So RingCental is both an incredibly impressive SaaS and Cloud company — but also a bit of a cautionary tale.

It’s been around for decades but has continued to iterate, expanding into the enterprise, the contact center, and so much more.

Fast forward to today, it’s at:

  • $2.43 Billion in ARR
  • Growing 9%-10%
  • With non-GAAP operating margins of 20.9%

and yet …

  • It trades at a $3 Billion maket cap,
  • or 1.2x ARR

Now they have $1.5 Billion in debt, so one could argue it’s really 3x net of debt.  But I’m not sure that’s the proper way to look at it.

Either way — ouch.

5 Interesting Learnings:

#1.  Even With a Big Enterprise Push for Years, 60% of Revenue Still From Mid-Market and SMB

RingCentral closed 20 $1M+ TCV deals last quarter.  But even as they push more and more into the enterprise, the SMBs still are buying.  Almost just as much.  A reminder not to abandon the bottom of the market even as you go more and more enterprise.

#2.  Working Hard to Add $100m ARR From New Products

It’s early here, though.  Another reminder on how important it is to properly sequence going more and more multi-product.

#3.  Quality Management is Their Biggest AI Play at the Moment

This makes sense.  Using AI to understand the efficacy of contact center agents is a big use case.

#4.   Driving Stock-Based Compensation Much Lower.  New Share Grants Are Down -60%.

SBC has become a much bigger issue in SaaS and Cloud the past 2+ years as the markets have focused on true efficiency and profitability.  RingCentral has followed, driving SBC down from 23.6% of revenue in 2021 to 15.7% today.

#5.  16,000 Channel Partners

A very large percent of RingCentral’s revenue comes from the channel.  A reminder to not stay too reliant on direct sales as you scale.

And a classic SaaStr deep dive with founder CEO Vlad Shmunis here:

 

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