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RingCentral (RNG) Q2 Earnings Top Estimates, Revenues Up Y/Y
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RingCentral (RNG - Free Report) reported second-quarter 2023 non-GAAP earnings of 83 cents per share, surpassing the Zacks Consensus Estimate by 10.67% and increasing 84.4% year over year.
Net revenues of $539 million surpassed the consensus mark by 0.6% and increased 10.8% year over year.
Quarter Details
Software subscription (95.2% of total revenues) revenues of $514 million beat the Zacks Consensus Estimate by 0.29% and increased 10.9% year over year.
Other revenues (4.8% of total revenues) of $25.7 million beat the consensus mark by 7.49% and increased 7.4% year over year.
Ringcentral, Inc. Price, Consensus and EPS Surprise
Annualized Exit Monthly Recurring Subscriptions (“ARR”) of $2.22 billion missed the consensus mark by 1.26% but increased 12% year over year. Mid-market and Enterprise ARR increased 13% year over year to $1.37 billion.
The second-quarter 2023 non-GAAP gross margin contracted 30 basis points (bps) from the year-ago quarter’s levels to 78.1%.
Research and development expenses declined 9.5% year over year to $54.4 million on a non-GAAP basis. Sales and marketing expenses were down 1.1% to $221.5 million. General and administrative expenses declined 4.1% to $40.6 million in the reported quarter.
On a non-GAAP basis, operating income was $104.4 million, up 89.3% year over year. The non-GAAP operating margin expanded 800 bps from the year-ago quarter’s levels to 19.4%.
Balance Sheet
As of Jun 30, 2023, cash and cash equivalents were $225.4 million compared with $274.8 million as of Mar 31, 2023.
Cash flow from operations was $90.7 million in the second quarter compared with first-quarter 2023 figure of $108.5 million.
Non-GAAP free cash flow was $81 million compared with $54 million reported in the previous quarter.
Guidance
For the third quarter of 2023, RingCentral expects revenues between $552 million and $556 million, indicating a year-over-year growth of 8-9%.
Subscription revenues in the quarter are expected to be between $526 million and $530 million, indicating a year-over-year growth of 9-10%.
The non-GAAP operating margin is expected to be 18-18.5% in the third quarter. Earnings are expected to be 75-78 cents per share.
For 2023, RingCentral maintains its revenue guidance to $2.187 billion and $2.205 billion, indicating a year-over-year growth of 10-11%.
Subscription revenues for the year are expected to be between $2.086 billion and $2.104 billion, suggesting a year-over-year growth of 11%.
The non-GAAP operating margin is expected to be between 18.5% and 19% for 2023.
Earnings are expected to be between $3.11 and $3.25 per share.
Zacks Rank & Stocks to Consider
Currently, RingCentral has a Zacks Rank #4 (Sell).
RingCentral shares have lost 1% year to date, underperforming the Zacks Computer & Technology sector’s increase of 37.3%.
Image: Bigstock
RingCentral (RNG) Q2 Earnings Top Estimates, Revenues Up Y/Y
RingCentral (RNG - Free Report) reported second-quarter 2023 non-GAAP earnings of 83 cents per share, surpassing the Zacks Consensus Estimate by 10.67% and increasing 84.4% year over year.
Net revenues of $539 million surpassed the consensus mark by 0.6% and increased 10.8% year over year.
Quarter Details
Software subscription (95.2% of total revenues) revenues of $514 million beat the Zacks Consensus Estimate by 0.29% and increased 10.9% year over year.
Other revenues (4.8% of total revenues) of $25.7 million beat the consensus mark by 7.49% and increased 7.4% year over year.
Ringcentral, Inc. Price, Consensus and EPS Surprise
Ringcentral, Inc. price-consensus-eps-surprise-chart | Ringcentral, Inc. Quote
Annualized Exit Monthly Recurring Subscriptions (“ARR”) of $2.22 billion missed the consensus mark by 1.26% but increased 12% year over year. Mid-market and Enterprise ARR increased 13% year over year to $1.37 billion.
The second-quarter 2023 non-GAAP gross margin contracted 30 basis points (bps) from the year-ago quarter’s levels to 78.1%.
Research and development expenses declined 9.5% year over year to $54.4 million on a non-GAAP basis. Sales and marketing expenses were down 1.1% to $221.5 million. General and administrative expenses declined 4.1% to $40.6 million in the reported quarter.
On a non-GAAP basis, operating income was $104.4 million, up 89.3% year over year. The non-GAAP operating margin expanded 800 bps from the year-ago quarter’s levels to 19.4%.
Balance Sheet
As of Jun 30, 2023, cash and cash equivalents were $225.4 million compared with $274.8 million as of Mar 31, 2023.
Cash flow from operations was $90.7 million in the second quarter compared with first-quarter 2023 figure of $108.5 million.
Non-GAAP free cash flow was $81 million compared with $54 million reported in the previous quarter.
Guidance
For the third quarter of 2023, RingCentral expects revenues between $552 million and $556 million, indicating a year-over-year growth of 8-9%.
Subscription revenues in the quarter are expected to be between $526 million and $530 million, indicating a year-over-year growth of 9-10%.
The non-GAAP operating margin is expected to be 18-18.5% in the third quarter. Earnings are expected to be 75-78 cents per share.
For 2023, RingCentral maintains its revenue guidance to $2.187 billion and $2.205 billion, indicating a year-over-year growth of 10-11%.
Subscription revenues for the year are expected to be between $2.086 billion and $2.104 billion, suggesting a year-over-year growth of 11%.
The non-GAAP operating margin is expected to be between 18.5% and 19% for 2023.
Earnings are expected to be between $3.11 and $3.25 per share.
Zacks Rank & Stocks to Consider
Currently, RingCentral has a Zacks Rank #4 (Sell).
RingCentral shares have lost 1% year to date, underperforming the Zacks Computer & Technology sector’s increase of 37.3%.
NVIDIA (NVDA - Free Report) , Cisco Systems (CSCO - Free Report) and Rekor Systems (REKR - Free Report) are some better-ranked stocks that investors can consider in the broader sector. NVIDIA sports a Zacks Rank #1 (Strong Buy), while Cisco Systems and Rekor Systems carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NVIDIA shares have gained 210.9% year to date. NVDA is set to report its second-quarter 2023 results on Aug 23.
Cisco Systems shares have gained 11.3% year to date. CSCO is set to report its fourth-quarter fiscal 2023 results on Aug 16.
Rekor Systems shares have gained 122.5% year to date. REKR is set to report its second-quarter 2023 results on Aug 14.