雅虎香港財經 RingCentral (RNG) Up 1.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for RingCentral (RNG). Shares have added about 1.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is RingCentral due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
RingCentral Q1 Earnings Top Estimates, Revenues Up Y/Y
RingCentral reported non-GAAP earnings of 87 cents per share in first-quarter 2024 and increasing 14.5% year over year.
Net revenues of $584 million and increased 9.5% year over year. A robust product portfolio and strong subscription revenues drove the upside.
Quarter Details
Software subscription (95.4% of total revenues) revenues increased 9.7% year over year to $557.5 million.
Other revenues (4.6% of total revenues) increased 5.2% year over year to $26.7 million.
Annualized Exit Monthly Recurring Subscriptions (ARR) increased 10% year over year to $2.37 billion. Mid-market and Enterprise ARR increased 11% year over year to $1.48 billion, The Enterprise ARR increased 13% year over year to $1.02 billion.
The first-quarter 2024 non-GAAP gross margin contracted 30 basis points (bps) from the year-ago quarter’s tally to 78.2%.
On a non-GAAP basis, research & development expenses declined 3% year over year to $58 million.
Sales and marketing expenses increased 7.1% to $234.6 million. General and administrative expenses fell 10.8% to $43.1 million in the reported quarter.
On a non-GAAP basis, operating income was $121.1 million, up 31.6% year over year. The non-GAAP operating margin expanded 350 bps from the year-ago quarter to 20.7%.
In the first quarter of 2024, RNG expanded its product portfolio with the introduction of RingEX with RingSense AI, enhancing customer interactions with personalized and context-aware features for more thoughtful conversations and increased efficiency in everyday work.
RingCentral also expanded its Global Service Provider (GSP) family by adding Optus, Australia's second-largest telecommunications provider, alongside partners like AT&T, BT and Vodafone.
Balance Sheet
As of Mar 31, 2024, cash and cash equivalents were $203 million compared with $222 million as of Dec 31, 2023.
Cash flow from operations was $96 million in the first quarter compared with the fourth-quarter 2023 figure of $113.8 million.
Non-GAAP free cash flow was $77 million compared with $96.9 million reported in the previous quarter. The non-GAAP cash flow margin was 13.1% in the first quarter.
In the first quarter of 2024, $80 million was allocated for repurchase of shares. Its board also increased the repurchase authorization by $250 million.
Guidance
For the second quarter of 2024, RingCentral expects revenues between $584.5 million and $587.5 million, indicating year-over-year growth of 8-9%.
Subscription revenues in the second quarter are expected to be between $558 million and $561 million, indicating year-over-year growth of 9%.
The non-GAAP operating margin is expected to be 20.7% in the second quarter of 2024. Earnings are expected to be 87-88 cents per share.
The share-based compensation is anticipated to be in the range of $98-$100 million in the second quarter of 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 23.33% due to these changes.
VGM Scores
Currently, RingCentral has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, RingCentral has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
RingCentral is part of the Zacks Internet - Software and Services industry. Over the past month, Sabre (SABR), a stock from the same industry, has gained 16.7%. The company reported its results for the quarter ended March 2024 more than a month ago.
Sabre reported revenues of $782.89 million in the last reported quarter, representing a year-over-year change of +5.4%. EPS of -$0.02 for the same period compares with -$0.18 a year ago.
For the current quarter, Sabre is expected to post a loss of $0.08 per share, indicating a change of +52.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -13.8% over the last 30 days.
Sabre has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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