RNG Q1 Earnings Beat Estimates, Revenues Rise Y/Y, Shares Gain

RingCentral RNG reported that in the first quarter of 2025, non-GAAP earnings were $1 per share, surpassing the Zacks Consensus Estimate by 4.17% and increasing 14.9% year over year.Total revenues of $612.1 million beat the consensus mark by 0.22% and increased 4.8% year over year. RingCentral’s steady top-line growth has been driven by the continued expansion of its high-margin subscription business and the growing adoption of artificial intelligence-driven solutions.Following a strong first-quarter 2025, RNG shares rose 0.49% to $26.80 in the pre-market trading.RNG’s Q1 Quarterly DetailsSoftware subscription revenues (96.4% of total revenues) increased 5.9% year over year to $590.1 million, beating the Zacks Consensus Estimate by 0.03%.Ringcentral, Inc. Price, Consensus and EPS Surprise  Ringcentral, Inc. price-consensus-eps-surprise-chart | Ringcentral, Inc. QuoteOther revenues (3.6% of total revenues) decreased 17.9% year over year to $21.9 million but beat the Zacks Consensus Estimate by 6.8%.Annualized Exit Monthly Recurring Subscriptions (ARR) increased 7% year over year to $2.53 billion, driven by strong demand for AI-powered multi-product offerings.Enterprise ARR increased 6% year over year to $1.08 billion.RingCentral’s Operating DetailsThe first-quarter 2025 non-GAAP gross margin contracted 130 basis points (bps) from the year-ago quarter to 76.9%.On a non-GAAP basis, research and development expenses increased 6.3% year over year to $61.7 million.Sales and marketing expenses decreased 0.6% to $233.3 million. General and administrative expenses moved down 1.1% to $42.6 million in the reported quarter.On a non-GAAP basis, operating income was $133.4 million, up 10.2% year over year. The operating margin expanded 110 bps from the year-ago quarter to 21.8%.The non-GAAP EBITDA margin was 25.3%, expanding 90 bps year over year.RNG’s Balance Sheet & Cash Flow DetailsAs of March 31, 2025, cash and cash equivalents were $154.4 million compared with $242.8 million as of Dec. 31, 2024.Cash flow from operations was $149.7 million in the first quarter of 2025 compared with $132.9 million in fourth-quarter 2024.In the first quarter of 2025, RNG bought shares worth $50 million. The current remaining repurchase authorization is $218 million.The non-GAAP free cash flow was $130.2 million compared with $111.8 million in the previous quarter. The non-GAAP cash flow margin was 21.3% in the first quarter.RNG Issues Q2 ViewFor the second quarter of 2025, RingCentral expects revenues of $614-$620 million, indicating year-over-year growth of 4-5%.Subscription revenues are expected to be $594-$600 million, indicating year-over-year growth of 5-6%.The non-GAAP operating margin is expected to be 22-22.5% in the second quarter of 2025. Non-GAAP earnings are expected to be $1.00-1.04 per share.Share-based compensation is anticipated to be $70-$73 million in the second quarter of 2025.For 2025, RingCentral projects year-over-year revenue growth of 4-6% on a reported basis. Year-over-year Subscriptions revenue growth is expected to be 5-7%.The non-GAAP operating margin is expected to be 22.5%, up 150 basis points year over year.Non-GAAP earnings for 2025 are expected to be $4.13-$4.27 per share, and share-based compensation is likely to be $300-$310 million. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)Zacks Rank & Stocks to ConsiderCurrently, RingCentral has a Zacks Rank #4 (Sell).UiPath PATH, Broadcom AVGO and WidePoint WYY are some better-ranked stocks in the broader Zacks Computer and Technology sector.UiPath sports a Zacks Rank #1 (Strong Buy) at present, and Broadcom and WidePoint carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.UiPath is slated to report first-quarter fiscal 2026 results on May 29, followed by Broadcom’s second-quarter fiscal 2025 results on June 5 and WidePoint’s first-quarter 2025 results on May 15.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report WidePoint Corporation (WYY): Free Stock Analysis Report Broadcom Inc. (AVGO): Free Stock Analysis Report UiPath, Inc. (PATH): Free Stock Analysis Report Ringcentral, Inc. (RNG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks