RingCentral Prepares for Q1 2025 Earnings Report on May 8
RingCentral (RNG) is set to report its first-quarter 2025 earnings on May 8. The company expects to generate total revenues between $607 million and $612 million, representing a year-over-year increase of 4-5%, both on a reported and constant-currency basis. Non-GAAP earnings are anticipated to range from 93 to 97 cents per share for the quarter.
According to the Zacks Consensus Estimate, first-quarter 2025 revenues are projected at $610.74 million, indicating a growth of 4.54% compared to last year’s figure. Additionally, the consensus for earnings is set at 96 cents per share, reflecting a 10.34% year-over-year increase and remaining stable over the past 30 days.
Performance Overview: Price and EPS Surprise
In the past four quarters, RingCentral’s earnings have consistently exceeded the Zacks Consensus Estimate, with an average surprise of 4.38%.
With the upcoming announcement, several factors are at play that may impact RingCentral’s results.
Key Considerations for Q1 Performance
Competition remains fierce, particularly from Microsoft (MSFT) and Zoom Communications (ZM). Ongoing concerns over market share losses to these companies in the cloud communications sector could hurt RingCentral’s about quarters.
Despite these challenges, RingCentral maintains a 20% share of the Unified Communications as a Service (UCaaS) market, underscoring its status as a significant player amid increasing competition.
Sluggish spending in enterprise IT, driven by broader macroeconomic factors, is expected to weigh on performance. This trend may further impact RingCentral’s financial results for the first quarter.
Additionally, RingCentral’s aggressive pricing strategies are likely to have limited revenue growth opportunities, especially in a competitive market.
Investment in artificial intelligence and product development also poses short-term challenges; these expenses could pressure gross and operating margins, despite aligning with long-term growth objectives. However, RingCentral’s multi-product approach, including offerings like RingCentral CX and RingCentral Events, is expected to enhance customer engagement and contribute positively to performance.
Earnings Model Insights
According to the Zacks model, a combination of positive earnings ESP and a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold) usually enhances the chances of an earnings beat. In RingCentral’s case, the situation differs.
Currently, RingCentral has an earnings ESP of 0.00% and a Zacks Rank of #4 (Sell), indicating less favorable conditions for an earnings surprise.
Consider This Stock
One noteworthy company that may have the elements necessary to surpass on earnings is StoneCo (STNE). Its earnings ESP stands at +6.25%, and it currently holds a Zacks Rank #1.
Like RingCentral, StoneCo will also release its first-quarter 2025 results on May 8, with the Zacks Consensus Estimate for earnings at 32 cents per share, reflecting a growth of 10.34% year-over-year.
