Latest news with #RingCX
Yahoo
3 days ago
- Business
- Yahoo
RNG Q1 Earnings Call: AI-Driven Portfolio Delivers Steady Growth and Margin Expansion
Office and call centre communications software provider RingCentral (NYSE:RNG) met Wall Street's revenue expectations in Q1 CY2025, with sales up 4.8% year on year to $612.1 million. The company expects next quarter's revenue to be around $617 million, close to analysts' estimates. Its non-GAAP profit of $1 per share was 4.2% above analysts' consensus estimates. Is now the time to buy RNG? Find out in our full research report (it's free). Revenue: $612.1 million vs analyst estimates of $610.6 million (4.8% year-on-year growth, in line) Adjusted EPS: $1 vs analyst estimates of $0.96 (4.2% beat) Adjusted Operating Income: $133.4 million vs analyst estimates of $129.7 million (21.8% margin, 2.8% beat) Revenue Guidance for Q2 CY2025 is $617 million at the midpoint, roughly in line with what analysts were expecting Management reiterated its full-year Adjusted EPS guidance of $4.20 at the midpoint Market Capitalization: $2.47 billion RingCentral's first quarter results were shaped by continued adoption of its AI-led multi-product strategy and growing customer demand in core voice communications. CEO Vlad Shmunis emphasized the company's progress in shifting traditional communications to cloud-based solutions, noting, "The early results of these new products are promising." Management highlighted strong momentum in products like RingCX and RingSense, as well as successful expansion within small business and global service provider (GSP) customer segments. President and COO Kira Makagon cited improved operational efficiency and customer outcomes, with AI tools helping to reduce manual work and drive business value for clients across healthcare, financial services, and retail. The company attributed margin improvements to disciplined sales and marketing spending and reported progress in free cash flow generation and debt reduction. Looking forward, RingCentral's outlook is anchored by ongoing investment in AI-powered solutions, expansion of its product suite, and a focus on profitable growth. CFO Abhey Lamba confirmed that the company intends to maintain operating profitability and free cash flow improvement, stating, "We are committed to further driving operational efficiencies resulting in margin expansion while enabling us to invest in growth opportunities." Management signaled cautious optimism given macroeconomic uncertainties, such as tariffs and shifting customer spending patterns, but expects continued demand for cost-saving AI products. CEO Vlad Shmunis added, "The next phase in our growth will be driven by leveraging AI throughout our growing portfolio with increased addressable market and wallet share." Management attributed the quarter's performance to adoption of new AI-enabled products, rising engagement among small businesses and GSP partners, and operational efficiencies that supported margin gains. AI product traction: The company's new AI-powered products, including RingCX (cloud contact center), RingSense (AI insights and coaching), and AIR (AI phone agent), saw rapid early adoption, especially among small businesses and GSPs. Management reported over 1,000 AIR customers and strong sequential growth in RingSense usage, with AI tools cited as drivers of measurable cost savings and productivity gains for clients. Small business momentum: ARR from customers with fewer than 100 employees grew by double digits, reaching a two-year high. These clients, often in healthcare, retail, and financial services, are adopting voice-centric AI products for customer engagement and operational efficiency, delivering higher average revenue per user and faster payback for RingCentral. GSP partnerships expanding: Global service providers accounted for over 10% of ARR, with double-digit growth and efficient customer acquisition. Major partners like AT&T, Vodafone, and Cox Communications are now reselling RingCentral's AI-powered solutions, extending reach in North America and international markets. Enterprise and channel strengths: Larger enterprises continue to adopt RingCentral, drawn to its integrations with platforms such as Microsoft Teams and Salesforce. Over half of $1 million-plus TCV deals in Q1 included multiple RingCentral products, signaling success in cross-selling and up-selling to existing accounts. Operational discipline: Operating margin improvement stemmed from efficiencies in sales, marketing, and internal use of AI, which has increased productivity in customer support, sales outreach, and product development. Record free cash flow enabled debt reduction and share repurchases, supporting a stronger balance sheet. RingCentral's forward