Cloopen : Second Quarter 2021 Earnings Release

Cloopen Group Holding Limited Announces Unaudited

Second Quarter 2021 Financial Results

BEIJING, China, August 11, 2021 - Cloopen Group Holding Limited (NYSE: RAAS) ("Cloopen" or the "Company"), a leading multi-capabilitycloud-based communications solution provider in China, today announced its unaudited financial results for the second quarter ended June 30, 2021.

Second Quarter ended June 30, 2021 Highlights

• Revenues were RMB273.9 million (US$42.4 million), representing a 47.9% increase year-over-year. Revenues from cloud-based contact center ("CC") solutions increased by 105.1% year-over-year.
• Gross margin was 43.1% in the second quarter of 2021.
• Net loss was RMB105.6 million (US$16.4 million) in the second quarter of 2021, compared to net loss of RMB62.2 million in the second quarter of 2020. After excluding share-based compensation, loss from disposal of subsidiaries, net, impairment loss of long-term investments, and change in fair value of warrant liabilities, non-GAAP net loss1 for the quarter was RMB26.4 million (US$4.1 million), compared to RMB37.0 million in the second quarter of 2020.
• Adjusted EBITDA loss2 was RMB30.0 million (US$4.6 million), representing a 1.8% decrease year-over-year.
• Active customers3 as of June 30, 2021 were 12,976 and dollar-based net customer retention rate4 was 109.0% for the three months ended June 30, 2021.

1. Non-GAAPnet loss and adjusted EBITDA are non-GAAP financial measures. See section entitled "Non-
   GAAP Financial Measure" for information on how the Company defines and calculates the non-GAAP financial measures. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is set forth at the end of this press release.
2. Non-GAAPnet loss and adjusted EBITDA are non-GAAP financial measures. See section entitled "Non-
   GAAP Financial Measure" for information on how the Company defines and calculates the non-GAAP financial measures. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is set forth at the end of this press release.
3. Active customers at the end of any period refers to customers which had over RMB50 in annual spending in the preceding 12 months.
4. "Dollar-basednet customer retention rate" illustrates the Company's ability to increase revenue generated from its existing customer base. To calculate dollar-based net customer retention rate for a given period, the Company first identifies all customers for solutions that it offers on a recurring basis, unless otherwise specified, with over RMB1,000 in monthly spending in the preceding period, then calculate the quotient from dividing the revenue generated from such customers in the given period by the revenue generated from the same group of customers in the preceding period. Solutions that the Company offers on a recurring basis include our CPaaS

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"We are encouraged by our second quarter performance, with revenues coming in at RMB273.9 million, representing an increase of 47.9% year-on-year and beating guidance once again. Our second quarter gross margin remained robust at 43.1%," said Mr. Changxun Sun, Cloopen's Chief Eexcutive Officer. "Most importantly, our non-GAAP net loss narrowed to RMB26.4 million, reflecting a significant 58.4% quarter over quarter decrease from RMB63.4 million."

"We sustained strong momentum for our cloud-based Contact Center (CC) business in the second quarter, demonstrated by a 105.1% year-over-year revenue increase, driven by synergies from our EliteCRM acquisition and consistent efforts to provide customized solutions that adapt to customers' envolving demands through one-stop customer management and cloud-based communication tools. With full-fledged products and services, our customer base grew at a steady pace, with large-enterprise customers as the main driving force, among which we are proud to announce our partnership with Tencent," Mr. Sun continued. "Meanwhile, Cloopen's unwavering devotion to data security through private and hybrid cloud via local deployment helps meet customers' increasingly strict security requirements. Looking ahead, we will continue to solidify our leading position in the SaaS business with more investment in data security and topline products and services."

