powered customer engagement firm RingCentral Q3 revenue beats on subscription growth

By Reuters News


Overview

  • AI-powered customer engagement platform's Q3 revenue grew 5.9% yr/yr, beating analyst expectations

  • Non-GAAP EPS for Q3 rose yr/yr

  • Company repurchased $18 mln in shares during Q3


Outlook

  • RingCentral raises full-year revenue outlook to $2.650 bln-$2.657 bln

  • Company expects Q4 revenue of $673 mln-$680 mln

  • RingCentral raises full-year non-GAAP EPS outlook to $5.07-$5.12


Result Drivers

  • SUBSCRIPTION GROWTH - Co said Q3 revenue growth was driven by higher subscriptions revenue, up 6% yr/yr

  • AI PRODUCT ADOPTION - Co said annual recurring revenue from customers using paid AI products nearly doubled yr/yr

  • EXPANDING MARGINS - Co attributed improved operating margins to strong execution and focus on profitable growth, per CFO Vaibhav Agarwal


Company press release:


Key Details

Metric

Beat/Miss

Actual

Consensus Estimate

Q3 Revenue

Beat

$676.04 mln

$667.04 mln (14 Analysts)

Q3 Net Income

$569.70 mln

Q3 Gross Profit

$494.30 mln

Q3 Income from Operations

$53.89 mln

Q3 Pretax Profit

$28.01 mln


Analyst Coverage

  • The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 7 "strong buy" or "buy", 10 "hold" and no "sell" or "strong sell"

  • The average consensus recommendation for the software peer group is "buy."

  • Wall Street's median 12-month price target for RingCentral, Inc. is $45.00, about 45.4% below its October 21 closing price of $82.42

  • The stock recently traded at 15 times the next 12-month earnings vs. a P/E of 8 three months ago


Reuters Recommended Reads

  • Oct 21 - Software provider SAP Q3 revenue rises on cloud business growth

  • Oct 20 - France's Sidetrade Q3 revenue rises on AI-native products, international growth

  • Oct 20 - Pegasystems Q3 revenue, adjusted EPS miss estimates as contract growth slows


For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.


(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)

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