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RingCentral (RNG) Q4 Earnings Top Estimates, Revenues Up Y/Y
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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.
Ringcentral, Inc. Price, Consensus and EPS Surprise
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%.
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RingCentral (RNG) Q4 Earnings Top Estimates, Revenues Up Y/Y
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.
Ringcentral, Inc. Price, Consensus and EPS Surprise
Ringcentral, Inc. price-consensus-eps-surprise-chart | Ringcentral, Inc. Quote
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.