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RingCentral (RNG) Q3 Earnings Top Estimates, Revenues Up Y/Y
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RingCentral (RNG - Free Report) reported third-quarter 2022 non-GAAP earnings of 55 cents per share, which surpassed the Zacks Consensus Estimate by 7.84% and jumped 52.8% year over year.
Net revenues of $509 million also beat the consensus mark by 1.21% and increased 22.8% year over year. The results reflect solid demand for RingCentral’s cloud-communication solutions.
Quarter Details
Software subscription (94.9% of total revenues) revenues increased 25.4% year over year to $483.2 million. Other revenues (5.1% of total revenues) declined 11.6% year over year to $25.8 million.
Annualized Exit Monthly Recurring Subscriptions (“ARR”) increased 25% year over year to $2.05 billion. Mid-market and Enterprise ARR increased 29% year over year to $1.25 billion.
Ringcentral, Inc. Price, Consensus and EPS Surprise
Third-quarter 2022 non-GAAP gross margin contracted 90 basis points (bps) from the year-ago quarter to 77.2%.
On a non-GAAP basis, research & development expenses increased 4.1% year over year to $60.7 million. Sales and marketing expenses were up 20.5% to $220.7 million. General and administrative expenses rose 10.6% to $43 million in the reported quarter.
On a non-GAAP basis, operating income was $68.7 million, up 57.7% year over year. Non-GAAP operating margin expanded 300 bps from the year-ago quarter to 13.5%.
Balance Sheet
As of Sep 30, 2022, cash and cash equivalents were $305.4 million compared with $306 million as of Jun 30, 2022.
As of Sep 30, 2022, cash flow from operations was $42.3 million. Non-GAAP free cash flow was $20.5 million.
Key Q3 Developments
During the reported quarter, RingCentral announced advanced and highly differentiated AI-driven video meeting capabilities, along with extended browser support for RingCentral MVP and RingCentral Video customers.
RingCentral announced new advanced cloud phone and platform innovations, including new enhancements to Salesforce and HubSpot integrations, as well as bulk number management capabilities.
Guidance
For the fourth quarter of 2022, RingCentral expects revenues between $523 million and $529 million, indicating year-over-year growth of 17-18%.
Moreover, subscription revenues for the quarter are expected between $501.5 million and $506.5 million, indicating year-over-year growth of 19-21%.
Non-GAAP operating margin is expected to be 14% for the fourth quarter. Earnings are expected between 59 cents and 60 cents per share.
For 2022, RingCentral now expects revenues between $1.987 billion and $1.993 billion, indicating year-over-year growth of 25%.
Further, subscription revenues for the year are expected between $1.888 billion and $1.893 billion, implying year-over-year growth of 27-28%. The company reiterated the midpoint of $1.890 billion.
Non-GAAP operating margin is expected to be 12.4% for full-year 2022, up from the previous guidance of 12%.
Earnings are expected between $1.97 and $1.98 per share compared with the previous guidance of $1.91-$1.95 per share.
Zacks Rank & Stocks to Consider
Currently, RingCentral has a Zacks Rank #3 (Hold).
RingCentral shares have lost 84.9% year to date, underperforming the Zacks Computer & Technology sector’s decline of 36.6%.
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RingCentral (RNG) Q3 Earnings Top Estimates, Revenues Up Y/Y
RingCentral (RNG - Free Report) reported third-quarter 2022 non-GAAP earnings of 55 cents per share, which surpassed the Zacks Consensus Estimate by 7.84% and jumped 52.8% year over year.
Net revenues of $509 million also beat the consensus mark by 1.21% and increased 22.8% year over year. The results reflect solid demand for RingCentral’s cloud-communication solutions.
Quarter Details
Software subscription (94.9% of total revenues) revenues increased 25.4% year over year to $483.2 million. Other revenues (5.1% of total revenues) declined 11.6% year over year to $25.8 million.
Annualized Exit Monthly Recurring Subscriptions (“ARR”) increased 25% year over year to $2.05 billion. Mid-market and Enterprise ARR increased 29% year over year to $1.25 billion.
Ringcentral, Inc. Price, Consensus and EPS Surprise
Ringcentral, Inc. price-consensus-eps-surprise-chart | Ringcentral, Inc. Quote
Third-quarter 2022 non-GAAP gross margin contracted 90 basis points (bps) from the year-ago quarter to 77.2%.
On a non-GAAP basis, research & development expenses increased 4.1% year over year to $60.7 million. Sales and marketing expenses were up 20.5% to $220.7 million. General and administrative expenses rose 10.6% to $43 million in the reported quarter.
On a non-GAAP basis, operating income was $68.7 million, up 57.7% year over year. Non-GAAP operating margin expanded 300 bps from the year-ago quarter to 13.5%.
Balance Sheet
As of Sep 30, 2022, cash and cash equivalents were $305.4 million compared with $306 million as of Jun 30, 2022.
As of Sep 30, 2022, cash flow from operations was $42.3 million. Non-GAAP free cash flow was $20.5 million.
Key Q3 Developments
During the reported quarter, RingCentral announced advanced and highly differentiated AI-driven video meeting capabilities, along with extended browser support for RingCentral MVP and RingCentral Video customers.
RingCentral announced new advanced cloud phone and platform innovations, including new enhancements to Salesforce and HubSpot integrations, as well as bulk number management capabilities.
Guidance
For the fourth quarter of 2022, RingCentral expects revenues between $523 million and $529 million, indicating year-over-year growth of 17-18%.
Moreover, subscription revenues for the quarter are expected between $501.5 million and $506.5 million, indicating year-over-year growth of 19-21%.
Non-GAAP operating margin is expected to be 14% for the fourth quarter. Earnings are expected between 59 cents and 60 cents per share.
For 2022, RingCentral now expects revenues between $1.987 billion and $1.993 billion, indicating year-over-year growth of 25%.
Further, subscription revenues for the year are expected between $1.888 billion and $1.893 billion, implying year-over-year growth of 27-28%. The company reiterated the midpoint of $1.890 billion.
Non-GAAP operating margin is expected to be 12.4% for full-year 2022, up from the previous guidance of 12%.
Earnings are expected between $1.97 and $1.98 per share compared with the previous guidance of $1.91-$1.95 per share.
Zacks Rank & Stocks to Consider
Currently, RingCentral has a Zacks Rank #3 (Hold).
RingCentral shares have lost 84.9% year to date, underperforming the Zacks Computer & Technology sector’s decline of 36.6%.
Zscaler (ZS - Free Report) , StoneCo (STNE - Free Report) , and Agilent Technologies (A - 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 (Strong Buy) stocks here.
Zscaler shares are down 63.9% year to date. ZS is set to report its first-quarter fiscal 2023 results on Dec 1.
StoneCo shares are down 39.4% year to date. STNE is set to report its third-quarter 2022 results on Nov 17.
Agilent shares are down 14.2% year to date. A is set to report its fourth-quarter fiscal 2022 results on Nov 21.