Mr. Steven Yipeng Li, Cloopen's Chief Financial Officer said, "We are excited to see another strong quarter in 2021. Revenues displayed higher quality, with our cloud-based contact center ("CC") solutions and cloud-based unified communications and collaboration ("UC&C") solutions business now contributing about 57.4% of total revenues. Our dollar-based net customer retention rate remained sound around 110% in the three months ended June 30, 2021. Our integration with EliteCRM yielded remarkable results with stronger product pipeline and more large-enterprise customers, as manifested by roughly RMB13.7 million revenue attributable to the integration during the second quarter. As we enrich and refine our products, as well as expand customer base while bolstering our profitability, we are confident in our ability to deliver stable long-term growth and persistently create value for our shareholders. "

Financial Results for the Second Quarter of 2021

Revenues

In the second quarter of 2021, revenues increased by 47.9% to RMB273.9 million (US$42.4 million) from RMB185.3 million in the second quarter of 2020. The increase was contributed by the robust performance across our product lines.

• Revenues from communications platform as a service ("CPaaS") solutions increased by 13.0% to RMB114.7 million (US$17.8 million) in the second quarter of 2021 from RMB101.5 million in the second quarter of 2020, primarily due to the organic growth

solutions and cloud-based CC solutions deployed primarily on public cloud, for which the Company charges a combination of seat subscription fees and related resource usage fees. The dollar-based net customer retention rate for all active customers was 109.6% for the second quarter of 2021, and the dollar-based net customer retention rate for all active customers for the 12 months ended June 30, 2021 was 107.9%.

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of text messaging services and voice calls services as a result of the increased demand from certain large enterprises.

• Revenues from cloud-based CC solutions increased by 105.1% to RMB108.3 million (US$16.8 million) in the second quarter of 2021 from RMB52.8 million in the second quarter of 2020, primarily due to an increase in the number of customers and projects as a result of the Company's business expansion, the EliteCRM acquisition and the Company's enhanced sales strategy, such as cross-selling and up-selling.
• Revenues from cloud-based unified communications and collaboration ("UC&C") solutions increased by 74.9% to RMB49.0 million (US$7.6 million) in the second quarter of 2021 from RMB28.0 million in the second quarter of 2020, primarily due to an increase in the number of customers and projects as a result of the Company's organic growth and the release of underserved demands amidst the COVID-19 outbreak in 2020.

Cost of Revenues

Cost of revenues increased by 36.8% to RMB155.8 million (US$24.1 million) in the second quarter of 2021 from RMB113.9 million in the second quarter of 2020, which was primarily due to increased telecommunications resources costs, outsourcing costs and staff costs as the Company continues to scale its business.

Gross Profit

Gross profit increased by 65.4% to RMB118.1 million (US$18.3 million) in the second quarter of 2021 from RMB71.4 million in the second quarter of 2020. Gross margin was 43.1% in the second quarter of 2021, compared with 38.5% in the second quarter of 2020.

Operating Expenses

In the second quarter of 2021, operating expenses were RMB214.5 million (US$33.2 million), representing a 65.6% increase from RMB129.5 million in the second quarter of 2020.

• Research and development expenses increased by 69.1% to RMB62.0 million (US$9.6 million) in the second quarter of 2021, compared with RMB36.6 million in the second quarter of 2020, primarily due to an increase in share-based compensation expenses of RMB3.2 million (US$0.5 million), an increase in the R&D staff expenses of RMB17.0 million (US$2.6 million) for development of core features and functions in cloud-based CC solutions and cloud-based UC&C solutions, and an increase in technology service expenses paid to the outsourcing service providers for the development of certain non- core features and functions in cloud-based UC&C solutions.
• Selling and marketing expenses increased by 56.2% to RMB72.8 million (US$11.3 million) in the second quarter of 2021 from RMB46.6 million in the second quarter of 2020, primarily due to an increase in share-based compensation expenses of RMB6.6 million (US$1.0 million) and an increase in staff expenses as the Company continues to scale its business and reach a wider customer base.
• General and administrative expenses increased by 72.3% to RMB79.7 million (US$12.3 million) in the second quarter of 2021 from RMB46.2 million in the second

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quarter of 2020, primarily due to an increase in share-based compensation expenses of RMB28.4 million (US$4.4 million) relating to share options granted to eligible employees and directors and restricted ordinary shares issued to management employees for business acquisition, and an increase in social insurance premiums as the Company had enjoyed a social insurance premiums deduction in 2020 according to the government relief policies during the COVID-19 outbreak.

