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RingCentral (RNG) Q1 Earnings Top Estimates, Revenues Up Y/Y

Zacks Equity Research
·4 min read

RingCentral RNG reported first-quarter 2022 non-GAAP earnings of 39 cents per share, which surpassed the Zacks Consensus Estimate by 14.71% and improved 44.4% year over year.

Net revenues of $468 million beat the consensus mark by 2.08% and surged 33% year over year. The performance reflects solid demand for RingCentral’s cloud-based communication platform and Contact Center business that provides UCaas. RingCentral’s strategic partnerships have positively impacted revenue growth.

Quarter Details

Software-subscription (94.1% of total revenues) revenues climbed 35% year over year to $440 million.

Annualized Exit Monthly Recurring Subscriptions (“ARR”) increased 35% year over year to $1.9 billion.

Mid-market and Enterprise ARR increased 46% year over year to $1.2 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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Other revenues (5.9% of total revenues) rose 2.2% year over year to $27.8 million, reflecting higher adoption of RingCentral’s apps in the prevailing work-from-home trend.

First-quarter 2022 non-GAAP gross margin expanded 90 basis points (bps) from the year-ago quarter to 78%.

On a non-GAAP basis, research & development (R&D) expenses increased 29.3% year over year to $62.1 million. Sales and marketing expenses were up 45.2% to $211.4 million. General and administrative expenses advanced 9.1% to $42.8 million in the reported quarter.

On a non-GAAP basis, operating income was $48.7 million, up 49.7% year over year. Non-GAAP operating margin expanded 120 bps from the year-ago quarter to 10.4%.

Balance Sheet & Cash Flow

As of Mar 31, 2022, cash and cash equivalents were $302 million compared with $267 million as of Dec 31, 2021.

As of Mar 31, 2022, cash flow from operation was $59 million compared with $37 million from the year-ago quarter. Non-GAAP free cash flow was $39 million compared with $23.2 million in the year-ago quarter.

Guidance

For the second quarter of 2022, RingCentral expects revenues between $475.5 million and $479.5 million, indicating year-over-year growth of 25% to 26%.

Software subscription revenues for the quarter are expected between $449 million and $452 million, suggesting year-over-year improvement of 28% to 29%.

Non-GAAP operating margin is expected to be 10.4% for the second quarter. Non-GAAP EPS is expected between 40 cents and 41 cents on 95.5 to 965 fully diluted shares.

For 2022, RingCentral expects revenues in the range of $1.990 billion to $2.015 billion, indicating year-over-year growth of 25% to 26%.

Software subscription revenues for the year are expected between $1.882 billion and $1.898 billion, implying year-over-year growth of 27% to 28%.

Non-GAAP operating margin is expected to be 11.5% for full-year 2022.

Earnings are expected between $1.83 per share and $1.87 per share.

Zacks Rank & Stocks to Consider

RingCentral currently carries a Zacks Rank #3 (Hold).

RingCentral’s shares have tumbled 63.4% compared with the Zacks Computer and Technology sector’s decline of 24.1% in the year-to-date period.

Here are some better-ranked stocks in the broader sector.

Analog Devices ADI currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ADI shares have declined 11.7% in the year-to-date period. ADI is scheduled to report second-quarter 2022 results on May 18.

Cisco Systems CSCO presently carries a Zacks Rank of 2.

Cisco shares have declined 20.2% in the year-to-date period. CSCO is slated to report third-quarter fiscal 2022 results on May 18.

Broadcom AVGO carries a Zacks Rank of 2 at present.

Broadcom shares have declined 15.4% in the year-to-date period. AVGO is scheduled to report first-quarter fiscal 2022 results on Jun 2.


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