RingCentral’s CEO, Vlad Shmunis, called the company’s Q1 2023 earnings results “a solid start to the year”.

Arguably, Shmunis has understated RingCentral’s success, with total revenue growing 14 percent year-over-year to $534 million, exceeding the high end of the guidance range, and other expectation-defying results.

The CEO was positive about the future, partly due to key product innovations, including RingCentral for Teams 2.0, RingSense, RingSense for Sales, RingCentral for Frontline Workers, and RingCentral Overlay.

Vlad Shmunis, RingCentral’s Founder, Chairman and CEO, said:

“We had a good first quarter, as we exceeded the high end of guidance across key metrics.

“Our open platform, deep integrations to top third-party applications, 99.999% reliability, global reach, and integrated UCaaS and CCaaS platform continue to resonate with customers and distinguish RingCentral from competitors.

“We also introduced several new products and features this quarter that we believe further differentiate our platform.”

RingCentral exceeded the high end of guidance across key metrics.

As well as beating total revenue predictions, the company was also ahead on subscription revenues with a revenue increase of 16 percent year-over-year to $508 million.

Annualised Monthly Recurring Subscriptions (ARR) were up, as was the Mid-market and Enterprise ARR.

RingCentral’s Non-GAAP operating margin was 17.2 percent, up 680 basis points year-over-year, making it a quarterly record.

Shmunis explained that its higher margins were the result of cost discipline, operational efficiencies, and reaping the rewards of last year’s actions.

Such actions, he believes, have put them in a strong position for when the broader market recovers.

Although the macro market environment “remains uncertain”, according to Shmunis”, RingCentral is focusing on the elements within its control, which include innovation and a disciplined approach to profitability.

RingCentral for Teams 2.0

One such innovation that Shmunis expressed optimism about was RingCentral for Teams 2.0. He said: “We believe that we simply, at this point, have the best Teams integration in the market today in the universe. It’s a completely seamless experience.

“What we have heard from customers, loud and clear, is that if they have standardized on Teams, they would much prefer to operate within the Teams’ single pane of glass.

“But as we all know, Teams does not really have a fully viable UCaaS solution; we do and this is a very close integration.

“We had good Teams business before, but we were far from the market, technology-wise.

“[Teams 2.0] we believe will really push us and position us well ahead of the competition.”

Teams 2.0 was released earlier this month, bringing RingCentral’s PBX capabilities into Microsoft Teams, without needing a second application.

Through this UC calling, faxing, and SMS application, customers have 99.999 percent reliability, advanced analytics, global availability, third-party integration capabilities, and industry-leading features.

Financial Outlook

RingCentral has raised its 2023 revenue and operating margin outlook.

The total revenue range is now between $2.187 and $2.205 billion, representing an annual growth of 10 percent to 11 percent.

The GAAP operating margin has been raised to between 7.9 percent and 6.6 percent, and the non-GAAP operating margin is at least 18.5 percent, representing a 0.5 percent increase.

For the second quarter, total revenue is in the range of $535 to $537 million, which represents year-over-year growth of 10 percent.

RingCentral’s latest innovations, such as Teams 2.0, will play a big role in determining the company’s success across its future financial quarters.

Shmunis believes it will increase its customer value proposition and create expansion opportunities within its customer base.

 

 



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