.
If our assumptions change or if actual circumstances differ from those in our assumptions, our results of operations could be adversely affected, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our Class A common stock. ITEM 1B.
Our corporate headquarters and many of our data centers, co-location and research and development facilities, and third-party customer service call centers are located in the U.S. (including in the state of California), Spain, Georgia, Bulgaria, and several countries in Asia, including China, the Philippines, India, and Australia.
Our corporate headquarters and other offices and many of our data centers, co-location and research and development facilities, and third-party customer service call centers are located in the U.S. (including in the state of California), Spain, Georgia, Bulgaria, and several countries in Asia, including China, the Philippines, India, and Australia.
We also cannot be certain that our insurance coverage will be adequate for data handling or data security liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that an insurer will not deny coverage as to any future claim.
We also cannot be certain that our insurance coverage will be sufficient for data handling or data security liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that an insurer will not deny coverage as to any future claim.
As a result, for as long as the Class B voting structure remains in place, a small number of stockholders who acquired their shares prior to the completion of our initial public offering will continue to have significant influence over the management and affairs of our company and over the outcome of many matters submitted to our stockholders for approval, including the election of directors and significant corporate transactions, such as a merger, consolidation or sale of substantially all of our assets.
As a result, for as long as the dual class structure remains in place, a small number of stockholders who acquired their shares prior to the completion of our initial public offering will continue to have significant influence over the management and affairs of our company and over the outcome of many matters submitted to our stockholders for approval, including the election of directors and significant corporate transactions, such as a merger, consolidation or sale of substantially all of our assets.
Although we test our services to detect and correct errors and defects before their general release, we have, from time to time, experienced significant interruptions in our services as a result of such errors or defects and may experience future interruptions of service if we fail to detect and correct these errors and defects.
Although we test our services to detect and correct errors and defects before their general release, we have, from time to time, experienced significant interruptions in our services as a result of such technical and/or human errors or defects and may experience future interruptions of service if we fail to detect and correct these errors and defects.
As a result of maintaining larger volumes of data and user files and/or as a result of our continued movement up market, or movement into new customer segments and acquisition of larger and more recognized customers, we may become more of a target for hackers, nation states and other malicious actors.
As a result of maintaining larger volumes of data and user files and/or as a result of our continued movement up market, or movement into new customer markets and acquisition of larger and more recognized customers, we may become more of a target for hackers, nation states, and other malicious actors.
To that end, we have registered numerous trademarks and service marks and have applied for registration of additional trademarks and service marks and have acquired a large number of domain names in and outside the U.S. to establish and protect our brand names as part of our intellectual property strategy.
We have registered numerous trademarks and service marks and have applied for registration of additional trademarks and service marks and have acquired a large number of domain names in and outside the U.S. to establish and protect our brand names as part of our intellectual property strategy.
If our fulfillment agents are unable to deliver phones of acceptable quality, or if there is a reduction or interruption in their ability to deliver the phones in a timely manner including due to the end of life of any particular unit, our ability to bring services to market, the reliability of our services and our relationships with customers or our overall reputation in the marketplace could suffer, which could cause us to lose revenue.
If our fulfillment agents are unable to deliver phones of acceptable quality, or if there is a reduction or interruption in their ability to deliver the phones in a timely manner including due to the end of life of any particular unit, our ability to bring services to market, the reliability of our services and our relationships with customers or our overall reputation in the 30 Table of Contents marketplace could suffer, which could cause us to lose revenue.
In the past, we have settled infringement litigation brought against us; however, we cannot assure you that we will be able to settle any future claims or, if we are able to settle any such claims, that the settlement will be on terms favorable to us.
In the past, we have settled infringement and misappropriation litigation brought against us; however, we cannot assure you that we will be able to settle any future claims or, if we are able to settle any such claims, that the settlement will be on terms favorable to us.
In addition, the restrictive covenants in the Credit Agreement, Senior Notes Indenture and any additional credit facilities or debt agreements we may secure in the future may restrict us from being able to conduct our operations in a manner appropriate for 46 Table of Contents our business and may restrict our growth, which could have an adverse effect on our business, financial condition, or results of operations.
In addition, the restrictive covenants in the Credit Agreement, Senior Notes Indenture and any additional credit facilities or debt agreements we may secure in the future may restrict us from being able to conduct our operations in a manner appropriate for our business and may restrict our growth, which could have an adverse effect on our business, financial condition, or results of operations.
Also, cyber-attacks, including on the supply chain (including our software supply chain), continue to increase in frequency and magnitude, and we cannot provide assurances that our preventative efforts, or those of our suppliers, will be successful.
Also, cyber-attacks, including on the supply chain (including our software supply chain), continue to increase in frequency and magnitude, and we cannot provide assurances that our preventative efforts, or those of our suppliers, have been or will be successful.
While management concluded internal control over financial reporting was at a reasonable assurance level as of December 31, 2023, there can be no assurance that material weaknesses will not be identified in the future.
While management concluded internal control over financial reporting was at a reasonable assurance level as of December 31, 2024, there can be no assurance that material weaknesses will not be identified in the future.
As part of our current disaster recovery arrangements, our North American and European infrastructure and our North American and European customers’ data is currently replicated in near real-time at data center facilities in the U.S. and Europe, respectively.
As part of our current disaster recovery arrangements, our North American, European, and Asia Pacific infrastructure and our North American, European, and Asia Pacific customers’ data is currently replicated in near real-time at data center facilities in the U.S., Europe, and Asia Pacific, respectively.
Currently, 22 Table of Contents this access is provided by companies that have significant and increasing market power in the broadband and Internet access marketplace, including incumbent phone companies, cable companies, and wireless companies. Some of these providers offer solutions and subscriptions that directly compete with our own offerings, which can potentially give them a competitive advantage.
Currently, this access is provided by companies that have significant and increasing market power in the broadband and Internet access marketplace, including incumbent phone companies, cable companies, and wireless companies. Some of these providers offer solutions and subscriptions that directly compete with our own offerings, which can potentially give them a competitive advantage.
For example, we typically enter into confidentiality agreements with our employees, consultants, third-party contractors, customers, and vendors in an effort to control access to, use of, and distribution of our technology, software, documentation, and other information.
We typically enter into confidentiality agreements with our employees, consultants, third-party contractors, customers, and vendors in an effort to control access to, use of, and distribution of our technology, software, documentation, and other information.
For example, we expect the volume of simultaneous calls to increase significantly as our customer base grows. Our network hardware and software may not be able to accommodate this additional simultaneous call volume.
For example, we expect the volume of simultaneous calls and video conferences to increase significantly as our customer base grows. Our network hardware and software may not be able to accommodate this additional simultaneous call volume.
Governmental regulators and contractual restrictions with telecom carriers may also restrict the ability of our channel partners and resellers to resell our products and services in some countries. We generally do not have long-term contracts with these channel partners, and the loss of or reduction in sales through these third parties could materially reduce our revenues.
Governmental regulations and contractual restrictions with telecom carriers may also restrict the ability of our channel partners to resell our products and services in some countries. We generally do not have long-term contracts with these channel partners, and the loss of or reduction in sales through these third parties could materially reduce our revenues.
Furthermore, many medium-sized and larger businesses that we target for sales may already purchase business communications solutions from our larger competitors or, due to economic conditions or otherwise, reduce their technology spending or reduce the number of new employees for whom they purchase our solutions or reduce the number of existing employees using our solution (i.e., down-sell).
Furthermore, many medium-sized and larger businesses that we sell and market to may already purchase business communications solutions from our larger competitors or, due to economic conditions or otherwise, reduce their technology spending or reduce the number of new employees for whom they purchase our solutions or reduce the number of existing employees using our solution (i.e., down-sell).
We have significant operations directly or through third parties in many countries including the U.S., Canada, the U.K., China, the Philippines, Germany, Georgia, Bulgaria, Spain, Australia, India, and France.
We have significant operations directly or through third parties in many countries outside of the U.S. and Canada, including, the U.K., China, the Philippines, Germany, Georgia, Bulgaria, Spain, Australia, India, and France.
The occurrence of errors or poor call quality in our subscriptions, whether caused by our systems or a third-party network or service provider, may result in the loss of our existing customers, delay or loss of market acceptance of our subscriptions, termination of our relationships and agreements with our channel partners, strategic partners, or global service providers, or liability for failure to meet service level agreements which may require us to issue service credits or pay damages, and may seriously harm our business and results of operations.
The occurrence of outages, errors or poor call quality in our subscriptions, whether caused by our systems or a third-party network or service provider, may result in the loss of our existing customers, delay or loss of market acceptance of our subscriptions, termination of our relationships and agreements with our channel partners, strategic partners, or GSPs, or liability for failure to meet service level agreements which may require us to issue service credits or pay damages, and may seriously harm our business and results of operations.
If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances could be significantly limited, and our business, results of operations, financial condition and prospects could be materially and adversely affected.
If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to 34 Table of Contents continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances could be significantly limited, and our business, results of operations, financial condition and prospects could be materially and adversely affected.
We rely on encryption and authentication technology to ensure secure transmission of and access to confidential information, including customer credit card numbers, debit card numbers, direct debit information, customer communications, and files uploaded by our customers.
We rely on encryption and authentication technology to provide secure transmission of and access to confidential information, including customer credit card numbers, debit card numbers, direct debit information, customer communications, and files uploaded by our customers.
A breach of our security systems could also expose us to increased costs, including remediation costs, disruption of operations, or increased cybersecurity protection costs, that may have a material adverse effect on our business.
A security breach or incident could also expose us to increased costs, including remediation costs, disruption of operations, or increased cybersecurity protection costs, that may have a material adverse effect on our business.
Therefore, the application of existing or future laws relating to indirect taxes to our business, or the audit of our business and operations with respect to such taxes or challenges of our positions by taxing authorities, all could result in increased tax liabilities for us or our customers that could materially and adversely affect our results of operations and our relationships with our customers.
Therefore, the application of existing or future laws relating to indirect taxes to our business, or the audit of our business and operations with respect to such taxes or challenges of our positions by taxing authorities, could result in increased tax liabilities for us or our customers, which could materially and adversely affect our results of operations and our relationships with our customers.
The unlicensed use of our brand, including domain names, by third parties could harm our reputation, cause confusion among our customers and impair our ability to market our solutions and subscriptions.
The unlicensed use of our brand, including through the registration of domain names, by third parties could harm our reputation, cause confusion among our customers and impair our ability to market our solutions and subscriptions.
As a result, the market price and trading volume for our Class A Common Stock has been and may continue to be highly volatile, and investors in our Class A Common Stock may experience a decrease in the value of their shares, including 48 Table of Contents decreases unrelated to our operating performance or prospects.
As a result, the market price and trading volume for our Class A Common Stock has been and may continue to be highly volatile, and investors in our Class A Common Stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects.
Local number portability is considered an important feature by many potential customers, and if we fail to reduce any related delays, we may experience increased difficulty in acquiring new customers. Moreover, the Federal Communications Commission (the “FCC”) requires Internet voice communications providers to comply with specified number porting timeframes when customers leave our subscription for the services of another provider.
Local number portability is considered an important feature by many potential customers, and if we fail to reduce any related delays, we may experience increased difficulty in acquiring new customers. Moreover, the FCC requires Internet voice communications providers to comply with specified number porting timeframes when customers leave our subscription for the services of another provider.
We cannot predict the effect of technological changes or the introduction of new, disruptive technologies on our business, and the market for cloud-based business communications may develop more slowly than we anticipate, or develop in a manner different than we expect, and our solutions could fail to achieve market acceptance.
We cannot predict the effect of technological changes or the introduction of new, disruptive technologies on our business, and the market for cloud-based business communications may develop in a manner different than we expect, and our solutions could fail to achieve market acceptance.
For example, to address customer hardships, we may work with customers to provide greater flexibility to manage challenges they are facing, but we cannot be assured that they will not reduce their number of users or terminate their subscriptions altogether.
For example, to address customer hardships, we may work with customers to provide greater flexibility to manage challenges they are facing in their own businesses, but we cannot be assured that they will not reduce their number of users or terminate their subscriptions altogether.
Several international jurisdictions have imposed similar number portability requirements on subscription providers like us. If we or our third-party global service providers are unable to process number portability requests within the requisite timeframes, we could be subject to fines and penalties.
Several international jurisdictions have imposed similar number portability requirements on subscription providers like us. If we or our third-party GSPs are unable to process number portability requests within the requisite timeframes, we could be subject to fines and penalties.
In addition, the cost to comply with such laws or regulations could be significant and would increase our operating expenses, which could harm our business, reputation, financial condition and results of operations. 29 Table of Contents Relatedly, large language models, or LLMs, can generate written content which contains bias, factual errors, misrepresentations, offensive language, or inappropriate statements.
In addition, the cost to comply with such laws or regulations could be significant and would increase our operating expenses, which could harm our business, reputation, financial condition and results of operations. Relatedly, large language models, or LLMs, can generate written content that contains bias, factual errors, misrepresentations, offensive language, or inappropriate statements.
Continued growth could also strain our ability to maintain reliable service levels for our customers, resellers, partners, and global service providers, develop and improve our operational, financial and management controls, enhance our billing and reporting systems and procedures, and recruit, train and retain highly skilled personnel.
Continued growth could also strain our ability to maintain reliable service levels for our customers, resellers, partners, and GSPs, develop and improve our operational, financial and management controls, enhance our billing and reporting systems and procedures, and recruit, train and retain highly skilled personnel.
In these market segments, the decision to purchase our subscriptions generally requires the approval of more technical personnel and management levels within a potential customer’s organization, and therefore, these types of sales require us to invest more time educating these potential customers about the benefits of our subscriptions.
In these markets, the decision to purchase our subscriptions generally requires the approval of more technical personnel and management levels within a potential customer’s organization, and therefore, these types of sales require us to invest more time educating these potential customers about the benefits of our subscriptions.
We may require additional capital or need to restructure our existing debt to pursue our business objectives and to respond to business opportunities, challenges or unforeseen circumstances. If capital is not available to us, our business, results of operations, and financial condition may be adversely affected.
Risks Related to Our Indebtedness We may require additional capital or need to restructure our existing debt to pursue our business objectives and to respond to business opportunities, challenges or unforeseen circumstances. If capital is not available to us, our business, results of operations, and financial condition may be adversely affected.
As a result, there can be no guarantee around the timing or volume of our share repurchases. The programs could affect the price of our Class A Common Stock, increase volatility and diminish our cash reserves. These programs may be suspended or terminated at any time and, even if fully implemented, may not enhance long-term stockholder value.
As a result, there can be no guarantee around the timing or volume of our share repurchases. This program could affect the price of our Class A Common Stock, increase volatility and diminish our cash reserves. This program may be suspended or terminated at any time and, even if fully implemented, may not enhance long-term stockholder value.
Such tax, fees and surcharge laws and rates vary greatly by jurisdiction, and the application of such taxes to e-commerce businesses, such as ours, is a complex and evolving area. There is uncertainty as to what constitutes sufficient “in state presence” for a state to levy taxes, fees, and surcharges for sales made over the Internet, and after the U.S.
Such tax, fees and surcharge laws and rates vary greatly by jurisdiction, and the application of such taxes to e-commerce businesses, such as ours, is complex and continuing to develop. There is uncertainty as to what constitutes sufficient “in state presence” for a state to levy taxes, fees, and surcharges for sales made over the Internet, and after the U.S.
We plan to fund repurchases under these programs from our future cash flow generation, as well as from additional potential sources of cash including capped calls associated with the Convertible Notes. Under the programs, share repurchases may be made at our discretion from time to time in open market transactions, privately negotiated transactions, or other means.
We plan to fund repurchases under this program from our future cash flow generation, as well as from additional potential sources of cash including capped calls associated with the Convertible Notes. Under this program, share repurchases may be made at our discretion from time to time in open market transactions, privately negotiated transactions, or other means.
Our turnover rate could increase in the future if customers are not satisfied with our services, including third-party services and products that we integrate or sell as separate items to our customers, the value proposition of our services, the customer support we provide, or our ability to otherwise meet their needs and expectations.
Our turnover rate could increase in the future if customers are not satisfied with our services, including third-party services and products that we integrate or sell as separate items to our customers, the value proposition of our services, the pricing of our services relative to similar services of our competitors, the customer support we provide, or our ability to otherwise meet their needs and expectations.
This 49 Table of Contents concentrated control will limit your ability to influence corporate matters for the foreseeable future, and, as a result, the market price of our Class A Common Stock could be adversely affected.
This concentrated control will limit your ability to influence corporate matters for the foreseeable future, and, as a result, the market price of our Class A Common Stock could be adversely affected.
Accordingly, we may need to increase our investment in, and devote greater resources to, advertising, marketing, and other efforts to create and maintain brand loyalty among users. Brand promotion activities may not yield increased revenues, and even if they do, any increased revenues may not offset the expenses incurred in building our brand.
Accordingly, we may need to increase our investment in, and devote greater resources to, advertising, marketing, and other efforts to create and maintain brand loyalty among users. Brand promotion activities may not yield increased revenues, and even if they do, any increased revenues may not offset the expenses 18 Table of Contents incurred in building our brand.
We continue to experience growth in our business. This growth has placed and may continue to place significant demands on our management, organizational structure, and our operational and financial infrastructure, particularly as we try to become more profitable and financially and operationally efficient.
This growth has placed and may continue to place significant demands on our management, organizational structure, and our operational and financial infrastructure, particularly as we try to become more profitable and financially and operationally efficient.
To deliver our subscriptions, we rely on third parties for our network connectivity and for certain of the features in our subscriptions. We currently use the infrastructure of third-party network service providers, including Lumen Technologies, Inc. and Bandwidth.com, Inc. in North America and several others internationally, to deliver our subscriptions over their networks.
To deliver our subscriptions, we rely on third parties for our network connectivity and for certain of the features in our subscriptions. 29 Table of Contents We currently use the infrastructure of third-party network service providers, including Inteliquent, Inc., Lumen Technologies, Inc. and Bandwidth.com, Inc. in North America and several others internationally, to deliver our subscriptions over their networks.
Security weaknesses or vulnerabilities in our, our vendors’, or our customers’ infrastructure, networks, or business practices that are successfully targeted could lead to increased costs, liability claims, including contractual liability claims relating to security obligations in agreements with our partners and our customers, fines, claims, investigations and other proceedings, reduced revenue, or harm to our reputation or competitive position.
Security weaknesses or vulnerabilities in our, our vendors’, or our customers’ infrastructure, networks, or business practices could lead to increased costs, liability claims, including contractual liability claims relating to security obligations in agreements with our partners and our customers, fines, claims, investigations and other proceedings, reduced revenue, or harm to our reputation or competitive position.
Use of AI technology by our workforce, even when used consistent with our guidelines, may result in allegations or claims against us related to violation of third-party intellectual property rights, unauthorized access to or use of proprietary information, and failure to comply with open source software requirements.
Use of AI technology by our workforce, even if consistent with our guidelines, may result in allegations or claims against us related to violation of third-party intellectual property or other rights, unauthorized access to or use of proprietary information, and failure to comply with open source software requirements.
Despite many recent layoffs in the technology industry and at the company, we believe that there is, and will continue to be, intense competition for highly skilled technical and other personnel with experience in our industry in the San Francisco Bay Area, where our headquarters is located, in Denver, Colorado, where a significant portion of our U.S. sales and customer support office and our network operations center is located, and in other locations where we maintain offices, and in some or all of the other locations where we have employees.
Despite many recent layoffs in the technology industry and at the company, we believe that there is, and will continue to be, intense competition for highly skilled technical and other personnel with experience in our industry in the San Francisco Bay Area, where our headquarters is located, in Denver, Colorado, where we have an office where a significant portion of our U.S. sales and customer support office and our network operations center is located, and in other locations where we have employees.
