Shares of business communications platform RingCentral Inc. burst out of the gate today following a strong third quarter earnings beat and bullish guidance for the next quarter.

The company reported a profit before certain costs such as stock compensation of 36 cents per share on revenue of $415 million, rising 37% from a year ago. That was better than expected, with analysts looking for earnings of just 33 cents on revenue of $393.46 million.

RingCentral followed that strong performance with a confident outlook, saying it expects to see fourth-quarter sales in a narrow range of $433.5 million to $434.5 million, well ahead of Wall Street’s forecast of $420.5 million.

The company announced it’s raising its full-year guidance too, saying it now sees $1.58 billion in annual sales, ahead of analysts’ $1.55 billion target.

Not surprisingly, investors cheered the company. Its stock made stunning gains, rising 23% in extended trading.

RingCentral founder, Chairman and Chief Executive Vlad Shmunis (pictured) hailed the “outstanding” results, which he credited to a combination of ramping contributions from its key partners and momentum from upmarket customers.

“With our award-winning RingCentral Message Video Phone platform, our seamless integration with an industry-leading cloud contact center solution, and our unparalleled market access with strategic partners, we believe we are uniquely positioned to meet the rising global demand for cloud-based communications solutions,” he said.

RingCentral sells a cloud communications platform aimed at business users. It bundles phone, video, messages, texts, chat, conferencing and even fax into a single platform, with a user interface consistent across smartphones, tablets and computers, so there’s no need to use separate apps for each function. Companies can use RingCentral to power their entire contact center.

The company has been around for a few years and it has plenty of competitors in the market, and yet it continues to grow. Notably, it reported subscriptions revenue that rose 38% from a year ago, to $385 million this quarter. Subscriptions now account for the bulk of the company’s sales at 93%.

Other metrics looked healthy too. For example, RingCentral reported annual recurring revenue of $1.64 billion, up 39% from a year ago. ARR from RingCentral Office, which is the company’s flagship enterprise product, rose by 42%, to $1.55 billion.

“This is impressive growth by RingCentral, fueled by the communication needs of the pandemic economy,” said analyst Holger Mueller of Constellation Research Inc. “Everything points to strong growth at the vendor, but investors may note its costs are growing even faster. While all may be well for now, RingCentral is still unprofitable so its management needs to find a path to get itself into the black.”

Today’s results came as RingCentral announced a new partnership with the business communications firm Mitel Networks Corp. Under the arrangement, RingCentral will become the exclusive unified communications-as-a-service partner for Mitel.

RingCentral announced a spate of similar partnerships earlier in the quarter with companies that include Verizon Business, Avaya Inc., Deutsche Telekom AG and Alcatel-Lucent Enterprise.

Photo: RingCentral