RingCentral Plunges 7% as Soft Q1 Outlook Overshadows Q4 Earnings Beat

RingCentral (NYSE:RNG) delivered better-than-expected fourth-quarter earnings and revenue, but its shares dropped 7% intra-day today as weaker-than-expected first-quarter guidance raised investor concerns.

For Q4, the cloud communications provider posted adjusted earnings per share of $0.98, edging past analyst expectations of $0.97. Revenue climbed 8% year-over-year to $615 million, slightly exceeding the $612.36 million forecast.

However, the company's Q1 outlook came in below Wall Street estimates, dampening enthusiasm around its solid year-end performance. RingCentral projected adjusted EPS between $0.93 and $0.97, missing the $1.01 consensus. Revenue guidance of $607 million to $612 million also fell short of the $627.4 million expected by analysts.

Despite the soft short-term outlook, RingCentral achieved GAAP operating profitability for the first time in 2024, generating record operating cash flow of $483 million, or 20.1% of total revenue. CEO Vlad Shmunis emphasized the company’s continued expansion in AI-powered products, including the recent launch of RingCentral AI Receptionist, which is showing early momentum.

For fiscal 2025, the company expects subscription revenue growth of 5-7% and total revenue growth of 4-6%. Full-year adjusted EPS is projected between $4.13 and $4.27, aligning closely with the $4.22 consensus estimate.

While RingCentral remains on a path of profitability and innovation, weaker near-term guidance overshadowed its strong Q4, leaving investors cautious about its growth trajectory in early 2025.