If such a failure to comply with relevant standards occurs, we may also face legal liability if we are found to not comply with applicable laws that incorporate, by 30 Table of Contents reference or by adoption of substantially similar provisions, merchant or service provider standards, including PCI DSS.
If such a failure to comply with relevant standards occurs, we may also face legal liability if we are found to not comply with applicable laws that incorporate, by reference or by adoption of substantially similar provisions, merchant or service provider standards, including the PCI DSS.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeDepending on the nature and severity of an incident, this process provides for escalating notification to our CEO and the board of directors (including our lead independent director and the audit and committee chair). 54 Table of Contents Our approach to cybersecurity risk management includes the following key elements: • Multi-Layered Defense and Continuous Monitoring - We work to protect our computing environments and products from cybersecurity threats through multi-layered defenses and apply lessons learned from our defense and monitoring efforts to help prevent future attacks.
Biggest changeOur approach to cybersecurity risk management includes the following key elements: • Multi-Layered Defense and Continuous Monitoring - We work to protect our computing environments and products from cybersecurity threats through multi-layered defenses and apply lessons learned from our defense and monitoring efforts to help prevent future attacks. We utilize data analytics to detect anomalies and search for cyber threats.
These relationships enable the rapid sharing of threat and vulnerability mitigation information. • Third Party Risk Assessments - We conduct information security assessments before sharing or allowing the hosting of sensitive data in computing environments managed by third parties, and our standard terms and conditions contain contractual provisions requiring certain security protections. • Training and Awareness - We provide on at least an annual basis awareness training to our employees to help identify, avoid and mitigate cybersecurity threats.
These relationships enable the rapid sharing of threat and vulnerability mitigation information. • Third Party Risk Assessments - We conduct information security assessments before sharing or allowing the hosting of sensitive data in computing environments managed by third parties, and our standard terms and conditions contain contractual provisions requiring certain security protections. 43 Table of Contents • Training and Awareness - We provide on at least an annual basis awareness training to our employees to help identify, avoid and mitigate cybersecurity threats.
We utilize data analytics to detect anomalies and search for cyber threats. Our Cybersecurity Operations Center provides comprehensive cyber threat detection and response capabilities and maintains a 24 hour, seven day per week monitoring system which complements the technology, processes, and threat detection techniques we use to monitor, manage, and mitigate cybersecurity threats.
Our Cybersecurity Operations Center provides comprehensive cyber threat detection and response capabilities and maintains a 24 hour, seven day per week monitoring system which complements the technology, processes, and threat detection techniques we use to monitor, manage, and mitigate cybersecurity threats.
The CISO manages a team of cybersecurity professionals with broad experience and expertise, including in cybersecurity threat assessments and detection, mitigation technologies, cybersecurity training, incident response, cyber forensics, insider threats and regulatory compliance.
The CISO is responsible for management of cybersecurity risk and the protection and defense of our networks, systems and data. The CISO manages a team of cybersecurity professionals with broad experience and expertise, including in cybersecurity threat assessments and detection, mitigation technologies, cybersecurity training, incident response, cyber forensics, insider threats and regulatory compliance.
Removed
The CISO reports to the Chief Information Officer (“CIO”) and is responsible for management of cybersecurity risk and the protection and defense of our networks, systems and data.
Added
Depending on the nature and severity of an incident, this process provides for escalating notification to our CEO and the board of directors (including our lead independent director and the audit and committee chair).

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our corporate headquarters is located in Belmont, California, and consists of approximately 110,000 square feet of office space under leases that expire in July 2026.
Biggest changeITEM 2. PROPERTIES Our corporate headquarters is located in Belmont, California, and consists of approximately 110,000 square feet of office space under leases that expire in July 2026. We also lease office space in Denver, Colorado; London, England; Paris, France; Valencia, Spain; Sofia, Bulgaria; Bangalore, India; Xiamen and Hangzhou, China; and other small offices worldwide.
In addition, we lease space from third-party datacenter hosting facilities under co-location agreements that support our cloud infrastructure, the most significant locations being Vienna and Ashburn, Virginia; San Jose and Santa Clara, California; Chicago, Illinois; Amsterdam, the Netherlands; Zurich, Switzerland; Frankfurt, Germany; Bangalore and Mumbai, India; Johannesburg, South Africa; and other small locations worldwide.
In addition, we lease space from third-party datacenter hosting facilities under co-location agreements that support our cloud infrastructure, the most significant locations being Vienna and Ashburn, Virginia; San Jose and Santa Clara, California; Chicago, Illinois; Amsterdam, the Netherlands; Zurich, Switzerland; Frankfurt, Germany; Bangalore and Mumbai, India; and other small locations worldwide.
Removed
We also lease office space in Denver, Colorado; Charlotte, North Carolina; Dallas, Texas; London, England; Paris, France; Alicante, Spain; Sofia, Bulgaria; Tel Aviv, Israel; Xiamen and Hangzhou, China; and other small offices worldwide.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeLEGAL PROCEEDINGS 55 Table of Contents Information with respect to this item may be found in Note 10 – Commitments and Contingencies in the accompanying notes to the consolidated financial statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K, under “Legal Matters” which is incorporated herein by reference.
Biggest changeITEM 3. LEGAL PROCEEDINGS Information with respect to this item may be found in Note 10 – Commitments and Contingencies in the accompanying notes to the consolidated financial statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K, under “Legal Matters” which is incorporated herein by reference. ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 56 Table of Contents PART II
MINE SAFETY DISCLOSURES Not applicable. 44 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The following table summarizes the share repurchase activity of our Class A Common Stock for the three months ended December 31, 2023 (in thousands, except per-share amounts): Period Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (1) Approximate dollar value of shares that may yet be purchased under the program (1) Balance as of September 30, 2023 50,591 October 1, 2023 to October 31, 2023 — $ — — 50,591 Authorization of November 2023 share repurchase program (1) — $ — — 100,000 November 1, 2023 to November 30, 2023 743,170 $ 28.83 743,170 129,200 December 1, 2023 to December 31, 2023 1,353,732 $ 32.73 1,353,732 85,036 Balance as of December 31, 2023 2,096,902 2,096,902 85,036 (1) On November 1, 2023, our board of directors authorized a share repurchase program under which we may repurchase up to $100.0 million of the Company’s outstanding shares of Class A Common Stock, subject to certain limitations.
Biggest changeIssuer Purchases of Equity Securities The following table summarizes the share repurchase activity of our Class A Common Stock for the three months ended December 31, 2024 (in thousands, except per-share amounts): Period Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (1) Approximate dollar value of shares that may yet be purchased under the program (1) Balance as of September 30, 2024 $ 242,765 October 1, 2024 to October 31, 2024 1,055,744 $ 32.72 1,055,744 $ 208,303 November 1, 2024 to November 30, 2024 806,713 $ 36.88 806,713 $ 178,588 December 1, 2024 to December 31, 2024 264,780 $ 39.62 264,780 $ 168,113 Balance as of December 31, 2024 2,127,237 2,127,237 $ 168,113 (1) In May 2024, our board of directors authorized an incremental $250.0 million share repurchase program, subject to certain limitations.
Sales of Unregistered Equity Securities and Use of Proceeds We did not sell any equity securities which were not registered under the Securities Act during the fiscal year ended December 31, 2023 that were not otherwise disclosed in our Quarterly Reports on Form 10-Q or our Current Reports on Form 8-K.
Sales of Unregistered Equity Securities and Use of Proceeds We did not sell any equity securities which were not registered under the Securities Act during the fiscal year ended December 31, 2024 that were not otherwise disclosed in our Quarterly Reports on Form 10-Q or our Current Reports on Form 8-K.
The graph below matches RingCentral Inc.’s cumulative 5-year total shareholder return on common stock with the cumulative total returns of the Russell 1000 index and the NASDAQ Computer index. The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2018 to December 31, 2023.
The graph below matches RingCentral Inc.’s cumulative 5-year total shareholder return on common stock with the cumulative total returns of the Russell 1000 index and the NASDAQ Computer index. The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2019 to December 31, 2024.
The stock price performance on the following graph is not intended to forecast or be indicative of future stock price performance of our Class A Common Stock. The stock price performance included in this graph is not necessarily indicative of future stock price performance. 58 Table of Contents ITEM 6. [Reserved] 59 Table of Contents
The stock price performance on the following graph is not intended to forecast or be indicative of future stock price performance of our Class A Common Stock. The stock price performance included in this graph is not necessarily indicative of future stock price performance. 46 Table of Contents ITEM 6. [Reserved] 47 Table of Contents
Stockholders As of February 12, 2024, there were 15 stockholders of record of our Class A Common Stock and Class B Common Stock. Because most of our shares of Class A Common Stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial stockholders represented by these record holders.
Stockholders As of February 18, 2025, there were 14 stockholders of record of our Class A Common Stock and Class B Common Stock. Because most of our shares of Class A Common Stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial stockholders represented by these record holders.
Please refer to Note 11 – Stockholders’ Deficit and Convertible Preferred Stock in the accompanying notes to the consolidated financial statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information.
R efer to Note 11 – Stockholders’ Deficit and Convertible Preferred Stock and Note 18 – Subsequent Events in the accompanying notes to the consolidated financial 45 Table of Contents statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information.
On February 7, 2024, our board of directors increased their authorization by $150 million, also subject to certain limitations. The 57 Table of Contents authorization under these programs expires on December 31, 2024.
