Performance and Market Position - RingCentral's shares have appreciated 20.2% in the past six months, outperforming the Zacks Computer & Technology sector's return of 2.9% and the Zacks Internet - Software and Services industry's growth of 6.2% [1] - The company has outperformed peers like Sabre (14.6% gain), NetEase (-2.2% loss), and Okta (-11.3% loss) during the same period [1] Growth Drivers - RingCentral's outperformance is driven by expanding AI initiatives, strong demand for its cloud phone system, a growing customer base, and a solid network of partners [2] - The company leverages AI to enhance product offerings such as RingCX, RingSense, and RingCentral Events, improving customer experience and streamlining business communications [3] - Strong demand for Unified Communications as a Service (UCaaS) and contact center Software-as-a-Service solutions continues to benefit the company [3] Financial Targets and Estimates - RingCentral aims to reach at least $100 million in exit annual recurring revenue from new products by the end of 2025 [4] - The Zacks Consensus Estimate for first-quarter fiscal 2025 earnings is $1 per share, indicating a 14.94% year-over-year growth [10] - First-quarter fiscal 2025 revenue estimates are $625.21 million, suggesting a 7.02% year-over-year increase [11] - Fiscal 2025 earnings are estimated at $4.19 per share, reflecting a 13.61% increase from fiscal 2024 [11] - Fiscal 2025 revenue is projected at $2.57 billion, indicating a 7.32% year-over-year growth [11] Partnerships and Global Expansion - RingCentral's partnerships with industry leaders like Verizon and AT&T enhance service accessibility and distribution [5] - The company has expanded its global presence, offering its AI-powered contact center, RingCX, in six countries: the United States, Canada, the U.K., France, Germany, and Australia [7][8] - RingCentral recently received a PAN-India license, allowing it to operate across all 22 telecommunications circles in India, making it the first cloud provider to offer fully compliant UCaaS and CCaaS solutions nationwide [9] Customer and Product Growth - RingCentral Events gained over 100 customers in Q3 2024, including Fortune 500 company Trimble [6] - Key customers such as Block, DHL, eBay, NYU, Rutgers, and TELUS renewed their relationships with RingCentral [6] - The company partnered with Verint to enhance RingCX, strengthening its presence in the Contact Center as a Service (CCaaS) market [7] Earnings Performance - RingCentral's earnings have beaten the Zacks Consensus Estimate in the trailing four quarters, with an average surprise of 4.76% [12]

Group 1 - RingCentral (NYSE: RNG) is expected to outperform in 2025, with the stock recently correcting about 17% down to $35 after reaching a 52-week high of $42 [1] - The stock is considered attractive as it is undervalued, with strong expected above-average revenue growth [1] - The focus is on growth and momentum stocks that are reasonably priced and likely to outperform the market over the long term [1] Group 2 - The article emphasizes the importance of investing in high-quality growth stocks, as demonstrated by past performance where the S&P 500 increased 367% and the Nasdaq increased 685% from 2009 through 2019 [1]

For RingCentral, Inc. (NYSE: RNG ) stock thus far, it has been a forgettable year, as it comfortably lags broader-market gains. The stock has dropped 5% in value over the past six months, while the S&P 500 is up a healthy 12%. On the operational end, though, the unifiedMuslim Farooque is a leading financial journalist and market analyst with over five years of expertise in covering the stock and cryptocurrency markets. His work has been widely featured on platforms such as Seeking Alpha, InvestorPlace, Guru ...

Tired of losing money? Our Tech Contrarians team of Wall Street analysts sifts through the noise in the tech industry and captures outperformers through a coveted research process. We let the work speak for itself here .We’re picking up our coverage of RingCentral, Inc. (NYSE: RNG ); the last article we wrote on RingCentral dates back to December 2022. We now update our thoughts on the stock and seek toAnalyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies me ...

