© Reuters. RingCentral jumps 7% on Q3 beat & raised guidance
(Updated – November 7, 2023 5:58 AM EST)
RingCentral (NYSE:) shares about 7% in pre-market Tuesday following the company’s reported Q3 results, with EPS of $0.78 coming in better than the consensus estimate of $0.75.
Revenue grew 10% year-over-year to $558 million, beating the consensus estimate of $554.22M. Subscriptions revenue came in at $531M, up 10% year-over-year. Annualized exit monthly recurring subscriptions (ARR) rose 11% year-over-year to $2.26B, with mid-market and enterprise ARR growing 13% to $1.41B.
“We are seeing early traction with our new products such as RingCX, RingSense and RingCentral Events. Our efficiency initiatives also continue to drive improved non-GAAP operating margins, which we are raising to 19.0%, at the high end of our prior range of 18.5% to 19.0%. We are also raising our free cash flow outlook, and now expect to generate $290 to $300 million of adjusted, unlevered free cash flow in 2023, up from our prior outlook of $270 to $290 million,” said CFO Sonalee Parekh.
Full 2023-year EPS is expected to be in the range of $3.19-$3.20, compared to the consensus of $3.15, Revenue is now seen at $2.198-$2.205 billion, compared to the consensus of $2.2B.
For Q4, the company anticipates EPS in the range of $0.82-$0.83, compared to the consensus estimate of $0.82, and revenue in the range of $566.5-$573.5M, compared to the consensus of $570.95M.
Analysts from BTIG commented that improving performance “sets stage for more focused growth from new CEO.” Still, the analysts remain Neutral-rated amid macro headwinds.
“We are encouraged by the changes underway, but remain Neutral for now as the macro will continue to limit growth and these initiatives will take some time to fully drive upside,” the analysts said.
Analysts from BofA cut the price target by $10 to $55 per share.
“We reiterate our Buy rating based on FCF generation potential, accelerating partnership revenue and a differentiated product offering.”
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