RingCentral (RNG - Free Report) reported fourth-quarter 2022 non-GAAP earnings of 60 cents per share, which surpassed the Zacks Consensus Estimate by 1.69% and jumped 53.8% year over year.
Net revenues of $524.7 million lagged the consensus mark by 0.69% but increased 17% year over year.
Quarter Details
Software subscription (95.6% of total revenues) revenues increased 19.4% year over year to $501.6 million. Other revenues (4.4% of total revenues) declined 18.2% year over year to $23.1 million.
Annualized Exit Monthly Recurring Subscriptions (“ARR”) increased 17% year over year to $2.10 billion. Mid-market and Enterprise ARR increased 20% year over year to $1.30 billion.
The fourth-quarter 2022 non-GAAP gross margin expanded 70 basis points (bps) from the year-ago quarter to 79.1%.
On a non-GAAP basis, research and development expenses increased 3.7% year over year to $64 million. Sales and marketing expenses were up 13.4% to $231.8 million. General and administrative expenses rose 20.3% to $45.6 million in the reported quarter.
On a non-GAAP basis, operating income was $73.4 million, up 55.3% year over year. The non-GAAP operating margin expanded 340 bps from the year-ago quarter to 14%.
Balance Sheet
As of Dec 31, 2022, cash and cash equivalents were $269.9 million compared with $305.4 million as of Sep 30, 2022.
RingCentral also announced that it entered a 5-year, $600-million credit facility, consisting of a $400-million Delayed Draw Term Loan A and a $200-million Revolver.
Guidance
For the first quarter of 2023, RingCentral expects revenues between $526 million and $530 million, indicating year-over-year growth of 12-13%.
Subscription revenues for the quarter are expected between $503 million and $505 million, indicating year-over-year growth of 14-15%.
The non-GAAP operating margin is expected to be 16.5% for the first quarter. Earnings are expected to be 69-70 cents per share.
For 2023, RingCentral expects revenues between $2.180 billion and $2.20 billion, indicating year-over-year growth of 10-11%.
Subscription revenues for the year are expected between $2.08 billion and $2.100 billion, implying year-over-year growth of 10-11%.
The non-GAAP operating margin is expected to be at least 18% for 2023.
Earnings are expected between $3.04 and $3.10 per share.
Zacks Rank & Stocks to Consider
Currently, RingCentral has a Zacks Rank #3 (Hold).
RingCentral shares have lost 70.6% year to date, underperforming the Zacks Computer & Technology sector’s decline of 17.2%.
Baidu (BIDU - Free Report) , Everbridge (EVBG - Free Report) and Frontier (FYBR - Free Report) are some better-ranked stocks that investors can consider in the broader sector. Baidu sports a Zacks Rank #1 (Strong Buy), while both Everbridge and Frontier carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Baidu shares have declined 9.1% in the past year. BIDU is set to report its fourth-quarter 2022 results on Feb 22.
Everbridge shares have declined 23.6% in the past year. EVBG is set to report its fourth-quarter 2022 results on Feb 22.
Frontier shares have gained 4.2% in the past year. FYBR is set to report its fourth-quarter 2022 results on Feb 24.
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RingCentral (RNG - Free Report) reported fourth-quarter 2022 non-GAAP earnings of 60 cents per share, which surpassed the Zacks Consensus Estimate by 1.69% and jumped 53.8% year over year.
Net revenues of $524.7 million lagged the consensus mark by 0.69% but increased 17% year over year.
Quarter Details
Software subscription (95.6% of total revenues) revenues increased 19.4% year over year to $501.6 million. Other revenues (4.4% of total revenues) declined 18.2% year over year to $23.1 million.
Annualized Exit Monthly Recurring Subscriptions (“ARR”) increased 17% year over year to $2.10 billion. Mid-market and Enterprise ARR increased 20% year over year to $1.30 billion.
The fourth-quarter 2022 non-GAAP gross margin expanded 70 basis points (bps) from the year-ago quarter to 79.1%.
On a non-GAAP basis, research and development expenses increased 3.7% year over year to $64 million. Sales and marketing expenses were up 13.4% to $231.8 million. General and administrative expenses rose 20.3% to $45.6 million in the reported quarter.
On a non-GAAP basis, operating income was $73.4 million, up 55.3% year over year. The non-GAAP operating margin expanded 340 bps from the year-ago quarter to 14%.
Balance Sheet
As of Dec 31, 2022, cash and cash equivalents were $269.9 million compared with $305.4 million as of Sep 30, 2022.
RingCentral also announced that it entered a 5-year, $600-million credit facility, consisting of a $400-million Delayed Draw Term Loan A and a $200-million Revolver.
Guidance
For the first quarter of 2023, RingCentral expects revenues between $526 million and $530 million, indicating year-over-year growth of 12-13%.
Subscription revenues for the quarter are expected between $503 million and $505 million, indicating year-over-year growth of 14-15%.
The non-GAAP operating margin is expected to be 16.5% for the first quarter. Earnings are expected to be 69-70 cents per share.
For 2023, RingCentral expects revenues between $2.180 billion and $2.20 billion, indicating year-over-year growth of 10-11%.
Subscription revenues for the year are expected between $2.08 billion and $2.100 billion, implying year-over-year growth of 10-11%.
The non-GAAP operating margin is expected to be at least 18% for 2023.
Earnings are expected between $3.04 and $3.10 per share.
Zacks Rank & Stocks to Consider
Currently, RingCentral has a Zacks Rank #3 (Hold).
RingCentral shares have lost 70.6% year to date, underperforming the Zacks Computer & Technology sector’s decline of 17.2%.
Baidu (BIDU - Free Report) , Everbridge (EVBG - Free Report) and Frontier (FYBR - Free Report) are some better-ranked stocks that investors can consider in the broader sector. Baidu sports a Zacks Rank #1 (Strong Buy), while both Everbridge and Frontier carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Baidu shares have declined 9.1% in the past year. BIDU is set to report its fourth-quarter 2022 results on Feb 22.
Everbridge shares have declined 23.6% in the past year. EVBG is set to report its fourth-quarter 2022 results on Feb 22.
Frontier shares have gained 4.2% in the past year. FYBR is set to report its fourth-quarter 2022 results on Feb 24.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How To Profit From Trillions On Spending For Infrastructure >>
Get the latest research report on BIDU - FREE
Get the latest research report on RNG - FREE
Get the latest research report on EVBG - FREE
Get the latest research report on FYBR - FREE