Financial Data and Key Metrics Changes - Subscription revenue for Q3 2024 was $583 million, up 10% year-over-year, exceeding guidance [35] - ARR reached $2.48 billion, a 9% increase year-over-year, with enterprise ARR rising 11% and mid-market and small business up 8% [35] - Free cash flow was $105 million, up 51% year-over-year, with a free cash flow margin of 17.3%, an increase of 480 basis points [38][39] - Operating margin increased approximately 2 points year-over-year to 21%, driven by spending discipline and efficiency [37] Business Line Data and Key Metrics Changes - RingCX, the new CCaaS product, saw strong traction with over 500 customers, a 45% sequential increase, and significant ARPU expansion [22][24] - RingSense, the conversation intelligence platform, now has over 1,200 customers, also up 45% sequentially [25] - RingCentral Events added over 100 new customers during the quarter, including notable Fortune 500 companies [26] Market Data and Key Metrics Changes - The company has been recognized by Gartner as a Leader in the 2024 Magic Quadrant for UCaaS for the tenth consecutive year, highlighting its competitive advantage in voice services [13] - The integration with Microsoft Teams continues to drive enterprise growth, with many larger customers choosing RingCentral as an add-on to Teams [77] Company Strategy and Development Direction - The company aims to solidify its UCaaS leadership by infusing AI across its portfolio and expanding its total addressable market (TAM) through new AI-powered products [10] - A strategic partnership with Verint was announced to enhance RingCX's capabilities, targeting a wide range of use cases from SMBs to large enterprises [23][66] - The focus on reducing stock-based compensation and returning capital to shareholders through buybacks is part of the company's strategy to improve financial health [39][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of AI products, indicating that AI will be a significant growth driver and ARPU solidifier [56][60] - The company is optimistic about the performance of RingCX and expects it to capture a meaningful share of the CCaaS market [24][51] - The outlook for Q4 2024 includes subscription revenue growth of 7% to 8% and total revenue growth of 7% [47] Other Important Information - The company has secured a $275 million delayed draw commitment to its Term Loan A, bringing total commitments to $350 million [42] - The liquidity position as of Q3 stands at $788 million, which includes cash on hand and undrawn commitments [43] Q&A Session Summary Question: Insights on AI strategy and its impact on growth - Management highlighted that AI is transformative and is already being monetized, with products like RingSense contributing positively to ARPU [56][60] Question: Trends in CCaaS for SMB vs. enterprise - RingCX is performing well in both segments, with strong growth in SMB and enterprise accounts, indicating its versatility [62][64] Question: Gross margin outlook - The gross margin is still strong at 81%, with slight headwinds due to investments in new products like RingCX [68] Question: Performance of Microsoft Teams opportunities - The integration with Teams is beneficial for larger customers, and the company expects to enhance RingCX's compatibility with Teams in the future [78] Question: Drivers of ARPU expansion - ARPU is being driven by cross-selling new products like RingCX and AI-based solutions, with a focus on delivering high value for the price [80][84]

Core Insights - RingCentral reported revenue of $608.77 million for Q3 2024, a year-over-year increase of 9.1% and a surprise of +1.14% over the Zacks Consensus Estimate of $601.91 million [1] - The company achieved an EPS of $0.95, compared to $0.78 a year ago, with an EPS surprise of +3.26% over the consensus estimate of $0.92 [1] Financial Performance Metrics - Mid-Market and Enterprise ARR was reported at $1.07 billion, below the average estimate of $1.55 billion from two analysts [3] - Annualized Exit Monthly Recurring Subscriptions (ARR) reached $2.48 billion, slightly above the average estimate of $2.47 billion from two analysts [3] - Subscription revenues totaled $582.97 million, exceeding the average estimate of $573.77 million from seven analysts, reflecting a year-over-year change of +9.8% [3] - Other revenues were reported at $25.80 million, below the average estimate of $28.01 million from seven analysts, indicating a year-over-year decline of -4.9% [3] Stock Performance - Over the past month, RingCentral shares have returned +23.3%, significantly outperforming the Zacks S&P 500 composite's +3.2% change [4] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [4]

