RingCentral (NYSE:), a provider of office and call center communications software, reported first-quarter 2024 results that exceeded Wall Street analyst expectations, with revenue up 9.5% year over year to $584.2 million. The company expects revenue to be around $586 million next quarter, in line with analyst estimates. It posted non-GAAP earnings of $0.87 per share, an improvement from earnings of $0.76 per share in the same quarter last year.
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RingCentral (RNG) Q1 CY2024 Highlights:
- Gain: $584.2 million vs. analyst estimates of $578.2 million (1% better)
- EPS (non-GAAP): $0.87 vs. analyst estimates of $0.80 (8.9% better)
- Revenue guidance for the second quarter of 2024 is $586 million in the middle, about in line with what analysts expected
- Company reaffirmed its full-year revenue expectations of $2.39 billion at the center
- Gross margin (GAAP): 70.8%, compared to 69.9% in the same quarter last year
- Free cash flow of $76.69 million, a decrease of 18.3% from the previous quarter
- Market capitalization: $2.80 billion
Founded in 1999 during the dot-com era, RingCentral (NYSE:RNG) provides software as a service that unifies phone, text, fax, video calls and chat on one platform.
VideoconferencingWork is becoming increasingly distributed, both across geographies and across devices. To ensure businesses can continue to function efficiently, they must be able to communicate as well as they did when teams were co-located, driving demand for integrated communications platforms.
Revenue Growth As you can see below, RingCentral’s revenue growth has been strong over the past three years, from $352.4 million in the first quarter of 2021 to $584.2 million this quarter.
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RingCentral’s quarterly revenue rose only 9.5% year over year, which could disappoint some shareholders. We can see that Q1 revenue increased by $12.94 million, which was about the same as Q4 CY2023.
Guidance for next quarter shows that RingCentral expects revenue to grow 8.7% year-over-year to $586 million, a slowdown from the 10.8% year-over-year increase seen in the same quarter last year was recorded. Looking ahead, analysts who follow the company expected revenue to grow 8% over the next twelve months before the earnings results were announced.
Cash is KingIf you’ve been following StockStory for a while, you know that we emphasize free cash flow. Why do you ask that? We believe that ultimately cash is king and you can’t use accounting profits to pay the bills. RingCentral’s free cash flow was $76.69 million in the first quarter, down 12.1% year over year.
RingCentral generated $313.4 million in free cash flow over the last twelve months, a decent 13.9% of revenue. This FCF margin comes from the asset-lite business model and gives the company a decent amount of cash to reinvest in its operations.
Key Takeaways from RingCentral’s First Quarter Results It was good to see RingCentral exceeding analyst expectations this quarter. We were also pleased that gross margin improved and free cash flow was solid. Zooming out, we think this was a decent quarter, showing that the company remains on track. The stock is up 11.2% after reporting and is currently trading at $33.35 per share.
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