RingCentral RNG reported third-quarter 2025 non-GAAP earnings of $1.13 per share, surpassing the Zacks Consensus Estimate by 4.63% and increasing 18.9% year over year.
Total revenues of $638.7 million beat the consensus mark by 0.29% and increased 4.9% year over year. A robust product portfolio and strong subscription revenues drove the upside.
RNG’s Quarterly Details
Software subscription revenues (96.4% of total revenues) increased 5.6% year over year to $615.8 million, beating the Zacks Consensus Estimate by 0.04%.
Other revenues (3.6% of total revenues) decreased 11.5% year over year to $22.8 million, beating the Zacks Consensus Estimate by 9.79%.
Ringcentral, Inc. Price, Consensus and EPS Surprise
Ringcentral, Inc. price-consensus-eps-surprise-chart | Ringcentral, Inc. Quote
Annualized Exit Monthly Recurring Subscriptions (ARR) increased 6% year over year to $2.63 billion, driven by strong demand for AI-powered multi-product offerings.
Enterprise ARR increased 3% year over year to $1.107 billion in the reported quarter.
RingCentral’s Operating Details
Third-quarter 2025 non-GAAP gross margin expanded 70 basis points (bps) from the year-ago quarter to 77.6%.
On a non-GAAP basis, research and development expenses decreased 0.7% year over year to $61.9 million.
Sales and marketing expenses increased 1.1% year over year to $240 million. General and administrative expenses rose 17% year over year to $47.5 million in the reported quarter.
On a non-GAAP basis, operating income was $145.9 million, up 14.1% year over year. The operating margin expanded 180 bps from the year-ago quarter to 22.8%.
The non-GAAP EBITDA margin was 26.3%, expanding 180 bps year over year.
RNG’s Balance Sheet & Cash Flow Details
As of Sept. 30, 2025 cash and cash equivalents were $145.3 million compared with $168 million as of June 30, 2025.
Cash flow from operations was $151 million in the third quarter of 2025 compared with $167 million in the second quarter of 2025.
In the third quarter of 2025, RNG bought shares worth $117 million. The current remaining repurchase authorization is $384 million.
The non-GAAP free cash flow was $129.5 million compared with $144.3 million in the previous quarter. The non-GAAP cash flow margin was 20.3% in the third quarter.
RNG Initiates Q4 & 2025 Guidance
For the fourth quarter of 2025, RingCentral expects revenues in the range of $638-$646 million, indicating year-over-year growth of 3.9-5.2%.
Subscription revenues are expected to be in the range of $618-$626 million, indicating year-over-year growth of 4.8-6.2%.
The non-GAAP operating margin is expected to be 22.8% in the fourth quarter of 2025. Earnings are expected to be in the range of $1.12-$1.15 per share.
The share-based compensation is anticipated to be in the range of $64-$69 million in the fourth quarter of 2025.
For 2025, RingCentral projects year-over-year revenue growth of 4.5%-5% on a reported basis. On a year-over-year basis, Subscriptions revenue growth is expected to be between 5.5% and 6%.
The non-GAAP operating margin is expected to be 22.5%, up 150 basis points year over year.
Non-GAAP earnings for 2025 are expected to be in the range of $4.29-$4.33 per share, and share-based compensation is likely to be between $275 and $280 million.
Zacks Rank & Stocks to Consider
RingCentral currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector are StoneCo STNE, Fair Isaac FICO and Analog Devices ADI, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
StoneCo is set to report third-quarter 2025 results on Nov. 06. StoneCo shares have gained 138.6% year to date.
Fair Isaac is slated to report fourth-quarter fiscal 2025 results on Nov. 05. Fair Isaac shares have plunged 17.1% year to date.
Analog Devices is set to report fiscal fourth-quarter 2025 results on Nov. 25. ADI shares have gained 9.9% year to date.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
