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

RingCentral RNG reported fourth-quarter 2023 non-GAAP earnings of 86 cents per share, which surpassed the Zacks Consensus Estimate by 3.61% and increased 43.3% year over year.

Net revenues of $571.3 million comfortably beat the consensus mark of $570 million and increased 8.9% year over year.

Quarter Details

Software subscription (95.8% of total revenues) revenues increased 9.1% year over year to $547.4 million. Other revenues (4.2% of total revenues) increased 3.3% year over year to $23.9 million.

Annualized Exit Monthly Recurring Subscriptions (“ARR”) increased 11% year over year to $2.3 billion. Mid-market ARR increased 10% and Enterprise ARR increased 13% year over year to $1 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

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In the fourth quarter of 2023, RNG expanded its product portfolio with the introduction of three new products, RingCX, RingSense for Sales and RingCentral Events, aimed to cater to evolving customer needs in areas such as contact center solutions, sales intelligence, and event management.

The fourth-quarter 2023 non-GAAP gross margin contracted 60 basis points (bps) from the year-ago quarter to 78.4%.

On a non-GAAP basis, research & development expenses decreased 6.4% year over year to $59.9 million.

Sales and marketing expenses decreased 0.5% to $230.7 million. General and administrative expenses decreased 11.4% to $40.4 million in the reported quarter.

On a non-GAAP basis, operating income was $117 million, up 59.3% year over year. The non-GAAP operating margin expanded 650 bps from the year-ago quarter to 20.5%.

Balance Sheet

As of Dec 31, 2023, cash and cash equivalents were $222.1 million compared with $432.4 million as of Sep 30, 2023.

Cash flow from operations was $113.8 million in the fourth quarter compared with the third-quarter 2023 figure of $86.6 million.

Non-GAAP free cash flow was $96.9 million compared with $86.7 million reported in the previous quarter.

Guidance

For the first quarter of 2024, RingCentral expects revenues between $575 million and $580 million, indicating year-over-year growth of 8-9%.

Subscription revenues in the quarter are expected to be between $550 million and $555 million, indicating year-over-year growth of 8-9%.

The non-GAAP operating margin is expected to be 19.5% in the first quarter of 2024. Earnings are expected to be 79-80 cents per share.

The share-based compensation is anticipated to be in the range of $98-$100 million in the first quarter of 2024.

Zacks Rank & Stocks to Consider

Currently, RingCentral has a Zacks Rank #2 (Buy).

RingCentral’s shares have lost 9.1% year to date compared with the Zacks Computer & Technology sector’s increase of 7.7%.

Here are some same-ranked stocks worth considering in the broader sector.

Agilent Technologies A, ACM Research ACMR and Bandwidth BAND are some better-ranked stocks that investors can consider in the broader sector.

All three stocks have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Agilent Technologies shares have declined 3.5% year to date. A is scheduled to release first-quarter 2024 results on Feb 27.

ACM Research shares have declined 6.1% year to date. ACMR is set to report its fourth-quarter 2023 results on Feb 28.

Bandwidth shares have declined 6.7% year to date. BAND is set to report its fourth-quarter 2023 results on Feb 28.

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ACM Research, Inc. (ACMR) : Free Stock Analysis Report

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Bandwidth Inc. (BAND) : Free Stock Analysis Report

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