RingCentral, a leading provider of cloud-based communications services, has announced its third-quarter financial results, surpassing both its own guidance and Street estimates. The company’s revenue for the quarter reached $558 million, marking a 10% increase compared to the previous year. This figure not only exceeds RingCentral’s projected range of $552 million to $556 million but also beats the FactSet consensus estimate of $554 million.
The company’s subscription revenue saw a similar growth rate, reaching $531 million, up 10% compared to the same quarter last year. This outcome also exceeded both internal expectations and Street estimates.
On an adjusted basis, RingCentral (ticker: RNG) reported earnings of 78 cents per share for the quarter, which falls at the high end of the company’s previously announced guidance range of 75 to 78 cents. This figure also surpassed the market consensus of 75 cents per share. However, when considering generally accepted accounting principles, RingCentral reported a loss of 45 cents per share for the quarter.
RingCentral achieved a non-GAAP operating margin of 19.1%, exceeding the projected range of 18% to 18.5%. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) came in at $128 million, surpassing the market consensus of $119 million.
Despite these positive results, RingCentral’s shares have experienced a decline of about 21% year-to-date. The company faces growing competition in the cloud-based communications industry, with rivals such as Microsoft Teams and Zoom Video Communications (ZM) gaining market share.
In a recent interview with CEO Tarek Robbiati, he highlighted that RingCentral is actively working to expand its product portfolio. Specifically, the company is focusing on enhancing its contact center software and developing niche video applications. RingCentral recently made a strategic acquisition, purchasing the events software business from the start-up Hopin. Additionally, the company is shifting its approach in the contact center space by transitioning from reselling third-party software solutions to creating its own platform tailored for midsize companies.
Tarek Robbiati, who joined RingCentral from Hewlett Packard Enterprise (HPE) where he served as CFO, was appointed CEO in August, taking over from founder Vlad Shmunis, who now serves as executive chairman. Robbiati previously held a similar role at Sprint.
RingCentral’s strong performance in the third quarter and its strategic initiatives to expand its product offerings demonstrate the company’s commitment to innovation and growth in the competitive cloud communications market.
RingCentral Projects Strong Fourth Quarter Results
RingCentral, a leading provider of cloud-based communication solutions, has announced its projections for the fourth quarter, forecasting an increase in revenue of 8% to 9%. The company expects to generate between $566.5 million and $573.5 million in revenue, with adjusted profits ranging from 82 to 83 cents per share. This estimate surpasses the street consensus of $570 million in revenue and profits of 81 cents per share. Furthermore, RingCentral anticipates an improvement in its non-GAAP operating margin, aiming for 20%.
Positive Outlook for the Full Year
RingCentral has also raised its revenue projections for the full year. It now expects to generate between $2.095 billion and $2.101 billion in revenue, representing an 11% increase compared to the previous year. The previous guidance ranged from $2.086 billion to $2.104 billion. The company has also revised its full year non-GAAP EPS forecast range to $3.19 to $3.20 per share, up from the previous range of $3.11 to $3.25 per share. Additionally, RingCentral now projects a non-GAAP operating margin of 19% for the full year, surpassing its previous forecast of 18.5% to 19%. The company has increased its free cash flow forecast as well, expecting a range of $290 million to $300 million for the year, up from a previous estimate of $270 million to $290 million.
Focus on Innovation and AI
Looking ahead, RingCentral is focused on driving innovation and expanding its product and service offerings by incorporating AI technology. The company aims to become more diverse and plans to apply artificial intelligence to call center operations, enhancing customer-agent interactions throughout all stages of a call. This includes improving customer interaction tracking, call summarization, and analysis of customer feedback. RingCentral will showcase its latest products for both virtual events and call center segments during an online event scheduled for November 14th.
Although the company’s CEO, Robbiati, declined to comment on the 2024 outlook in detail, he emphasized the importance of innovation in RingCentral’s upcoming plans. The company is currently in the planning cycle for next year and seeks to leverage AI technology to offer a wider range of products and services.