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RingCentral (RNG) Q4 Earnings Top Estimates, Revenues Up Y/Y

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Zacks Equity Research
·3 min read
In this article:
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RingCentral RNG 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, Inc. Price, Consensus and EPS Surprise

Ringcentral, Inc. Price, Consensus and EPS Surprise
Ringcentral, Inc. Price, Consensus and EPS Surprise

Ringcentral, Inc. price-consensus-eps-surprise-chart | Ringcentral, Inc. Quote

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%.

Software-subscription revenues for the year are expected between $1.870 billion and $1.890 billion, implying year-over-year growth of 26% to 28%.

Non-GAAP operating margin is expected to be 10.6% for full-year 2022.

Earnings are expected between $1.69 per share and $1.72 per share.

Zacks Rank & Stocks to Consider

Currently, RingCentral has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same sector are Allied Motion Technologies AMOT, Zscaler ZS and Box BOX. While Allied Motion sports a Zacks Rank #1 (Strong Buy), both Zscaler and Box carries Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Allied Motion Technologies’ shares have declined 6.4% year to date.

AMOT is likely to report fourth-quarter 2021 results on Mar 9.

Zscaler’s shares are down 20.7% on a year-to-date basis.

ZS is scheduled to report second-quarter fiscal 2022 results on Feb 24.

Box’s shares are down 3.9% on a year-to-date basis.

BOX is scheduled to report fourth-quarter fiscal 2022 results on Mar 2.


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