RingCentral, Inc. announced robust financial results for the third quarter ended September 30, 2024, with total revenue reaching $612.1 million, a 5% year-over-year increase that landed at the high end of guidance. Subscription revenue, the core of the business, grew 6% year-over-year to $590.1 million, driven by new customer acquisition and product sales. Annualized Exit Monthly Recurring Subscriptions (ARR) reached $2.53 billion, up 7% year-over-year, indicating continued business momentum.
Profitability expanded significantly, with non-GAAP operating margin at 21.8%, exceeding the guidance range and marking the third consecutive quarter of GAAP operating profitability. The company generated a record $130.2 million in non-GAAP free cash flow, representing a 70% year-over-year increase and a robust 21.3% free cash flow margin. This strong cash flow generation is central to the company's capital allocation strategy.
RingCentral also announced the appointment of Abhey Lamba as its new Chief Financial Officer, effective in the coming weeks. Lamba, joining from Amazon Web Services, will be responsible for all financial functions, including financial planning, controllership, tax, treasury, corporate development, and investor relations. CEO Vlad Shmunis highlighted Lamba's 30 years of experience and track record in driving growth and profitability at premier technology companies.
The company is actively strengthening its balance sheet, having settled the remaining $161.3 million principal of its 2025 Convertible Notes in cash upon maturity in March 2025. The net debt leverage ratio improved to 2x on a trailing 12-months basis. Additionally, $50.0 million was used for share repurchases in Q1 2025, with approximately $218.1 million remaining authorized, contributing to a 3% year-over-year decline in diluted share count.
Looking ahead, management provided guidance for Q2 2025, expecting subscription revenue between $594 million and $600 million, and total revenue between $614 million and $620 million. For the full year 2025, the outlook forecasts subscription revenue growth of 5-7% and total revenue growth of 4-6%. Non-GAAP operating margin is expected to expand to approximately 22.5%, a 150 basis point increase year-over-year, with free cash flow targeted at $500 million to $510 million, representing approximately 25% growth at the midpoint compared to 2024.
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