RingCentral (NYSE:RNG) climbed by as much as 27 percent in intra-day trading on Friday to be just 83-cents shy of its 52-week high, after management announced a strong earnings performance that exceeded company expectations across all key metrics.
AI Portfolio Boosts Growth
In an updated report, RingCentral (NYSE:RNG) said that it grew its revenues in the second quarter of the year by 5.9 percent to $657 million from $620 million in the same period last year. The figure also exceeded earlier expectations of $648 million to $653 million.
The growth was particularly owed to strong subscription revenues, which ended at $634 million during the period, up 5.8 percent from $598.7 million year-on-year, and beating its earlier guidance of $628 million to $633 million.
Photo by Tima Miroshnichenko on Pexels
GAAP diluted earnings per share ended at $0.45, more than tripling the $0.14 posted in the same period last year. Non-GAAP diluted EPS stood at $1.22, or 15 percent higher than the $1.06 year-on-year, and surpassing its earlier outlook of $1.15 to $1.17.
“We delivered another strong quarter, exceeding the high end of guidance across all key metrics while accelerating our transformation into an Agentic Voice AI leader,” RingCentral (NYSE:RNG) Chairman and CEO Vlad Shmunis said.
“Customers using at least one paid AI product now represent approximately 13% of ARR, having doubled year-over-year. This is a reflection of the growing value of our AI portfolio. Powered by our global voice network, rich customer interaction data, and ability to orchestrate AI and human agents, RingCentral is uniquely positioned to lead the future of customer engagement,” he noted.
67% Higher Dividend
The company announced a sharp increase in shareholder returns following the results, having hiked its dividends by 67 percent to $0.125 from $0.075 previously.
The first round under the new rate is scheduled for payment on August 20 to all shareholders on record as of August 6.
NiCE Partnership Expanded
In other news, RingCentral (NYSE:RNG) said that it expanded its partnership with NiCE Ltd—a technology company specializing in customer relations management software, artificial intelligence, and digital and workforce engagement management—to offer each other’s communication software to more customers.
Under a new multi-year deal, NiCE will resell RingCentral’s unified communications as a service (UCaaS) solution, RingEx.
In addition, the latter will market and sell RingCentral Contact Center, which runs on NiCE’s CXone technology, for another year.
Hedge Fund Participation Dips but Conviction Strengthens
Institutional investors appeared to be bullish about the company’s long-term growth prospects.
Data from Insider Monkey as of the end of the first quarter of the year showed that 25 hedge funds held positions in the company, down from 27 in the previous quarter.
However, institutional conviction strengthened markedly, with the existing hedge funds collectively owning a $406 million stake in the company, up 17.7 percent from the $344.8 million in the quarter prior.
While we acknowledge the risk and potential of RNG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RNG and that has 10,000% upside potential, check out our report about the cheapest AI stock.
READ NEXT: 33 Stocks That Should Double in 3 Years and Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy.
Disclosure: None. Follow Insider Monkey on Google News.