In February 2025, our board of directors authorized an incremental $100.0 million share repurchase, subject to certain limitations. The authorization under these programs do not expire.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe historical results presented below are not necessarily indicative of the results that may be expected for any future period (in thousands): Year ended December 31, 2023 2022 2021 Revenues Subscriptions $ 2,100,329 $ 1,887,756 $ 1,482,080 Other 102,100 100,574 112,674 Total revenues 2,202,429 1,988,330 1,594,754 Cost of revenues Subscriptions 557,050 531,098 345,948 Other 107,241 110,633 102,421 Total cost of revenues 664,291 641,731 448,369 Gross profit 1,538,138 1,346,599 1,146,385 Operating expenses Research and development 335,851 362,256 309,739 Sales and marketing 1,068,050 1,057,231 854,156 General and administrative 333,048 292,898 284,276 Asset write-down charges — 283,689 — Total operating expenses 1,736,949 1,996,074 1,448,171 Loss from operations (198,811) (649,475) (301,786) Other income (expense), net Interest expense (35,997) (4,807) (64,382) Other income (expense) 77,963 (219,771) (7,554) Other income (expense), net 41,966 (224,578) (71,936) Loss before income taxes (156,845) (874,053) (373,722) Provision for income taxes 8,395 5,113 2,528 Net loss $ (165,240) $ (879,166) $ (376,250) 64 Table of Contents Percentage of Total Revenues* Year ended December 31, 2023 2022 2021 Revenues Subscriptions 95 % 95 % 93 % Other 5 5 7 Total revenues 100 100 100 Cost of revenues Subscriptions 25 27 22 Other 5 6 6 Total cost of revenues 30 32 28 Gross profit 70 68 72 Operating expenses Research and development 15 18 19 Sales and marketing 48 53 54 General and administrative 15 15 18 Asset write-down charges — 14 — Total operating expenses 79 100 91 Loss from operations (9) (33) (19) Other income (expense), net Interest expense (2) 0 (4) Other income (expense) 4 (11) — Other income (expense), net 2 (11) (5) Loss before income taxes (7) (44) (23) Provision for income taxes — — — Net loss (8 %) (44 %) (24 %) * Percentages may not add up due to rounding.
Biggest changeThe historical results presented below are not necessarily indicative of the results that may be expected for any future period (in thousands): Year ended December 31, 2024 2023 2022 Revenues Subscriptions $ 2,297,192 $ 2,100,329 $ 1,887,756 Other 103,203 102,100 100,574 Total revenues 2,400,395 2,202,429 1,988,330 Cost of revenues Subscriptions 593,294 557,050 531,098 Other 112,213 107,241 110,633 Total cost of revenues 705,507 664,291 641,731 Gross profit 1,694,888 1,538,138 1,346,599 Operating expenses Research and development 329,323 335,851 362,256 Sales and marketing 1,096,448 1,068,050 1,057,231 General and administrative 266,447 333,048 292,898 Asset write-down charges — — 283,689 Total operating expenses 1,692,218 1,736,949 1,996,074 Income (loss) from operations 2,670 (198,811) (649,475) Other income (expense), net Interest expense (64,995) (35,997) (4,807) Other income (expense) 15,100 77,963 (219,771) Other income (expense), net (49,895) 41,966 (224,578) Loss before income taxes (47,225) (156,845) (874,053) Provision for income taxes 11,063 8,395 5,113 Net loss $ (58,288) $ (165,240) $ (879,166) 52 Table of Contents Percentage of Total Revenues* Year ended December 31, 2024 2023 2022 Revenues Subscriptions 96 % 95 % 95 % Other 4 5 5 Total revenues 100 100 100 Cost of revenues Subscriptions 25 25 27 Other 5 5 6 Total cost of revenues 29 30 32 Gross profit 71 70 68 Operating expenses Research and development 14 15 18 Sales and marketing 46 48 53 General and administrative 11 15 15 Asset write-down charges — — 14 Total operating expenses 70 79 100 Income (loss) from operations — (9) (33) Other income (expense), net Interest expense (3) (2) 0 Other income (expense) 1 4 (11) Other income (expense), net (2) 2 (11) Loss before income taxes (2) (7) (44) Provision for income taxes — — — Net loss (2 %) (8 %) (44 %) * Percentages may not add up due to rounding.
The timing and amount of any such financing requirements will depend on a number of factors, including the maturity dates of our existing debt. We may from time to time seek to refinance certain of our outstanding debt through issuances of new notes or convertible debt, term loans, exchange transactions or repurchases.
The timing and amount of any such financing requirements will depend on a number of factors, including the maturity dates of our existing debt. We may from time to time seek to refinance certain of our outstanding debt through issuances of new notes or convertible debt, term loans, exchange transactions or debt repurchases.
Deferred Revenue Deferred revenue primarily consists of the unearned portion of monthly or annual invoiced fees for our subscriptions, which we recognize as revenue in accordance with our revenue recognition policy. For customers with multi-year contracts, we generally invoice for only one monthly or annual subscription period in advance.
Deferred Revenue Deferred revenue primarily consists of the unearned portion of monthly or annual invoiced fees for our subscriptions, which we recognize as revenue in accordance with our revenue recognition policy. For customers with multi-year contracts, we generally invoice for monthly or only one annual subscription period in advance.
Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this report, particularly in the section entitled “Risk Factors” included under Part I, Item1A. This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this report, particularly in the section entitled “Risk Factors” included under Part I, Item1A. This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
We believe that our operations, existing liquidity sources as well as capital resources and ability to raise cash through additional financing will satisfy our future cash requirements and obligations for at least the next 12 months.
We believe that cash flows from our operations, existing liquidity sources as well as capital resources and ability to raise cash through additional financing will satisfy our future cash requirements and obligations for at least the next 12 months.
To date, we have not incurred any material costs as a result of such indemnification provisions and have not accrued any liabilities related to such obligations in the consolidated financial statements as of December 31, 2023.
To date, we have not incurred any material costs as a result of such indemnification provisions and have not accrued any liabilities related to such obligations in the consolidated financial statements as of December 31, 2024.
Sales and marketing expenses are the largest component of our operating expenses and consist primarily of personnel costs for employees and contractors directly associated with our sales and marketing activities including share-based compensation expenses, internet advertising fees, television, radio and billboard advertising, public relations, commissions paid to employees, resellers and other third parties, amortization of capitalized sales commissions, trade shows, credit card fees, marketing and promotional activities, amortization of acquired customer relationship intangibles, allocated costs of facilities and information technology, and the impact of the restructuring activities in 2023 and 2022.
Sales and marketing expenses are the largest component of our operating expenses and consist primarily of personnel costs for employees and contractors directly associated with our sales and marketing activities including share-based compensation expenses, internet advertising fees, television, radio and billboard advertising, public relations, commissions paid to employees, resellers and other third parties, amortization of capitalized sales commissions, trade shows, credit card fees, marketing and promotional activities, amortization of acquired customer relationship intangibles, and allocated costs of facilities and information technology.
Non-GAAP Adjusted, Unlevered Free Cash Flow To supplement our statements of cash flows presented on a GAAP basis, we use non-GAAP measures of cash flows to analyze cash flow generated from our operations.
Free Cash Flow To supplement our statements of cash flows presented on a GAAP basis, we use non-GAAP measures of cash flows to analyze cash flow generated from our operations.
Other income (expenses) consist primarily of the following items: • unrealized gains and losses from fair value adjustments on our long-term investments; • Gains and losses on extinguishment of debt relating to the partial repurchase of our convertible notes; • the realized impact on foreign exchange resulting from the settlement of our foreign currency assets and liabilities as well as unrealized impact on foreign exchange resulting from remeasurement of transactions and monetary assets and liabilities denominated in non-functional currencies; and • interest income from our investments. 63 Table of Contents Results of Operations The following tables set forth selected consolidated statements of operations data and such data as a percentage of total revenues.
Other income (expenses) consist primarily of the following: • unrealized gains and losses from fair value adjustments on our long-term investments; • gains and losses on extinguishment of debt relating to the partial repurchase of our convertible notes; • gains and losses arising from agreements with strategic partners; • the realized impact on foreign exchange resulting from the settlement of our foreign currency assets and liabilities as well as unrealized impact on foreign exchange resulting from remeasurement of transactions and monetary assets and liabilities denominated in non-functional currencies; and • interest income from our investments. 51 Table of Contents Results of Operations The following tables set forth selected consolidated statements of operations data and such data as a percentage of total revenues.
In many instances, we could reasonably use different accounting estimates, and in some instances changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, our 72 Table of Contents actual results could differ significantly from the estimates made by our management.
In many instances, we could reasonably use different accounting estimates, and in some instances changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, our actual results could differ significantly from the estimates made by our management.
Recent Accounting Pronouncements For a summary of recent accounting pronouncements and the anticipated effects on our consolidated financial statements, see Note 1 to the consolidated financial statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” in this Annual Report on Form 10-K, which is incorporated herein by reference. 73 Table of Contents
Recent Accounting Pronouncements For a summary of recent accounting pronouncements and the anticipated effects on our consolidated financial statements, see Note 1 to the consolidated financial statements included in Part II, Item 8, “ Consolidated Financial Statements and Supplementary Data ” in this Annual Report on Form 10-K, which is incorporated herein by reference. 60 Table of Contents
As of December 31, 2023, we had customers from a range of industries, including financial services, education, healthcare, legal services, real estate, retail, technology, insurance, construction, hospitality, and state and local government, among others. For the years ended December 31, 2023, 2022 and 2021, the vast majority of our total revenues were generated in the U.S. and Canada.
As of December 31, 2024, we had customers from a range of industries, including financial services, education, healthcare, legal services, real estate, retail, technology, insurance, construction, hospitality, and state and local government, among others. For the years ended December 31, 2024, 2023 and 2022, the vast majority of our total revenues were generated in North America.
Although we expect to continue to add new customers and increase the usage of our product for existing customers, we will monitor the impact of macroeconomic factors that could 65 Table of Contents have an impact on customer buying behavior and demand, including contract duration, timing of customer purchases, churn, upsell and down-sell, renewals, payment terms, and credit card declines, all of which could cause variability in our revenue.
Although we expect to continue to add new customers for our products, including new product sales, and increase the usage of our products for existing customers, we will monitor the macroeconomic factors that could impact customer buying behavior and demand, including contract duration, timing of customer purchases, churn, upsell and down-sell, renewals, payment terms, and credit card declines, all of which could cause variability in our revenue.
Discussion regarding our financial condition and results of operations for fiscal 2022 as compared to fiscal 2021 is included in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 23, 2023.