Core Insights - RingCentral's (RNG) shares have increased by 7.4% over the past month, outperforming the Zacks Computer & Technology sector's growth of 5.6% due to its expanding AI initiatives, particularly the launch of RingCX, an AI-first cloud contact center product [1] - The company's Annual Recurring Revenue (ARR) reached $2.43 billion in Q2 2024, driven by strong demand for its Unified Communications as a Service (UCaaS) and contact center SaaS solutions [2] - RingCentral's strategic partnerships, including a collaboration with Zayo to launch Zayo UC+, are enhancing its AI capabilities and customer experiences [2] Growth Drivers - The expansion into vertical markets such as healthcare, financial services, and retail has significantly contributed to RingCentral's growth, with notable improvements in operational efficiency reported by clients like MedCare Equipment [3] - The enterprise segment has shown strong momentum, with double-digit year-over-year growth in Q2 2024 and nearly 20 deals closed with total contract values exceeding $1 million, alongside a 30% increase in average TCV for large deals [4] - The partnership with Vodafone Business aims to enhance customer experiences across 30 markets by early 2025, further solidifying RingCentral's market position [5] Financial Outlook - For Q3 2024, RingCentral anticipates revenues between $600.5 million and $603.5 million, reflecting an 8% year-over-year growth, with the Zacks Consensus Estimate at $601.9 million, indicating a 7.84% increase from the previous year [6] - The consensus estimate for earnings stands at 92 cents, suggesting a year-over-year growth of 17.95% [7] Investment Considerations - RingCentral's stock is currently viewed as undervalued, with a Value Score of A and a forward 12-month Price/Sales ratio of 1.26, significantly lower than the industry average of 3.40 [8] - The company holds a Zacks Rank 2 (Buy), indicating positive sentiment among analysts [8]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Ringcentral (RNG) as a strong value stock based on various financial metrics [2][8]. Company Metrics - Ringcentral (RNG) has a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential for value investors [4]. - The stock's P/E ratio is 7.51, significantly lower than the industry average of 20.62, suggesting it may be undervalued [4]. - RNG's Forward P/E has fluctuated between 6.89 and 10.63 over the past 52 weeks, with a median of 8.73 [4]. - The PEG ratio for RNG is 0.37, compared to the industry's average of 0.96, indicating favorable growth expectations relative to its valuation [5]. - Over the last 12 months, RNG's PEG has ranged from 0.24 to 0.48, with a median of 0.35 [5]. - The P/S ratio for RNG is 1.2, while the industry average is 2.53, further supporting the notion of undervaluation [6]. - RNG's P/CF ratio stands at 11.02, compared to the industry's average of 13.08, reflecting a strong cash flow outlook [7]. - The P/CF ratio has varied from -126.77 to 16.16 over the past 52 weeks, with a median of 11.82 [7]. Investment Outlook - The combination of RNG's strong value metrics and positive earnings outlook positions it as an attractive investment opportunity for value investors [8].

Core Viewpoint - RingCentral (RNG) has experienced an 18.3% decline in share price year-to-date, contrasting with a 12.6% rise in the Zacks Computer & Technology sector, primarily due to challenging macroeconomic conditions, unfavorable forex, and stiff competition [1] Group 1: Company Performance and Prospects - RingCentral's expanding partner base, including a recent partnership with Zayo, is expected to enhance its growth prospects [1][5] - The new Zayo UC+ offering integrates RingCentral's AI-driven UCaaS solution with Zayo's network infrastructure, providing a comprehensive platform for communication services [2] - The enterprise segment showed strong momentum, with double-digit year-over-year growth in the UCaaS business and approximately 20 deals exceeding $1 million in total contract value [5] Group 2: Strategic Partnerships and Innovations - An expanded partnership with Vodafone Business aims to offer Vodafone Business Contact Center with RingCentral, extending to 30 markets by early 2025 [6] - RingCentral's AI-powered contact center, RingCX, has secured a significant client and introduced over 300 new features, enhancing integrations with platforms like ServiceNow and Microsoft Teams [6] Group 3: Financial Guidance and Valuation - For Q3 2024, RingCentral anticipates revenues between $600.5 million and $603.5 million, reflecting an 8% year-over-year growth [8] - The consensus estimate for Q3 2024 earnings is 92 cents, indicating a 17.95% year-over-year growth [9] - RingCentral is considered an attractive investment due to its growth initiatives, with a Growth Score of A and a Valuation Score of A, indicating it is currently undervalued [9]

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers. Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, i ...