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RingCentral (RNG) Q1 Earnings Top Estimates, Revenues Up Y/Y
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RingCentral (RNG - Free Report) reported non-GAAP earnings of 87 cents per share in first-quarter 2024, surpassing the Zacks Consensus Estimate by 8.75% and increasing 14.5% year over year.
Net revenues of $584 million comfortably beat the consensus mark by 1.11% and increased 9.5% year over year. A robust product portfolio and strong subscription revenues drove the upside.
Quarter Details
Software subscription (95.4% of total revenues) revenues increased 9.7% year over year to $557.5 million, beating the Zacks Consensus Estimate by 0.90%.
Other revenues (4.6% of total revenues) increased 5.2% year over year to $26.7 million, beating the Zacks Consensus Estimate by 5.60%
Ringcentral, Inc. Price, Consensus and EPS Surprise
Annualized Exit Monthly Recurring Subscriptions (ARR) increased 10% year over year to $2.37 billion. Mid-market and Enterprise ARR increased 11% year over year to $1.48 billion, beating the Zacks Consensus Estimate by 1.85%. The Enterprise ARR increased 13% year over year to $1.02 billion.
The first-quarter 2024 non-GAAP gross margin contracted 30 basis points (bps) from the year-ago quarter’s tally to 78.2%.
On a non-GAAP basis, research & development expenses declined 3% year over year to $58 million.
Sales and marketing expenses increased 7.1% to $234.6 million. General and administrative expenses fell 10.8% to $43.1 million in the reported quarter.
On a non-GAAP basis, operating income was $121.1 million, up 31.6% year over year. The non-GAAP operating margin expanded 350 bps from the year-ago quarter to 20.7%.
In the first quarter of 2024, RNG expanded its product portfolio with the introduction of RingEX with RingSense AI, enhancing customer interactions with personalized and context-aware features for more thoughtful conversations and increased efficiency in everyday work.
RingCentral also expanded its Global Service Provider (GSP) family by adding Optus, Australia's second-largest telecommunications provider, alongside partners like AT&T, BT and Vodafone.
Balance Sheet
As of Mar 31, 2024, cash and cash equivalents were $203 million compared with $222 million as of Dec 31, 2023.
Cash flow from operations was $96 million in the first quarter compared with the fourth-quarter 2023 figure of $113.8 million.
Non-GAAP free cash flow was $77 million compared with $96.9 million reported in the previous quarter. The non-GAAP cash flow margin was 13.1% in the first quarter.
In the first quarter of 2024, $80 million was allocated for repurchase of shares. Its board also increased the repurchase authorization by $250 million.
Guidance
For the second quarter of 2024, RingCentral expects revenues between $584.5 million and $587.5 million, indicating year-over-year growth of 8-9%.
Subscription revenues in the second quarter are expected to be between $558 million and $561 million, indicating year-over-year growth of 9%.
The non-GAAP operating margin is expected to be 20.7% in the second quarter of 2024. Earnings are expected to be 87-88 cents per share.
The share-based compensation is anticipated to be in the range of $98-$100 million in the second quarter of 2024.
Zacks Rank & Stocks to Consider
Currently, RingCentral has a Zacks Rank #3 (Hold).
RingCentral’s shares have lost 11.6% year to date compared with the Zacks Computer & Technology sector’s increase of 12.2%.
Here are some top-ranked stocks worth considering in the broader sector.
Akoustis Technologies (AKTS - Free Report) , NVIDIA (NVDA - Free Report) and Babcock (BW - Free Report) are some better-ranked stocks that investors can consider in the broader sector.
Image: Bigstock
RingCentral (RNG) Q1 Earnings Top Estimates, Revenues Up Y/Y
RingCentral (RNG - Free Report) reported non-GAAP earnings of 87 cents per share in first-quarter 2024, surpassing the Zacks Consensus Estimate by 8.75% and increasing 14.5% year over year.
Net revenues of $584 million comfortably beat the consensus mark by 1.11% and increased 9.5% year over year. A robust product portfolio and strong subscription revenues drove the upside.
Quarter Details
Software subscription (95.4% of total revenues) revenues increased 9.7% year over year to $557.5 million, beating the Zacks Consensus Estimate by 0.90%.
Other revenues (4.6% of total revenues) increased 5.2% year over year to $26.7 million, beating the Zacks Consensus Estimate by 5.60%
Ringcentral, Inc. Price, Consensus and EPS Surprise
Ringcentral, Inc. price-consensus-eps-surprise-chart | Ringcentral, Inc. Quote
Annualized Exit Monthly Recurring Subscriptions (ARR) increased 10% year over year to $2.37 billion. Mid-market and Enterprise ARR increased 11% year over year to $1.48 billion, beating the Zacks Consensus Estimate by 1.85%. The Enterprise ARR increased 13% year over year to $1.02 billion.
The first-quarter 2024 non-GAAP gross margin contracted 30 basis points (bps) from the year-ago quarter’s tally to 78.2%.
On a non-GAAP basis, research & development expenses declined 3% year over year to $58 million.
Sales and marketing expenses increased 7.1% to $234.6 million. General and administrative expenses fell 10.8% to $43.1 million in the reported quarter.
On a non-GAAP basis, operating income was $121.1 million, up 31.6% year over year. The non-GAAP operating margin expanded 350 bps from the year-ago quarter to 20.7%.
In the first quarter of 2024, RNG expanded its product portfolio with the introduction of RingEX with RingSense AI, enhancing customer interactions with personalized and context-aware features for more thoughtful conversations and increased efficiency in everyday work.
RingCentral also expanded its Global Service Provider (GSP) family by adding Optus, Australia's second-largest telecommunications provider, alongside partners like AT&T, BT and Vodafone.
Balance Sheet
As of Mar 31, 2024, cash and cash equivalents were $203 million compared with $222 million as of Dec 31, 2023.
Cash flow from operations was $96 million in the first quarter compared with the fourth-quarter 2023 figure of $113.8 million.
Non-GAAP free cash flow was $77 million compared with $96.9 million reported in the previous quarter. The non-GAAP cash flow margin was 13.1% in the first quarter.
In the first quarter of 2024, $80 million was allocated for repurchase of shares. Its board also increased the repurchase authorization by $250 million.
Guidance
For the second quarter of 2024, RingCentral expects revenues between $584.5 million and $587.5 million, indicating year-over-year growth of 8-9%.
Subscription revenues in the second quarter are expected to be between $558 million and $561 million, indicating year-over-year growth of 9%.
The non-GAAP operating margin is expected to be 20.7% in the second quarter of 2024. Earnings are expected to be 87-88 cents per share.
The share-based compensation is anticipated to be in the range of $98-$100 million in the second quarter of 2024.
Zacks Rank & Stocks to Consider
Currently, RingCentral has a Zacks Rank #3 (Hold).
RingCentral’s shares have lost 11.6% year to date compared with the Zacks Computer & Technology sector’s increase of 12.2%.
Here are some top-ranked stocks worth considering in the broader sector.
Akoustis Technologies (AKTS - Free Report) , NVIDIA (NVDA - Free Report) and Babcock (BW - Free Report) are some better-ranked stocks that investors can consider in the broader sector.
All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Akoustis Technologies’ shares have declined 28.4% year to date. AKTS is scheduled to release third-quarter fiscal 2024 results on May 13.
NVIDIA has surged 82.9% year to date. NVDA is scheduled to release first-quarter fiscal 2025 results on May 22.
Babcock’s shares have declined 21.9% year to date. BW is set to report first-quarter 2024 results on May 9.