Discussion regarding our financial condition and results of operations for fiscal 2023 as compared to fiscal 2022 is included in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 22, 2024, as amended on April 24, 2024.
We primarily generate revenues from the sale of subscriptions to our offerings. Our subscription plans have monthly, annual, or multi-year contractual terms. We believe that this flexibility in contract duration is important to meet the different needs of our customers. For the years ended December 31, 2023 and 2022, subscriptions revenues accounted for 90% or more of our total revenues.
Our subscription plans have monthly, annual, or multi-year contractual terms. We believe that this flexibility in contract duration is important to meet the different needs of our customers. For the years ended December 31, 2024 and 2023, subscriptions revenues accounted for over 90% of our total revenues.
Our revenue growth has primarily been driven by our flagship RingCentral MVP, RingCentral contact center solutions, and recurring license and other fees. Our revenue is derived from sales through our direct and indirect sales channels, including resellers and distributors, strategic partners and global service providers.
Our revenue has primarily been driven by our flagship RingEX, RingCentral Contact Center, RingCX, and other fees. Our revenue is derived from sales through our direct and indirect sales channels, including resellers and distributors, strategic partners and global service providers.
Our Monthly Recurring Subscriptions equals the monthly value of all customer recurring charges at the end of a given month. For example, our Monthly Recurring Subscriptions at December 31, 2023 was $194.1 million. As such, our ARR at December 31, 2023 was $2.33 billion compared to $2.10 billion at December 31, 2022.
Our Monthly Recurring Subscriptions equals the monthly value of all customer recurring charges at the end of a given month. For example, our Monthly Recurring Subscriptions at December 31, 2024 was $207.4 million. As such, our ARR at December 31, 2024 was $2.49 billion compared to $2.33 billion at December 31, 2023.
Our Net Monthly Subscription Dollar Retention Rate would then equal 99.4%, or approximately 99%, or one plus the quotient of the Dollar Net Change divided by the Average Monthly Recurring Subscriptions. 61 Table of Contents Our key business metrics for the five quarterly periods ended December 31, 2023 were as follows (dollars in billions): December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 Net Monthly Subscription Dollar Retention Rate >99% >99% >99% >99% >99% Annualized Exit Monthly Recurring Subscriptions $ 2.33 $ 2.26 $ 2.22 $ 2.16 $ 2.10 Components of Results of Operations Revenues Our revenues for the years presented consisted of subscriptions and other revenues.
Our Net Monthly Subscription Dollar Retention Rate would then equal 99.4%, or approximately 99%, or one plus the quotient of the Dollar Net Change divided by the Average Monthly Recurring Subscriptions. 49 Table of Contents Our key business metrics for the five quarterly periods ended December 31, 2024 were as follows (dollars in billions, except percentages): December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Net Monthly Subscription Dollar Retention Rate >99% >99% >99% >99% >99% Annualized Exit Monthly Recurring Subscriptions $ 2.49 $ 2.48 $ 2.43 $ 2.37 $ 2.33 Components of Results of Operations Revenues Our revenues for the years presented generally consists of subscriptions and other revenues.
Other significant components of general and administrative expenses include professional service fees, allocated costs of facilities and information technology, cost of compliance with certain government-imposed taxes, the costs of legal matters, business acquisition costs, loss contingencies, and the impact of the restructuring activities in 2023 and 2022.
Other significant components of general and administrative expenses include professional service fees, allocated costs of facilities and information technology, cost of compliance with certain government-imposed taxes, the costs of legal matters, business acquisition costs, changes in the fair-value of contingent consideration and loss contingencies.
Key Business Metrics In addition to United States generally accepted accounting principles (“U.S. GAAP”) and financial measures such as total revenues, gross margin, and cash flows from operations, we regularly review a number of key business metrics to evaluate growth trends, measure our performance, and make strategic decisions.
GAAP”) and financial measures such as total revenues, gross margin, and cash flows from operations, we review a number of key business metrics to evaluate growth trends, measure our performance, and make strategic decisions.
We will continue to invest in processes, systems, and personnel to support our anticipated revenue growth while driving efficiencies. Asset write-down charges consist of write-offs related to our assets, including deferred and prepaid sales commission and acquired intangibles balances, whenever events or changes in circumstances have occurred that could indicate the carrying amount of such assets may not be recoverable.
Asset write-down charges consist of write-offs related to our assets, including deferred and prepaid sales commission and acquired intangibles balances, whenever events or changes in circumstances have occurred that could indicate the carrying amount of such assets may not be recoverable.
The higher cost of subscription revenues was primarily due to an increase in third-party costs of $29.5 million to support our solution offerings, infrastructure support costs of $13.1 million, and personnel and contractor-related costs of $5.7 million, partially offset by $23.3 million decrease in the amortization of our intangible assets.
The higher cost of subscription revenues was primarily due to a $32.9 million increase in third-party costs to support our solution offerings, a $14.3 million increase in infrastructure support costs, and a $5.5 million increase in personnel and contractor costs, partially offset by a $16.9 million decrease in the amortization of our intangible assets.
Net cash provided by operating activities was $399.7 million for the year ended December 31, 2023. The cash flow from operating activities was driven by timing of cash receipts from customers and global service providers, primarily offset by cash payments for personnel-related costs and to vendors and interest expense on our debt obligations.
The cash flow from operating activities was primarily driven by timing of cash receipts from customers and global service providers, offset by cash payments for personnel-related costs and payments to vendors along with interest payments on our debt obligations.
Net cash used in financing activities for the year ended December 31, 2023, increased by $259.8 million as compared to the year ended December 31, 2022.
Net cash used in financing activities for the year ended December 31, 2024, decreased by $6.9 million as compared to the year ended December 31, 2023.
Our future capital requirements will depend on many factors, including revenue growth and costs incurred to support customer growth, acquisitions and expansions, sales and marketing, research and development, increased general and administrative expenses to support the anticipated growth in our operations, and capital equipment required to support our headcount and in support of our co-location data center facilities, our interest payments for both our Term Loan and 2030 Senior Notes, the repurchase, repayment or otherwise settlement of a portion of our 2025 Convertible Notes and/or our 2026 Convertible Notes, as well as the impact of the global macroeconomic conditions.
Our future capital requirements will depend on many factors, including revenue growth and costs incurred to support customer growth, acquisitions and expansions, operating expenses, and capital equipment required to support our headcount and in support of our co-location data center facilities, our interest payments for both our Term Loan and 2030 Senior Notes, and the repayment of our 2025 Convertible Notes and/or our 2026 Convertible Notes.
We are actively implementing various measures to enhance operational efficiencies throughout the Company. These include disciplined spending, increased productivity, efficiency gains, and optimizing our go-to-market strategies. Macroeconomic Conditions and Other Factors We are subject to risks and exposures caused by the current macroeconomic environment.
These include stricter discipline in spending, increased productivity, efficiency gains, and optimizing our go-to-market strategies. Macroeconomic Conditions and Other Factors We are subject to risks and exposures caused by the current macroeconomic environment.
Refer to Note 6, Long-Term Debt , in the accompanying notes to the Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional information. We were in compliance with all debt covenants as of December 31, 2023.
Refer to Note 6, Long-Term Debt , in the accompanying notes to the consolidated financial statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information regarding our Credit Agreement, the 2030 Senior Notes and the Convertible Notes.
Net cash provided by operating activities for the year ended December 31, 2023, increased by $208.4 million as compared to the year ended December 31, 2022. This change reflects working capital impacts resulting from the timing of payments and collections as well as higher operating margin driven by cost efficiencies.
Net cash provided by operating activities for the year ended December 31, 2024, increased by $83.6 million as compared to the year ended December 31, 2023. This change reflects working capital impacts resulting from the timing of payments and collections as well as interest payments on our debt obligations.
Cost of subscriptions revenues increased by $26.0 million, or 5%, during fiscal year 2023 as compared to fiscal year 2022.
Cost of subscriptions revenues increased by $36.2 million, or 7%, during fiscal year 2024 as compared to fiscal year 2023.
Net Cash Used In Investing Activities Our primary investing activities have consisted of our capital expenditures and expenditures for internal-use software, intellectual property assets, and cash paid for business acquisitions.
Net Cash Used In Investing Activities Our primary investing activities consist of our capital expenditures and expenditures for internal-use software, business acquisitions, and cash paid for intellectual property assets. Net cash used in investing activities was $109.4 million for the year ended December 31, 2024.
Cost of Revenues and Gross Margin Year ended December 31, Year ended December 31, (in thousands, except percentages) 2023 2022 $ Change % Change 2022 2021 $ Change % Change Cost of revenues Subscriptions $ 557,050 $ 531,098 $ 25,952 5 % $ 531,098 $ 345,948 $ 185,150 54 % Other 107,241 110,633 (3,392) (3) % 110,633 102,421 8,212 8 % Total cost of revenues $ 664,291 $ 641,731 $ 22,560 4 % $ 641,731 $ 448,369 $ 193,362 43 % Percentage of revenues Subscriptions 25 % 27 % 27 % 22 % Other 5 % 6 % 6 % 6 % Gross margins Subscriptions 73 % 72 % 72 % 77 % Other (5) % (10) % (10) % 9 % Total gross margin % 70 % 68 % 68 % 72 % Subscription cost of revenues and gross margin.
Cost of Revenues and Gross Margin Year ended December 31, Year ended December 31, (in thousands, except percentages) 2024 2023 $ Change % Change 2023 2022 $ Change % Change Cost of revenues Subscriptions $ 593,294 $ 557,050 $ 36,244 7 % $ 557,050 $ 531,098 $ 25,952 5 % Other 112,213 107,241 4,972 5 % 107,241 110,633 (3,392) (3) % Total cost of revenues $ 705,507 $ 664,291 $ 41,216 6 % $ 664,291 $ 641,731 $ 22,560 4 % Percentage of total revenues Subscriptions 25 % 25 % 25 % 27 % Other 5 % 5 % 5 % 6 % Gross margins Subscriptions 74 % 73 % 73 % 72 % Other (9) % (5) % (5) % (10) % Total gross margin % 71 % 70 % 70 % 68 % Subscription cost of revenues and gross margin.
