RingCentral has surpassed its guidance for the quarter, with total revenue increasing 11 percent year over year to $539 million.
In its earnings call for Q2 2023, RingCentral stressed that its focus on profitability is reaping the rewards sooner than estimated. Not only had revenues exceeded guidance, but operating margins had, too, with a non-GAAP operating margin of 19.4 percent — up 800 basis points year over year and a quarterly record for RingCentral.
RingCentral’s latest earnings maintain the company’s positive momentum in 2023, with Q1 2023’s postings noting total revenue growing 14 percent year over year.
Vlad Shmunis, Founder, Chairman and CEO (and imminent Executive Chairman) at RingCentral, commented:
It was another solid quarter, as revenue and operating margin were both above our guidance. We remain focused on delivering healthy growth and expanding profitability, while also continuing to invest in innovation to bolster our leading position in the cloud communications market.”
Other key findings included subscriptions revenue increasing 11 percent year over year to $514 million.
Annualized Exit Monthly Recurring Subscriptions (ARR) increased 12 percent year over year to $2.2 billion. Mid-market and Enterprise ARR grew 13 percent year over year to $1.4 billion.
RingCentral emphasises that its operational efficiencies and cost discipline will allow the company to push ahead on achieving its free cash flow goal of between $270 and $290 million this calendar year.
“Our focus on profitability and efficiency has allowed us to meaningfully accelerate the attainment of our near-term free cash flow goal,” explained Sonalee Parekh, RingCentral’s CFO. “We expect to generate $270 to $290 million of adjusted, unlevered free cash flow in 2023, much earlier than anticipated.”
A Seismic August for RingCentral
Compounding RingCentral’s earnings news is the revelation that Founder Shmunis will stand down as CEO later this month, with his successor named as Tarek Robbiati.
Robbiati has been a RingCentral Board of Directors member since last December and was previously Chief Financial Officer and EVP of Finance and Strategy at Hewlett Packard Enterprise. Robbiati will be CEO effective August 28, 2023, and will remain a member of the Company’s Board.
Robbiati’s CV illustrates almost three decades as a renowned strategic and financial operator, respected for his leadership roles within the telecom, media, technology and financial services industries.
Shmunis will transition to the position of Executive Chairman with a remit of driving RingCentral’s strategic product vision and innovation.
“When I founded RingCentral two decades ago, we were a tiny, unfunded startup with an ambitious mission to improve how businesses around the world communicate internally and with their customers,” Shmunis said. “From those humble beginnings, we have become a recognized leader in our space and one of the largest pure-play SaaS companies in the world.”
RingCentral similarly announced that Mo Katibeh, President and Chief Operating Officer, will also stand down. Katibeh will remain an advisor to RingCentral to enable a smooth transition.
In further news this week, RingCentral launched RingCX, a native, AI-powered contact centre solution.
RingCX is an easy-to-deploy product that combines RingCentral’s primary UC services — including message, video, phone, SMS, and fax — with contact centre and is enhanced by a generative AI feature set. RingCX is a next-gen, AI-powered solution that provides a complete, native omnichannel experience and improves customer journeys.
RingCX is also integrated with RingCentral’s UCaaS platform, RingCentral MVP, for a unified employee and customer experience. RingCX is currently available in beta, with general availability scheduled for later in 2023.
It’s not only this week that RingCentral made significant moves. RingCentral acquired the events business of Hopin last week, strengthening its presence in the virtual event space.
RingCentral stressed that the deal also included “engineering, product and go-to-market talent from Hopin”, complementing the acquired technology. Hopin Session is also part of the agreement, a solution designed to host virtual webinars.
The acquisition of Hopin’s products illustrates RingCentral’s portfolio expanding beyond collaboration and into the events space.
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