RNG Q1 Earnings Beat Estimates, Revenues Rise Y/Y, Shares Gain

Core Insights - RingCentral reported strong first-quarter 2025 results with non-GAAP earnings of $1 per share, exceeding estimates by 4.17% and showing a year-over-year increase of 14.9% [1] - Total revenues reached $612.1 million, beating consensus by 0.22% and increasing 4.8% year over year, driven by subscription business growth and AI adoption [1] Financial Performance - Software subscription revenues, which constitute 96.4% of total revenues, grew 5.9% year over year to $590.1 million, surpassing estimates by 0.03% [3] - Other revenues decreased 17.9% year over year to $21.9 million but exceeded estimates by 6.8% [3] - Annualized Exit Monthly Recurring Subscriptions (ARR) rose 7% year over year to $2.53 billion, fueled by demand for AI-powered offerings [3][4] Operating Metrics - Non-GAAP gross margin contracted by 130 basis points to 76.9% year over year [5] - Non-GAAP operating income increased 10.2% year over year to $133.4 million, with an operating margin of 21.8%, expanding 110 basis points [6] - Non-GAAP EBITDA margin improved to 25.3%, up 90 basis points year over year [6] Balance Sheet & Cash Flow - As of March 31, 2025, cash and cash equivalents were $154.4 million, down from $242.8 million at the end of 2024 [7] - Cash flow from operations was $149.7 million in Q1 2025, compared to $132.9 million in Q4 2024 [7] - Non-GAAP free cash flow increased to $130.2 million from $111.8 million in the previous quarter, with a cash flow margin of 21.3% [8] Future Guidance - For Q2 2025, RingCentral expects revenues between $614 million and $620 million, indicating year-over-year growth of 4-5% [9] - Subscription revenues are projected to be between $594 million and $600 million, reflecting a growth of 5-6% year over year [10] - Non-GAAP earnings for Q2 are anticipated to be between $1.00 and $1.04 per share, with an expected operating margin of 22-22.5% [10] - For the full year 2025, revenue growth is projected at 4-6%, with subscription revenue growth expected at 5-7% [10][11]