The uncertainty created by the global economic conditions, including concerns about rising inflation and an associated economic downturn, may also impact our customers’ ability to pay on a timely basis, which could negatively impact our operating cash flows. 69 Table of Contents Cash Flows The table below provides selected cash flow information for the periods indicated (in thousands): Year ended December 31, 2023 2022 2021 Net cash provided by operating activities $ 399,662 $ 191,305 $ 152,151 Net cash used in investing activities (90,449) (87,210) (396,829) Net cash used in financing activities (358,018) (98,218) (127,051) Effect of exchange rate changes 1,016 (3,055) (962) Net increase (decrease) in cash and cash equivalents $ (47,789) $ 2,822 $ (372,691) Net Cash Provided by Operating Activities Cash provided by operating activities is driven by the timing of customer collections, as well as the amount and timing of disbursements to our vendors, the amount of cash we invest in personnel, marketing, and infrastructure costs to support the anticipated growth of our business, and payments under strategic arrangements.
Cash Flows The table below provides selected cash flow information for the periods indicated (in thousands): Year ended December 31, 2024 2023 2022 Net cash provided by operating activities $ 483,276 $ 399,662 $ 191,305 Net cash used in investing activities (109,359) (90,449) (87,210) Net cash used in financing activities (351,081) (358,018) (98,218) Effect of exchange rate changes (2,220) 1,016 (3,055) Net increase (decrease) in cash and cash equivalents $ 20,616 $ (47,789) $ 2,822 Net Cash Provided By Operating Activities Cash provided by operating activities is driven by the timing of customer collections, as well as the amount and timing of disbursements to our vendors, the amount of cash we invest in personnel, sales, marketing, innovation and infrastructure costs to support the anticipated growth of our business, and payments under strategic arrangements. 57 Table of Contents Net cash provided by operating activities was $483.3 million for the year ended December 31, 2024.
General and administrative expenses consist primarily of personnel costs, including share-based compensation expenses, for employees and contractors engaged in infrastructure and administrative activities to support the day-to-day operations of our business.
We expect to incur incremental sales and marketing expenses to support our growth while driving cost efficiencies by further optimizing our go-to-market strategies. General and administrative expenses consist primarily of personnel costs, including share-based compensation expenses, for employees and contractors engaged in infrastructure and administrative activities to support the day-to-day operations of our business.
Such issuances, exchanges or repurchases, if any, will depend on prevailing market conditions, our ability to negotiate acceptable terms, our liquidity position and other factors.
Such issuances, exchanges or repurchases, if any, will depend on prevailing market conditions, our ability to negotiate acceptable terms, our liquidity position and other factors. Refer to risk factors in Part I, Item 1A in this Annual Report on Form 10-K for additional information.
Other income and expense, net, can fluctuate in the future due to changes in interest rates on our money market funds, interest expense on our Credit Agreement, asset write-down charges, and fluctuations in currency exchange rates in the current macroeconomic environment.
Other income and expense, net, can fluctuate in the future due to changes in interest rates on our money market funds, interest expense on our Credit Agreement, and fluctuations in currency exchange rates in the current macroeconomic environment. Net Loss Net loss decreased by $107.0 million, or (65)%, during fiscal year 2024 as compared to fiscal year 2023.
We believe information regarding adjusted, unlevered free cash flow provides useful information to management and investors in understanding the strength of liquidity and available cash. A limitation of the use of adjusted, unlevered free cash flow is that it does not represent the total increase or decrease in our cash balance for the period.
A limitation of the use of free cash flow is that it does not represent the total increase or decrease in our cash balance for the period.
Comparison of Fiscal Years Ended December 31, 2023, 2022, and 2021: Revenues Year ended December 31, Year ended December 31, (in thousands, except percentages) 2023 2022 $ Change % Change 2022 2021 $ Change % Change Revenues Subscriptions $ 2,100,329 $ 1,887,756 $ 212,573 11 % $ 1,887,756 $ 1,482,080 $ 405,676 27 % Other 102,100 100,574 1,526 2 % 100,574 112,674 (12,100) (11) % Total revenues $ 2,202,429 $ 1,988,330 $ 214,099 11 % $ 1,988,330 $ 1,594,754 $ 393,576 25 % Percentage of revenues Subscriptions 95 % 95 % 95 % 93 % Other 5 5 5 7 Total 100 % 100 % 100 % 100 % Subscriptions revenue.
Comparison of Fiscal Years Ended December 31, 2024, 2023, and 2022: Revenues Year ended December 31, Year ended December 31, (in thousands, except percentages) 2024 2023 $ Change % Change 2023 2022 $ Change % Change Revenues Subscriptions $ 2,297,192 $ 2,100,329 $ 196,863 9 % $ 2,100,329 $ 1,887,756 $ 212,573 11 % Other 103,203 102,100 1,103 1 % 102,100 100,574 1,526 2 % Total revenues $ 2,400,395 $ 2,202,429 $ 197,966 9 % $ 2,202,429 $ 1,988,330 $ 214,099 11 % Percentage of total revenues Subscriptions 96 % 95 % 95 % 95 % Other 4 5 5 5 Total 100 % 100 % 100 % 100 % Subscriptions revenue.
Net cash used in investing activities was $90.4 million for the year ended December 31, 2023, primarily due to capital expenditures including personnel-related costs associated with development of internal-use software of $75.7 million, and net cash paid of $14.7 million to acquire Hopin.
This was primarily driven by $80.5 million in capital expenditures, including personnel-related costs associated with the development of internal-use software, and $26.3 million in cash paid for business combinations. Net cash used in investing activities for the year ended December 31, 2024 increased by $18.9 million as compared to the year ended December 31, 2023.
Research and development expenses consist primarily of personnel costs for employees and contractors, including share-based compensation 62 Table of Contents expenses, and allocated costs of facilities and information technology, software tools, product certification, and the impact of the restructuring activities in 2023 and 2022.
Research and 50 Table of Contents development expenses consist primarily of personnel costs for employees and contractors, including share-based compensation expenses, and allocated costs of facilities and information technology, software tools and product certification. We expense research and development costs as incurred, except for certain internal-use software development costs that we capitalize.
Research and Development Year ended December 31, Year ended December 31, (in thousands, except percentages) 2023 2022 $ Change % Change 2022 2021 $ Change % Change Research and development $ 335,851 $ 362,256 $ (26,405) (7) % $ 362,256 $ 309,739 $ 52,517 17 % Percentage of total revenues 15 % 18 % 18 % 19 % Research and development expenses decreased by $26.4 million, or (7)%, during fiscal year 2023 as compared to fiscal year 2022, primarily due to a $31.1 million reduction in personnel and contractor costs, partially offset by $5.7 million increase in professional fees.
Research and Development Year ended December 31, Year ended December 31, (in thousands, except percentages) 2024 2023 $ Change % Change 2023 2022 $ Change % Change Research and development $ 329,323 $ 335,851 $ (6,528) (2) % $ 335,851 $ 362,256 $ (26,405) (7) % Percentage of total revenues 14 % 15 % 15 % 18 % Research and development expenses decreased by $6.5 million, or (2)%, during fiscal year 2024 as compared to fiscal year 2023.
(4) Purchase obligations are primarily related to third-party managed hosting services and represent our non-cancellable open purchase orders and contractual obligations for which we have not received the goods or services as of December 31, 2023.
(4) Purchase obligations are primarily related to third-party managed hosting services and represent our non-cancellable open purchase orders and contractual obligations for which we have not received the goods or services as of December 31, 2024. 59 Table of Contents Indemnification Obligations Certain of our agreements with sales agents, resellers and customers include provisions for indemnification against liabilities if our products infringe a third party’s intellectual property rights.
We finance our operations primarily through sales to our customers, which could be billed either monthly or annually one year in advance. For customers with annual or multi-year contracts and those who opt for annual invoicing, we generally invoice only one annual period in advance and revenue is deferred for such advanced billings.
For customers with annual or multi-year contracts and those who opt for annual invoicing, we generally invoice only one annual period in advance and revenue is deferred for such advanced billings. We also have access to additional liquidity from our Term Loan and Revolving Credit Facility.
General and Administrative Year ended December 31, Year ended December 31, (in thousands, except percentages) 2023 2022 $ Change % Change 2022 2021 $ Change % Change General and administrative $ 333,048 $ 292,898 $ 40,150 14 % $ 292,898 $ 284,276 $ 8,622 3 % Percentage of total revenues 15 % 15 % 15 % 18 % General and administrative expenses increased by $40.2 million, or 14%, during fiscal year 2023 as compared to fiscal year 2022, primarily due to an increase in personnel and contractor costs of $33.2 million, and professional fees of $5.2 million.
General and Administrative Year ended December 31, Year ended December 31, (in thousands, except percentages) 2024 2023 $ Change % Change 2023 2022 $ Change % Change General and administrative $ 266,447 $ 333,048 $ (66,601) (20) % $ 333,048 $ 292,898 $ 40,150 14 % Percentage of total revenues 11 % 15 % 15 % 15 % General and administrative expenses decreased by $66.6 million, or (20)%, during fiscal year 2024 as compared to fiscal year 2023.
Refer to Note 5 – Strategic Partnerships the accompanying notes to the consolidated financial statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further information regarding our assessment of our deferred and prepaid sales commission balances with our strategic partners.
Refer to Note 11, Stockholders’ Deficit and Convertible Preferred Stock and Note 18 – Subsequent Events in the accompanying notes to the Consolidated Financial Statements included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional information.
Macroeconomic factors include increased inflation, increased interest rates, supply chain disruptions, decreased economic output, geopolitical conflict and fluctuations in currency exchange rates, all of which can cause uncertainty. We have experienced more cautious buying behavior from larger customers manifesting itself in smaller initial deployments.
Macroeconomic factors include persistent inflation, higher interest rates, change in government administration, supply chain disruptions, decreased economic output, geopolitical conflict and fluctuations in currency exchange rates, all of which can cause uncertainty. The overall macroeconomic environment may affect buying behavior from larger customers that could have an adverse impact on our results.
