RingCentral RNG reported first-quarter 2023 non-GAAP earnings of 76 cents per share, which surpassed the Zacks Consensus Estimate by 10.15% and increased 94.9% year over year.
Net revenues of $534 million surpassed the consensus mark by 1.2% and increased 14% year over year.
Software subscription (95% of total revenues) revenues increased 16% year over year to $508 million. Other revenues (5% of total revenues) declined 8% year over year to $25 million.
Annualized Exit Monthly Recurring Subscriptions (“ARR”) increased 14% year over year to $2.16 billion. Mid-market and Enterprise ARR increased 15% year over year to $1.33 billion.
Ringcentral, Inc. Price, Consensus and EPS Surprise
Ringcentral, Inc. price-consensus-eps-surprise-chart | Ringcentral, Inc. Quote
The first-quarter 2023 non-GAAP gross margin expanded 50 basis points (bps) from the year-ago quarter’s levels to 78.5%.
On a non-GAAP basis, research and development expenses declined 3.6% year over year to $59.8 million. Sales and marketing expenses were up 3.6% to $219 million. General and administrative expenses rose 13% to $48.3 million in the reported quarter.
On a non-GAAP basis, operating income was $92 million, up 89.1% year over year. The non-GAAP operating margin expanded 680 bps from the year-ago quarter’s levels to 17.2%.
As of Mar 31, 2023, cash and cash equivalents were $274.8 million compared with $269.9 million as of Dec 31, 2022.
Cash flow from operations was $108.5 million in the first quarter compared with fourth-quarter 2022 figure of $39.4 million.
Non-GAAP free cash flow was $54 million compared with a negative $13.6 million reported in the previous quarter.
For the second quarter of 2023, RingCentral expects revenues between $535 million and $537 million, indicating a year-over-year growth of 10%.
Subscription revenues in the quarter are expected between $511 million and $513 million, indicating a year-over-year growth of 10-11%.
The non-GAAP operating margin is expected to be 17.5% in the second quarter. Earnings are expected to be 74-76 cents per share.
For 2023, RingCentral raised 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 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 at least 18.5% for 2023.
Earnings are expected between $3.19 and $3.25 per share.
Zacks Rank & Stocks to Consider
Currently, RingCentral has a Zacks Rank #4 (Sell).
RingCentral shares have lost 25.2% year to date, underperforming the Zacks Computer & Technology sector’s increase of 20.7%.
Box BOX, NVIDIA NVDA and MakeMyTrip Limited MMYT are some better-ranked stocks that investors can consider in the broader sector. Box sports a Zacks Rank #1 (Strong Buy), while NVIDIA and MakeMyTrip carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Box shares have declined 12.9% year to date. BOX is set to report its first-quarter fiscal 2024 results on May 30.
NVIDIA shares have gained 95.5% year to date. NVDA is set to report its first-quarter fiscal 2024 results on May 24.
MakeMyTrip shares have declined 7.7% year to date. MMYT is set to report its fourth-quarter fiscal 2023 results on May 16.
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