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RingCentral (RNG) Q2 Earnings Top Estimates, Revenues Up Y/Y
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RingCentral (RNG - Free Report) reported second-quarter 2022 non-GAAP earnings of 39 cents per share, which surpassed the Zacks Consensus Estimate by 12.50% and improved 40.6% year over year.
Net revenues of $487 million beat the consensus mark by 1.65% and surged 28% year over year. The performance reflects solid demand for RingCentral’s cloud-based communication platform and Contact Center business that provides UCaas. RingCentral’s strategic partnerships have positively impacted revenue growth.
Quarter Details
Software-subscription (95.1% of total revenues) revenues climbed 32% year over year to $487 million.
Annualized Exit Monthly Recurring subscriptions (ARR) increased 31% year over year to $2.0 billion.
Mid-market and Enterprise ARR surged 38% year over year to $1.2 billion.
Other revenues (4.9% of total revenues) fell 14.8% year over year to $23.9 million.
Second-quarter 2022 non-GAAP gross margin expanded 100 basis points (bps) from the year-ago quarter to 78.4%.
Ringcentral, Inc. Price, Consensus and EPS Surprise
On a non-GAAP basis, research & development (R&D) expenses increased 11.8% year over year to $60.1 million. Sales and marketing expenses escalated 36.8% to $224 million. General and administrative expenses advanced 13.9% to $42.3 million in the reported quarter.
On a non-GAAP basis, operating income was $55.2 million, up 42.2% year over year. Non-GAAP operating margin expanded 110 bps from the year-ago quarter to 11.3%.
Balance Sheet& Cash Flow
As of Mar 31, 2022, cash and cash equivalents were $306 million compared with $302 million as of Mar 31, 2022.
As of Mar 31, 2022, cash flow from operation was $51 million compared with $30 million from the year-ago quarter. Non-GAAP free cash flow was $29 million compared with $14.4 million in the prior-year quarter.
Guidance
For the third quarter of 2022, RingCentral expects revenues between $500 million and $504 million, indicating year-over-year growth of 21% to 22%.
Software subscription revenues for the quarter are expected to be $473.5-$476.5 million, suggesting year-over-year improvement of 23% to 24%.
Non-GAAP operating margin is expected to be 12.4% for the third quarter. Non-GAAP EPS is expected between 50 cents and 51 cents on 96 to 97 fully diluted shares.
For 2022, RingCentral expects revenues in the range of $1.990 billion to $2.015 billion, indicating year-over-year growth of 25% to 26%.
Software subscription revenues for the year are expected between $1.882 billion and $1.898 billion, implying year-over-year growth of 27% to 28%.
Non-GAAP operating margin is expected to be 12% for full-year 2022.
Earnings are expected between $1.91 per share and $1.95 per share.
Zacks Rank & Stocks to Consider
RingCentral currently carries a Zacks Rank #4 (Sell).
RingCentral’s shares have tumbled 81.5% compared with the Zacks Computer and Technology sector’s decline of 22.7% in the year-to-date period.
Here are some better-ranked stocks worth considering in the broader sector.
ASUR’s shares have decreased 30.2% in the year-to-date period compared with the Zacks Internet - Delivery Services industry’s decline of 6%. ASUR is scheduled to report second-quarter 2022 results on Aug 8.
BLNK’s shares have fallen 16.5% in the year-to-date period compared with the Zacks Electronics - Miscellaneous Services industry’s decline of 14.7%. Blink is scheduled to report second-quarter 2022 results on Aug 8.
ANGI’s shares have slumped 36.6% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 31.8%. ANGI is scheduled to report second-quarter 2022 results on Aug 9.
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RingCentral (RNG) Q2 Earnings Top Estimates, Revenues Up Y/Y
RingCentral (RNG - Free Report) reported second-quarter 2022 non-GAAP earnings of 39 cents per share, which surpassed the Zacks Consensus Estimate by 12.50% and improved 40.6% year over year.
Net revenues of $487 million beat the consensus mark by 1.65% and surged 28% year over year. The performance reflects solid demand for RingCentral’s cloud-based communication platform and Contact Center business that provides UCaas. RingCentral’s strategic partnerships have positively impacted revenue growth.
Quarter Details
Software-subscription (95.1% of total revenues) revenues climbed 32% year over year to $487 million.
Annualized Exit Monthly Recurring subscriptions (ARR) increased 31% year over year to $2.0 billion.
Mid-market and Enterprise ARR surged 38% year over year to $1.2 billion.
Other revenues (4.9% of total revenues) fell 14.8% year over year to $23.9 million.
Second-quarter 2022 non-GAAP gross margin expanded 100 basis points (bps) from the year-ago quarter to 78.4%.
Ringcentral, Inc. Price, Consensus and EPS Surprise
Ringcentral, Inc. price-consensus-eps-surprise-chart | Ringcentral, Inc. Quote
On a non-GAAP basis, research & development (R&D) expenses increased 11.8% year over year to $60.1 million. Sales and marketing expenses escalated 36.8% to $224 million. General and administrative expenses advanced 13.9% to $42.3 million in the reported quarter.
On a non-GAAP basis, operating income was $55.2 million, up 42.2% year over year. Non-GAAP operating margin expanded 110 bps from the year-ago quarter to 11.3%.
Balance Sheet& Cash Flow
As of Mar 31, 2022, cash and cash equivalents were $306 million compared with $302 million as of Mar 31, 2022.
As of Mar 31, 2022, cash flow from operation was $51 million compared with $30 million from the year-ago quarter. Non-GAAP free cash flow was $29 million compared with $14.4 million in the prior-year quarter.
Guidance
For the third quarter of 2022, RingCentral expects revenues between $500 million and $504 million, indicating year-over-year growth of 21% to 22%.
Software subscription revenues for the quarter are expected to be $473.5-$476.5 million, suggesting year-over-year improvement of 23% to 24%.
Non-GAAP operating margin is expected to be 12.4% for the third quarter. Non-GAAP EPS is expected between 50 cents and 51 cents on 96 to 97 fully diluted shares.
For 2022, RingCentral expects revenues in the range of $1.990 billion to $2.015 billion, indicating year-over-year growth of 25% to 26%.
Software subscription revenues for the year are expected between $1.882 billion and $1.898 billion, implying year-over-year growth of 27% to 28%.
Non-GAAP operating margin is expected to be 12% for full-year 2022.
Earnings are expected between $1.91 per share and $1.95 per share.
Zacks Rank & Stocks to Consider
RingCentral currently carries a Zacks Rank #4 (Sell).
RingCentral’s shares have tumbled 81.5% compared with the Zacks Computer and Technology sector’s decline of 22.7% in the year-to-date period.
Here are some better-ranked stocks worth considering in the broader sector.
Asure Software (ASUR - Free Report) carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ASUR’s shares have decreased 30.2% in the year-to-date period compared with the Zacks Internet - Delivery Services industry’s decline of 6%. ASUR is scheduled to report second-quarter 2022 results on Aug 8.
Blink Charging (BLNK - Free Report) carries a Zacks Rank #2.
BLNK’s shares have fallen 16.5% in the year-to-date period compared with the Zacks Electronics - Miscellaneous Services industry’s decline of 14.7%. Blink is scheduled to report second-quarter 2022 results on Aug 8.
Angi (ANGI - Free Report) carries a Zacks Rank #2.
ANGI’s shares have slumped 36.6% in the year-to-date period compared with the Zacks Internet - Content industry’s decline of 31.8%. ANGI is scheduled to report second-quarter 2022 results on Aug 9.