RingCentral (RNG) Up 7.2% Since Last Earnings Report: Can It Continue?

Core Insights - RingCentral reported strong Q3 2025 earnings, with non-GAAP earnings of $1.13 per share, exceeding estimates by 4.63% and showing an 18.9% year-over-year increase [2] - Total revenues reached $638.7 million, beating consensus by 0.29% and increasing 4.9% year-over-year, driven by a robust product portfolio and strong subscription revenues [2] Financial Performance - Software subscription revenues, which constitute 96.4% of total revenues, increased 5.6% year-over-year to $615.8 million, surpassing estimates by 0.04% [3] - Other revenues decreased 11.5% year-over-year to $22.8 million but exceeded estimates by 9.79% [3] - Annualized Exit Monthly Recurring Subscriptions (ARR) rose 6% year-over-year to $2.63 billion, fueled by demand for AI-powered offerings [3][4] Operating Metrics - Non-GAAP gross margin expanded by 70 basis points to 77.6% [5] - Non-GAAP operating income increased 14.1% year-over-year to $145.9 million, with an operating margin of 22.8% [6] - Non-GAAP EBITDA margin was 26.3%, reflecting an expansion of 180 basis points year-over-year [6] Balance Sheet and Cash Flow - As of September 30, 2025, cash and cash equivalents were $145.3 million, down from $168 million as of June 30, 2025 [7] - Cash flow from operations was $151 million in Q3 2025, compared to $167 million in Q2 2025 [7] - Non-GAAP free cash flow was $129.5 million, down from $144.3 million in the previous quarter [8] Guidance - For Q4 2025, RingCentral expects revenues between $638-$646 million, indicating year-over-year growth of 3.9-5.2% [9] - Subscription revenues are projected to be between $618-$626 million, reflecting growth of 4.8-6.2% [9] - Non-GAAP operating margin is anticipated to be 22.8% in Q4 2025, with earnings expected in the range of $1.12-$1.15 per share [9] Industry Context - RingCentral is part of the Zacks Internet - Software and Services industry, which has seen competitors like VeriSign report positive results, with a revenue increase of 7.3% year-over-year [15] - VeriSign's earnings for the current quarter are expected to show a year-over-year change of +16% [16]