RingCentral has announced that roughly 10% of its workforce is being cut despite its Q3 2022 results exceeding the high end of guidance across key metrics.
Total revenue for RingCentral’s third quarter was $509 million, which is an increase of $94 million compared to Q3 2021. Subscriptions revenue also increased 25% year-over-year to $483 million.
Other financial highlights include its GAAP operating margin of 35.9%, up from 20.1% the year before. There was also a record non-GAAP operating margin of 13.5%, which is an increase of 300 basis points year-over-year.
Alongside this positive performance, Vlad Shmunis, Founder, Chairman, and CEO at RingCentral, reflected on the company’s mass layoffs: “While we recently made the extremely difficult decision to further rationalize our workforce, we believe this will allow us to be more agile and better align our course with our strategic priorities in the current macro environment.
“This decision was not made lightly, and we understand the impact this has on our people and their families. We're taking meaningful action to help ease the transition for our impacted employees.
“We want to underscore how grateful we are for their hard work and all their contributions. RingCentral would not be where we are today without them.”
Sonalee Parekh, Chief Financial Officer at RingCentral explained that the job cuts will result in GAAP-only restructuring charges somewhere between $10 – $15 million. The money will be primarily made up of employee severance and benefits costs, which will be spread out over the next two quarters.
RingCentral joins a slew of technology companies which have made layoffs recently, including Microsoft, Twitter, Meta, Salesforce, Lyft, Stripe, Netflix, and more.
Parekh also provided a full financial overview of the company’s Q3 results, which included the company’s adjusted EBITDA of $87 million, compared to $59 million for Q3 2021.
It was not all sunny this quarter for RingCentral. Its GAAP operating loss was $183 million, compared to $83 million in Q3 2021. Its GAAP net loss per share was $2.98, compared to $1.60 in Q3 2021. A non-cash charge related to an Avaya prepaid commissions balance was given as the primary reason for these shortcomings.
Parekh said: “I am very proud of the quarter we delivered.
“RingCentral is well-placed to navigate the current environment, and we have the financial profile and flexibility to invest in the significant opportunity ahead of us, while continuing to grow and expand profitability in a meaningful way.
Looking ahead to the company’s Q4 guidance, the total revenue range is between $523 to $529 million, representing 17% - 18% year-over-year growth.