Other Income (Expense), Net Year ended December 31, Year ended December 31, (in thousands, except percentages) 2023 2022 $ Change % Change 2022 2021 $ Change % Change Interest expense $ (35,997) $ (4,807) $ (31,190) nm $ (4,807) $ (64,382) $ 59,575 nm Other income (expense) 77,963 (219,771) 297,734 nm (219,771) (7,554) (212,217) nm Other income (expense), net $ 41,966 $ (224,578) $ 266,544 nm $ (224,578) $ (71,936) $ (152,642) nm nm - not meaningful Other expense, net, decreased by $266.5 million during fiscal year 2023 as compared to fiscal year 2022.
Other Income (Expense), Net Year ended December 31, Year ended December 31, (in thousands, except percentages) 2024 2023 $ Change % Change 2023 2022 $ Change % Change Interest expense $ (64,995) $ (35,997) $ (28,998) 81% $ (35,997) $ (4,807) $ (31,190) 649% Other income (expense) 15,100 77,963 (62,863) (81)% 77,963 (219,771) 297,734 nm Other income (expense), net $ (49,895) $ 41,966 $ (91,861) nm $ 41,966 $ (224,578) $ 266,544 nm *nm - not meaningful Interest expense .
Other revenues. Other revenues increased by $1.5 million, or 2%, during fiscal year 2023 as compared to fiscal year 2022, primarily due to higher professional services revenue compared to the respective prior year period.
Other revenues increased by $1.1 million, or 1%, during fiscal year 2024 as compared to fiscal year 2023, higher device sales as a result of overall growth in business compared to the respective prior year period.
Other cost of revenues and gross margin . Cost of other revenues decreased by $3.4 million, or (3)%, during fiscal year 2023 as compared to fiscal year 2022, primarily due to decrease in costs associated with sale of phones.
During fiscal year 2024 as compared to fiscal year 2023, our subscription gross margin remained relatively consistent period over period. Other cost of revenues and gross margin . Cost of other revenues increased by $5.0 million, or 5%, during fiscal year 2024 as compared to fiscal year 2023, primarily due to an increase in costs associated with phone sales.
During fiscal year 2023 as compared to fiscal year 2022, our subscription gross margin improved due to lower amortization of acquired intangible assets and higher subscription revenue. We expect to continue investing in our infrastructure and capacity to improve the availability of our subscription offerings, supporting the growth of both our new and existing customers.
We expect to continue investing in our infrastructure and capacity to improve the availability of our offerings, including new products, supporting the growth of both our new and existing customers.
Of the total decrease in personnel and contractor costs, $21.2 million was due to reduction in headcount, and $14.2 million was due to reduction in costs associated with the relocation of our third-party contractors resulting from the Russia-Ukraine conflict, partially offset by $5.1 million due to higher share-based compensation expense primarily driven by equity awards granted to new and existing employees. 66 Table of Contents We believe that continued investment in our products is important for our future growth, and we expect our research and development expenses to continue to increase in absolute dollars, although these expenses may fluctuate as a percentage of our total revenues from period to period depending on the timing of these expenses.
This decline was primarily due to $17.0 million decrease in share-based compensation due to rationalization of stock grants and $8.8 million reduction in professional fees, partially offset by $13.8 million increase in headcount cost and $4.7 million increase in overhead costs. 54 Table of Contents We believe that investment in our products is important for our future growth, and our research and development expenses may fluctuate as a percentage of our total revenues from period to period depending on the timing of these expenses.
We define adjusted, unlevered free cash flow, a non-GAAP financial measure, as GAAP net cash provided by (used in) operating activities adjusted for capital expenditures including purchases of property and equipment and capitalized internal-use software, strategic partnerships, repayment of convertible notes attributable to debt discount, restructuring and other non-recurring payments, and cash paid for interest.
We define free cash flow, a non-GAAP financial measure, as GAAP net cash provided by (used in) operating activities adjusted for capitalized expenditures that include purchases of property and equipment and capitalized internal-use software. We believe information regarding free cash flow provides useful information to management and investors in understanding the strength of liquidity and available cash.
The growth of our business and our future success depend on many factors, including our ability to expand our customer base, expand our indirect sales channels, continue to innovate, grow revenues from our existing customer base, expand our distribution channels, and scale internationally. 60 Table of Contents In the fourth quarter of each of 2023 and 2022, our board of directors approved a reduction-in-force plan as part of broader efforts to optimize the Company cost structure.
The growth of our business and our future success depend on many factors, including our ability to expand our customer base, expand our indirect sales channels, continue to innovate, grow revenues from our existing customer base, increase sales and revenues from our existing and new products, expand our distribution channels, and scale internationally. 48 Table of Contents We have been actively implementing various measures to enhance operational efficiencies.
Therefore, our deferred revenue balance does not capture the full contract value of multi-year contracts.
Therefore, our deferred revenue balance does not capture the full contract value of multi-year contracts. Accordingly, we believe that deferred revenue is not a reliable indicator of future revenues and we do not utilize deferred revenue as a key management metric internally.
Our indirect sales channels who sell our solutions consist of: • Regional and global network of resellers and distributors; • Strategic partners who market and sell our MVP or other solutions, including co-branded solutions. • Global Service Providers including AT&T, TELUS, BT, Vodafone, DT, Optus, 1&1 Versatel and Ecotel in Germany, MCM in Mexico, Frontier, Charter Communications and others.
We use our direct inside sales force and indirect sales channels to market our product and our subscription offerings. Our indirect sales channels who sell our solutions consist of: • Regional and global network of resellers and distributors; • Global Service Providers and strategic partners who market and sell our RingEX, RingCX or other solutions, including co-branded solutions.
Sales and Marketing Year ended December 31, Year ended December 31, (in thousands, except percentages) 2023 2022 $ Change % Change 2022 2021 $ Change % Change Sales and marketing $ 1,068,050 $ 1,057,231 $ 10,819 1 % $ 1,057,231 $ 854,156 $ 203,075 24 % Percentage of total revenues 48 % 53 % 53 % 54 % Sales and marketing expenses increased by $10.8 million, or 1%, during fiscal year 2023 as compared to fiscal year 2022, primarily due to an increase in third-party commissions of $57.9 million, amortization of deferred sales commission costs of $20.6 million, and professional fees of $6.1 million, partially offset by decrease in advertising and marketing costs of $45.8 million, and decrease in personnel and contractor costs of $26.5 million primarily attributed to reduction in headcount.
Sales and Marketing Year ended December 31, Year ended December 31, (in thousands, except percentages) 2024 2023 $ Change % Change 2023 2022 $ Change % Change Sales and marketing $ 1,096,448 $ 1,068,050 $ 28,398 3 % $ 1,068,050 $ 1,057,231 $ 10,819 1 % Percentage of total revenues 46 % 48 % 48 % 53 % Sales and marketing expenses increased by $28.4 million, or 3%, during fiscal year 2024 as compared to fiscal year 2023.
Backlog We have generally signed new customers contracts with varying length, from month-to-month to multi-year terms for our subscription services. At any point in the contract term, there can be amounts allocated to services that we have not yet contractually performed, which constitute a backlog.
At any point in the contract term, there can be amounts allocated to services that we have not yet contractually performed, which constitute our remaining performance obligations. Until we meet our performance obligations, we do not recognize them as revenues in our consolidated financial statements.
Net cash used in financing activities was $358.0 million for the year ended December 31, 2023, primarily due to payments of approximately $311.1 million to repurchase and retire 10 million shares of our Class A Common Stock pursuant to our share repurchase program, and $821.0 million paid toward the partial repurchase of our Convertible Notes from $785.7 million of proceeds, net of debt issuance costs, from the issuance of both our Term Loan and 2030 Senior Notes in fiscal year 2023.
Net cash used in financing activities was $351.1 million for the year ended December 31, 2024. This was primarily driven by $322.4 million paid, including excise taxes, to repurchase and retire approximately 9.6 million shares of our Class A Common Stock under our share repurchase program.
We expect to incur incremental sales and marketing expenses to support our growth while driving cost efficiencies by further optimizing our go-to-market strategies, although these expenses may fluctuate as a percentage of our total revenues from period to period depending on the timing of these expenses.
We believe that investment in our products is important for our future growth, and our research and development expenses may fluctuate as a percentage of our total revenues from period to period depending on the timing of these expenses.
Net Loss Net loss decreased by $713.9 million during fiscal year 2023 as compared to fiscal year 2022 driven by reduction in loss from operations and other expenses, net.
Other income decreased by $62.9 million, or (81)%, during fiscal year 2024 as compared to fiscal year 2023.
The interest expense has increased by $31.2 million during fiscal year 2023 as compared to fiscal year 2022, driven by interest under our Credit Agreement entered into in February 2023, and 2030 Senior Notes issued in August 2023.
Interest expense increased by $29.0 million, or 81%, during fiscal year 2024 as compared to fiscal year 2023. This increase was mainly attributable to interest incurred under our Credit Agreement and the 2030 Senior Notes that were raised in 2023. 55 Table of Contents Other income (expense).
The increase was primarily due to the acquisition of new customers, upsells of MVP seats and additional offerings to our existing customer base, derived from sales through our direct and indirect sales channels, including resellers and distributors, strategic partners and global service providers.
Our sales are derived from our direct and indirect sales channels, including resellers, distributors, strategic partners and global service providers. 53 Table of Contents Other revenues.
Of the total increase in personnel and contractor costs, $34.1 million was due to higher share-based compensation expense primarily driven by equity awards granted to new and existing employees including performance stock units (“PSUs”), partially offset by a decrease of $3.2 million due to reduction in headcount.
These increases were partially offset by a $15.6 million decrease in personnel and contractor costs, primarily due to headcount reductions, $16.6 million decrease in share-based compensation due to rationalization of stock grants, a $9.1 million reduction in advertising and marketing costs driven by disciplined spending, and a $5.3 million reduction in professional fees.