Net Loss

Net loss for the second quarter of 2021 was RMB105.6 million (US$16.4 million), compared with RMB62.2 million in the second quarter of 2020 with the increase primarily driven by increases in non-cash items of RMB53.8 million (US$8.3 million), including the increases in share-based compensation of RMB38.1 million (US$5.9 million) and impairment loss of long- term investments of RMB15.7 million (US$2.4 million).

Basic and Diluted Net Loss Per Share

Basic and diluted net loss per share was RMB0.33 (US$0.05) in the second quarter of 2021, compared with RMB0.87 in the second quarter of 2020.

Recent Development

The Company has entered into partnerships with Tencent on Tencent Cloud, Tencent Qidian, which is Tencent Cloud's SCRM plaform, and WeCom. The Company's CC prodcuts are now available on Tencent Cloud's joint development products platform. The Company has also begun receiving orders for UC products through partnership with Tencent Cloud for a wide range of industries including manufacturing, energy, and social governance. Furthermore, the Company's 7Moor Cloud will connect with WeCom's customer service interface, for which new products are expected to be officially launched in the third quarter of 2021.

Outlook

For the third quarter of 2021, Cloopen currently expects revenues to be between RMB275.0 million and RMB278.0 million, representing an increase of 43.8% to 45.3% year-over-year.

The above outlook is based on the current market conditions and reflects the Company's current and preliminary estimates of market and operating conditions and customer demand, which are all subject to substantial change and uncertainty, such as the impact of the COVID- 19 outbreak and the new regulations on K-12after-school tutoring in China.

Exchange Rate

The Company's business is primarily conducted in China and all revenues are denominated in Renminbi ("RMB"). This announcement contains currency conversions of RMB amounts into U.S. dollars ("US$") solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB6.4566 to US$1.00, the effective noon buying rate for June 30, 2021 as set forth in the H.10 statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on June 30, 2021, or at any other rate.

Conference Call and Webcast

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Cloopen's management team will host a conference call at 8:00 AM U.S. Eastern Time, (8:00 PM Beijing/Hong Kong time) on August 11, 2021, following the quarterly results announcement.

The dial-in details for the live conference call are:

International:	1-412-902-4272
US toll free:	1-888-346-8982
Mainland China toll free:	400-120-1203
Hong Kong toll free:	800-905-945

Please dial in 10 minutes before the call is scheduled to begin. When prompted, ask to be connected to the call for "Cloopen Group Holding Limited." Participants will be required to state their name and company upon entering the call.

A live webcast and archive of the conference call will be available on the Investor Relations section of Cloopen's website at http:// ir.yuntongxun.com.

A replay of the conference call will be available one hour after the end of the conference call until August 18, 2021.

The dial-in details for the telephone replay are:

International:	1-412-317-0088
US toll free:	1-877-344-7529
Canada toll free:	855-669-9658
Replay access code:	10159204

Non-GAAP Financial Measure

The Company uses non-GAAP net loss and adjusted EBITDA as non-GAAP financial measures, in evaluating its operating results and for financial and operational decision-making purposes.

The Company defines adjusted EBITDA as net loss excluding depreciation and amortization, interest expenses (income), net, income tax benefit, share-based compensation, investment income, loss (gain) from disposal of subsidiaries, net, share of losses (income) of equity method investments, change in fair value of warrant liabilities, impairment loss of long-term investments and foreign currency exchange (gains) losses, net. The Company defines non- GAAP net loss as net loss excluding share-based compensation, loss (gain) from disposal of subsidiaries, net, impairment loss of long-term investments and change in fair value of warrant liabilities. The Company believes that such non-GAAP financial measures provide useful information to investors and others in understanding and evaluating its operating results.

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