RingCentral (RNG) Q3 Earnings Top Estimates, Revenues Up Y/Y
RingCentral RNG reported third-quarter 2023 non-GAAP earnings of 78 cents per share, which surpassed the Zacks Consensus Estimate by 2.63% and jumped 41.8% year over year.
Net revenues of $558.2 million comfortably beat the consensus mark of $554 million and increased 9.7% year over year.
Quarter Details
Software subscription (95.1% of total revenues) revenues increased 9.9% year over year to $531 million. Other revenues (4.9% of total revenues) increased 5.2% year over year to $27.1 million.
Annualized Exit Monthly Recurring Subscriptions (“ARR”) increased 11% year over year to $2.26 billion. Mid-market and Enterprise ARR increased 13% year over year to $1.41 billion.
Ringcentral, Inc. Price, Consensus and EPS Surprise
Ringcentral, Inc. price-consensus-eps-surprise-chart | Ringcentral, Inc. Quote
Third-quarter 2023 non-GAAP gross margin expanded 90 basis points (bps) from the year-ago quarter to 78.1%.
On a non-GAAP basis, research & development expenses decreased 8.3% year over year to $55.7 million.
Sales and marketing expenses were up 4.3% to $230.1 million. General and administrative expenses rose 1.1% to $43.5 million in the reported quarter.
On a non-GAAP basis, operating income was $106.8 million, up 55.6% year over year. Non-GAAP operating margin expanded 570 bps from the year-ago quarter to 19.1%.
Balance Sheet
As of Sep 30, 2023, cash and cash equivalents were $432.4 million compared with $225.4 million as of Jun 30, 2023.
Cash flow from operations was $86.6 million in the third quarter compared with the second-quarter 2023 figure of $90.7 million.
Non-GAAP free cash flow was $86.7 million compared with $81 million reported in the previous quarter.
Guidance
For the fourth quarter of 2023, RingCentral expects revenues between $566.5 million and $573.5 million, indicating year-over-year growth of 8-9%.
Subscription revenues in the quarter are expected to be between $542 million and $548 million, indicating year-over-year growth of 8-9%.
The non-GAAP operating margin is expected to be 20% in the fourth quarter. Earnings are expected to be 82-83 cents per share.
For 2023, RingCentral maintains its revenue guidance to $2.198 billion and $2.205 billion, indicating year-over-year growth of 11%.
Subscription revenues for the year are expected to be between $2.095 billion and $2.101 billion, suggesting year-over-year growth of 11%.
The non-GAAP operating margin is expected to be 19% for 2023.
Earnings are expected to be between $3.19 and $3.20 per share.
Zacks Rank & Stocks to Consider
Currently, RingCentral has a Zacks Rank #3 (Hold).
RingCentral shares have lost 20.2% year to date, underperforming the Zacks Computer & Technology sector’s increase of 36.4%.
NetEase NTES, NVIDIA NVDA and Model N MODN are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NetEase shares have gained 53.6% year to date. NTES is set to report its third-quarter 2023 results on Nov 16.
NVIDIA shares have returned 213.1% year to date. NVDA is set to report its third-quarter fiscal 2024 results on Nov 21.
Model N shares have declined 37.6% year to date. MODN is set to report its fourth-quarter fiscal 2023 results on Nov 9.
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