RNG Q4 Earnings Beat Estimates, Revenues Rise Y/Y, Shares Fall

RingCentral RNG reported fourth-quarter 2024 non-GAAP earnings of 98 cents per share, surpassing the Zacks Consensus Estimate by 2.08% and increasing 14% year over year.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Total revenues of $614.5 million beat the consensus mark by 0.37% and increased 7.6% year over year. A robust product portfolio and strong subscription revenues drove the upside.Following the results, RNG shares fell 2.57% in the pre-market trading to $29.98, driven by concerns over the company’s subdued first-quarter 2025 outlook.Ringcentral, Inc. Price, Consensus and EPS Surprise  Ringcentral, Inc. price-consensus-eps-surprise-chart | Ringcentral, Inc. QuoteHowever, RingCentral has growing prospects, driven by AI-powered product adoption, securing high-value enterprise deals and expanding profit margins.RNG’s Quarterly DetailsSoftware subscription revenues (96% of total revenues) increased 7.7% year over year to $589.7 million, beating the Zacks Consensus Estimate by 0.26%. Other revenues (4% of total revenues) increased 3.9% year over year to $24.8 million, beating the Zacks Consensus Estimate by 2.95%.Annualized Exit Monthly Recurring Subscriptions (ARR) increased 7% year over year to $2.49 billion. Enterprise ARR increased 7% year over year to $1.07 billion.RingCentral secured more than 30 deals exceeding $1 million in total contract value in the reported quarter.RingCentral’s Operating DetailsThe fourth-quarter 2024 non-GAAP gross margin contracted 110 basis points (bps) from the year-ago quarter to 77.3%.On a non-GAAP basis, research and development expenses increased 3.5% year over year to $62.1 million. Sales and marketing expenses increased 4.3% to $240.6 million. General and administrative expenses were up 2.6% to $41.4 million in the reported quarter.On a non-GAAP basis, operating income was $131.2 million, up 12.1% year over year. The operating margin expanded 90 bps from the year-ago quarter to 21.3%.The non-GAAP EBITDA margin was 24.9%, expanding 70 bps year over year.RNG’s Balance Sheet & Cash Flow DetailsAs of Dec. 31, 2024, cash and cash equivalents were $243 million compared with $213 million as of Sept. 30, 2024.Cash flow from operations was $132.9 million in the fourth quarter compared with the third-quarter 2024 figure of $127.2 million.The non-GAAP free cash flow was $111.8 million compared with $105.4 million reported in the previous quarter. The non-GAAP cash flow margin was 18.2% in the fourth quarter.In the fourth quarter of 2024, RNG bought shares worth $77 million. The current remaining repurchase authorization is $270 million.RNG Initiates Q1 & 2025 GuidanceFor the first quarter of 2025, RingCentral expects revenues of $607-$612 million, indicating year-over-year growth of 4-5%.Subscription revenues are expected to be $587-$592 million, indicating year-over-year growth of 5-6%.The non-GAAP operating margin is expected to be 21-21.5% in the first quarter of 2025. Earnings are expected to be 93-97 cents per share.The share-based compensation is anticipated to be $81-$84 million in the first 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.Zacks Rank & Stocks to ConsiderCurrently, RingCentral has a Zacks Rank #3 (Hold).Some better-ranked stocks from the broader Computer and Technology sector are Okta OKTA, DoubleVerify DV and Eventbrite EB. Okta sports Zacks Rank #1 (Strong Buy), and DoubleVerify and Eventbrite carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Okta shares have risen 20.8% year to date. OKTA is set to report fourth-quarter fiscal 2025 results on March 03.DoubleVerify shares have gained 16.4% year to date. DV is set to report fourth-quarter 2024 results on Feb. 27.Eventbrite shares have fallen 0.3% year to date. EB is set to report fourth-quarter 2024 results on Feb. 27.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want 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 DoubleVerify Holdings, Inc. (DV): Free Stock Analysis Report Ringcentral, Inc. (RNG): Free Stock Analysis Report Okta, Inc. (OKTA): Free Stock Analysis Report Eventbrite, Inc. (EB): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks