RingCentral(US:RNG)2025-11-03 21:36Financial Performance - Total revenue for Q3 2025 was $639 million, a 5% increase year-over-year, with subscriptions revenue at $616 million, up 6% year-over-year[5] - Total revenues for Q3 2025 reached $638.7 million, a 4.5% increase from $608.8 million in Q3 2024[30] - Subscription revenues were $615.8 million, up 5.6% from $583.0 million year-over-year[30] - Net income for the nine months ended September 30, 2025, was $20.4 million, compared to a net loss of $51.1 million for the same period in 2024[33] - The company reported a gross profit of $458.3 million for Q3 2025, representing a gross margin of approximately 71.7%[30] - Non-GAAP income from operations for Q3 2025 was $145.9 million, representing a 14.1% increase compared to $127.9 million in Q3 2024[35] - GAAP net income for Q3 2025 was $17.6 million, compared to a net loss of $7.9 million in Q3 2024[37] - Non-GAAP net income for Q3 2025 was $103.9 million, an increase from $88.9 million in Q3 2024[37] - Non-GAAP free cash flow for Q3 2025 was $129.5 million, up from $105.4 million in Q3 2024, reflecting a margin of 20.3%[39] Cash Flow and Liquidity - Net cash from operating activities reached $151 million, a 19% increase year-over-year, and free cash flow was $130 million, up 23% year-over-year[5] - Cash flows from operating activities for the nine months ended September 30, 2025, were $468.4 million, an increase from $350.4 million in the prior year[33] - The net cash used in financing activities for the nine months ended September 30, 2025, was $484.7 million, compared to $273.1 million in the prior year[33] - The company raised its free cash flow outlook for 2025 to over $525 million, indicating a 420 basis points year-over-year margin expansion[1] Operational Metrics - Annualized Exit Monthly Recurring Subscriptions (ARR) increased to $2.63 billion, reflecting a 6% year-over-year growth[5] - The annualized exit monthly recurring subscriptions (ARR) metric is a leading indicator of anticipated subscription revenue, calculated as monthly recurring subscriptions (MRR) multiplied by 12[26] - Non-GAAP gross profit margin for subscriptions was 80.8% in Q3 2025, slightly up from 80.5% in Q3 2024[35] - Operating expenses as a percentage of total revenues on a non-GAAP basis were 9.7% for Q3 2025, compared to 10.2% in Q3 2024[35] Guidance and Forecast - Fourth quarter 2025 guidance includes total revenue of $638 to $646 million and subscriptions revenue of $618 to $626 million, with a non-GAAP EPS forecast of $1.12 to $1.15[9] - The company expects Q4 2025 GAAP income from operations to be between $41 million and $48 million, with a non-GAAP operating margin of 22.8%[40] - For FY 2025, the company forecasts non-GAAP free cash flow between $525 million and $530 million[40] - The projected non-GAAP tax rate for fiscal 2025 is estimated to be 22.5%[24] Credit and Ratings - RingCentral's credit rating was upgraded by S&P, following similar upgrades from Fitch Ratings and Moody's, highlighting the company's strong financial position[9] - The company expanded its credit facility to $1.26 billion, with $955 million remaining undrawn, primarily to address $609 million in Convertible Notes due in March 2026[9] Product Development - New AI products were announced, including AI Receptionist (AIR), AI Virtual Assistant (AVA), and AI Conversation Expert (ACE), contributing to an AI-led product portfolio approaching $100 million in ARR[3] - The company was recognized as a Leader in the 2025 Gartner Magic Quadrant for Unified Communications as a Service, marking its eleventh consecutive year in the Leaders quadrant[9]