According to a Market research Future report, the global Cloud Communication Platform is estimated to grow 25% over the next few years to $5.7 billion, driven by the increasing adoption of BYOD and remote working practices within organizations. Recently, RingCentral (NYSE:RNG), a leading player in the market, announced its impressive first quarter results.
For the first quarter of the year, RingCentral's revenues grew 34% over the year to $201.5 million, ahead of the market's forecast of $193.5 million. It ended the quarter with an adjusted EPS of $0.17 per share, better than previous year's $0.16 and also ahead of the Street's forecast of $0.15 for the quarter.
By segment, software subscriptions revenue increased 33% over the year to $182.7 million. Other revenues grew 40% to $18.8 million.
Among key metrics, its annualized exit monthly recurring subscriptions (NYSE:ARR) increased 32% over the year to $777 million with RingCentral Office ARR growing 36% to $694 million. Mid-market and Enterprise ARR increased 70% to $346 million, Enterprise ARR grew 95% to $200 million and Channel ARR increased 75% to $203 million.
For the current quarter, RingCentral expects revenues of $203.5-$204.5 million with a non GAAP EPS of $0.15-$0.17. The market was looking for revenues of $203 million and an EPS of $0.16. RingCentral expects to end the current year with revenues of $862-$866 million and an EPS of $0.71-$0.75. The market had forecast revenues of $854.1 million with an EPS of $0.71 for the year.
RingCentral's Product Expansion
RingCentral continues to expand its product offering with the addition of new services. Recently, it introduced RingCentral Persist, a new solution that enables enterprise customers to continue to have communications services even if there is internet failure at their location. RingCentral Persist adds resiliency to its already-strong delivery infrastructure and has been deployed in places such as the Chase Center sports and entertainment complex.
With reference to integrating its service with existing offerings, RingCentral recently announced the integration of RingCentral Engage with Google Dialogflow. Engage is the company's new digital customer engagement platform. The integration with Dialogflow will grant RingCentral's customers access to Dialogflow's machine learning and AI capabilities. These customers also will be able to deploy chatbot virtual agents to manage automated digital customer interactions.
Besides product expansion, RingCentral remains focused on its platform expansion and upgrade as well. Recently, it expanded its open platform with a new feature called RingCentral Embeddable. Embeddable will give developers the ability to integrate RingCentral's communications capabilities into any web application using a few lines of code. It will enhance custom workflows in a simple, user-friendly way.
Additionally, it also extended its open platform to help customers meet compliance and regulatory requirements. Customers from industries such as oil and gas, real estate, and healthcare can now access their new APIs that can address specific data retention needs. RingCentral already has a strong developer network. Its open platform has more than 20,000 developers and over 2,000 integrations.
RingCentral looks poised to achieve its goal of crossing the $1 billion revenue milestone in fiscal 2020. Adding platform enhancing capabilities and product expansions will help it surpass that milestone.
Its stock is currently trading at $117.81, with a market capitalization of $9.7 billion. It touched a 52-week high of $127 earlier last week. It has climbed from a 52-week low of $64.41 that it had fallen to in December last year when most tech stocks had taken a beating.