If these conditions continue, they could have an adverse impact on our results. We continuously monitor the impact of these circumstances on our business and financial results, as well as the overall global economy and geopolitical landscape. The implications of macroeconomic conditions on our business, results of operations and overall financial position, particularly in the long term, remain uncertain.
The implications of macroeconomic conditions on our business, results of operations and overall financial position, particularly in the long term, remain uncertain. Key Business Metrics In addition to United States generally accepted accounting principles (“U.S.
Accordingly, we believe that deferred revenue is not a reliable indicator of future revenues and we do not utilize deferred revenue as a key management metric internally. 71 Table of Contents Contractual Obligations The following summarizes our contractual obligations as of December 31, 2023 (in thousands): Payments due by period Up to 1 year 1 to 3 years 3 to 5 years More than 5 years Total Operating lease obligations (1) $ 18,643 $ 23,237 $ 7,228 $ 701 $ 49,809 Supplier financing arrangements (2) 2,464 1,267 463 — 4,194 Principal payments on long-term debt (3) 20,000 810,391 330,000 400,000 1,560,391 Contractual interest payments on long-term debt (3) 65,641 126,492 97,886 68,000 358,019 Purchase obligations (4) 95,405 78,490 56,193 4,135 234,223 Total $ 202,153 $ 1,039,877 $ 491,770 $ 472,836 $ 2,206,636 (1) Represents obligations under non-cancellable lease agreements for our corporate and worldwide offices, and colocation data centers.
Contractual Obligations The following summarizes our contractual obligations as of December 31, 2024 (in thousands): Payments due by period Up to 1 year 1 to 3 years 3 to 5 years More than 5 years Total Operating lease obligations (1) $ 23,000 $ 26,611 $ 5,043 $ — $ 54,654 Supplier financing arrangements (2) 633 1,097 — — 1,730 Principal payments on long-term debt (3) 181,326 649,065 310,000 400,000 1,540,391 Contractual interest payments on long-term debt (3) 57,160 110,487 70,421 34,000 272,068 Purchase obligations (4) 63,758 70,121 32,409 — 166,288 Total $ 325,877 $ 857,381 $ 417,873 $ 434,000 $ 2,035,131 (1) Represents obligations under non-cancellable lease agreements for our corporate and worldwide offices, and colocation data centers.
During fiscal year 2023, we repurchased and subsequently retired 10 million shares of our Class A Common Stock, for an aggregate amount of approximately $315 million. As of December 31, 2023, approximately $85.0 million remained authorized and available under our share repurchase programs for future share repurchases.
As of December 31, 2024, approximately $168.1 million remained authorized and available under our share repurchase programs for future share repurchases. In February 2025, our board of directors authorized an incremental $100.0 million share repurchase, subject to certain limitations. The authorization does not expire.
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Overview We are a leading provider of AI-driven global enterprise cloud communications, video meetings, collaboration, and contact center software-as-a-service (“SaaS”) solutions. We believe that our innovative, cloud-based communication and contact center solutions disrupt the large market for business communications and collaboration by providing flexible and cost-effective solutions that support mobile and distributed workforces.
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Overview Over the past 25 years, RingCentral has transformed business communications, leading the shift from on-premises legacy communications to the cloud. Today, the company has an AI-powered multi-product portfolio including Unified Communications as a Service (“UCaaS”), Contact Center as a Service (“CCaaS”), Video & Events, and RingSense AI solutions.
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We enable convenient and effective communications for organizations across all their locations and employees, enabling them to be more productive and more responsive. Our cloud-based business communications and collaboration solutions are designed to be easy to use, providing a user identity across multiple locations and devices, including smartphones, tablets, PCs and desk phones.
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RingCentral’s core tenets include: a) Trust: We provide communications that businesses can trust with reliability, security, and privacy; b) Innovation: We execute through focused and strategic innovation, setting the bar in the industry for many market firsts; c) Partnerships: We have a diverse set of strategic partners, global service providers, channel partners, and third-party developers.
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Our solutions can be deployed rapidly and configured and managed easily. Our cloud-based solutions are location and device independent and better suited to address the needs of modern mobile and global enterprise workforces than are legacy on-premises systems.
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RingCentral is designed for intelligent, connected, and effortless businesses communications, making employee and customer experiences more productive and efficient. Our flagship cloud-based offerings, RingEX and RingCX, are subscription based and made available at different rates varying by the specific functionalities, services, and number of users. We primarily generate revenues from the sale of subscriptions to our offerings.
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Through our open Application Programming Interface (API) platform, we enable third-party developers and customers to integrate our solution with leading business applications to customize their own business workflows. We have a portfolio of cloud-based offerings that are subscription based, made available at different rates varying by the specific functionalities, services, and number of users.
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We have in the past and may in the future experience lower upsell and increased downsell of additional RingEX (formerly RingCentral MVP) services within our existing base as customers slow hiring and rationalize their employee counts. We continuously monitor the impact of these circumstances on our business and financial results, as well as the overall global economy and geopolitical landscape.
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We use our direct inside sales force and indirect sales channels to market our brand and our subscription offerings.
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We expect the general and administrative expenses to reflect the impact of our operational efficiency measures as we realign our hiring strategies and rationalize our discretionary spending.
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We have experienced elevated sales cycle times for our up-market customers, as customers required additional approvals before making purchase decisions. We are also seeing less upsell of additional MVP services within our existing base as customers have slowed hiring and rationalized their employee counts. We anticipate this behavior may persist until the macroeconomic environment becomes less uncertain.
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S ubscriptions revenue increased by $196.9 million, or 9%, during fiscal year 2024 as compared to fiscal year 2023. The increase was primarily due to the acquisition of new customers, sale of new products, upsells of RingEX and additional offerings to our existing customer base.
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We expense research and development costs as incurred, except for certain internal-use software development costs that we capitalize. We will continue to innovate and invest in current and future software development projects while driving efficiencies.
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This increase was primarily driven by a $52.5 million increase in third-party commissions and an $22.5 million increase in amortization of deferred sales commission costs.
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S ubscriptions revenue increased by $212.6 million, or 11%, during fiscal year 2023 as compared to fiscal year 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur consolidated results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign currency exchange rates. To date, we have not entered into any hedging arrangements with respect to foreign currency risk.
Biggest changeOur consolidated results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates. To date, we have not entered into any hedging arrangements with respect to foreign currency risk.
During fiscal 2023, a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our consolidated financial statements. As our international operations continue to expand, risks associated with fluctuating foreign currency rates may increase. We will continue to reassess our approach to managing these risks.
During fiscal 2024, a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have had a material impact on our consolidated financial statements. As our international operations continue to expand, risks associated with fluctuating foreign currency rates may increase. We will continue to reassess our approach to managing these risks.
During fiscal year 2023, a hypothetical 10% increase or decrease in overall interest rates would not have had a material impact on our interest income. As of December 31, 2023, we had $161.3 million and $609.1 million outstanding from our 2025 Convertible Notes and 2026 Convertible Notes, respectively.
During fiscal year 2024, a hypothetical 10% increase or decrease in overall interest rates would not have had a material impact on our interest income. As of December 31, 2024, we had $161.3 million and $609.1 million outstanding from our 2025 Convertible Notes and 2026 Convertible Notes, respectively.
As of December 31, 2023, we had $400.0 million outstanding under our 2030 Senior Notes. The 2030 Senior Notes have fixed annual interest rates, and therefore we do not have economic interest rate exposure on these debt obligations. However, the fair values of the 2030 Senior Notes are exposed to interest rate risk.
As of December 31, 2024, we had $400.0 million outstanding under our 2030 Senior Notes. The 2030 Senior Notes have fixed annual interest rates, and therefore we do not have economic interest rate exposure on these debt obligations. However, the fair values of our 2030 Senior Notes are exposed to interest rate risk.
The interest rate swap agreement was effective beginning June 30, 2023, and terminates on February 14, 2028, consistent with the duration of the maturity of the Term Loan. Our interest rate swap agreement is designated as cash flow hedge and highly effective in offsetting changes in our future expected cash flows due to the fluctuation of our variable rate debt.
The interest rate swap agreement became effective on June 30, 2023, and terminates on February 14, 2028, consistent with the duration of the maturity of the Term Loan. Our interest rate swap agreement is designated as cash flow hedge and highly effective in offsetting changes in our future expected cash flows due to the fluctuation of our variable rate debt.
Generally, the fair values of the Senior Notes will increase as interest rates fall and decrease as interest rates rise. 74 Table of Contents Inflation Risk We do not believe that inflation has had a material effect on our business, results of operations, or financial condition.
Generally, the fair values of the 2030 Senior Notes will increase as interest rates fall and decrease as interest rates rise. 61 Table of Contents Inflation Risk We do not believe that inflation has had a material effect on our business, results of operations, or financial condition.
The fair value of the Convertible Notes will generally increase as our Class A common stock price increases and will generally decrease as our Class A common stock price decrease in value. As of December 31, 2023, we had no amounts outstanding under our Revolving Credit Facility and $390.0 million outstanding under our Term Loan under our Credit Agreement.
The fair value of the Convertible Notes will generally increase as our Class A common stock price increases and will generally decrease as our Class A common stock price decrease in value. As of December 31, 2024, we had no amounts outstanding under our Revolving Credit Facility and $370.0 million principal outstanding under our Term Loan under our Credit Agreement.
Nonetheless, if our costs in connection with the operation of our business were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations. 75 Table of Contents
Nonetheless, if our costs in connection with the operation of our business were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could have a material adverse effect on our business, financial condition and results of operations. 62 Table of Contents
Interest Rate Risk As of December 31, 2023, we had cash and cash equivalents of $222.2 million. We invest our cash and cash equivalents in short-term money market funds. The carrying amount of our cash equivalents reasonably approximates fair values.
Interest Rate Risk As of December 31, 2024, we had cash and cash equivalents of $242.8 million. We invest our cash and cash equivalents in short-term money market funds. The carrying amount of our cash equivalents reasonably approximates fair values.

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