Company Performance - RingCentral reported quarterly earnings of $1 per share, exceeding the Zacks Consensus Estimate of $0.96 per share, and up from $0.87 per share a year ago, representing an earnings surprise of 4.17% [1] - The company posted revenues of $612.06 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.22%, and an increase from $584.21 million year-over-year [2] - Over the last four quarters, RingCentral has consistently surpassed consensus EPS and revenue estimates [2] Stock Outlook - RingCentral shares have declined approximately 25.5% since the beginning of the year, compared to a decline of 4.3% for the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $1.02 on revenues of $621 million, and for the current fiscal year, it is $4.19 on revenues of $2.52 billion [7] Industry Context - The Internet - Software and Services industry, to which RingCentral belongs, is currently ranked in the bottom 19% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - The performance of RingCentral's stock may be influenced by the overall outlook for the industry [8]

Financial Data and Key Metrics Changes - The company achieved total revenues of $612 million, representing a 5% year-over-year increase, and was at the high end of guidance [39] - Annual Recurring Revenue (ARR) increased to $2.53 billion, up 7% year-over-year, driven by the AI-powered multi-product portfolio [40] - Operating margin expanded by 110 basis points year-over-year to approximately 22%, exceeding guidance [40] - Record quarterly free cash flow of $130 million, up 70% year-over-year, with a free cash flow margin of 21.3% [42] Business Line Data and Key Metrics Changes - Subscription revenue grew by 6% to $590 million, with strong large deal activity noted [40] - The new product portfolio, including Ring CX and AIR, is expected to contribute over $100 million in ARR by the end of 2025 [40][10] Market Data and Key Metrics Changes - The company maintains a 20% market share in the $30 billion UCaaS market [8] - Strong adoption of AI-based products, particularly among smaller customers, with double-digit ARR growth from this cohort [13] Company Strategy and Development Direction - The company is focused on leveraging AI across its product portfolio to enhance customer experiences and drive growth [22] - A commitment to investing over $250 million annually in innovation, particularly in AI-led products [8] - The strategy includes expanding the total addressable market (TAM) through a multi-product portfolio [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to maintain profitability and growth despite macroeconomic uncertainties [44] - The company is taking a prudent approach to guidance for the remainder of 2025, expecting subscription revenue growth of 5% to 7% year-over-year [44] Other Important Information - The company paid down $166 million of debt during the quarter, reducing the net leverage ratio to 2x [7] - The company aims to reduce gross debt levels to below $1 billion by the end of 2026 [44] Q&A Session Summary Question: What is the target split for the business makeup across various customer types? - Management indicated a desire to grow all customer cohorts, noting better traction with smaller businesses due to product-market fit and reliance on voice communications [50][51] Question: How much pricing power does the company have with the introduction of AI products? - Management believes that AI will significantly enhance ARPU as it replaces human labor with software solutions, leading to greater cost savings for customers [61] Question: How have deals and customer spending tracked in the current macro environment? - Management reported that there has not been a significant impact on sales cycles or deal activity, maintaining business as usual [68] Question: What are the expectations for the second half of the year? - Management reiterated guidance for the year, citing strong Q1 performance but acknowledging macroeconomic uncertainties that could affect projections [72] Question: How is the company approaching international opportunities? - Management noted that 90% of the business is in the US and Canada, with international growth primarily through GSP partnerships [82] Question: How is the partnership with NICE progressing? - Management expressed optimism about the partnership, highlighting the unique product offering that combines strengths in UCaaS and CCaaS [86] Question: What is the initial customer feedback on the AIR product? - Feedback has been positive, with significant productivity improvements reported by early adopters [94]

Financial Data and Key Metrics Changes - The company achieved total revenues of $612 million, representing a 5% year-over-year increase, and was at the high end of guidance [40] - Annual Recurring Revenue (ARR) increased to $2.53 billion, up 7% year-over-year, driven by the AI-powered multi-product portfolio [41] - Operating margin expanded by 110 basis points year-over-year to approximately 22%, exceeding guidance [41] - Record quarterly free cash flow of $130 million, up 70% year-over-year, with a free cash flow margin of 21.3% [42] - The company reduced its net leverage ratio to 2x from 2.2x on a trailing twelve months basis [43] Business Line Data and Key Metrics Changes - Subscription revenue grew by 6% to $590 million, with strong large deal activity noted [41] - The new product portfolio, including Ring CX and RingCentral AI, is expected to contribute over $100 million in ARR by the end of 2025 [41][60] - The AI-powered products, particularly AIR, are seeing strong adoption and positive customer feedback, with significant productivity improvements reported [95] Market Data and Key Metrics Changes - The company leads the $30 billion UCaaS market with a steady 20% market share [7] - Strong adoption of AI-based products is noted among smaller customers, with ARR from these customers growing by double digits [12] - Global Service Providers (GSPs) account for over 10% of ARR, delivering double-digit growth [14] Company Strategy and Development Direction - The company is focused on leveraging AI across its product portfolio to enhance customer experiences and drive growth [22] - A commitment to investing over $250 million annually in innovation, particularly in AI-led products, is emphasized [7] - The strategy includes expanding the total addressable market (TAM) through a multi-product portfolio [31] Management's Comments on Operating Environment and Future Outlook - Management acknowledges macroeconomic uncertainties but remains optimistic about the company's strong performance and growth potential [44] - The company expects subscription revenue growth of 5% to 7% year-over-year for 2025, with total revenue growth of 4% to 6% [44] - Management highlights the ongoing shift from on-premises to cloud solutions as a significant opportunity [53] Other Important Information - The company repurchased approximately 1.8 million shares for $50 million during the quarter [43] - The company aims to reduce gross debt levels to below $1 billion by the end of 2026 [44] Q&A Session Summary Question: What is the target split for the business makeup across various customer types? - The company aims to grow all customer cohorts, with a noted better traction among smaller businesses due to product-market fit and reliance on voice communications [51][52] Question: How much pricing power does the company have with AI innovations? - The company expects significant pricing power as AI replaces human labor, leading to greater cost savings for customers [62] Question: How have deals and customer spending tracked in April? - The company has not seen significant impacts from macroeconomic factors, maintaining business as usual with no lengthening of sales cycles reported [70] Question: What are the expectations for the second half of the year? - The company is taking a prudent approach to guidance, monitoring macroeconomic conditions while remaining confident in its ability to deliver value to customers [74] Question: How is the company approaching international opportunities? - The company sees international growth primarily through GSP partnerships, with 90% of its business currently in the US and Canada [82] Question: How is the partnership with NICE progressing? - The partnership is viewed positively, with both companies offering complementary products that enhance market differentiation [86]

Financial Performance - Total revenue for Q1 2025 was $612 million, representing a 5% year-over-year growth from $584 million in Q1 2024[3] - Subscription revenue was $590 million, accounting for 96% of total revenue, with a 6% year-over-year increase[3] - GAAP operating income was $10 million, compared to a loss of ($11) million in the same period last year[3] - Non-GAAP operating income was $133 million, or 21.8% of total revenue, up from $121 million, or 20.7% of total revenue, year-over-year[3] - Adjusted EBITDA for Q1 2025 was $155 million, or 25.3% of total revenue, compared to $143 million, or 24.4% of total revenue, in the same period last year[3] - Total revenues for Q1 2025 were $612,056,000, an increase of 4.8% compared to $584,211,000 in Q1 2024[27] - Subscription revenues reached $590,112,000, up from $557,487,000, reflecting a growth of 5.8% year-over-year[27] - Non-GAAP net income for Q1 2025 was $92.791 million, compared to $83.734 million in Q1 2024, reflecting a 10.4% year-over-year growth[33] - Non-GAAP free cash flow for Q1 2025 was $130.176 million, significantly up from $76.685 million in Q1 2024, representing a 69.9% increase[34] - Non-GAAP operating margin improved to 21.8% in Q1 2025, compared to 20.7% in Q1 2024[31] - GAAP net loss for Q1 2025 was $10.328 million, an improvement from a loss of $28.494 million in Q1 2024[33] Cash Flow and Debt Management - Free cash flow for Q1 2025 was $130 million, or 21.3% of total revenue, compared to $77 million in Q1 2024[5] - The company reduced debt by $166 million and plans to achieve approximately $600 million in operating cash flow for 2025[2] - Cash and cash equivalents decreased to $154,436,000 from $242,811,000 at the end of Q4 2024, a decline of 36.4%[25] - The total liabilities decreased to $1,973,340,000 from $2,131,343,000, a reduction of 7.4%[25] - The company reported a net cash provided by operating activities of $149,662,000, an increase from $96,094,000 in the prior year[29] Customer Metrics and Product Performance - The company achieved over $2.5 billion in Annual Recurring Revenue (ARR) and has over 1,000 paying customers for both RingCX and AI Receptionist (AIR)[1][2] - RingCentral's AI Receptionist (AIR) is generating significant customer interest, with over 1,000 activated customers and notable efficiency improvements reported[2][5] - The Net Monthly Subscription Dollar Retention Rate was not explicitly stated, but the company defines it as a key metric for subscription revenue growth[21] Guidance and Future Outlook - Full year 2025 guidance includes total revenue growth of 4% to 6% and non-GAAP EPS range of $4.13 to $4.27[5] - The forecast for Q2 2025 indicates a non-GAAP operating margin range of 22.0% to 22.5%[35] - The company expects non-GAAP free cash flow for FY 2025 to be between $500 million and $510 million[35] Operating Expenses and R&D - Operating expenses totaled $421,266,000, slightly down from $424,631,000 in Q1 2024, showing cost management efforts[27] - The company continues to invest in research and development, with expenses of $81,983,000 in Q1 2025, compared to $80,528,000 in Q1 2024[27] - Research and development expenses as a percentage of total revenues were 10.1% in Q1 2025, slightly up from 9.9% in Q1 2024[31] Profitability Metrics - The company reported a gross profit of $431,606,000, compared to $413,732,000 in the same quarter last year, indicating a gross margin improvement[27] - The company reported a gross profit margin of 76.9% for Q1 2025, down from 78.2% in Q1 2024[31]

RingCentral (RNG) is scheduled to report first-quarter 2025 results on May 8.RNG expects total revenues between $607 million and $612 million for the first quarter, indicating year-over-year growth of 4-5% on a reported and constant-currency basis. Non-GAAP earnings are expected to be 93-97 cents per share for the first quarter of 2025.The Zacks Consensus Estimate for first-quarter 2025 revenues is pegged at $610.74 million, suggesting 4.54% growth over the figure reported in the year-ago quarter.The consen ...

Rosenblatt analyst Catharine Trebnick maintained RingCentral RNG with a Buy and lowered the price forecast from $40 to $28 on Thursday.Trebnick reduced her price forecast due to lower revenue projections for fiscal 2025 and 2026, reflecting ongoing economic uncertainty and recent leadership transitions.The analyst remarked RingCentral as a stock for patient investors.Also Read: Zoom Shares Rise After Global Outage Reminds Investors of Platform’s Reach and Reliability StakesThe new products are gaining tract ...

Core Viewpoint - Twilio and RingCentral are leading players in the cloud communications industry, with distinct approaches and market positions, raising the question of which stock presents a better investment opportunity today [2]. Twilio Overview - Twilio has improved profitability, with Q4 2024 revenues increasing 11% year over year to $1.19 billion and achieving GAAP operating profitability for the first time, reflecting management's focus on cost discipline [3][6]. - The company offers AI-powered communication tools, such as Twilio Verify and Voice Intelligence, which enhance customer interactions and provide a competitive edge through an API-first model [4]. - Twilio's financial position is strong, with $2.38 billion in cash and marketable securities against $991 million in long-term debt, allowing for significant shareholder returns, including $2.3 billion in buybacks in 2024 [5]. - However, Twilio faces near-term challenges, with Q1 2025 revenue guidance of $1.13-$1.14 billion indicating a sequential decline and EPS forecasts falling short of expectations [6]. - The company's usage-based revenue model is vulnerable to economic downturns, with rising competition and pricing pressures in the cloud communications market [7]. RingCentral Overview - RingCentral is a leader in the UCaaS market, with Q4 2024 revenues reaching $615 million, an 8% year-over-year increase, supported by AI-driven product innovations [8][11]. - The introduction of AI Receptionist in February 2025 exemplifies RingCentral's commitment to AI-enhanced solutions, reinforcing its competitive position [9]. - Partnerships with major tech companies like Microsoft and Google enhance RingCentral's appeal, serving over 400,000 organizations and 7 million end-users globally [10]. - RingCentral operates on a subscription-based model, ensuring predictable revenues, with Q1 2025 revenue expectations of $607-$612 million, a 4-5% year-over-year increase [11]. - Despite a weaker liquidity position with $243 million in cash against $1.35 billion in long-term debt, RingCentral's strong cash flow generation of $403 million in free cash flow for 2024 allows effective debt management [12]. Financial Estimates and Valuation - The Zacks Consensus Estimate for Twilio's 2025 sales and EPS implies year-over-year growth of 7.7% and 15%, respectively, although EPS estimates have been trending downward [13]. - In contrast, RingCentral's 2025 sales and EPS estimates imply a year-over-year increase of 5.2% and 13.5%, with EPS estimates trending upward [15]. - RingCentral's forward sales multiple is 0.86X, below its median of 1.20X, while Twilio's forward earnings multiple is 2.35X, above its median of 2.79X, indicating a more attractive valuation for RingCentral [15]. Conclusion - Both companies have unique strengths and challenges, with RingCentral's subscription-based revenues and AI innovations positioning it well for sustainable growth, while Twilio's long-term potential remains promising despite near-term risks [17][18]. - RingCentral's attractive valuation and favorable estimate revisions make it a more compelling investment choice in the current market environment, with a Zacks Rank of 1 (Strong Buy) compared to Twilio's Rank of 3 (Hold) [18].

