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Why Is RingCentral (RNG) Down 0.9% Since Last Earnings Report?
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A month has gone by since the last earnings report for RingCentral (RNG - Free Report) . Shares have lost about 0.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is RingCentral due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
RingCentral Q4 Earnings Top Estimates, Revenues Up Y/Y
RingCentral reported fourth-quarter 2021 non-GAAP earnings of 39 cents per share, which surpassed the Zacks Consensus Estimate by 5.41% and surged 34.5% year over year.
Net revenues of $448.5 million also beat the consensus mark by 3.22% and jumped 34.1% year over year. The results reflect solid demand for RingCentral’s cloud communication solutions.
Quarter Details
Software-subscription (93.7% of total revenues) revenues surged 37.1% year over year to $420.2 million.
Annualized Exit Monthly Recurring Subscriptions (“ARR”) increased 39% year over year to $1.8 billion.
RingCentral Office ARR (UCaaS + CCaaS) soared 41% year over year to $1.7 billion. Mid-market and Enterprise ARR increased 52% year over year to $1.1 billion
Other revenues (6.3% of total revenues) climbed 0.9% year over year to $28.3 million, reflecting higher adoption of RingCentral’s apps in the prevailing work-from-home wave.
Fourth-quarter 2021 non-GAAP gross margin expanded 170 basis points (bps) from the year-ago quarter to 78.4%.
On a non-GAAP basis, research & development (R&D) expenses increased 36.6% year over year to $61.7 million. Sales and marketing expenses were up 44.2% to $204.5 million. General and administrative expenses rose 6.6% to $37.9 million in the reported quarter.
On a non-GAAP basis, operating income was $47.3 million, up 40% year over year. Non-GAAP operating margin expanded 40 bps from the year-ago quarter to 10.5%.
Balance Sheet
As of Dec 31, 2021, cash and cash equivalents were $267.2 million compared with $345.2 million as of Sep 30, 2021.
Guidance
For the first quarter of 2022, RingCentral expects revenues between $455 million and $459 million, indicating year-over-year growth between 29% and 30%.
Software-subscription revenues for the quarter are expected between $426 million and $429 million, indicating year-over-year growth between 31% and 32%.
Non-GAAP operating margin is expected to be 9.2% for the fourth quarter. Earnings are expected to be 34 cents per share.
For 2022, RingCentral expects revenues between $1.990 billion and $2.015 billion, indicating year-over-year growth of 25% to 26%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 13.13% due to these changes.
VGM Scores
At this time, RingCentral has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, RingCentral has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is RingCentral (RNG) Down 0.9% Since Last Earnings Report?
A month has gone by since the last earnings report for RingCentral (RNG - Free Report) . Shares have lost about 0.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is RingCentral due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
RingCentral Q4 Earnings Top Estimates, Revenues Up Y/Y
RingCentral reported fourth-quarter 2021 non-GAAP earnings of 39 cents per share, which surpassed the Zacks Consensus Estimate by 5.41% and surged 34.5% year over year.
Net revenues of $448.5 million also beat the consensus mark by 3.22% and jumped 34.1% year over year. The results reflect solid demand for RingCentral’s cloud communication solutions.
Quarter Details
Software-subscription (93.7% of total revenues) revenues surged 37.1% year over year to $420.2 million.
Annualized Exit Monthly Recurring Subscriptions (“ARR”) increased 39% year over year to $1.8 billion.
RingCentral Office ARR (UCaaS + CCaaS) soared 41% year over year to $1.7 billion. Mid-market and Enterprise ARR increased 52% year over year to $1.1 billion
Other revenues (6.3% of total revenues) climbed 0.9% year over year to $28.3 million, reflecting higher adoption of RingCentral’s apps in the prevailing work-from-home wave.
Fourth-quarter 2021 non-GAAP gross margin expanded 170 basis points (bps) from the year-ago quarter to 78.4%.
On a non-GAAP basis, research & development (R&D) expenses increased 36.6% year over year to $61.7 million. Sales and marketing expenses were up 44.2% to $204.5 million. General and administrative expenses rose 6.6% to $37.9 million in the reported quarter.
On a non-GAAP basis, operating income was $47.3 million, up 40% year over year. Non-GAAP operating margin expanded 40 bps from the year-ago quarter to 10.5%.
Balance Sheet
As of Dec 31, 2021, cash and cash equivalents were $267.2 million compared with $345.2 million as of Sep 30, 2021.
Guidance
For the first quarter of 2022, RingCentral expects revenues between $455 million and $459 million, indicating year-over-year growth between 29% and 30%.
Software-subscription revenues for the quarter are expected between $426 million and $429 million, indicating year-over-year growth between 31% and 32%.
Non-GAAP operating margin is expected to be 9.2% for the fourth quarter. Earnings are expected to be 34 cents per share.
For 2022, RingCentral expects revenues between $1.990 billion and $2.015 billion, indicating year-over-year growth of 25% to 26%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 13.13% due to these changes.
VGM Scores
At this time, RingCentral has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, RingCentral has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.