What happened
Shares of RingCentral (RNG 3.36%) are seeing strong bullish momentum Wednesday following the release of the company's first-quarter earnings results. The collaboration software company's stock was up roughly 17% as of 11:30 a.m. ET, according to data from S&P Global Market Intelligence.
RingCentral published its Q1 report after the market closed yesterday and posted sales and earnings for the period that topped Wall Street's expectations. The company reported non-GAAP (generally accepted accounting principles) adjusted earnings per share of $0.76 on revenue of $534 million, handily beating the average analyst estimate's call for per-share earnings of $0.69 on sales of approximately $528 million.
So what
RingCentral's subscription revenue climbed 16% year over year in the first quarter to reach $508 million, pushing overall sales up 16% compared to the prior-year period. The company posted a best-ever operating margin of 17.2% in the quarter, and its GAAP operating loss narrowed to $55 million from $104 million in last year's quarter.
NYSE: RNG
Key Data Points
RingCentral beat its own targets and Wall Street's estimates across key metrics and ended the quarter with a cash-and-equivalents position of $275 million -- up from $270 million in Q4. In addition to beating the market's sales and earnings targets for Q1, the company also issued forward guidance that surpassed expectations.
Now what
For the second quarter, RingCentral is guiding for sales to come in between $535 million and $537 million, suggesting growth of roughly 10% year over year at the midpoint of the target. The company expects to post adjusted earnings per share between $0.74 and $0.76 in the period, with the guidance coming in ahead of the market's expectations for per-share earnings of $0.73.
For the full year, RingCentral now expects subscription revenue between $2.086 billion and $2.104 billion, up from its previous guidance for revenue between $2.08 billion and $2.1 billion. Adjusted earnings for the year are now projected to come in between $3.19 and $3.25 per share, up significantly from the company's earlier target for per-share earnings between $3.04 and $3.10. The new guidance also handily topped the Wall Street average estimate, which targeted adjusted earnings of $3.09 per share.
Following today's rally, RingCentral now has a market capitalization of roughly $3 billion and is valued at approximately 10 times this year's expected adjusted earnings.