Core Viewpoint - RingCentral (RNG) has experienced a significant decline in its stock price, dropping 27.6% year-to-date, while the broader Computer & Technology sector has decreased by 11.8% [1] Group 1: Performance Comparison - RNG has underperformed compared to peers like Microsoft, Zoom Communication, and Cisco Systems, which are advancing in AI-driven UCAAS communication technology [2] - Microsoft and Zoom Communication shares each fell by 9.3%, while Cisco Systems shares increased by 4.4%, highlighting RNG's relative underperformance [3] Group 2: Factors Influencing Performance - The decline in RNG's stock can be attributed to macroeconomic uncertainties, cautious enterprise spending, fierce competition, and currency fluctuations [3] - Despite these challenges, RNG is benefiting from strong AI-driven product adoption, increasing enterprise deals, and an expanding multi-product portfolio, particularly with RingCX and RingSense [3][4] Group 3: Product Innovations and Partnerships - RNG launched AI Receptionist in Q4 2024, an AI-powered phone agent that automates customer inquiries and call routing, providing a cost-effective solution for businesses [5] - The company is experiencing solid demand for its Unified Communications as a Service and contact center software-as-a-service solutions, bolstered by partnerships with AT&T, Cox Communications, BT, and Vodafone [6] Group 4: Future Guidance - For Q1 2025, RNG expects revenues between $607 million and $612 million, indicating a year-over-year growth of 4-5% [8] - The Zacks Consensus Estimate for Q1 2025 revenues is $610.74 million, suggesting a growth of 4.54% compared to the previous year [8] Group 5: Earnings Expectations - The consensus estimate for earnings is 96 cents per share, reflecting a year-over-year growth of 10.34% [9] Group 6: Investment Outlook - Despite macroeconomic uncertainties and competition, RNG's strong AI-driven product adoption and robust first-quarter guidance present a compelling investment opportunity [11] - RNG currently holds a Zacks Rank 1 (Strong Buy) and a Growth Score of A, indicating a favorable investment outlook [11]

Group 1: Core Insights - Investors in RingCentral, Inc. (RNG) should monitor stock movements due to high implied volatility in the options market, particularly the Apr 17, 2025 $17.50 Call option [1] - Implied volatility indicates market expectations for significant price movement, suggesting potential upcoming events that could lead to a rally or sell-off [2] - RingCentral holds a Zacks Rank 1 (Strong Buy) in the Internet - Software and Services industry, which is in the top 27% of the Zacks Industry Rank [3] Group 2: Analyst Perspectives - Over the last 60 days, one analyst has raised the earnings estimate for the current quarter, while five have lowered theirs, resulting in a consensus estimate decrease from $1.00 to $0.96 per share [3] - The high implied volatility may indicate a developing trading opportunity, as options traders often seek to sell premium on such options to capture decay [4]

Industry Overview - The Internet-Software & Services industry is experiencing a slow economy, with estimates fluctuating due to varying expectations on interest rate decisions [1] - Companies are in cost-saving mode, reducing operating expenses to maintain profitability despite revenue softness [1] - Capital investments are limited, with only a few companies making significant investments [1] Key Players - RingCentral (RNG) and Criteo (CRTO) are performing well by leveraging AI for revenue growth and developing client retention systems through subscriptions [2] - RingCentral's AI-powered product portfolio includes Unified Communications as a Service (UCaaS) and Contact Center as a Service (CCaaS), with average recurring revenue from new products exceeding $50 million for the first time [16][17] - Criteo's AI-driven commerce media platform connects advertisers with retailers, maintaining a strong client base of around 17,000 and a client retention rate of approximately 90% [21][23] Market Performance - The Zacks Internet – Software & Services Industry has shown improvement, returning 9.5% over the past year, outperforming the broader sector's return of 7.1% and the S&P 500's 8.8% [11] - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 22.3X, which is a 7.4% premium to the S&P 500 [13] Growth Prospects - The Zacks Industry Rank for the Internet-Software & Services industry is 45, placing it in the top 18% of over 250 classified industries, indicating strong growth prospects [6][8] - Despite recent rate cuts, the economic slowdown poses challenges for the industry, as customers tend to reduce software and service purchases during such times [7] Financial Estimates - The aggregate estimate revision trend shows caution, with estimates for fiscal years 2025 and 2026 experiencing fluctuations [9] - Analysts expect revenue growth of 5.7% for RingCentral in 2025 and 2.5% in 2026, while Criteo is projected to see sales increase by 4.8% this year [19][24]