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RingCentral’s (NYSE:RNG) Q2 Earnings Results: Revenue In Line With Expectations, Stock Jumps 11%

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Office and call centre communications software provider RingCentral (NYSE: RNG) met Wall Street’s revenue expectations in Q2 CY2025, with sales up 4.6% year on year to $620.4 million. The company expects next quarter’s revenue to be around $635 million, close to analysts’ estimates. Its non-GAAP profit of $1.06 per share was 3.6% above analysts’ consensus estimates.

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RingCentral (RNG) Q2 CY2025 Highlights:

  • Revenue: $620.4 million vs analyst estimates of $617.7 million (4.6% year-on-year growth, in line)
  • Adjusted EPS: $1.06 vs analyst estimates of $1.02 (3.6% beat)
  • Adjusted Operating Income: $140 million vs analyst estimates of $137.6 million (22.6% margin, 1.7% beat)
  • Revenue Guidance for Q3 CY2025 is $635 million at the midpoint, roughly in line with what analysts were expecting
  • Management raised its full-year Adjusted EPS guidance to $4.26 at the midpoint, a 1.4% increase
  • Operating Margin: 0%, in line with the same quarter last year
  • Free Cash Flow Margin: 23.3%, up from 21.3% in the previous quarter
  • Market Capitalization: $2.14 billion

“I want to congratulate Vaibhav Agarwal on his promotion to Chief Financial Officer of RingCentral. With his nine year tenure in prior roles as Deputy Chief Financial Officer, Chief Transformation Officer, and Chief Accounting Officer, Vaibhav has been a key contributor and has a deep understanding of our strategy, finances, and operations,” said Vlad Shmunis, Founder, Chairman and CEO of RingCentral.

Company Overview

Founded in 1999 during the dot-com era, RingCentral (NYSE: RNG) provides software as a service that unifies phone, text, fax, video calls and chat in one platform.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last three years, RingCentral grew its sales at a 10.5% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the software sector, which enjoys a number of secular tailwinds.

RingCentral Quarterly Revenue

This quarter, RingCentral grew its revenue by 4.6% year on year, and its $620.4 million of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 4.3% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 5.2% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and suggests its products and services will face some demand challenges.

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Customer Acquisition Efficiency

The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.

RingCentral’s recent customer acquisition efforts haven’t yielded returns as its CAC payback period was negative this quarter, meaning its incremental sales and marketing investments outpaced its revenue. The company’s inefficiency indicates it operates in a highly competitive environment where there is little differentiation between RingCentral’s products and its peers.

Key Takeaways from RingCentral’s Q2 Results

It was encouraging to see RingCentral beat analysts’ EBITDA expectations this quarter. We were also glad its full-year EPS guidance slightly exceeded Wall Street’s estimates. On the other hand, its revenue guidance for next quarter was in line. Overall, this print had some key positives. The stock traded up 11% to $26.22 immediately after reporting.

Is RingCentral an attractive investment opportunity right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.

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