RingCentral’s first quarter results were met positively by the market, with management attributing growth to increased adoption of its AI-powered products and continued momentum across key customer segments. CEO Vlad Shmunis highlighted the company’s progress in expanding its product suite, particularly with RingCX and AIR, stating, “We achieved total revenues of $612 million... and expanded operating margin.” Management also noted stronger engagement from small businesses and telecom partners, a trend that supported both revenue growth and improved operating efficiency.
Is now the time to buy RNG? Find out in our full research report (it’s free).
RingCentral (RNG) Q1 CY2025 Highlights:
- 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
- Operating Margin: 1.7%, up from -1.9% in the same quarter last year
- Annual Recurring Revenue: $2.53 billion at quarter end, up 6.8% year on year
- Billings: $598.9 million at quarter end, in line with the same quarter last year
- Market Capitalization: $2.5 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions RingCentral’s Q1 Earnings Call
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Meta Marshall (Morgan Stanley) asked about the optimal customer mix and the strongest verticals for RingSense. CEO Vlad Shmunis replied that smaller businesses are showing better traction due to product-market fit and that healthcare, financial services, and retail are key sectors.
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Kash Rangan (Goldman Sachs) inquired about pricing power from AI tools. Shmunis said AI creates new value by replacing human labor, leading to higher average revenue per user (ARPU) over time, with all new AI products sold as add-ons.
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Billy Fitzsimmons (Jefferies) probed the impact of macroeconomic uncertainty and tariffs on sales cycles. President Kira Makagon responded that there has been no noticeable lengthening of sales cycles, and AI adoption is viewed as essential for cost savings.
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Peter Levine (Evercore ISI) questioned why guidance was maintained and if go-to-market strategy is changing. Shmunis explained that the outlook remains prudent given external uncertainties, and emphasized increased appetite among partners for the full product suite.
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Ronit Shah (Wells Fargo) asked for feedback on AIR and its contribution to new product targets. Makagon reported positive customer feedback and significant productivity improvements, though specific product-level contributions to ARR targets were not disclosed.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will be watching (1) the rate of adoption and upsell of new AI-driven products such as AIR and RingSense within the customer base, (2) the pace of expansion in telecom and global service provider partnerships, and (3) the company’s ability to maintain margin improvements while investing in product innovation. Any significant macroeconomic shifts or changes in competitive pricing will also be important factors to monitor.
RingCentral currently trades at $27.79, up from $26.69 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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