guidance rests on expanding its AI-first portfolio, disciplined cost management, and continued growth in core markets despite macroeconomic uncertainties. AI-led product expansion: Management expects ongoing adoption of new AI-powered offerings—such as AIR and RingCX—to drive higher average revenue per user and open new customer segments. These products are positioned as cost-saving and productivity-boosting solutions for both existing and new clients. Go-to-market leverage: The company plans to deepen relationships with GSPs and channel partners, using these alliances to efficiently access international markets and supplement direct sales, particularly as cloud adoption accelerates among businesses replacing legacy systems. Macro environment monitoring: While not seeing immediate headwinds, management remains cautious regarding tariffs, interest rates, and broader economic conditions. The company aims to maintain flexibility in its approach, emphasizing prudent financial management and readiness to adjust strategy if customer demand or deal cycles shift. In the coming quarters, StockStory analysts will be watching (1) sustained adoption and revenue contribution from AI-powered products like AIR and RingCX, (2) the pace of expansion among small business and GSP customer segments, and (3) progress toward free cash flow and margin targets through operational efficiency. The ability to maintain growth despite macroeconomic fluctuations will also be an important marker of execution. RingCentral currently trades at a forward price-to-sales ratio of 1×. In the wake of earnings, is it a buy or sell? See for yourself in our full research report (it's free). The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
Yahoo
24-04-2025
- Business
- Yahoo
RingCentral A Stock for Patient Investors, AI Tools And New Products Show Early Promise: Analyst
Rosenblatt analyst Catharine Trebnick maintained RingCentral (NYSE:RNG) with a Buy and lowered the price forecast from $40 to $28 on Thursday. Trebnick reduced her price forecast due to lower revenue projections for fiscal 2025 and 2026, reflecting ongoing economic uncertainty and recent leadership transitions. The analyst remarked RingCentral as a stock for patient investors. The new products are gaining traction, but she expected slower growth with the economic backdrop and increased competition across the partner channel. The new price forecast of $28 (from $40) reflects ~1.5 times (from ~2 times) Trebnick's revenue estimate of 6% Y/ Y in fiscal 2026. RingCentral's stock is trading at 1.3 times EV/calendar 2026 Sales, which are growing at 6% Y/Y, and a discount to its CCaaS group average of 2.5 times, which is growing at 8% Y/Y. The analyst decreased her fiscal 2025 revenue growth rate to 4.4%, which is below the low point of the guidance (+5% CC growth). Trebnick's fiscal 2025 estimate has been revised to $2.506 billion (+4.4% growth) from $2.510 billion (+4.6% growth) and below the Street's $2.516 billion (+4.8% growth). Similarly, the analyst decreased her fiscal 2026 estimate to $2.656 billion (+6% growth) from $2.680 billion (+7% growth), which is below the Street's $2.665 billion (+6% growth). For fiscal 2025, Trebnick's operating income moves to $561 million (22.4% margin), down from ($563 million) and below the current Street estimate ($565 million). For fiscal 2026, the analyst's adjusted operating income is $623 million (23.5% margin), just slightly below the current Street estimate of $622 million (23.3% margin). Due to the deceleration of sales volume, Trebnick adjusted her fiscal 2025 adjusted EPS to $4.19 (from $4.20). Looking ahead to fiscal 2026, the analyst's adjusted EPS of $4.66 (down from $4.70) and below the current Street estimate of $4.68. The three modules, RingCX, RingEvents, and RingSense, are expected to drive $100 million in ARR in fiscal 2025, and with this strong start, Trebnick anticipates this will be incremental to the target. RingCX has gone +700 in one year. RingCentral has introduced several new products, AI Interaction Analytics, AI Agent Assist, and AI Supervisor Assist, which should drive incremental revenue in the second half of 2025 and into fiscal 2026. Price Action: RNG stock closed higher by 6.38% to $25.01 on Thursday. Read Next:Date Firm Action From To Feb 2022 Evercore ISI Group Maintains Outperform Feb 2022 JP Morgan Maintains Overweight Feb 2022 Needham Maintains Buy View More Analyst Ratings for RNG View the Latest Analyst Ratings UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? RINGCENTRAL (RNG): Free Stock Analysis Report This article RingCentral A Stock for Patient Investors, AI Tools And New Products Show Early Promise: Analyst originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
